Leases

3 Months Ended

Mar. 31, 2020

Leases

Leases

6. Leases

The Company leases real properties for use as administrative and sales offices, in addition to automobiles and office equipment. The Company determines if a contract contains a lease arrangement at the inception of the contract. For leases in which the Company is the lessee, leases are classified as either finance or operating, with classification affecting the pattern of expense recognition. Operating lease right-of-use (“ROU”) assets are initially measured at the present value of lease payments over the lease term plus initial direct costs, if any. If a lease does not provide a discount rate and the rate cannot be readily determined, an incremental borrowing rate is used to determine the future lease payments. Lease and variable non-lease components within the Company’s lease agreements are accounted for separately. The Company has no material leases in which the Company is the lessor.

The Company’s leasing arrangements are classified as operating leases, for which expense is recognized on a straight-line basis. As of March 31, 2020 and December 31, 2019, total ROU assets were $190.4 million and $199.7 million, respectively, and operating lease liabilities were $229.5 million and $242.3 million, respectively. The ROU assets and operating lease liabilities are included in Other assets and Other liabilities, respectively, in the Company’s Condensed Consolidated Balance Sheets. Cash paid for operating lease liabilities is recorded as Cash flows from operating activities in the Company’s Condensed Consolidated Statements of Cash Flows. For the three months ended March 31, 2020 and 2019, operating lease costs were $13.2 million and $15.0 million, which were included within Operating income in the Company’s Condensed Consolidated Statements of Income. Short-term and variable lease costs were not material for the three months ended March 31, 2020 and 2019.

The Company’s leases have remaining terms from less than 1 year to 11 years. Certain of these leases contain escalation provisions and/or renewal options, giving the Company the right to extend the lease by up to 10 years. However, a significant majority of these options are not reflected in the calculation of the ROU asset and operating lease liability due to uncertainty surrounding the likelihood of renewal.  

The following table summarizes the weighted-average lease term and discount rate for operating lease liabilities:

	March 31, 2020
Weighted-average remaining lease term (in years)	7.5
Weighted-average discount rate	6.5	%

The following table represents maturities of operating lease liabilities as of March 31, 2020 (in millions):

Due within 1 year	$	50.8
Due after 1 year through 2 years		42.7
Due after 2 years through 3 years		36.1
Due after 3 years through 4 years		31.3
Due after 4 years through 5 years		29.1
Due after 5 years		95.8
Total lease payments		285.8
Less imputed interest		(56.3)
Total operating lease liabilities	$	229.5