14. Leases (Notes)

3 Months Ended

Mar. 31, 2020

Leases of Lessee Disclosure [Text Block]

14. LEASES: FINANCE, AND OPERATING WHERE WE ACT AS LESSEE

For operating leases where we act as lessor in reagent rental agreements, please see Note 1. We have operating leases and to a lesser extent finance leases, for buildings, vehicles and equipment. For operating leases, we have elected not to separate lease and non-lease components for buildings, vehicles and equipment. Our leases have remaining lease terms of 1 year to 19 years, which includes our determination to exercise renewal options.

We determine if an arrangement is a lease at inception. Right-of-use (ROU) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease. For purposes of determining the lease term used in the measurement of operating lease ROU assets and operating lease liabilities, we include the noncancellable period of the lease together with those periods covered by the option to extend the lease if we are reasonably certain to exercise that option, the periods covered by an option to terminate the lease if we are reasonably certain not to exercise that option, and the periods covered by the option to extend (or to not terminate) the lease in which exercise of the option is controlled by the lessor. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The components of lease expense were as follows (in millions):



	Three Months Ended		Three Months Ended
	March 31,		March 31,
	2020		2019
Operating lease cost	$	12.6	$	12.4

Finance lease cost:
Amortization of right-of-use assets	$	0.1	$	0.1
Interest on lease liabilities	0.2		0.2
Total finance lease cost	$	0.3	$	0.3

Sublease income	$	0.7	$	0.7

The sublease is for a building with a term that ends in 2025, with no options to extend or renew.

Operating lease cost includes original reduction in the carrying amount of ROU assets, the impact of remeasurements, modifications, impairments and abandonments.

Historically, our short-term leases, reflecting leases with a lease term of one year or less, are not significant. Operating lease variable cost is primarily comprised of reimbursed actual common area maintenance, property taxes and insurance, which are immaterial.

Supplemental cash flow information related to leases was as follows (in millions):



	Three Months Ended		Three Months Ended
	March 31,		March 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	11.4	$	11.7
Operating cash flows from finance leases	$	0.2	$	0.2
Financing cash flows from finance leases	$	0.1	$	0.2

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	10.8	$	1.4
Finance leases	$	—	$	—

Supplemental balance sheet information related to leases was as follows (in millions):



	March 31, 2020		December 31, 2019

Operating Leases
Operating lease right-of-use assets	$	200.5	$	201.9

Current operating lease liabilities	$	34.4	$	35.4
Operating lease liabilities	175.5		176.0
Total operating lease liabilities	$	209.9	$	211.4

Finance leases are included in Property, plant and equipment, Current maturities of long-term debt, and Long-term debt, net of current maturities.



	March 31, 2020			December 31, 2019

Finance Leases
Property, plant and equipment, gross	$	11.4		$	11.4
Less: accumulated depreciation and amortization	(4.3		)	(4.2		)
Property, plant and equipment, net	$	7.1		$	7.2

Current maturities of long-term debt and notes payable	$	0.5		$	0.5
Long-term debt, net of current maturities	11.0			11.2
Total finance lease liabilities	$	11.5		$	11.7



	March 31, 2020		December 31, 2019

Weighted Average Remaining Lease Term
Operating leases - in years	9		9
Finance leases - in years	18		18

Weighted Average Discount Rate
Operating leases	4.1	%	4.2	%
Finance leases	6.5	%	6.5	%

Maturities of lease liabilities were as follows (in millions):



Year Ending December 31,	Operating Leases			Finance Leases

2020 (excluding the three months ended March 31, 2020)	$	32.0		$	1.2
2021	37.7			1.2
2022	30.5			1.1
2023	25.7			1.1
2024	23.0			1.1
Thereafter	105.0			14.9
Total lease payments	253.9			20.6
Less imputed interest	(44.0		)	(9.1		)
Total	$	209.9		$	11.5

As of March 31, 2020, we have an additional lease for a facility in Fort Worth, Texas USA that has not commenced of $1.6 million. The operating lease will commence in either the second or third quarter of 2020 with a lease term of four years.