Leases

12 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

Leases

The Company determines if a contract is (or contains) a lease at inception by evaluating whether the contract conveys the right to control the use of an identified asset. The Company has operating and finance leases primarily associated with real estate, automobiles and manufacturing and office equipment.

The Company has lease agreements that include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of the underlying assets. The term of the Company’s leases generally reflects the non-cancellable period of the lease. Some of the Company’s lease agreements include options to extend or terminate the lease, which are excluded from the minimum lease terms unless the Company is reasonably certain the option will be exercised. Lease expense for operating leases and amortization expense for finance leases is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets and are instead recognized on a straight-line basis over the lease term

Right-of-use (“ROU”) assets and liabilities are recognized in the consolidated balance sheets based on the present value of remaining lease payments over the lease term. Additionally, ROU assets include any lease payments made at or before the lease commencement date, any initial direct costs incurred, and are reduced by lease incentives received. As most of the Company’s leases do not provide an implicit rate, the present value of lease payments is determined using the Company’s incremental borrowing rate at the commencement date of the lease. Lease payments included in the measurement of the lease liabilities are comprised of fixed payments, variable payments that depend on an index or rate, and amounts probable to be paid if an option is reasonably certain to be exercised. Variable lease payments, typically based on usage of the asset or changes in an index or rate, are excluded from the lease liabilities and are recognized in the period in which the obligation for those payments is incurred.

ROU assets and lease liability balances recorded on the consolidated balance sheets are summarized as follows (in millions):

Leases	Classification	March 31, 2020
Assets:
Operating ROU assets	Other assets	$	71.1
Finance ROU assets	Property, plant and equipment, net (1)	27.3
Total ROU assets		$	98.4
Liabilities:
Current
Operating	Other current liabilities	$	12.8
Finance	Current maturities of debt	0.5
Non-current
Operating	Other liabilities	63.1
Finance	Long-term debt	27.4
Total lease liabilities		$	103.8

____________________

(1)Finance lease assets are recorded net of accumulated amortization of $1.0 million as of March 31, 2020.

        The components of lease expense reported in the consolidated statements of operations are as follows (in millions):

	Twelve Months Ended
	March 31, 2020
Operating lease expenses (1)	$	15.0
Finance lease expenses:
Depreciation of finance ROU assets (1)	1.0
Interest on lease liabilities (2)	1.6
Total finance lease expense	2.6
Variable and short-term lease expense (1)	4.4
Total lease expense	$	22.0

____________________

(1)Included in cost of sales and selling, general and administrative expenses.

(2)Included in interest expense, net.

Lease expense under operating leases totaled $18.3 million and $18.9 million for the fiscal years ended March 31, 2019 and 2018, respectively.

Future minimum lease payments under operating and finance leases as of March 31, 2020 are as follows (in millions):

Years ending March 31,	Operating Leases (1)		Finance Leases (1)
2021	14.6		2.1
2022	14.6		2.0
2023	14.3		2.0
2024	11.3		2.0
2025	9.0		2.0
Thereafter	28.5		44.7
Total future minimum lease payments	92.3		54.8
Less: Imputed interest	(16.4)		(26.9)
Total lease liabilities	$	75.9	$	27.9

____________________

(1)Excludes legally binding minimum lease payments for leases signed but not yet commenced.

        The weighted-average remaining lease terms and discount rates for leases are as follows:

Lease Term and Discount Rate	March 31, 2020
Weighted-average remaining lease terms (years):
Operating leases	6.7
Finance leases	27.8
Weighted-average discount rate:
Operating leases	4.6	%
Finance leases	5.7	%

        Cash paid for amounts included in the measurement of lease liabilities are as follows (in millions):

	Twelve Months Ended
	March 31, 2020
Operating cash flows from operating leases	$	14.4
Operating cash flows from finance leases	1.5
Financing cash flows from finance leases	0.4

        ROU assets obtained in exchange for lease liabilities are as follows (in millions):

	Twelve Months Ended
	March 31, 2020
Operating leases	$	43.4
Finance leases	1.0

Sale-Leaseback Transaction:

        During fiscal 2018, the Company entered into a sale-leaseback arrangement for an owned facility in Downers Grove, Illinois. In accordance with the sale-leaseback guidance of ASC 840, the property did not qualify for sale accounting and as a result was accounted for as a financing transaction. No gain or loss was recognized in connection with this transaction. Upon the Company's adoption of ASC 842 on April 1, 2019, this financing transaction did not qualify for sale-leaseback accounting under the requirements of ASC 842 and, accordingly, continued to be accounted for as a financing obligation. The financing obligation and related asset of $4.6 million and $3.0 million, respectively, are recorded in Property, plant and equipment, net and Other liabilities in the consolidated balance sheet as of March 31, 2020.

        Prior to the adoption of ASC 842, the Company was considered, for accounting purposes only, the owner of the new facility due to the Company's continuing involvement with the new manufacturing facility during the construction period and accordingly recorded the construction asset and financing obligation within its consolidated balance sheets. Upon the adoption of ASC 842 on April 1, 2019, the Company derecognized approximately $23.0 million of the construction asset and financing obligation recorded as of March 31, 2019, and has accounted for the new facility as a finance lease in accordance with ASC 842.

