Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets, current portion of operating lease liabilities, and long-term portion of operating lease liabilities on the consolidated balance sheets. Finance lease ROU assets are included in property, equipment and software, net, and the current and non-current portion of financing lease liabilities are included in other accrued expenses and other non-current liabilities, respectively, on the consolidated balance sheets.

ROU assets represent the Company's right to control the use of an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating and financing lease ROU assets and liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the incremental borrowing rate, determined based on the information available at lease commencement date, is used in calculating the present value of lease payments. The ROU asset also includes any lease prepayments made and excludes lease incentives. Leases may include options to extend or terminate the lease and lease terms incorporate these when it is reasonably certain that the option will be exercised.

The Company elected to not separate lease and non-lease components for building and equipment leases. The Company will account for the lease and non-lease components, such as fixed service charges, as a single lease component. Leases with an initial term of 12 months or less are not recorded on the balance sheet; lease expense is recognized for these short-term leases on a straight-line basis over the lease term.

The Company has operating and finance leases for corporate offices, operational facilities, shared service centers, and certain equipment. Leases have remaining lease terms of 1 year to 15 years, some of which include options to extend the leases for up to 10 years. In circumstances where there are significant foreign tax incentives, the Company has determined it to be reasonably certain to exercise the renewal options. The Company subleases certain office spaces to third parties.

The Company elected to not separate lease and non-lease components for equipment leased to customers as part of certain service arrangements. The lease components are combined with the non-lease components and accounted for under ASC 606.

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

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Operating lease cost	$	4.9		$	14.3
Finance lease cost:
Amortization of right-of-use assets	0.2			0.6
Interest on lease liabilities	—			0.1
Sublease income	(0.6		)	(1.7		)
Total lease cost	$	4.5		$	13.3

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

	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	13.8
Operating cash flows for finance leases	0.1
Financing cash flows for finance leases	0.6
ROU assets obtained in exchange for lease obligations:
Operating leases	11.6
Finance leases	0.5

The Company presents all non-cash transactions related to adjustments to the lease liability or right-of-use asset as non-cash transactions. This includes all non-cash charges related to any modification or reassessment events triggering remeasurement.

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

	September 30, 2019
Operating leases
Operating lease right-of-use assets	$	75.0
Current portion of operating lease liabilities	$	11.1
Non-current portion of operating lease liabilities	81.8
Total operating lease liabilities	$	92.9
Finance leases
Property, equipment and software, gross	$	2.8
Accumulated depreciation	(0.9		)
Property, equipment and software, net	$	1.9
Other accrued expenses	$	1.0
Other non-current liabilities	0.4
Total finance lease liabilities	$	1.4
Weighted average remaining lease term:
Operating leases	8 years
Finance leases	2 years
Weighted average borrowing rate:
Operating leases	8.74		%
Finance leases	6.33		%

Maturities of lease liabilities as of September 30, 2019 are as follows (in millions):

	Operating Leases		Finance Leases
Remainder of 2019	$	4.8	$	0.2
2020	18.0		0.8
2021	16.7		0.4
2022	15.1		0.1
2023	14.7		—
2024	14.4		—
Thereafter	48.2		—
Total	131.9		1.5
Less:
Imputed interest	39.0		0.1
Present value of lease liabilities	$	92.9	$	1.4

Leases

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets, current portion of operating lease liabilities, and long-term portion of operating lease liabilities on the consolidated balance sheets. Finance lease ROU assets are included in property, equipment and software, net, and the current and non-current portion of financing lease liabilities are included in other accrued expenses and other non-current liabilities, respectively, on the consolidated balance sheets.

ROU assets represent the Company's right to control the use of an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating and financing lease ROU assets and liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the incremental borrowing rate, determined based on the information available at lease commencement date, is used in calculating the present value of lease payments. The ROU asset also includes any lease prepayments made and excludes lease incentives. Leases may include options to extend or terminate the lease and lease terms incorporate these when it is reasonably certain that the option will be exercised.

The Company elected to not separate lease and non-lease components for building and equipment leases. The Company will account for the lease and non-lease components, such as fixed service charges, as a single lease component. Leases with an initial term of 12 months or less are not recorded on the balance sheet; lease expense is recognized for these short-term leases on a straight-line basis over the lease term.

The Company has operating and finance leases for corporate offices, operational facilities, shared service centers, and certain equipment. Leases have remaining lease terms of 1 year to 15 years, some of which include options to extend the leases for up to 10 years. In circumstances where there are significant foreign tax incentives, the Company has determined it to be reasonably certain to exercise the renewal options. The Company subleases certain office spaces to third parties.

The Company elected to not separate lease and non-lease components for equipment leased to customers as part of certain service arrangements. The lease components are combined with the non-lease components and accounted for under ASC 606.

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

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Operating lease cost	$	4.9		$	14.3
Finance lease cost:
Amortization of right-of-use assets	0.2			0.6
Interest on lease liabilities	—			0.1
Sublease income	(0.6		)	(1.7		)
Total lease cost	$	4.5		$	13.3

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

	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	13.8
Operating cash flows for finance leases	0.1
Financing cash flows for finance leases	0.6
ROU assets obtained in exchange for lease obligations:
Operating leases	11.6
Finance leases	0.5

The Company presents all non-cash transactions related to adjustments to the lease liability or right-of-use asset as non-cash transactions. This includes all non-cash charges related to any modification or reassessment events triggering remeasurement.

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

	September 30, 2019
Operating leases
Operating lease right-of-use assets	$	75.0
Current portion of operating lease liabilities	$	11.1
Non-current portion of operating lease liabilities	81.8
Total operating lease liabilities	$	92.9
Finance leases
Property, equipment and software, gross	$	2.8
Accumulated depreciation	(0.9		)
Property, equipment and software, net	$	1.9
Other accrued expenses	$	1.0
Other non-current liabilities	0.4
Total finance lease liabilities	$	1.4
Weighted average remaining lease term:
Operating leases	8 years
Finance leases	2 years
Weighted average borrowing rate:
Operating leases	8.74		%
Finance leases	6.33		%

Maturities of lease liabilities as of September 30, 2019 are as follows (in millions):

	Operating Leases		Finance Leases
Remainder of 2019	$	4.8	$	0.2
2020	18.0		0.8
2021	16.7		0.4
2022	15.1		0.1
2023	14.7		—
2024	14.4		—
Thereafter	48.2		—
Total	131.9		1.5
Less:
Imputed interest	39.0		0.1
Present value of lease liabilities	$	92.9	$	1.4