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Recent Accounting Pronouncements | 12 Months Ended
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Dec. 31, 2019
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Income Taxes In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This pronouncement enhances and simplifies various aspects of income tax accounting guidance. Among other things, the amendment removes the year-to-date loss limitation in interim-period tax accounting and requires entities to reflect the effect of an enacted change in tax laws in the interim period that includes the enactment date of the new legislation. The standard is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact of the adoption of this update on our consolidated financial position, results of operations, and cash flows. Cloud Computing Arrangements In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal Use Software (Topic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which addresses a customer’s accounting for implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract. ASU 2018-15 aligns the accounting for costs incurred to implement a CCA that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. The standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. Entities are permitted to apply either a retrospective or prospective approach to adopt the guidance. We are currently evaluating the impact of the adoption of this update on our consolidated financial position, results of operations, and cash flows. Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326). This pronouncement, along with subsequent ASUs issued to clarify certain provisions of ASU 2016-13, modifies the measurement of expected credit losses of certain financial instruments, including accounts receivable (excluding those related to operating leases) and net investments in sales-type leases. Among other things, these amendments require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The standard requires a cumulative-effect adjustment to the statement of financial position as of the beginning of the first reporting period in which the guidance is effective. Periods prior to the adoption date that are presented for comparative purposes are not adjusted. We are currently evaluating the impact of the adoption of this update on our consolidated financial position, results of operations, and cash flows. Derivatives and Hedging In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815). This pronouncement, along with ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, were issued to clarify certain provisions of these ASUs, simplifies and clarifies the accounting and disclosure for hedging activities by more closely aligning the results of cash flow and fair value hedge accounting with the risk management activities of an entity. The amendments in this update are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. We adopted this standard during the first quarter of 2019 and it did not impact our consolidated financial position, results of operations, or cash flows. Leases In February 2016, the FASB issued Topic 842, which sets out the principles for the identification, measurement, recognition, presentation and disclosure of leases and its related updates. Topic 842 impacts the accounting for both lessors and lessees. We have adopted the standard effective January 1, 2019, using the modified retrospective transition method and initial application date of January 1, 2017. For all facilities and equipment that we lease, we have elected the practical expedient to combine lease and non-lease components. For our existing operating and finance leases that commenced before the date of initial application where we are the lessee, we have made an accounting policy election to use the incremental borrowing rate considering the remaining lease term and remaining minimum rental payments. In calculating the change in ROU assets from a lease modification that decreases our rights as lessee to use one or more underlying assets, we have made an accounting policy election of remeasuring the ROU asset based on how much of the original right of use remains after modification. The new standard requires lessors to identify and evaluate the lease and non-lease components in arrangements containing a lease, provides clarification on the scope of non-lease components and provides more guidance on how to identify and separate the components. From a lessor perspective, the adoption of the new lease standard primarily impacts our ChoiceLease product line, which includes a vehicle lease as well as maintenance and other services. The standard requires lessees to classify leases as either finance or operating leases. This classification determines whether the related expense is recognized based on asset amortization and interest on the obligation (finance