Leases

12 Months Ended

Dec. 31, 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 Consolidated Balance Sheet was material, but the impact was immaterial for our Consolidated Statements of Income, Consolidated Statements of Cash Flows and Consolidated Statement of Stockholders' Equity.

The Company leases its corporate headquarters, various other facilities for distribution, manufacturing, and offices, as well as 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 Consolidated Balance Sheet. The Company currently has an immaterial amount of financing leases and leases with terms of more than one month and 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 incremental borrowing rate is dependent upon duration of the lease and has been segmented into three groups of time. All leases within the same region and the same group of time share the same incremental borrowing rate. The Company has lease agreements with lease and non-lease components, which are combined for accounting purposes for all classes of assets except information technology equipment.

The components of lease expense for the year ended December 31, 2019 were as follows:



(in millions)	2019
Operating lease cost	$	29.6
Sublease income	(1.7		)
Total lease cost	$	27.9

Total rental expense reported in our Consolidated Statements of Income for all non-cancelable operating leases (reduced by minor amounts for subleases) amounted to $27.9 million, $33.0 million and $30.9 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Other information related to leases for the year ended December 31, 2019 was as follows:



(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	$	29.6
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	35.5

Weighted average remaining lease term:
Operating leases	7.0 years

Weighted average discount rate:
Operating leases	5.3		%

Future minimum lease payments, net of sub-lease income, for all non-cancelable leases as of December 31, 2019 were as follows:



(in millions)
2020	$	28.4
2021	24.0
2022	19.8
2023	15.6
2024	13.5
Thereafter	41.5
Total minimum lease payments	142.8
Less imputed interest	31.2
Future minimum payments for leases, net of sublease rental income and imputed interest	$	111.6