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Leases

12 Months Ended

Dec. 31, 2020

Lease Accounting

We lease certain dealerships, office space, land and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. We have elected not to bifurcate lease and non-lease components related to leases of real property.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 25 or more years. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Certain of our lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We rent or sublease certain real estate to third parties.

We adopted Topic 842 as of January 1, 2019. Prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting under Topic 840.

The table below presents the lease-related liabilities and finance lease ROU assets recorded on the Consolidated Balance Sheets:


(Dollars in millions)	December 31, 2020			December 31, 2019
Operating lease liabilities:
Current portion included in accrued liabilities	$	30.8		$	25.2
Noncurrent operating lease liabilities	246.7			238.5
Total operating lease liabilities	277.5			263.7
Finance lease liabilities:
Current portion included in current maturities of long-term debt	6.0			1.1
Long-term portion of lease liabilities in long-term debt	240.4			29.4
Total finance lease liabilities	246.4			30.5
Total lease liabilities	$	523.9		$	294.2
Finance lease right-of-use assets:
Total finance lease right-of-use assets 1	$	253.9
Weighted-average remaining lease term:
Operating leases	5 years
Finance leases	12 years
Weighted-average discount rate:
Operating leases	4.69		%
Finance leases	4.12		%

1 Finance lease right-of-use assets included in property and equipment, net of accumulated depreciation.

The components of lease costs, which were included in selling, general and administrative in our Consolidated Statements of Operations, were as follows:


	Year Ended December 31,
(Dollars in millions)	2020
Operating lease cost 1	$	41.6
Variable lease cost 2	3.1
Amortization of finance lease right-of-use assets	4.5
Interest on finance lease liabilities	3.4
Sublease income	(4.9)
Total lease costs	$	47.7

1 Includes short-term and month-to-month lease costs, which are immaterial.

2 Variable lease cost generally includes reimbursement for actual costs incurred by our lessors for common area maintenance, property taxes and insurance on leased real estate.

Rent expense, net of sublease income, for all operating leases was $41.3 million and $43.3 million for the years ended December 31, 2019 and 2018, respectively. These amounts are included as a component of selling, general and administrative expenses in our Consolidated Statements of Operations.

As of December 31, 2020, the maturities of our operating and finance lease liabilities were as follows:


(Dollars in millions)	Operating Lease Liabilities		Finance Lease Liabilities
Year Ending December 31,
2021	$	42.7	$	11.9
2022	40.6		25.7
2023	34.7		92.3
2024	29.4		13.3
2025	26.9		99.5
Thereafter	199.7		32.8
Total minimum lease payments	374.0		275.5
Less:
Present value adjustment	(96.5)		(29.1)
Total lease liabilities	$	277.5	$	246.4

Leases