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Leases | 9 Months Ended
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Sep. 30, 2019
Leases [Abstract] |
Leases, Operating Leases | LEASES We have operating and finance leases for certain of our technology centers, warehouses, office spaces, land, and equipment. As described within Note 1, we adopted ASU 2016-02, "Leases," on January 1, 2019 requiring, among other changes, operating and finance leases with terms exceeding twelve months to be recognized as ROU assets and lease liabilities on the balance sheet. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The lease term is determined to be the non-cancelable period including any lessee renewal options which are considered to be reasonably certain of exercise. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company used judgment to determine an appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term in a similar economic environment. Certain of our lease agreements include rental payments based on an index or adjusted periodically for inflation. The changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. In addition, variable lease expense also includes elements of a contract that is based on usage during the term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Supplemental balance sheet information related to leases is summarized as follows:
|  |  | September 30, 2019
Assets | Classification |  |
Operating lease assets, net | Other assets (1) |  | $ | 96.3 |
Finance lease assets, net | Property, plant and equipment, net (2) |  | 67.1 |
Total leased assets |  |  | $ | 163.4 |
Liabilities |  |  |
Current |  |  |
Operating lease liabilities | Other accrued liabilities |  | $ | 28.5 |
Finance lease liabilities | Current portion of borrowings |  | 2.9 |
Noncurrent |  |  |
Operating lease liabilities | Other liabilities |  | 70.9 |
Finance lease liabilities | Long-term borrowings |  | 62.1 |
Total lease liabilities |  |  | $ | 164.4 |
(1) Operating lease assets are recorded net of accumulated amortization of $13.8 million as of September 30, 2019. (2) Finance lease assets are recorded net of accumulated amortization of $3.4 million as of September 30, 2019. Components of lease expense are summarized as follows:
|  | Three Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2019
Finance lease cost |  |  |  |
Amortization of right-of-use assets |  | $ | 1.1 |  |  | $ | 3.1 |
Interest on lease liabilities |  | 0.9 |  |  | 2.6 |
Operating lease cost |  | 9.3 |  |  | 27.3 |
Variable lease cost |  | 0.6 |  |  | 2.5 |
Short-term lease cost |  | 0.4 |  |  | 0.8 |
Net lease cost |  | $ | 12.3 |  |  | $ | 36.3 |
Supplemental cash flow information related to leases is summarized as follows:
|  | Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |
Operating cash flows from operating leases |  | $ | 27.5 |
Operating cash flows from finance leases |  | $ | 2.6 |
Financing cash flows from finance leases |  | $ | 2.1 |
Right-of-use assets obtained in exchange for lease obligations: |  |
Operating leases |  | $ | 17.9 |
Finance leases |  | $ | — |
Lease term and discount rate information is summarized as follows:
|  | September 30, 2019
Weighted-average remaining lease term (years) |  |
Operating leases |  | 5.1 |
Finance leases |  | 17.0 |
Weighted-average discount rate |  |
Operating leases |  | 3.9 | %
Finance leases |  | 5.2 | %
Maturities of lease liabilities as of September 30, 2019 is as follows:
|  | Operating Leases |  | Finance Leases
Year |  |  |  |
Remainder of 2019 |  | $ | 7.2 |  |  | $ | 0.7 |
2020 |  | 30.9 |  |  | 5.4 |
2021 |  | 24.0 |  |  | 5.5 |
2022 |  | 16.9 |  |  | 5.6 |
2023 |  | 12.0 |  |  | 5.7 |
Thereafter |  | 22.6 |  |  | 78.4 |
Total lease payments |  | $ | 113.6 |  |  | $ | 101.3 |
Less: imputed interest |  | 14.2 |  |  | 36.3 |
Present value of lease liabilities |  | $ | 99.4 |  |  | $ | 65.0 |
As discussed in Note 1, we have elected the transition methodology to apply the standard at the beginning of the period of adoption, January 1, 2019, through a cumulative-effect adjustment to retained earnings. Under this transition method, the application date of the new standard shall begin in the reporting period in which we have adopted the standard. For comparability purposes, the following table reflects the total remaining cash payments related to all transactions during the rental term at December 31, 2018 associated with three lease arrangements that were treated as sale-leaseback financing transactions under ASC 840 and disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2018:
|  | Sale-leaseback Obligations
2019 |  | $ | 5.3 |
2020 |  | 5.4 |
2021 |  | 5.4 |
2022 |  | 5.7 |
2023 |  | 5.7 |
Thereafter |  | 77.1 |
Total minimum payments |  | $ | 104.6 |
At December 31, 2018, future minimum payments under non-cancelable operating leases under ASC 840 were as follows:
|  | Operating Leases
2019 |  | $ | 34.6 |
2020 |  | 23.5 |
2021 |  | 17.1 |
2022 |  | 13.2 |
2023 |  | 11.5 |
Thereafter |  | 16.6 |
Total minimum payments |  | $ | 116.5 |
