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Leases

12 Months Ended

Dec. 31, 2019

The Company leases warehouse facilities, trucks, office equipment and certain sales offices. Certain of the Company’s real estate leases include one or more options to renew the applicable lease agreement, with the exercise of renewal options at the Company’s sole discretion; the Company generally includes only one real estate lease extension option in the recognition of ROU assets and lease liabilities when it is reasonably certain to be exercised. Certain of the Company’s vehicle leases have residual value guarantees.

Leases with a term of twelve months or less are not recorded on the balance sheet; the Company recognizes lease expenses for such leases on a straight-line basis over the lease term. The majority of the Company’s lease payments are fixed and are incorporated into the ROU lease assets and liabilities. However, certain vehicle leases have variable payments, such as per-mile charges, which are expensed as incurred. The Company combines lease components and non-lease components across all asset classes for purposes of recognizing lease assets and liabilities. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

Leases consist of the following (in millions):



Assets	Classification	December 31, 2019
Operating	Operating lease ROU assets	$	199.8
Finance	Property and equipment, net	59.8
Total leases		$	259.6

Liabilities
Current:
Operating	Operating lease liabilities	$	39.5
Finance	Accrued liabilities	8.4
Non-current:
Operating	Long-term operating lease liabilities	173.4
Finance	Long-term debt	57.3
Total lease liabilities		$	278.6

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



	Year Ended
	December 31, 2019
Operating lease cost	$	51.8
Finance lease cost:
Amortization of leased assets	6.0
Interest on lease liabilities	2.2
Short-term lease cost	1.7
Variable lease cost	20.7
Net lease cost	$	82.4

Maturity of lease liabilities as of December 31, 2019, were as follows (in millions):



	Operating leases			Finance leases			Total
2020	$	48.5		$	11.4		$	59.9
2021	41.8			10.7			52.5
2022	33.6			10.6			44.2
2023	26.3			10.3			36.6
2024	21.9			9.9			31.8
2025 and thereafter	84.1			26.0			110.1
Total lease payments	256.2			78.9			335.1
Less: interest	(43.3		)	(13.2		)	(56.5		)
Present value of lease liabilities	$	212.9		$	65.7		$	278.6

Weighted-average remaining lease term and weighted-average discount rate regarding the Company’s leases were as follows:



Lease term	December 31, 2019
Weighted-average remaining lease term (years):
Operating	7.3
Finance	7.6
Discount rate
Weighted-average discount rate:
Operating	4.9	%
Finance	4.8	%

Other information regarding the Company’s leases were as follows (in millions):



	Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used by operating leases	$	51.3
Operating cash flows used by finance leases	2.2
Financing cash flows used by finance leases	5.6
Lease liabilities arising from obtaining new ROU assets:
Operating leases	$	11.1
Finance leases	41.9

As of December 31, 2019, the Company had $16.8 million of leases, primarily for trailers, that had not yet commenced.

Future minimum operating lease payments as of December 31, 2018, as reported in the 2018 Form 10-K under ASC 840, were as follows (in millions):

Operating Leases



Year ending December 31,
2019	$	61.6
2020	56.8
2021	48.4
2022	38.3
2023	29.8
2024 and Thereafter	108.6
Total	$	343.5

Future minimum capital lease payments as of December 31, 2018, as reported in the 2018 Form 10-K under ASC 840, were as follows (in millions):

Capital Leases



Year ending December 31,
2019	$	4.7
2020	4.3
2021	3.5
2022	3.4
2023	3.2
2024 and thereafter	18.9
Total	38.0
Less: interest	(8.6		)
Present value of future minimum lease payments	29.4
Less: current portion	(3.2		)
Non-current portion	$	26.2

Leases