Leases

Leases

The Company determines if a contract is (or contains) a lease at inception by evaluating whether the contract conveys the right to control the use of an identified asset. The Company has operating and finance leases primarily associated with real estate, automobiles and manufacturing and office equipment.

The Company has lease agreements that include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of the underlying assets. The term of the Company’s leases generally reflects the non-cancellable period of the lease. Some of the Company’s lease agreements include options to extend or terminate the lease, which are excluded from the minimum lease terms unless the Company is reasonably certain the option will be exercised. Lease expense for operating leases and amortization expense for finance leases is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets and are instead recognized on a straight-line basis over the lease term

Right-of-use (“ROU”) assets and liabilities are recognized in the consolidated balance sheets based on the present value of remaining lease payments over the lease term. Additionally, ROU assets include any lease payments made at or before the lease commencement date, any initial direct costs incurred, and are reduced by lease incentives received. As most of the Company’s leases do not provide an implicit rate, the present value of lease payments is determined using the Company’s incremental borrowing rate at the commencement date of the lease. Lease payments included in the measurement of the lease liabilities are comprised of fixed payments, variable payments that depend on an index or rate, and amounts probable to be paid if an option is reasonably certain to be exercised. Variable lease payments, typically based on usage of the asset or changes in an index or rate, are excluded from the lease liabilities and are recognized in the period in which the obligation for those payments is incurred.

ROU assets and lease liability balances recorded on the consolidated balance sheets are summarized as follows (in millions):

Leases	Classification	March 31, 2020
Assets:
Operating ROU assets	Other assets	$	71.1
Finance ROU assets	Property, plant and equipment, net (1)	27.3
Total ROU assets		$	98.4
Liabilities:
Current
Operating	Other current liabilities	$	12.8
Finance	Current maturities of debt	0.5
Non-current
Operating	Other liabilities	63.1
Finance	Long-term debt	27.4
Total lease liabilities		$	103.8

____________________

(1)Finance lease assets are recorded net of accumulated amortization of $1.0 million as of March 31, 2020.

        The components of lease expense reported in the consolidated statements of operations are as follows (in millions):

	Twelve Months Ended
	March 31, 2020
Operating lease expenses (1)	$	15.0
Finance lease expenses:
Depreciation of finance ROU assets (1)	1.0
Interest on lease liabilities (2)	1.6
Total finance lease expense	2.6
Variable and short-term lease expense (1)	4.4
Total lease expense	$	22.0

____________________

(1)Included in cost of sales and selling, general and administrative expenses.

(2)Included in interest expense, net.

Lease expense under operating leases totaled $18.3 million and $18.9 million for the fiscal years ended March 31, 2019 and 2018, respectively.

Future minimum lease payments under operating and finance leases as of March 31, 2020 are as follows (in millions):

Years ending March 31,	Operating Leases (1)		Finance Leases (1)
2021	14.6		2.1
2022	14.6		2.0
2023	14.3		2.0
2024	11.3		2.0
2025	9.0		2.0
Thereafter	28.5		44.7
Total future minimum lease payments	92.3		54.8
Less: Imputed interest	(16.4)		(26.9)
Total lease liabilities	$	75.9	$	27.9

____________________

(1)Excludes legally binding minimum lease payments for leases signed but not yet commenced.

        The weighted-average remaining lease terms and discount rates for leases are as follows:

Lease Term and Discount Rate	March 31, 2020
Weighted-average remaining lease terms (years):
Operating leases	6.7
Finance leases	27.8
Weighted-average discount rate:
Operating leases	4.6	%
Finance leases	5.7	%

        Cash paid for amounts included in the measurement of lease liabilities are as follows (in millions):

	Twelve Months Ended
	March 31, 2020
Operating cash flows from operating leases	$	14.4
Operating cash flows from finance leases	1.5
Financing cash flows from finance leases	0.4

        ROU assets obtained in exchange for lease liabilities are as follows (in millions):

	Twelve Months Ended
	March 31, 2020
Operating leases	$	43.4
Finance leases	1.0

Sale-Leaseback Transaction:

        During fiscal 2018, the Company entered into a sale-leaseback arrangement for an owned facility in Downers Grove, Illinois. In accordance with the sale-leaseback guidance of ASC 840, the property did not qualify for sale accounting and as a result was accounted for as a financing transaction. No gain or loss was recognized in connection with this transaction. Upon the Company's adoption of ASC 842 on April 1, 2019, this financing transaction did not qualify for sale-leaseback accounting under the requirements of ASC 842 and, accordingly, continued to be accounted for as a financing obligation. The financing obligation and related asset of $4.6 million and $3.0 million, respectively, are recorded in Property, plant and equipment, net and Other liabilities in the consolidated balance sheet as of March 31, 2020.

        Prior to the adoption of ASC 842, the Company was considered, for accounting purposes only, the owner of the new facility due to the Company's continuing involvement with the new manufacturing facility during the construction period and accordingly recorded the construction asset and financing obligation within its consolidated balance sheets. Upon the adoption of ASC 842 on April 1, 2019, the Company derecognized approximately $23.0 million of the construction asset and financing obligation recorded as of March 31, 2019, and has accounted for the new facility as a finance lease in accordance with ASC 842.