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Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

Leases

    The Company leases certain land, buildings, machinery, equipment, vehicles and office and computer equipment under finance and operating leases. The Company adopted ASU 2016-02, “Leases” 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 Consolidated Balance Sheets. The Company has certain leases that contain one or more options to terminate or renew that can extend the lease term up to 17 years. Options that the company is reasonably certain to exercise are included in the lease term. 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 December 31, 2020 and 2019 were as follows (in millions):

Lease Assets						Classification						As of December 31, 2020						As of December 31, 2019
Operating ROU assets						Right-of-use lease assets						$	165.1					$	187.3
Finance lease assets						Property, plant and equipment, net(1)						15.1						19.1
Total leased assets												$	180.2					$	206.4
Lease Liabilities						Classification						As of December 31, 2020						As of December 31, 2019
Current:
Operating						Accrued expenses						$	43.5					$	42.3
Finance						Other current liabilities						3.0						4.5
Noncurrent:
Operating						Operating lease liabilities						125.9						148.6
Finance						Other noncurrent liabilities						9.8						12.0
Total leased liabilities												$	182.2					$	207.4

____________________________________

(1) Finance lease assets are recorded net of accumulated depreciation of $15.6 million and $15.2 million as of December 31, 2020 and 2019, respectively.

    Total lease cost for 2020 and 2019 are set forth below (in millions):

						Classification						Year Ended December 31, 2020						Year Ended December 31, 2019
Operating lease cost						Selling, general and administrative expenses						$	54.0					$	55.0
Variable lease cost						Selling, general and administrative expenses						1.7						0.6
Short-term lease cost						Selling, general and administrative expenses						11.0						8.1
Finance lease cost:
Amortization of leased assets						Depreciation expense(1)						3.7						4.7
Interest on leased liabilities						Interest expense, net						0.6						0.7
Total lease cost												$	71.0					$	69.1

____________________________________

(1) Depreciation expense was included in both cost of sales and selling, general and administrative expenses.

    Lease payment amounts for operating and finance leases with remaining terms greater than one year as of December 31, 2020 were as follows (in millions):

												December 31, 2020
																		Operating Leases						Finance Leases
2021																		$	47.6					$	3.3
2022																		37.7						1.4
2023																		28.6						1.1
2024																		18.9						0.8
2025																		13.6						0.6
Thereafter																		44.5						9.1
Total lease payments																		190.9						16.3
Less: imputed interest(1)																		(21.5)						(3.5)
Present value of leased liabilities																		$	169.4					$	12.8

____________________________________

(1) Calculated using the implicit interest rate for each lease.

    Lease payment amounts for operating and finance leases with remaining terms greater than one year as of December 31, 2019 were as follows (in millions):

												December 31, 2019
																		Operating Leases						Finance Leases
2020																		$	48.3					$	4.8
2021																		40.8						2.7
2022																		31.5						1.2
2023																		24.1						0.9
2024																		16.7						0.6
Thereafter																		61.6						8.7
Total lease payments																		223.0						18.9
Less: imputed interest(1)																		(32.1)						(2.4)
Present value of leased liabilities																		$	190.9					$	16.5

____________________________________

(1) Calculated using the implicit interest rate for each lease.

    The following table summarizes the weighted-average remaining lease term and weighted-average discount rate:

						As of December 31, 2020						As of December 31, 2019
Weighted-average remaining lease term:
Operating leases						7 years			7 years
Finance leases						15 years			14 years
Weighted-average discount rate:
Operating leases						3.5		%	4.1					%
Finance leases						2.7		%	2.9					%

    The following table summarizes the supplemental cash flow information for 2020 and 2019 (in millions):

						Year Ended December 31, 2020						Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases						$	54.1					$	51.9
Operating cash flows from finance leases						0.4						0.6
Financing cash flows from finance leases						3.8						5.3
Leased assets obtained in exchange for lease obligations:
Operating leases						$	30.8					$	34.8
Finance leases						0.9						1.5

