Leases

3 Months Ended

Mar. 31, 2019

As discussed in Note 2, we adopted ASU 2016-02 as of January 1, 2019. We have operating and finance leases for buildings and certain machinery and equipment. Operating leases are included in operating lease assets, other current liabilities, and operating lease liabilities in our condensed consolidated balance sheets. Amortization of lease assets is included in non-cash lease expense in our condensed consolidated statement of cash flows. Amounts recognized for finance leases as of and for the three months ended March 31, 2019 were immaterial.

Operating lease assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at commencement date. As most of our lease contracts do not provide an explicit interest rate, we use our incremental borrowing rate in determining the present value of future lease payments. Our incremental borrowing rates include estimates related to the impact of collateralization and the economic environment where the leased asset is located. The operating lease assets also include any prepaid lease payments and initial direct costs incurred, but exclude lease incentives received at lease commencement. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Our leases have remaining lease terms of

years, some of which may include options to extend or terminate the lease. Lease expense for lease payments is recognized on a straight-line basis over the lease term in a manner similar to previous accounting guidance.

We do not recognize leases with an initial term of twelve months or less on the balance sheet and instead recognize the related lease payments as expense in the statement of comprehensive income on a straight-line basis over the lease term. We account for lease and non-lease components as a single lease component for all asset classes

. Additionally, for certain equipment leases, we apply a portfolio approach and account for multiple lease components as a single lease component.

Certain of our lease agreements include variable rental payments, including rental payments adjusted periodically for inflation. Variable rental payments are expensed during the period they are incurred and therefore are excluded from our lease assets and liabilities. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease expense recognized in the condensed consolidated statement of comprehensive income during the three months ended March 31, 2019 was $

13.0

million, including approximately $

2.1

million of short-term and variable lease costs.

Other information related to leases was as follows:


(In millions, except lease term and discount rate)	Three Months Ended March 31,
(In millions, except lease term and discount rate)	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		$ 10.0
Right-of-use assets obtained in exchange for operating lease obligations:		7.7
Weighted average remaining lease term - operating leases		7.7 years
Weighted average discount rate - operating leases		4.4 %

Total lease payments under non-cancellable operating leases as of March 31, 2019 were as follows:

(In millions)
Year Ending December 31,
2019 (excluding the three months ended March 31, 2019)	$	28.7
2020		34.5
2021		28.6
2022		23.6
2023		20.0
Thereafter		79.8
Total lease payments		215.2
Less imputed interest		(34.4	)
Total	$	180.8
Reported as of March 31, 2019
Other current liabilities	$	31.8
Operating lease liabilities		149.0
Total	$	180.8