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Leases | 6 Months Ended
--- | ---
Nov. 30, 2019
Leases [Abstract] |
Leases | The Company's lease arrangements primarily relate to corporate offices and warehouse facilities, and to a lesser extent, certain equipment and other assets. The Company's leases generally have initial terms ranging from 3 to 10 years and certain leases include renewal or early-termination options, rent escalation clauses, and/or lease incentives. Lease renewal rent payment terms generally reflect adjustments for market rates prevailing at the time of renewal. The Company's leases require fixed minimum rent payments and also often require the payment of certain other costs that do not relate specifically to its right to use an underlying leased asset, but are associated with the asset such as real estate taxes, insurance, common area maintenance fees and/or certain other costs (referred to collectively herein as "non-lease components"), which may be fixed or variable in amount depending on the terms of the respective lease agreement. The Company's leases do not contain significant residual value guarantees or restrictive covenants. The Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, it's related term is assessed based on the date in which the underlying asset is made available for the Company's use by the lessor. The Company's assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the Condensed Consolidated Statements of Operations over the lease term. For leases with a term exceeding 12 months, a lease liability is recorded on the Company's Condensed Consolidated Balance Sheet at lease commencement reflecting the present value of its fixed minimum payment obligations over the lease term. A corresponding right-of-use ("ROU") asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. The Company includes fixed payment obligations related to non-lease components in the measurement of ROU assets and lease liabilities, as it elects to account for lease and non-lease components together as a single lease component. ROU assets associated with finance leases are presented separate from operating leases ROU assets and are included within Property, plant and equipment, net on the Company's Condensed Consolidated Balance Sheet. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Company's incremental borrowing rate reflects the rate it would pay to borrow on a secured basis, and incorporates the term and economic environment of the associated lease. For operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term. For finance leases, the initial ROU asset is depreciated on a straight-line basis over the lease term, along with recognition of interest expense associated with accretion of the lease liability, which is ultimately reduced by the related fixed payments. For leases with a term of 12 months or less (referred to as a "short-term lease"), any fixed lease payments are recognized on a straight-line basis over the lease term, and are not recognized on the Condensed Consolidated balance sheet. Variable lease costs for both operating and finance leases, if any, are recognized as incurred. The following table summarizes right-of-use assets and lease liabilities recorded on the Company's Condensed Consolidated Balance Sheet as of November 30, 2019:
| November 30, 2019 |  | Location within Condensed Consolidated Balance Sheet
Operating leases | $76.4 |  | Operating lease right-of-use assets, net
Finance leases | 11.1 |  | Property, plant and equipment, net
Total lease assets | $87.5 |  |
Operating leases : |  |  |
Current portion | 23.5 |  | Current portion of operating lease liabilities
Non-current portion | 56.0 |  | Long-term operating lease liabilities
Total operating lease liabilities | $79.5 |  |
Finance leases : |  |  |
Current portion | 2.0 |  | Other accrued expenses
Non-current portion | 9.8 |  | Other noncurrent liabilities
Total finance lease liabilities | $11.8 |  |
Total lease liabilities | $91.3 |  |
The following table summarizes the activity as a result of the adoption of ASC 842 for the three and six months ended November 30, 2019:
|  | Three Months Ended November 30, 2019 |  | Six Months Ended November 30, 2019 |  | Location within Condensed Consolidated Statement of Operations
| Operating lease expense | $7.1 |  | $14.2 |  | Selling, general and administrative expenses
| Finance lease costs : |  |  |  |  |
| Depreciation of leased assets | 0.5 |  | 0.9 |  | Selling, general and administrative expenses
| Accretion of lease liabilities | 0.1 |  | 0.2 |  | Interest income (expense), net
| Total lease expense | $7.7 |  | $15.3 |  |
The following table summarizes certain cash flows information related to the Company's leases for the six months ended November 30, 2019:
| Six Months Ended November 30, 2019
Cash paid for amounts included in the measurement of lease liabilities: |
Operating cash flows from operating leases | $3.2
Operating cash flows from finance leases | 0.2
Financing cash flows from finance leases | 0.9
The following table provides a maturity analysis summary of the Company's lease liabilities recorded on the Company's Condensed Consolidated Balance Sheet as of November 30, 2019:
| Operating |  | Finance
| Leases |  | Leases
Remainder of Fiscal 2020 (1) | $14.0 |  | $1.2
Fiscal 2021 | 23.0 |  | 2.4
Fiscal 2022 | 18.6 |  | 2.3
Fiscal 2023 | 12.8 |  | 2.1
Fiscal 2024 | 7.3 |  | 2.0
Fiscal 2025 and thereafter | 11.4 |  | 3.3
Total lease payments | 87.1 |  | 13.3
Less: interest | (7.6) |  | (1.5)
Total lease liabilities | $79.5 |  | $11.8
(1) Fiscal 2020 includes the remaining six months of the current fiscal year ending May 31, 2020. The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates related to the Company's leases recorded on the Company's Condensed Consolidated Balance Sheet as of November 30, 2019:
| Operating |  | Finance
| Leases |  | Leases
Weighted-average remaining lease term (years) | 4.3 |  | 6.2
Weighted-average discount rate | 3.9% |  | 3.8%
