Leases

3 Months Ended

Dec. 31, 2019

Leases

The Company adopted ASU 2016-02 on October 1, 2019. The Company has elected to utilize the package of practical expedients permitted under the transition guidance, which allows it to carryforward its historical lease classification, its assessment on whether a contract was or contains a lease, and its assessment of initial direct costs for any leases that existed prior to October 1, 2019. Additionally, the Company has elected an accounting policy not to separate non-lease components from lease components and instead, account for these components as a single lease component. The Company has made an accounting policy election not to recognize ROU assets and lease liabilities for leases that, at the commencement date, are for 12 months or less. For leases that do not provide an implicit rate, the Company uses its secured incremental borrowing rate, based on the information available for leases, including the lease term and interest rate environment in the country in which the lease exists, to calculate the present value of the future lease payments.

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment over a contracted period in exchange for payment. The Company evaluates if an arrangement is a lease at the inception date for the agreement. For operating leases entered into prior to October 1, 2019, the right of use (“ROU”) assets and operating lease liabilities are recognized in the balance sheet based on the present value of the remaining future minimum payments over the lease term from the implementation date. Certain leases include an option to either renew or terminate the lease. For purposes of calculating lease liabilities, these options are included within the lease term when it has become reasonably certain that the Company will exercise such options. Leases entered into subsequent to the implementation date calculate the operating lease ROU asset and operating lease liabilities based on the present value of minimum payments over the lease term at the commencement date of the lease.

The Company leases certain offices and manufacturing facilities, warehouses, employee vehicles, and certain manufacturing related equipment. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheet. All recorded leases are classified as operating leases and lease expense is recognized on a straight-line basis over the lease term.

A summary of the company's lease information is as follows:


	Classification	December 31, 2019
Assets
Right of use assets	Other assets	$	55.7

Liabilities
Current lease liabilities	Other current liabilities	$	12.0
Long-term lease liabilities	Other liabilities	43.6
Total lease liabilities		$	55.6

Other information
Weighted-average remaining lease term (years)		11
Weighted-average incremental borrowing rate		7.0		%


	Three Months Ended December 31, 2019
Statement of Income
Lease cost ⁽¹⁾	$	3.7

Other information
Leased assets obtained in exchange for new lease liabilities	$	0.1
Cash paid for amounts included in the measurement of lease liabilities	$	3.8

(1)Lease expense is included in cost of products sold or SG&A expenses based on the nature of the lease. Short-term lease expense is excluded from this amount and is not material.

The Company's minimum annual rentals including reasonable assured renewal options under lease agreements are as follows:


	Operating Leases
2020	$	10.7
2021	10.7
2022	8.1
2023	6.7
2024	5.3
2025 and thereafter	42.4
Total future minimum lease commitments	83.9
Less: Imputed Interest	(28.3)
Present value of lease liabilities	$	55.6

At September 30, 2019, the aggregate future minimum rental commitments under all non-cancelable operating lease agreements were as follows:


	Operating Leases
2020	$	13.6
2021	10.5
2022	7.4
2023	5.9
2024	4.6
2025 and thereafter	12.5
Total future minimum lease commitments	54.5