XML 95 R25.htm IDEA: XBRL DOCUMENT
v3.19.3

Leases | 9 Months Ended
--- | ---
Sep. 30, 2019
Leases [Abstract] |
Leases | LEASES The Company leases certain land, buildings, machinery, equipment, vehicles and office and computer equipment under finance and operating leases. As previously discussed in Note 1, the Company adopted ASU 2016-02 effective January 1, 2019. Under the new standard, lessees are required to record an asset (ROU asset or finance lease asset) and a lease liability. The new standard continues to allow for two types of leases for income statement recognition purposes: operating leases and finance leases. Operating leases result in the recognition of a single lease expense on a straight-line basis over the lease term, similar to the treatment for operating leases under previous U.S. GAAP. Finance leases result in an accelerated expense also similar to previous U.S. GAAP. ASU 2016-02 also contains amended guidance regarding the identification of embedded leases in service and supply contracts, as well as the identification of lease and nonlease components of an arrangement. ROU assets represent the Company’s right to use an underlying asset for the lease term while lease liabilities represent the Company’s obligation to make lease payments for the lease term. All leases greater than 12 months result in the recognition of an ROU asset and liability at the lease commencement date based on the present value of the lease payments over the lease term. The present value of the lease payments is calculated using the applicable weighted-average discount rate. The weighted-average discount rate is based on the discount rate implicit in the lease, or if the implicit rate is not readily determinable from the lease, then the Company estimates an applicable incremental borrowing rate. The incremental borrowing rate is estimated using the currency denomination of the lease, the contractual lease term and the Company’s applicable borrowing rate. The Company does not recognize a ROU asset or lease liability with respect to operating leases with an initial term of 12 months or less and recognizes expense on such leases on a straight-line basis over the lease term. The Company accounts for lease components separately from nonlease components other than for real estate and office equipment. The Company evaluated its supplier agreements for the existence of leases and determined these leases comprised an insignificant portion of its supplier agreements. As such, these leases were not material to the Company’s Condensed Consolidated Balance Sheets. The Company has certain leases that include one or more options to renew, with renewal terms that can extend the lease term from one to ten years. The exercise of the lease renewal options is at the Company’s discretion and are included in the determination of the ROU asset and lease liability when the option is reasonably certain of being exercised. The depreciable life of ROU assets and leasehold improvements are limited by the expected lease term. The Company has certain lease agreements that include variable rental payments that are adjusted periodically for inflation based on the index rate as defined by the applicable government authority. Generally, the Company’s lease agreements do not contain any residual value guarantees or restrictive covenants. Total lease assets and liabilities at September 30, 2019 were as follows (in millions):
Lease Assets |  | Classification |  | As of September 30, 2019
Operating ROU assets |  | Right-of-use lease assets |  | $ | 193.5 |
Finance lease assets |  | Property, plant and equipment, net(1) |  | 14.6 |
Total leased assets |  |  |  | $ | 208.1 |
Lease Liabilities |  | Classification |  | As of September 30, 2019
Current: |  |  |  |
Operating |  | Accrued expenses |  | $ | 42.2 |
Finance |  | Other current liabilities |  | 4.2 |
Noncurrent: |  |  |  |
Operating |  | Operating lease liabilities |  | 154.8 |
Finance |  | Other noncurrent liabilities |  | 7.9 |
Total leased liabilities |  |  |  | $ | 209.1 |
(1) Finance lease assets are recorded net of accumulated depreciation of $17.9 million as of September 30, 2019. Total lease cost for the three and nine months ended September 30, 2019 is set forth below (in millions):
|  | Classification |  | Three months ended September 30, 2019 |  | Nine Months Ended September 30, 2019
Operating lease cost |  | Selling, general and administrative expenses |  | $ | 13.8 |  |  | $ | 41.8 |
Variable lease cost |  | Selling, general and administrative expenses |  | 0.3 |  |  | 0.4 |
Short-term lease cost |  | Selling, general and administrative expenses |  | 2.0 |  |  | 5.7 |
Finance lease cost: |  |  |  |  |  |
Amortization of leased assets |  | Depreciation expense(1) |  | 1.1 |  |  | 3.6 |
Interest on leased liabilities |  | Interest expense, net |  | 0.2 |  |  | 0.6 |
Total lease cost |  |  |  | $ | 17.4 |  |  | $ | 52.1 |
