Leases

6 Months Ended

Jun. 30, 2019

5. Leases

On January 1, 2019, the Company adopted accounting standard ASU No. 2016-02, Leases (Topic 842), applying the transition method in accounting standard ASU 2018-11 Leases (Topic 842), Targeted Improvements. ASU 2018-11 allows an entity to initially apply ASU 2016-02 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company recorded a net increase to beginning retained earnings of $0.5 million as of January 1, 2019 due to the cumulative impact of adopting ASU 2016-02. The impact of adopting ASU 2016-02 on our Condensed Consolidated Balance Sheet was material, but the impact was immaterial for our Consolidated Statements of Income and Condensed Consolidated Statements of Cash Flows.

The Company leases its corporate headquarters, various other facilities for distribution, manufacturing, and offices, and vehicles, forklifts, and other equipment. The Company determines if an arrangement is a lease at inception. Leases are included in "Right of use asset, leases" ("ROU") assets, and the current portion of the lease liability is included in "Lease liabilities" and the non-current portion is included in "Long-term lease liabilities" in the Condensed Consolidated Balance Sheet. The Company currently has an immaterial amount of financing leases and leases with a term of less than 12 months. ROU assets and lease liabilities are recognized based on the present value of lease payments over the lease term. Because most of the Company’s leases do not provide an implicit rate of return, the Company uses its incremental collateralized borrowing rate, on a regional basis, in determining the present value of lease payments. The Company has lease agreements with lease and non-lease components, which are combined for accounting purposes.

The components of lease expense were as follows:



	Three Months Ended June 30,			Six Months Ended June 30,
(in millions)	2019			2019
Operating lease cost	$	7.0		$	14.0
Sublease income	(0.4		)	(0.8		)
Total lease cost	$	6.6		$	13.2

Other information related to leases was as follows:



	Six Months Ended June 30,
(in millions, except lease term and discount rate)	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15.4
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	19.5

Weighted average remaining lease term:
Operating leases	7.4 years

Weighted average discount rate:
Operating leases	5.4		%

Future minimum lease payments, net of sub-lease income, for all non-cancelable leases as of June 30, 2019 were as follows:



(in millions)
2019	$	12.8
2020	23.0
2021	19.2
2022	15.4
2023	11.7
2024	10.9
Thereafter	40.1
Total minimum lease payments	133.1
Less imputed interest	26.2
Future minimum payments for leases, net of sublease rental income and imputed interest	$	106.9