Lessee, Finance Leases | LEASES We have operating and finance leases for certain of our technology centers, warehouses, office spaces, land, and equipment. As described within Note 1, we adopted ASU 2016-02, "Leases," on January 1, 2019 requiring, among other changes, operating and finance leases with terms exceeding twelve months to be recognized as ROU assets and lease liabilities on the balance sheet. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The lease term is determined to be the non-cancelable period including any lessee renewal options which are considered to be reasonably certain of exercise. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company used judgment to determine an appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term in a similar economic environment. Certain of our lease agreements include rental payments based on an index or adjusted periodically for inflation. The changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. In addition, variable lease expense also includes elements of a contract that is based on usage during the term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Supplemental balance sheet information related to leases is summarized as follows:
|  |  | September 30, 2019
Assets | Classification |  |
Operating lease assets, net | Other assets (1) |  | $ | 96.3 |
Finance lease assets, net | Property, plant and equipment, net (2) |  | 67.1 |
Total leased assets |  |  | $ | 163.4 |
Liabilities |  |  |
Current |  |  |
Operating lease liabilities | Other accrued liabilities |  | $ | 28.5 |
Finance lease liabilities | Current portion of borrowings |  | 2.9 |
Noncurrent |  |  |
Operating lease liabilities | Other liabilities |  | 70.9 |
Finance lease liabilities | Long-term borrowings |  | 62.1 |
Total lease liabilities |  |  | $ | 164.4 |
(1) Operating lease assets are recorded net of accumulated amortization of $13.8 million as of September 30, 2019. (2) Finance lease assets are recorded net of accumulated amortization of $3.4 million as of September 30, 2019. Components of lease expense are summarized as follows:
|  | Three Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2019
Finance lease cost |  |  |  |
Amortization of right-of-use assets |  | $ | 1.1 |  |  | $ | 3.1 |
Interest on lease liabilities |  | 0.9 |  |  | 2.6 |
Operating lease cost |  | 9.3 |  |  | 27.3 |
Variable lease cost |  | 0.6 |  |  | 2.5 |
Short-term lease cost |  | 0.4 |  |  | 0.8 |
Net lease cost |  | $ | 12.3 |  |  | $ | 36.3 |
Supplemental cash flow information related to leases is summarized as follows:
|  | Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |
Operating cash flows from operating leases |  | $ | 27.5 |
Operating cash flows from finance leases |  | $ | 2.6 |
Financing cash flows from finance leases |  | $ | 2.1 |
Right-of-use assets obtained in exchange for lease obligations: |  |
Operating leases |  | $ | 17.9 |
Finance leases |  | $ | — |
Lease term and discount rate information is summarized as follows:
|  | September 30, 2019
Weighted-average remaining lease term (years) |  |
Operating leases |  | 5.1 |
Finance leases |  | 17.0 |
Weighted-average discount rate |  |
Operating leases |  | 3.9 | %
Finance leases |  | 5.2 | %
Maturities of lease liabilities as of September 30, 2019 is as follows:
|  | Operating Leases |  | Finance Leases
Year |  |  |  |
Remainder of 2019 |  | $ | 7.2 |  |  | $ | 0.7 |
2020 |  | 30.9 |  |  | 5.4 |
2021 |  | 24.0 |  |  | 5.5 |
2022 |  | 16.9 |  |  | 5.6 |
2023 |  | 12.0 |  |  | 5.7 |
Thereafter |  | 22.6 |  |  | 78.4 |
Total lease payments |  | $ | 113.6 |  |  | $ | 101.3 |
Less: imputed interest |  | 14.2 |  |  | 36.3 |
Present value of lease liabilities |  | $ | 99.4 |  |  | $ | 65.0 |
As discussed in Note 1, we have elected the transition methodology to apply the standard at the beginning of the period of adoption, January 1, 2019, through a cumulative-effect adjustment to retained earnings. Under this transition method, the application date of the new standard shall begin in the reporting period in which we have adopted the standard. For comparability purposes, the following table reflects the total remaining cash payments related to all transactions during the rental term at December 31, 2018 associated with three lease arrangements that were treated as sale-leaseback financing transactions under ASC 840 and disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2018:
|  | Sale-leaseback Obligations
2019 |  | $ | 5.3 |
2020 |  | 5.4 |
2021 |  | 5.4 |
2022 |  | 5.7 |
2023 |  | 5.7 |
Thereafter |  | 77.1 |
Total minimum payments |  | $ | 104.6 |
At December 31, 2018, future minimum payments under non-cancelable operating leases under ASC 840 were as follows:
|  | Operating Leases
2019 |  | $ | 34.6 |
2020 |  | 23.5 |
2021 |  | 17.1 |
2022 |  | 13.2 |
2023 |  | 11.5 |
Thereafter |  | 16.6 |
Total minimum payments |  | $ | 116.5 |

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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 + Details
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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 + Details
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