XML 57 R15.htm IDEA: XBRL DOCUMENT

Leases

9 Months Ended

Sep. 30, 2019

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