(1) Depreciation expense is a component of both cost of sales and selling, general and administrative expenses. The total lease expense under noncancelable operating leases was approximately $72.1 million for the year ended December 31, 2018. The aggregate future minimum lease payments under noncancelable operating and finance leases with remaining terms greater than one year as of September 30, 2019 and December 31, 2018 were as follows (in millions):
|  | September 30, 2019 |  | December 31, 2018
|  | Operating Leases(1)(2) |  | Finance Leases |  | Operating Leases(5) |  | Finance Leases(5)
2019 |  | $ | 12.7 |  |  | $ | 1.3 |  |  | $ | 46.7 |  |  | $ | 4.9 |
2020 |  | 46.1 |  |  | 4.1 |  |  | 39.5 |  |  | 3.5 |
2021 |  | 38.9 |  |  | 2.2 |  |  | 32.6 |  |  | 2.8 |
2022 |  | 29.7 |  |  | 0.9 |  |  | 26.0 |  |  | 0.9 |
2023 |  | 23.0 |  |  | 0.6 |  |  | 21.7 |  |  | 0.7 |
Thereafter |  | 80.3 |  |  | 4.1 |  |  | 85.5 |  |  | 3.7 |
Total lease payments |  | 230.7 |  |  | 13.2 |  |  | 252.0 |  |  | 16.5 |
Less: imputed interest(3)(4) |  | (33.7 | ) |  | (1.1 | ) |  | — |  |  | (1.0 | )
Present value of leased liabilities |  | $ | 197.0 |  |  | $ | 12.1 |  |  | $ | 252.0 |  |  | $ | 15.5 |
(1) Operating lease payments include $12.3 million related to options to extend leases that are reasonably certain of being exercised. (2) This amount excludes lease payments for the nine months ended September 30, 2019. (3) Calculated using the implicit interest rate for each lease. (4) Imputed interest for operating leases as of December 31, 2018 is not applicable as the Company adopted ASC 842 on January 1, 2019. (5) As determined under ASC 840, “Leases.” For leases related to real estate and office equipment, the minimum lease payments exclude payments for nonlease components. The following table summarizes the weighted-average remaining lease term and weighted-average discount rate:
|  | As of September 30, 2019
Weighted-average remaining lease term: |  |
Operating leases |  | 8 years |
Finance leases |  | 9 years |
Weighted-average discount rate: |  |
Operating leases |  | 4.0 | %
Finance leases |  | 2.8 | %
The following table summarizes the supplemental cash flow information for the nine months September 30, 2019 (in millions):
|  | Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |
Operating cash flows from operating leases |  | $ | 41.8 |
Operating cash flows from finance leases |  | 3.6 |
Financing cash flows from finance leases |  | 0.6 |
Leased assets obtained in exchange for lease obligations: |  |
Operating leases |  | $ | 27.2 |
Finance leases |  | 0.6 |
Leases | LEASES The Company leases certain land, buildings, machinery, equipment, vehicles and office and computer equipment under finance and operating leases. As previously discussed in Note 1, the Company adopted ASU 2016-02 effective January 1, 2019. Under the new standard, lessees are required to record an asset (ROU asset or finance lease asset) and a lease liability. The new standard continues to allow for two types of leases for income statement recognition purposes: operating leases and finance leases. Operating leases result in the recognition of a single lease expense on a straight-line basis over the lease term, similar to the treatment for operating leases under previous U.S. GAAP. Finance leases result in an accelerated expense also similar to previous U.S. GAAP. ASU 2016-02 also contains amended guidance regarding the identification of embedded leases in service and supply contracts, as well as the identification of lease and nonlease components of an arrangement. ROU assets represent the Company’s right to use an underlying asset for the lease term while lease liabilities represent the Company’s obligation to make lease payments for the lease term. All leases greater than 12 months result in the recognition of an ROU asset and liability at the lease commencement date based on the present value of the lease payments over the lease term. The present value of the lease payments is calculated using the applicable weighted-average discount rate. The weighted-average discount rate is based on the discount rate implicit in the lease, or if the implicit rate is not readily determinable from the lease, then the Company estimates an applicable incremental borrowing rate. The incremental borrowing rate is estimated using the currency denomination of the lease, the contractual lease term and the Company’s applicable borrowing rate. The Company does not recognize a ROU asset or lease liability with respect to operating leases with an initial term of 12 months or less and recognizes expense on such leases on a straight-line basis over the lease term. The Company accounts for lease components separately from nonlease components other than for real estate and office equipment. The Company evaluated its supplier agreements for the existence of leases and determined these leases comprised an insignificant portion of its supplier agreements. As such, these leases were not material to the Company’s Condensed Consolidated Balance Sheets. The Company has certain leases that include one or more options to renew, with renewal terms that can extend the lease term from one to ten years. The exercise of the lease renewal options is at the Company’s discretion and are included in the determination of the ROU asset and lease liability when the option is reasonably certain of being exercised. The depreciable life of ROU assets and leasehold improvements are limited by the expected lease term. The Company has certain lease agreements that include variable rental payments that are adjusted periodically for inflation based on the index rate as defined by the applicable government authority. Generally, the Company’s lease agreements do not contain any residual value guarantees or restrictive covenants. Total lease assets and liabilities at September 30, 2019 were as follows (in millions):
