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Leases | 6 Months Ended
--- | ---
Jun. 30, 2019
Leases [Abstract] |
Leases | Leases The Company adopted the guidance contained in ASC 842, Leases, on January 1, 2019 using the modified retrospective approach permitted by ASU 2018-11, Leases (Topic 842): Targeted Improvements. Under this method, the Company applied the new leases standard at the adoption date and recognized a cumulative-effect adjustment to the opening balance of retained earnings as of January 1, 2019. The comparative period presented in the condensed consolidated financial statements for 2018 continue to be presented in accordance with previous GAAP as codified in ASC Topic 840, Leases. The Company leases certain office space, warehouses, manufacturing facilities, land, and equipment. The Company elected the practical expedient which allows that leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For leases without lease terms (i.e. month-to-month leases), lease expense is recognized as incurred and no asset or liability is recorded for these leases. The Company accounts for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from non-lease components (e.g., common-area maintenance costs). Most leases include one or more options to renew, with renewal terms that can extend the lease term. The exercise of lease renewal options is at our sole discretion. Lease assets and liabilities are determined based on the lease term including those periods for which renewal options are considered reasonably certain to be exercised. Certain leases also include options to purchase the leased property, although we are unlikely to do so in most cases. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company's leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental borrowing rate to discount the lease payments based on information available at lease commencement. Components of right-of-use assets and lease liabilities presented in the balance sheet are as follows ($ in million):
Assets | Classification | June 30, 2019
Operating lease right-of-use assets | Other assets | $ | 23.4 |
Finance lease right-of-use assets | Property, plant and equipment, net | 3.1 |
Liabilities | Classification | June 30, 2019
Current operating lease obligation | Accrued expenses | $ | 4.9 |
Long-term operating lease obligation | Other liabilities | 19.7 |
Total operating lease obligation |  | $ | 24.6 |
Current finance lease obligation | Current debt | $ | 0.4 |
Long-term finance lease obligation | Long-term debt | 3.1 |
Total finance lease obligation |  | $ | 3.5 |
| June 30, 2019
Assets | Finance |  | Operating |  | Total
Land and improvements | $ | — |  |  | $ | 0.1 |  |  | $ | 0.1 |
Buildings and improvements | 3.0 |  |  | 21.9 |  |  | 24.9 |
Machinery and equipment | 0.6 |  |  | 4.7 |  |  | 5.3 |
Gross property, plant and equipment | 3.6 |  |  | 26.7 |  |  | 30.3 |
Less: Accumulated depreciation | (0.5 | ) |  | (3.3 | ) |  | (3.8 | )
Right-of-use assets | $ | 3.1 |  |  | $ | 23.4 |  |  | $ | 26.5 |
Components of lease expense incurred by the Company are as follow ($ in millions):
Lease Cost | Three Months Ended June 30, 2019 |  | Six Months Ended June 30, 2019
Finance lease cost (cost resulting from lease payments) |  |  |
Interest expense on lease liabilities | $ | 0.1 |  |  | $ | 0.1 |
Amortization of right-of-use assets | 0.1 |  |  | 0.2 |
Operating lease cost | 1.6 |  |  | 3.1 |
Short-term lease expense | 0.1 |  |  | 0.2 |
Total Lease Cost | $ | 1.9 |  |  | $ | 3.6 |
The following table represents future contractual lease liabilities for the next five years and thereafter for finance and operating leases ($ in millions):
Maturity of Lease Liabilities | Finance |  | Operating |  | Total
Remainder of 2019 | $ | 0.3 |  |  | $ | 3.2 |  |  | $ | 3.5 |
2020 | 0.6 |  |  | 5.9 |  |  | 6.5 |
2021 | 0.5 |  |  | 5.2 |  |  | 5.7 |
2022 | 0.6 |  |  | 4.0 |  |  | 4.6 |
2023 | 0.5 |  |  | 2.8 |  |  | 3.3 |
2024 | 0.5 |  |  | 2.3 |  |  | 2.8 |
Thereafter | 1.4 |  |  | 7.0 |  |  | 8.4 |
Total Lease Payments | $ | 4.4 |  |  | $ | 30.4 |  |  | $ | 34.8 |
Less: Interest | 0.9 |  |  | 5.8 |  |  | 6.7 |
Present Value of Lease Liabilities | $ | 3.5 |  |  | $ | 24.6 |  |  | $ | 28.1 |
Lease Term and Discount Rate | June 30, 2019
Weighted-average remaining lease term (years) |
Operating leases | 7.0 |
Finance leases | 7.9 |
Weighted-average discount rate |
Operating leases | 6.49 | %
Finance leases | 5.28 | %
Other Information (millions) | Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities |
Operating cash flows from operating leases | 3.1 |
Operating cash flows from finance leases | 0.2 |
Leased assets obtained in exchange for new finance lease liabilities | 0.5 |
Leased assets obtained in exchange for new operating lease liabilities | 3.2 |
Future minimum obligations under non-cancelable operating leases having an initial or remaining term in excess of one year as of December 31, 2018 were as follows ($ in millions):
2019 | $ | 5.8 |
2020 | 5.0 |
2021 | 4.4 |
2022 | 3.6 |
2023 | 3.0 |
Thereafter | 8.1 |
Total | $ | 29.9 |
