Leases

12 Months Ended

Dec. 31, 2020

14. Leases

The Company leases land, office space, equipment, railcars and locomotives. Arrangements are assessed at inception to determine if a lease exists and, with the adoption of ASC 842, “Leases,” right-of-use (“ROU”) assets and lease liabilities are recognized based on the present value of lease payments over the lease term. Because the Company’s leases do not provide an implicit rate of return, the Company uses its incremental borrowing rate at the inception of a lease to calculate the present value of lease payments. Our incremental borrowing rate is determined through market sources for secured borrowings and approximates the interest rate at which we could borrow on a collateralized basis with similar terms and payments in similar economic environments. The Company has elected to apply the short-term lease exception for all asset classes, therefore, excluding all leases with a term of less than 12 months from the balance sheet, and will recognize the lease payments in the period they are incurred. Additionally, the Company has elected to account for lease and nonlease components of an arrangement, such as assets and services, as a single lease component for all asset classes.

Certain of our long-term leases include one or more options to renew or to terminate, with renewal terms that can extend the lease term from one month to 50 years. The impact of lease renewals or terminations are included in the expected lease term to the extent the Company is reasonably certain to exercise the renewal or termination. The Company's finance leases are immaterial to our consolidated financial statements.

The components of lease expense were as follows:


	Year ended December 31, 2020		Year ended December 31, 2019
	(Dollars in millions)
Operating leases:
Cost of products sold and operating expenses	$	1.8	$	1.9
Selling, general and administrative expenses	0.5		0.5
	$	2.3	$	2.4




Short-term leases:
Cost of products sold and operating expenses(1)(2)	6.4		9.3
Total lease expense	$	8.7	$	11.7

(1)Includes expenses for month-to-month equipment leases, which are classified as short-term as the Company is not reasonably certain to renew the lease term beyond one month.

(2)Includes variable lease expenses, which are immaterial to the consolidated financial statements.

Supplemental balance sheet information related to leases was as follows:


	Financial Statement Classification	December 31, 2020		December 31, 2019
		(Dollars in millions)

Operating ROU assets	Deferred charges and other assets	$	10.8	$	12.4

Operating lease liabilities:
Current operating lease liabilities	Accrued liabilities	$	2.0	$	1.9
Noncurrent operating lease liabilities	Other deferred credits and liabilities	8.2		9.8
Total operating lease liabilities		$	10.2	$	11.7

The weighted average remaining lease term and weighted average discount rate were as follows:


	December 31, 2020		December 31, 2019
Weighted average remaining lease term of operating leases	7.3 years		7.9 years
Weighted average discount rate of operating leases	4.7	%	4.8	%

Supplemental cash flow information related to leases was as follows:


	Year Ended December 31, 2020		Year Ended December 31, 2019
	(Dollars in millions)
Operating cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities	$	2.3	$	3.9
Non-cash activity:
ROU assets obtained in exchange for new operating lease liabilities	$	0.2	$	7.9

Maturities of operating lease liabilities as of December 31, 2020 are as follows:


	(Dollars in millions)
Year ending December 31:
2021	$	2.3
2022	1.7
2023	1.4
2024	1.3
2025	1.3
2026-Thereafter	4.0
Total lease payments	12.0
Less: imputed interest	1.8
Total lease liabilities	$	10.2