Changes in Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Changes and Error Corrections [Abstract]

In 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires leases with durations greater than twelve months to be recognized on the balance sheet, as right-of-use assets with corresponding operating lease liabilities. In July 2018, the FASB issued ASU No. 2018-11, “Targeted Improvements - Leases (Topic 842).” This update provides an optional transition method that allows entities to elect to apply the standard using the modified retrospective approach at its effective date, versus recasting the prior periods presented. If elected, an entity would recognize a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption. We adopted the new standard as of January 1, 2019 using the transition method that provides for a cumulative-effect adjustment to retained earnings upon adoption. The Consolidated Financial Statements for the twelve months ended December 31, 2019 are presented under the new standard, while comparative years presented are not adjusted and continue to be reported in accordance with our historical accounting policy. We elected the package of practical expedients, which permits us to not reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We elected the short-term lease recognition exemption for all leases that qualify. We have both real estate leases and equipment leases that are impacted by the new guidance. Most of our leases do not provide an implicit rate, therefore we use our incremental borrowing rate at the commencement date in determining the present value of lease payments. Adoption of the new standard resulted in the derecognition of a deferred gain from prior completed sale-leaseback transactions. This adjustment, net of tax, was recorded as $0.9 million increase in retained earnings. See Note 11.

The impact of adopting Topic 842 on the accompanying Condensed Consolidated Balance Sheet as of January 1, 2019 was as follows (in millions):



Impact on Consolidated Balance Sheets	December 31, 2018		Adjustments			January 1, 2019
Operating lease right-of-use assets	$	—	$	259.7		$	259.7
Total Assets	5,384.0		259.7			5,643.7
Operating lease liabilities:
Accrued liabilities	283.6		26.6			310.2
Deferred revenue	121.7		(1.3		)	120.4
Noncurrent operating lease liabilities	—		243.9			243.9
Other long-term liabilities	122.2		(10.3		)	111.9
Total Liabilities	4,186.8		258.8			4,445.6
Retained earnings	1,162.1		0.9			1,163.0
Total Liabilities and Stockholders’ Equity	5,384.0		259.7			5,643.7