Leases | Leases The Company adopted the guidance contained in ASC 842, Leases, on January 1, 2019 using the modified retrospective approach permitted by ASU 2018-11, Leases (Topic 842): Targeted Improvements. Under this method, the Company applied the new leases standard at the adoption date and recognized a cumulative-effect adjustment to the opening balance of retained earnings as of January 1, 2019. The comparative period presented in the condensed consolidated financial statements for 2018 continue to be presented in accordance with previous GAAP as codified in ASC Topic 840, Leases. The Company leases certain office space, warehouses, manufacturing facilities, land, and equipment. The Company elected the practical expedient which allows that leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For leases without lease terms (i.e. month-to-month leases), lease expense is recognized as incurred and no asset or liability is recorded for these leases. The Company accounts for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from non-lease components (e.g., common-area maintenance costs). Most leases include one or more options to renew, with renewal terms that can extend the lease term. The exercise of lease renewal options is at our sole discretion. Lease assets and liabilities are determined based on the lease term including those periods for which renewal options are considered reasonably certain to be exercised. Certain leases also include options to purchase the leased property, although we are unlikely to do so in most cases. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company's leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental borrowing rate to discount the lease payments based on information available at lease commencement. Components of right-of-use assets and lease liabilities presented in the balance sheet are as follows ($ in million):
Assets | Classification | June 30, 2019
Operating lease right-of-use assets | Other assets | $ | 23.4 |
Finance lease right-of-use assets | Property, plant and equipment, net | 3.1 |
Liabilities | Classification | June 30, 2019
Current operating lease obligation | Accrued expenses | $ | 4.9 |
Long-term operating lease obligation | Other liabilities | 19.7 |
Total operating lease obligation |  | $ | 24.6 |
Current finance lease obligation | Current debt | $ | 0.4 |
Long-term finance lease obligation | Long-term debt | 3.1 |
Total finance lease obligation |  | $ | 3.5 |
| June 30, 2019
Assets | Finance |  | Operating |  | Total
Land and improvements | $ | — |  |  | $ | 0.1 |  |  | $ | 0.1 |
Buildings and improvements | 3.0 |  |  | 21.9 |  |  | 24.9 |
Machinery and equipment | 0.6 |  |  | 4.7 |  |  | 5.3 |
Gross property, plant and equipment | 3.6 |  |  | 26.7 |  |  | 30.3 |
Less: Accumulated depreciation | (0.5 | ) |  | (3.3 | ) |  | (3.8 | )
Right-of-use assets | $ | 3.1 |  |  | $ | 23.4 |  |  | $ | 26.5 |
Components of lease expense incurred by the Company are as follow ($ in millions):
Lease Cost | Three Months Ended June 30, 2019 |  | Six Months Ended June 30, 2019
Finance lease cost (cost resulting from lease payments) |  |  |
Interest expense on lease liabilities | $ | 0.1 |  |  | $ | 0.1 |
Amortization of right-of-use assets | 0.1 |  |  | 0.2 |
Operating lease cost | 1.6 |  |  | 3.1 |
Short-term lease expense | 0.1 |  |  | 0.2 |
Total Lease Cost | $ | 1.9 |  |  | $ | 3.6 |
The following table represents future contractual lease liabilities for the next five years and thereafter for finance and operating leases ($ in millions):
Maturity of Lease Liabilities | Finance |  | Operating |  | Total
Remainder of 2019 | $ | 0.3 |  |  | $ | 3.2 |  |  | $ | 3.5 |
2020 | 0.6 |  |  | 5.9 |  |  | 6.5 |
2021 | 0.5 |  |  | 5.2 |  |  | 5.7 |
2022 | 0.6 |  |  | 4.0 |  |  | 4.6 |
2023 | 0.5 |  |  | 2.8 |  |  | 3.3 |
2024 | 0.5 |  |  | 2.3 |  |  | 2.8 |
Thereafter | 1.4 |  |  | 7.0 |  |  | 8.4 |
Total Lease Payments | $ | 4.4 |  |  | $ | 30.4 |  |  | $ | 34.8 |
Less: Interest | 0.9 |  |  | 5.8 |  |  | 6.7 |
Present Value of Lease Liabilities | $ | 3.5 |  |  | $ | 24.6 |  |  | $ | 28.1 |
Lease Term and Discount Rate | June 30, 2019
Weighted-average remaining lease term (years) |
Operating leases | 7.0 |
Finance leases | 7.9 |
Weighted-average discount rate |
Operating leases | 6.49 | %
Finance leases | 5.28 | %
Other Information (millions) | Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities |
Operating cash flows from operating leases | 3.1 |
Operating cash flows from finance leases | 0.2 |
Leased assets obtained in exchange for new finance lease liabilities | 0.5 |
Leased assets obtained in exchange for new operating lease liabilities | 3.2 |
Future minimum obligations under non-cancelable operating leases having an initial or remaining term in excess of one year as of December 31, 2018 were as follows ($ in millions):
2019 | $ | 5.8 |
2020 | 5.0 |
2021 | 4.4 |
2022 | 3.6 |
2023 | 3.0 |
Thereafter | 8.1 |
Total | $ | 29.9 |

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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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