Leases | The Company's lease arrangements primarily relate to corporate offices and warehouse facilities, and to a lesser extent, certain equipment and other assets. The Company's leases generally have initial terms ranging from 3 to 10 years and certain leases include renewal or early-termination options, rent escalation clauses, and/or lease incentives. Lease renewal rent payment terms generally reflect adjustments for market rates prevailing at the time of renewal. The Company's leases require fixed minimum rent payments and also often require the payment of certain other costs that do not relate specifically to its right to use an underlying leased asset, but are associated with the asset such as real estate taxes, insurance, common area maintenance fees and/or certain other costs (referred to collectively herein as "non-lease components"), which may be fixed or variable in amount depending on the terms of the respective lease agreement. The Company's leases do not contain significant residual value guarantees or restrictive covenants. The Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, it's related term is assessed based on the date in which the underlying asset is made available for the Company's use by the lessor. The Company's assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the Condensed Consolidated Statements of Operations over the lease term. For leases with a term exceeding 12 months, a lease liability is recorded on the Company's Condensed Consolidated Balance Sheet at lease commencement reflecting the present value of its fixed minimum payment obligations over the lease term. A corresponding right-of-use ("ROU") asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. The Company includes fixed payment obligations related to non-lease components in the measurement of ROU assets and lease liabilities, as it elects to account for lease and non-lease components together as a single lease component. ROU assets associated with finance leases are presented separate from operating leases ROU assets and are included within Property, plant and equipment, net on the Company's Condensed Consolidated Balance Sheet. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Company's incremental borrowing rate reflects the rate it would pay to borrow on a secured basis, and incorporates the term and economic environment of the associated lease. For operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term. For finance leases, the initial ROU asset is depreciated on a straight-line basis over the lease term, along with recognition of interest expense associated with accretion of the lease liability, which is ultimately reduced by the related fixed payments. For leases with a term of 12 months or less (referred to as a "short-term lease"), any fixed lease payments are recognized on a straight-line basis over the lease term, and are not recognized on the Condensed Consolidated balance sheet. Variable lease costs for both operating and finance leases, if any, are recognized as incurred. The following table summarizes right-of-use assets and lease liabilities recorded on the Company's Condensed Consolidated Balance Sheet as of November 30, 2019:
| November 30, 2019 |  | Location within Condensed Consolidated Balance Sheet
Operating leases | $76.4 |  | Operating lease right-of-use assets, net
Finance leases | 11.1 |  | Property, plant and equipment, net
Total lease assets | $87.5 |  |
Operating leases : |  |  |
Current portion | 23.5 |  | Current portion of operating lease liabilities
Non-current portion | 56.0 |  | Long-term operating lease liabilities
Total operating lease liabilities | $79.5 |  |
Finance leases : |  |  |
Current portion | 2.0 |  | Other accrued expenses
Non-current portion | 9.8 |  | Other noncurrent liabilities
Total finance lease liabilities | $11.8 |  |
Total lease liabilities | $91.3 |  |
The following table summarizes the activity as a result of the adoption of ASC 842 for the three and six months ended November 30, 2019:
|  | Three Months Ended November 30, 2019 |  | Six Months Ended November 30, 2019 |  | Location within Condensed Consolidated Statement of Operations
| Operating lease expense | $7.1 |  | $14.2 |  | Selling, general and administrative expenses
| Finance lease costs : |  |  |  |  |
| Depreciation of leased assets | 0.5 |  | 0.9 |  | Selling, general and administrative expenses
| Accretion of lease liabilities | 0.1 |  | 0.2 |  | Interest income (expense), net
| Total lease expense | $7.7 |  | $15.3 |  |
The following table summarizes certain cash flows information related to the Company's leases for the six months ended November 30, 2019:
| Six Months Ended November 30, 2019
Cash paid for amounts included in the measurement of lease liabilities: |
Operating cash flows from operating leases | $3.2
Operating cash flows from finance leases | 0.2
Financing cash flows from finance leases | 0.9
The following table provides a maturity analysis summary of the Company's lease liabilities recorded on the Company's Condensed Consolidated Balance Sheet as of November 30, 2019:
| Operating |  | Finance
| Leases |  | Leases
Remainder of Fiscal 2020 (1) | $14.0 |  | $1.2
Fiscal 2021 | 23.0 |  | 2.4
Fiscal 2022 | 18.6 |  | 2.3
Fiscal 2023 | 12.8 |  | 2.1
Fiscal 2024 | 7.3 |  | 2.0
Fiscal 2025 and thereafter | 11.4 |  | 3.3
Total lease payments | 87.1 |  | 13.3
Less: interest | (7.6) |  | (1.5)
Total lease liabilities | $79.5 |  | $11.8
(1) Fiscal 2020 includes the remaining six months of the current fiscal year ending May 31, 2020. The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates related to the Company's leases recorded on the Company's Condensed Consolidated Balance Sheet as of November 30, 2019:
| Operating |  | Finance
| Leases |  | Leases
Weighted-average remaining lease term (years) | 4.3 |  | 6.2
Weighted-average discount rate | 3.9% |  | 3.8%

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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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