leases) or on a straight-line basis over the term of the lease (operating lease). We recorded a ROU asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. We have elected the practical expedient to not apply these recognition requirements to leases with a term of 12 months or less with the exception of our real estate leases. Instead we recognize the lease payments on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred. Effective with the adoption of the new leasing accounting standard in 2019, we recorded an after-tax cumulative effect adjustment to decrease retained earnings as of January 1, 2017 primarily to recognize a contract liability (deferred revenue) related to maintenance services, which was partially offset by costs capitalized related to sales commissions and is reflected in the Consolidated Statements of Shareholders' Equity. Adoption of the new lease standard impacted our previously reported Consolidated Statements of Earnings and Comprehensive Income results as follows (in millions, except per share amounts):
| Year ended December 31, 2018 |  | Year ended December 31, 2017
| As Previously Reported | Lessor Adjustments (1) | Lessee and Other Adjustments (1) | As Revised |  | As Previously Reported | Lessor Adjustments (1) | Lessee and Other Adjustments (1) | As Revised
Lease & related maintenance and rental revenues (1) | $ | 3,508.1 |  | $ | 3.5 |  | $ | 1.3 |  | $ | 3,512.9 |  |  | $ | 3,237.7 |  | $ | (17.0 | ) | $ | — |  | $ | 3,220.7 |
Total revenues | 8,409.2 |  | 3.5 |  | 1.3 |  | 8,413.9 |  |  | 7,297.1 |  | (17.0 | ) | — |  | 7,280.1 |
Cost of lease & related maintenance and rental (1) | 2,566.3 |  | (10.9 | ) | — |  | 2,555.4 |  |  | 2,355.0 |  | (1.8 | ) | — |  | 2,353.2 |
Cost of services (2) | 3,655.8 |  | — |  | 7.6 |  | 3,663.3 |  |  | 2,970.8 |  | — |  | 6.6 |  | 2,977.4 |
Other operating expenses | 125.3 |  | — |  | (1.4 | ) | 124.0 |  |  | 115.5 |  | — |  | (0.5 | ) | 115.0 |
Selling, general and administrative expenses (2) | 854.8 |  | (2.5 | ) | (2.9 | ) | 849.4 |  |  | 871.2 |  | 2.1 |  | (2.4 | ) | 870.9 |
Used vehicle sales, net | 21.7 |  | 0.6 |  | — |  | 22.3 |  |  | 17.2 |  | (0.3 | ) | — |  | 17.0 |
Interest expense | 178.6 |  | — |  | 1.9 |  | 180.5 |  |  | 140.4 |  | — |  | 1.5 |  | 141.9 |
Restructuring and other items, net (2) | 25.1 |  | — |  | (3.3 | ) | 21.9 |  |  | 21.4 |  | — |  | (4.1 | ) | 17.3 |
Earnings (loss) from continuing operations before income taxes | 373.9 |  | 16.3 |  | (0.7 | ) | 389.5 |  |  | 314.5 |  | (17.0 | ) | (1.1 | ) | 296.4 |
Provision for (benefit from) income taxes | 98.3 |  | 4.3 |  | — |  | 102.5 |  |  | (477.7 | ) | 54.1 |  | — |  | (423.7 | )
Earnings (loss) from continuing operations | 275.6 |  | 12.0 |  | (0.7 | ) | 286.9 |  |  | 792.3 |  | (71.1 | ) | (1.1 | ) | 720.1 |
Net earnings (loss) | $ | 273.3 |  | $ | 12.0 |  | $ | (0.7 | ) | $ | 284.6 |  |  | $ | 791.8 |  | $ | (71.1 | ) | $ | (1.1 | ) | $ | 719.6 |
Comprehensive income | $ | 170.0 |  | $ | 14.3 |  | $ | — |  | $ | 184.4 |  |  | $ | 918.4 |  | $ | (75.5 | ) | — |  | $ | 842.8 |
Earnings (loss) per common share - Basic |  |  |  |  |  |  |  |  |
Continuing operations | $ | 5.24 |  | $ | 0.22 |  | $ | — |  | $ | 5.46 |  |  | $ | 15.00 |  | $ | (1.36 | ) | $ | — |  | $ | 13.64 |
Net earnings (loss) | $ | 5.20 |  | $ | 0.22 |  | $ | — |  | $ | 5.41 |  |  | $ | 15.00 |  | $ | (1.36 | ) | $ | — |  | $ | 13.63 |
Earnings (loss) per common share - Diluted |  |  |  |  |  |  |  |  |
Continuing operations | $ | 5.21 |  | $ | 0.22 |  | $ | — |  | $ | 5.43 |  |  | $ | 14.90 |  | $ | (1.36 | ) | $ | — |  | $ | 13.54 |
Net earnings (loss) | $ | 5.17 |  | $ | 0.22 |  | $ | — |  | $ | 5.38 |  |  | $ | 14.89 |  | $ | (1.36 | ) | $ | — |  | $ | 13.53 |
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(1) | We determined that certain lessor arrangements of revenue earning equipment historically accounted for as operating leases should have been accounted for as direct financing leases. Additionally, we evaluated our leases for classification and determined that certain lessee arrangements, primarily real estate leases, historically accounted for as operating leases should have been accounted for as capital leases. The prior period error was corrected by reducing "Lease & related maintenance and rental revenues" by approximately $19 million and $15 million during the years ended December 31, 2018 and 2017, respectively. We also reduced depreciation expense (included in "Cost of lease & related maintenance and rental") by approximately $17 million and $14 million during the years ended December 31, 2018 and 2017, respectively. We concluded these errors were not material to any of our previously issued consolidated financial statements.
(2) | Adjustments primarily reflect the reclassification of our Singapore operations that were shut down during 2019 into "Restructuring and other items, net,".