Lease Assets |  | Classification |  | As of September 30, 2019
Operating ROU assets |  | Right-of-use lease assets |  | $ | 193.5 |
Finance lease assets |  | Property, plant and equipment, net(1) |  | 14.6 |
Total leased assets |  |  |  | $ | 208.1 |
Lease Liabilities |  | Classification |  | As of September 30, 2019
Current: |  |  |  |
Operating |  | Accrued expenses |  | $ | 42.2 |
Finance |  | Other current liabilities |  | 4.2 |
Noncurrent: |  |  |  |
Operating |  | Operating lease liabilities |  | 154.8 |
Finance |  | Other noncurrent liabilities |  | 7.9 |
Total leased liabilities |  |  |  | $ | 209.1 |
(1) Finance lease assets are recorded net of accumulated depreciation of $17.9 million as of September 30, 2019. Total lease cost for the three and nine months ended September 30, 2019 is set forth below (in millions):
|  | Classification |  | Three months ended September 30, 2019 |  | Nine Months Ended September 30, 2019
Operating lease cost |  | Selling, general and administrative expenses |  | $ | 13.8 |  |  | $ | 41.8 |
Variable lease cost |  | Selling, general and administrative expenses |  | 0.3 |  |  | 0.4 |
Short-term lease cost |  | Selling, general and administrative expenses |  | 2.0 |  |  | 5.7 |
Finance lease cost: |  |  |  |  |  |
Amortization of leased assets |  | Depreciation expense(1) |  | 1.1 |  |  | 3.6 |
Interest on leased liabilities |  | Interest expense, net |  | 0.2 |  |  | 0.6 |
Total lease cost |  |  |  | $ | 17.4 |  |  | $ | 52.1 |
(1) Depreciation expense is a component of both cost of sales and selling, general and administrative expenses. The total lease expense under noncancelable operating leases was approximately $72.1 million for the year ended December 31, 2018. The aggregate future minimum lease payments under noncancelable operating and finance leases with remaining terms greater than one year as of September 30, 2019 and December 31, 2018 were as follows (in millions):
|  | September 30, 2019 |  | December 31, 2018
|  | Operating Leases(1)(2) |  | Finance Leases |  | Operating Leases(5) |  | Finance Leases(5)
2019 |  | $ | 12.7 |  |  | $ | 1.3 |  |  | $ | 46.7 |  |  | $ | 4.9 |
2020 |  | 46.1 |  |  | 4.1 |  |  | 39.5 |  |  | 3.5 |
2021 |  | 38.9 |  |  | 2.2 |  |  | 32.6 |  |  | 2.8 |
2022 |  | 29.7 |  |  | 0.9 |  |  | 26.0 |  |  | 0.9 |
2023 |  | 23.0 |  |  | 0.6 |  |  | 21.7 |  |  | 0.7 |
Thereafter |  | 80.3 |  |  | 4.1 |  |  | 85.5 |  |  | 3.7 |
Total lease payments |  | 230.7 |  |  | 13.2 |  |  | 252.0 |  |  | 16.5 |
Less: imputed interest(3)(4) |  | (33.7 | ) |  | (1.1 | ) |  | — |  |  | (1.0 | )
Present value of leased liabilities |  | $ | 197.0 |  |  | $ | 12.1 |  |  | $ | 252.0 |  |  | $ | 15.5 |
(1) Operating lease payments include $12.3 million related to options to extend leases that are reasonably certain of being exercised. (2) This amount excludes lease payments for the nine months ended September 30, 2019. (3) Calculated using the implicit interest rate for each lease. (4) Imputed interest for operating leases as of December 31, 2018 is not applicable as the Company adopted ASC 842 on January 1, 2019. (5) As determined under ASC 840, “Leases.” For leases related to real estate and office equipment, the minimum lease payments exclude payments for nonlease components. The following table summarizes the weighted-average remaining lease term and weighted-average discount rate:
|  | As of September 30, 2019
Weighted-average remaining lease term: |  |
Operating leases |  | 8 years |
Finance leases |  | 9 years |
Weighted-average discount rate: |  |
Operating leases |  | 4.0 | %
Finance leases |  | 2.8 | %
The following table summarizes the supplemental cash flow information for the nine months September 30, 2019 (in millions):
|  | Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |
Operating cash flows from operating leases |  | $ | 41.8 |
Operating cash flows from finance leases |  | 3.6 |
Financing cash flows from finance leases |  | 0.6 |
Leased assets obtained in exchange for lease obligations: |  |
Operating leases |  | $ | 27.2 |
Finance leases |  | 0.6 |

X
- References No definition available. + Details
Name: | us-gaap_LeasesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
Name: | us-gaap_LesseeFinanceLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
Name: | us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration