Leases

9 Months Ended

Sep. 30, 2019

The Company leases real estate, office equipment, dealership operating assets under long-term lease agreements and subleases certain real estate to third parties. For leases effective on or after January 1, 2019, the Company determines if an arrangement is a lease at inception and recognizes ROU assets and lease liabilities at commencement date based on the present value of lease payments over the lease term. For such leases, the aggregate present value of the Company’s lease payments may include options to purchase the leased property or lease terms with options to renew or terminate the lease, when it is reasonably certain that the Company will exercise such an option. The exercise of lease renewals, terminations, or purchase options is generally at the Company’s discretion. The Company’s leases may also include rental payments adjusted periodically for inflation. Payments based on a change in an index or rates are not considered in the determination of lease payments for purposes of measuring the related lease liability. The Company discounts lease payments using its incremental borrowing rate based on information available as of the measurement date. Subsequent to the recognition of its ROU assets and lease liabilities, the Company recognizes lease expense related to its operating lease payments on a straight-line basis over the lease term. None of the Company’s lease agreements contain material residual value guarantees or material restrictive covenants.

The Company performs interim reviews of its ROU assets for impairment when evidence exists that the carrying value of an asset may not be recoverable. During the three months ended September 30, 2019, the Company recognized a ROU asset impairment charge of $1.4 million relating to two operating leases within the U.K. segment. The impairment charge was recognized within Asset impairments in the Company's Condensed Consolidated Statements of Operations.

Additional information regarding the Company’s operating and finance leases is as follows (in millions, except for lease term and discount rate information):



Leases	Balance Sheet Classification	September 30, 2019
Assets:
Operating	Operating lease assets	$	204.7
Finance	Property and equipment, net	59.0
Total		$	263.7
Liabilities:
Current:
Operating	Current operating lease liabilities	$	23.9
Finance	Current maturities of long-term debt	6.4
Noncurrent:
Operating	Operating lease liabilities, net of current portion	195.5
Finance	Long-term debt, net of current maturities	59.7
Total		$	285.5



Lease Expense	Income Statement Classification	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Operating	Selling, general and administrative expenses	$	10.0		$	31.1
Operating	Asset impairments	1.4			1.4
Variable	Selling, general and administrative expenses	0.6			1.6
Sublease income	Selling, general and administrative expenses	(0.4		)	(1.0		)
Finance:
Amortization of lease assets	Depreciation and amortization expense	1.7			4.1
Interest on lease liabilities	Other interest expense, net	1.5			3.5
Net lease expense		$	14.8		$	40.7



	September 30, 2019
Maturities of Lease Liabilities	Operating Leases			Finance Leases
2019 (excluding the nine months ended September 30, 2019)	$	6.8		$	4.6
2020	38.5			8.5
2021	36.7			8.5
2022	32.4			8.4
2023	29.4			7.2
Thereafter	170.0			65.6
Total lease payments	313.8			102.8
Less: Interest	(94.4		)	(36.7		)
Present value of lease liabilities	$	219.4		$	66.1



Weighted-Average Lease Term and Discount Rate	September 30, 2019
Weighted-average remaining lease terms:
Operating	11.5
Financing	14.6
Weighted-average discount rates:
Operating	5.9	%
Financing	7.8	%



Other Information	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	31.1
Operating cash flows from finance leases	$	3.5
Financing cash flows from finance leases	$	2.7
Right-of-use assets obtained in exchange for lease obligations:
Operating leases, initial recognition	$	18.2
Operating leases, modifications and remeasurements	$	(9.5	)
Finance leases, initial recognition	$	14.0
Finance leases, modifications and remeasurements	$	8.2

LEASES

Additional information regarding the Company’s operating and finance leases is as follows (in millions, except for lease term and discount rate information):



Leases	Balance Sheet Classification	September 30, 2019
Assets:
Operating	Operating lease assets	$	204.7
Finance	Property and equipment, net	59.0
Total		$	263.7
Liabilities:
Current:
Operating	Current operating lease liabilities	$	23.9
Finance	Current maturities of long-term debt	6.4
Noncurrent:
Operating	Operating lease liabilities, net of current portion	195.5
Finance	Long-term debt, net of current maturities	59.7
Total		$	285.5



Lease Expense	Income Statement Classification	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Operating	Selling, general and administrative expenses	$	10.0		$	31.1
Operating	Asset impairments	1.4			1.4
Variable	Selling, general and administrative expenses	0.6			1.6
Sublease income	Selling, general and administrative expenses	(0.4		)	(1.0		)
Finance:
Amortization of lease assets	Depreciation and amortization expense	1.7			4.1
Interest on lease liabilities	Other interest expense, net	1.5			3.5
Net lease expense		$	14.8		$	40.7



	September 30, 2019
Maturities of Lease Liabilities	Operating Leases			Finance Leases
2019 (excluding the nine months ended September 30, 2019)	$	6.8		$	4.6
2020	38.5			8.5
2021	36.7			8.5
2022	32.4			8.4
2023	29.4			7.2
Thereafter	170.0			65.6
Total lease payments	313.8			102.8
Less: Interest	(94.4		)	(36.7		)
Present value of lease liabilities	$	219.4		$	66.1



Weighted-Average Lease Term and Discount Rate	September 30, 2019
Weighted-average remaining lease terms:
Operating	11.5
Financing	14.6
Weighted-average discount rates:
Operating	5.9	%
Financing	7.8	%



Other Information	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	31.1
Operating cash flows from finance leases	$	3.5
Financing cash flows from finance leases	$	2.7
Right-of-use assets obtained in exchange for lease obligations:
Operating leases, initial recognition	$	18.2
Operating leases, modifications and remeasurements	$	(9.5	)
Finance leases, initial recognition	$	14.0
Finance leases, modifications and remeasurements	$	8.2