Note: Amounts may not be additive due to rounding. Adoption of the new lease standard impacted our previously reported Consolidated Balance Sheet as follows (in millions):
|  | December 31, 2018
|  | As Previously |  | Lessor |  | Lessee |  |
|  | Reported |  | Adjustment (1) |  | Adjustment (1) |  | As Revised
Receivables, net |  | $ | 1,219.4 |  |  | $ | 22.6 |  |  | $ | — |  |  | $ | 1,242.1 |
Prepaid expenses and other current assets |  | 201.6 |  |  | (23.3 | ) |  | — |  |  | 178.3 |
Total current assets |  | 1,568.4 |  |  | (0.7 | ) |  | — |  |  | 1,567.7 |
Revenue earning equipment, net |  | 9,498.0 |  |  | (84.2 | ) |  | 2.2 |  |  | 9,416.0 |
Operating property and equipment, net |  | 843.8 |  |  | — |  |  | 18.2 |  |  | 862.1 |
Sales-type leases and other assets |  | 606.6 |  |  | 156.8 |  |  | 204.3 |  |  | 967.8 |
Total assets |  | 13,051.1 |  |  | 72.0 |  |  | 224.7 |  |  | 13,347.8 |
Short-term debt and current portion of long term-debt |  | 930.0 |  |  | — |  |  | 7.2 |  |  | 937.1 |
Accrued expenses and other current liabilities |  | 630.5 |  |  | 145.1 |  |  | 72.2 |  |  | 847.7 |
Total current liabilities |  | 2,292.3 |  |  | 145.1 |  |  | 79.3 |  |  | 2,516.7 |
Long-term debt |  | 5,693.6 |  |  | — |  |  | 18.5 |  |  | 5,712.1 |
Other non-current liabilities |  | 849.9 |  |  | 421.2 |  |  | 131.5 |  |  | 1,402.6 |
Deferred income taxes |  | 1,304.8 |  |  | (124.6 | ) |  | (0.5 | ) |  | 1,179.7 |
Total liabilities |  | 10,140.8 |  |  | 441.7 |  |  | 228.8 |  |  | 10,811.2 |
Retained earnings |  | 2,710.7 |  |  | (369.6 | ) |  | (3.8 | ) |  | 2,337.3 |
Accumulated other comprehensive loss |  | (911.3 | ) |  | (0.1 | ) |  | (0.2 | ) |  | (911.6 | )
Total shareholders' equity |  | 2,910.3 |  |  | (369.7 | ) |  | (4.1 | ) |  | 2,536.6 |
Total liabilities and shareholders' equity |  | 13,051.1 |  |  | 72.0 |  |  | 224.7 |  |  | 13,347.8 |
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(1) | We determined that in a prior period certain lessor arrangements of revenue earning equipment historically accounted for as operating leases should
have been accounted for as direct financing leases. Additionally, we evaluated our leases for classification and determined that certain lessee arrangements, primarily real estate leases, historically accounted for as operating leases should have been accounted for as capital leases. The prior period error was corrected by increasing "Receivables, net" by approximately $24 million and also increasing "sales-type leases and other assets" by approximately $65 million and reducing "Revenue earning equipment, net" by $83 million. We concluded these errors were not material to any of our previously issued consolidated financial statements. Note: Amounts may not be additive due to rounding. Adoption of the new lease standard impacted our previously reported Consolidated Statements of Cash Flows as follows (in millions):
| Year ended December 31, 2018 |  | Year ended December 31, 2017
| As Previously Reported | New Lease Standard Adjustments | As Revised |  | As Previously Reported | New Lease Standard Adjustments | As Revised
Net earnings (loss) | $ | 273.3 |  | $ | 11.3 |  | $ | 284.6 |  |  | $ | 791.8 |  | $ | (72.2 | ) | $ | 719.6 |
Earnings (loss) from continuing operations | 275.6 |  | 11.3 |  | 286.9 |  |  | 792.3 |  | (72.2 | ) | 720.1 |
Depreciation expense | 1,395.0 |  | (6.4 | ) | 1,388.6 |  |  | 1,255.2 |  | 2.5 |  | 1,257.7 |
Used vehicle sales, net | 21.7 |  | 0.6 |  | 22.3 |  |  | 17.2 |  | (0.3 | ) | 17.0 |
Amortization expense and other non-cash charges, net | 31.2 |  | 36.8 |  | 67.9 |  |  | 8.3 |  | 32.7 |  | 41.0 |
Non-cash lease expense | — |  | 81.1 |  | 81.1 |  |  | — |  | 67.8 |  | 67.8 |
Deferred income tax expense | 104.6 |  | 4.3 |  | 108.9 |  |  | (500.3 | ) | 54.1 |  | (446.2 | )
Collections on sales-type leases and other items | — |  | 82.8 |  | 82.8 |  |  | — |  | 81.0 |  | 81.0 |
Changes in operating assets and liabilities: |  |  |  |  |  |  |
Receivables | (189.3 | ) | (3.8 | ) | (193.1 | ) |  | (173.8 | ) | (5.0 | ) | (178.9 | )
Prepaid expenses and other assets | (65.8 | ) | (18.9 | ) | (84.7 | ) |  | (38.9 | ) | (56.9 | ) | (95.8 | )
Accrued expenses and other non-current liabilities | 3.1 |  | (104.8 | ) | (101.8 | ) |  | 78.4 |  | (23.6 | ) | 54.8 |
Net cash provided by operating activities from continuing operations | 1,635.1 |  | 82.9 |  | 1,718.0 |  |  | 1,548.0 |  | 80.1 |  | 1,628.1 |
Collections on direct finance leases and other items | 75.0 |  | (75.0 | ) | — |  |  | 73.2 |  | (73.2 | ) | — |
Net cash used in investing activities from continuing operations | (2,746.5 | ) | (75.0 | ) | (2,821.5 | ) |  | (1,365.5 | ) | (73.2 | ) | (1,438.7 | )
Debt repaid | (797.8 | ) | (7.9 | ) | (805.7 | ) |  | (962.6 | ) | (6.9 | ) | (969.5 | )
Net cash provided by (used in) financing activities from continuing operations | 1,093.4 |  | (7.9 | ) | 1,085.5 |  |  | (155.1 | ) | (6.9 | ) | (162.1 | )
Note: Amounts may not be additive due to rounding.

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