Leases

12 Months Ended

Dec. 31, 2019

Effective January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842) using the modified retrospective transition option. The Company also elected the package of transition provisions available for expired or existing contracts, which allowed us to carry forward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. The most significant impact was recognition of right-of-use ("ROU") assets of $16 million and lease liabilities of $17 million on the Condensed Consolidated Balance Sheet as of January 1, 2019. The adoption of this standard did not have a significant effect related to existing leases and, as a result, no cumulative-effect adjustment was needed. The Company also completed the implementation of new processes to assist in the ongoing lease data collection and analysis, and updated its accounting policies and internal controls in connection with the adoption of the new standard.

The Company has operating leases for corporate offices, warehouses and certain equipment, with remaining lease terms of up to 11 years, some of which include options to extend the leases for up to five years. The Company determines if an arrangement is a lease at inception. Operating leases with terms greater than 12 months are included in "Lease Right-of-Use Assets", "Lease liabilities payable within one year" and "Noncurrent Lease Liabilities" on the Condensed Consolidated Balance Sheets. As of December 31, 2019, the Company did not have any material finance leases.

Operating lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The Company’s lease agreements contain lease and non-lease components, which are accounted for as a single lease component. Additionally, for certain equipment leases, the Company applies a portfolio approach to effectively account for the operating lease ROU assets and liabilities.

The components of lease expense were as follows:



	Year Ended December 31, 2019
Operating lease cost	$	3.1
Short-term lease cost	1.5
Variable lease cost (a)	2.1

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(a)	The variable lease costs consist mainly of a warehouse lease where the cost is determined based on the square footage used each month.

For the year ended December 31, 2019, the Company paid $3.1 million for amounts included in the measurement of operating lease liabilities. For the year ended December 31, 2019, new ROU assets of $0.4 million were obtained in exchange for operating lease liabilities.

As of December 31, 2019, the weighted average remaining lease term and weighted average discount rate for operating leases were 8.1 years and 4.9%, respectively.

Maturities of lease liabilities were as follows:



Year Ending December 31,	Operating Leases
2020	$	2.8
2021	2.6
2022	2.3
2023	2.0
2024	1.7
Thereafter	7.4
Total lease payments	18.8
Less: Imputed interest	3.9
Total lease liabilities	$	14.9

Under the previous accounting standard, ASC Topic 840, Leases, which was effective through December 31, 2018, the rent expense under operating leases for the years ended December 31, 2018 and 2017 rent was $7.2 million and $6.8 million, respectively.