Leases

Leases

    The Company leases certain land, buildings, machinery, equipment, vehicles and office and computer equipment under finance and operating leases. The Company adopted ASU 2016-02, “Leases” 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 Consolidated Balance Sheets. The Company has certain leases that contain one or more options to terminate or renew that can extend the lease term up to 17 years. Options that the company is reasonably certain to exercise are included in the lease term. 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 December 31, 2020 and 2019 were as follows (in millions):

Lease Assets						Classification						As of December 31, 2020						As of December 31, 2019
Operating ROU assets						Right-of-use lease assets						$	165.1					$	187.3
Finance lease assets						Property, plant and equipment, net(1)						15.1						19.1
Total leased assets												$	180.2					$	206.4
Lease Liabilities						Classification						As of December 31, 2020						As of December 31, 2019
Current:
Operating						Accrued expenses						$	43.5					$	42.3
Finance						Other current liabilities						3.0						4.5
Noncurrent:
Operating						Operating lease liabilities						125.9						148.6
Finance						Other noncurrent liabilities						9.8						12.0
Total leased liabilities												$	182.2					$	207.4

____________________________________

(1) Finance lease assets are recorded net of accumulated depreciation of $15.6 million and $15.2 million as of December 31, 2020 and 2019, respectively.

    Total lease cost for 2020 and 2019 are set forth below (in millions):

						Classification						Year Ended December 31, 2020						Year Ended December 31, 2019
Operating lease cost						Selling, general and administrative expenses						$	54.0					$	55.0
Variable lease cost						Selling, general and administrative expenses						1.7						0.6
Short-term lease cost						Selling, general and administrative expenses						11.0						8.1
Finance lease cost:
Amortization of leased assets						Depreciation expense(1)						3.7						4.7
Interest on leased liabilities						Interest expense, net						0.6						0.7
Total lease cost												$	71.0					$	69.1

____________________________________

(1) Depreciation expense was included in both cost of sales and selling, general and administrative expenses.

    Lease payment amounts for operating and finance leases with remaining terms greater than one year as of December 31, 2020 were as follows (in millions):

												December 31, 2020
																		Operating Leases						Finance Leases
2021																		$	47.6					$	3.3
2022																		37.7						1.4
2023																		28.6						1.1
2024																		18.9						0.8
2025																		13.6						0.6
Thereafter																		44.5						9.1
Total lease payments																		190.9						16.3
Less: imputed interest(1)																		(21.5)						(3.5)
Present value of leased liabilities																		$	169.4					$	12.8

____________________________________

(1) Calculated using the implicit interest rate for each lease.

    Lease payment amounts for operating and finance leases with remaining terms greater than one year as of December 31, 2019 were as follows (in millions):

												December 31, 2019
																		Operating Leases						Finance Leases
2020																		$	48.3					$	4.8
2021																		40.8						2.7
2022																		31.5						1.2
2023																		24.1						0.9
2024																		16.7						0.6
Thereafter																		61.6						8.7
Total lease payments																		223.0						18.9
Less: imputed interest(1)																		(32.1)						(2.4)
Present value of leased liabilities																		$	190.9					$	16.5

____________________________________

(1) Calculated using the implicit interest rate for each lease.

    The following table summarizes the weighted-average remaining lease term and weighted-average discount rate:

						As of December 31, 2020						As of December 31, 2019
Weighted-average remaining lease term:
Operating leases						7 years			7 years
Finance leases						15 years			14 years
Weighted-average discount rate:
Operating leases						3.5		%	4.1					%
Finance leases						2.7		%	2.9					%

    The following table summarizes the supplemental cash flow information for 2020 and 2019 (in millions):

						Year Ended December 31, 2020						Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases						$	54.1					$	51.9
Operating cash flows from finance leases						0.4						0.6
Financing cash flows from finance leases						3.8						5.3
Leased assets obtained in exchange for lease obligations:
Operating leases						$	30.8					$	34.8
Finance leases						0.9						1.5

X

- References

No definition available.

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- 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

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- 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

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