Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leases

Leases

The Company adopted ASC Topic 842, Leases, as of January 1, 2019 and has applied its transition provisions at the beginning of the period of adoption (i.e. on the effective date), and did not restate comparative periods. Under this transition provision, the Company has applied the legacy guidance under ASC Topic 840, Leases, including its disclosure requirements, in the comparative periods presented.

Under ASC Topic 842, a lease is a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment (i.e., an identified asset) for a period of time in exchange for consideration. The Company’s contracts containing a lease include explicitly or implicitly identified assets where the Company has the right to substantially all of the economic benefits of the assets and has the ability to direct how and for what purpose the assets are used during the lease term. Leases are classified as either operating or financing. For operating leases, the Company has recognized a lease liability equal to the present value of the remaining lease payments, and a right of use asset equal to the lease liability, subject to certain adjustments, such as for prepaid rents. The Company used its incremental borrowing rate to determine the present value of the lease payments. The Company’s incremental borrowing rate is the rate of interest that it would have to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The Company determined the incremental borrowing rates for its leases by applying its applicable borrowing rate, with adjustment as appropriate for lease currency and lease term.

Upon adoption, the Company recognized right-of-use assets and lease liabilities for operating leases in the amount of $23.5 and $24.3, respectively.

The Company enters into contracts to lease real estate, equipment and vehicles. The Company’s most individually significant lease liabilities relate to real estate leases that have initial contract lease terms ranging from 7 to 55 years. The Company’s most significant lease liabilities in aggregate value relate to equipment and vehicle leases that have initial contract lease terms of 3 years. Certain leases include renewal, termination or purchase options that were not deemed reasonably assured of exercise under ASC 840. Under ASC Topic 842, the lease term at the lease commencement date is determined based on the non-cancellable period for which the Company has the right to use the underlying asset, together with any periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option, periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option, and periods covered by an option to extend (or not to terminate) the lease in which the exercise of the option is controlled by the lessor. The Company considered a number of factors when evaluating whether the options in its lease contracts were reasonably certain of exercise, such as length of time before option exercise, expected value of the leased asset at the end of the initial lease term, importance of the lease to overall operations, costs to negotiate a new lease, and any contractual or economic penalties.

Operating leases result in a straight-line lease expense, while finance leases result in a front-loaded expense pattern. The assets associated with financing leases have been included in Property, Plant and Equipment in the consolidated balance sheet. Depreciation on financing lease assets is included in Depreciation and amortization on the consolidated statement of operations. The Company does not sublease any of its material leased assets to third parties and the Company is not party to any lease contracts with related parties. The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants.

ASC Topic 842 includes practical expedient and policy election choices. The Company elected the package of practical expedients available in the standard and as a result, did not reassess the lease classification of existing leases, did not reassess whether existing contracts are or contain leases and did not reassess the initial direct costs associated with existing leases. The Company did not elect the hindsight practical expedient, and so did not re-evaluate lease term for existing leases.

The Company has made an accounting policy election not to recognize right of use assets and lease liabilities for leases with a lease term of 12 months or less, including renewal options that are reasonably certain to be exercised, that also do not include an option to purchase the underlying asset that is reasonably certain of exercise. Instead, lease payments for these leases are recognized as lease cost on a straight-line basis over the lease term.

ASC Topic 842 includes a number of reassessment and re-measurement requirements for lessees based on certain triggering events or conditions, including whether a contract is or contains a lease, assessment of lease term and purchase options, measurement of lease payments, assessment of lease classification and assessment of the discount rate. The Company reviewed the reassessment and re-measurement requirements and did not identify any events or conditions during the year ended December 31, 2019 that required a reassessment or re-measurement. In addition, there were no impairment indicators identified during the year ended December 31, 2019 that required an impairment test for the Company’s right-of-use assets or other long-lived assets in accordance with ASC 360-10.

Certain of the Company’s leases include variable lease costs to reimburse the lessor for real estate tax and insurance expenses, and certain non-lease components that transfer a distinct service to the Company, such as common area maintenance services. The Company has elected not to separate the accounting for lease components and non-lease components, for all classes of leased assets.

The components of lease expense and supplemental cash flow information related to leases for the periods are as follows:

	Year Ended December 31, 2019
Lease cost
Finance lease cost
Amortization of right-of-use assets	$	15.5
Interest on lease liabilities	3.1
Operating lease cost	6.0
Short-term lease cost	6.2
Total lease cost	$	30.8
Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	3.1
Operating cash flows from operating leases	$	5.0
Financing cash flows from finance leases	$	35.7
Right-of-use assets obtained in exchange for new finance lease liabilities	$	19.2
Right-of-use assets obtained in exchange for new operating lease liabilities	$	7.0

The weighted average lease terms as of the end of period are as follows:

	December 31, 2019
Weighted average remaining lease terms
Weighted-average remaining lease term (in years) - finance leases	2.02
Weighted-average remaining lease term (in years) - operating leases	15.51

The weighted average discount rates for the periods are as follows:

	December 31, 2019
Discount rates
Weighted-average discount rate - finance leases	5.0	%
Weighted-average discount rate - operating leases	4.8	%

The supplemental balance sheet information related to leases for the period is as follows:

	December 31, 2019
Operating leases
Operating lease right-of-use assets	$	26.1
Accrued expenses	$	4.9
Other long-term liabilities	21.4
Total operating lease liabilities	$	26.3
Finance leases
Property and equipment, at cost	$	111.8
Accumulated depreciation	(30.5		)
Property and equipment, net	$	81.3
Current maturities of long-term debt	$	29.7
Long term debt, less current maturities	22.9
Total finance lease liabilities	$	52.6

Maturities of the Company’s lease liabilities are as follows:

Year Ending	Operating Leases			Finance Leases
2020	5.6			31.5
2021	5.0			17.5
2022	3.3			4.8
2023	2.5			1.3
2024	2.0			0.7
Thereafter	21.5			—
Total lease payments	39.9			55.8
Less: Imputed interest	(13.6		)	(3.2		)
Present value of lease liabilities	$	26.3		$	52.6

Leases

Leases

The Company adopted ASC Topic 842, Leases, as of January 1, 2019 and has applied its transition provisions at the beginning of the period of adoption (i.e. on the effective date), and did not restate comparative periods. Under this transition provision, the Company has applied the legacy guidance under ASC Topic 840, Leases, including its disclosure requirements, in the comparative periods presented.

Under ASC Topic 842, a lease is a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment (i.e., an identified asset) for a period of time in exchange for consideration. The Company’s contracts containing a lease include explicitly or implicitly identified assets where the Company has the right to substantially all of the economic benefits of the assets and has the ability to direct how and for what purpose the assets are used during the lease term. Leases are classified as either operating or financing. For operating leases, the Company has recognized a lease liability equal to the present value of the remaining lease payments, and a right of use asset equal to the lease liability, subject to certain adjustments, such as for prepaid rents. The Company used its incremental borrowing rate to determine the present value of the lease payments. The Company’s incremental borrowing rate is the rate of interest that it would have to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The Company determined the incremental borrowing rates for its leases by applying its applicable borrowing rate, with adjustment as appropriate for lease currency and lease term.

Upon adoption, the Company recognized right-of-use assets and lease liabilities for operating leases in the amount of $23.5 and $24.3, respectively.

The Company enters into contracts to lease real estate, equipment and vehicles. The Company’s most individually significant lease liabilities relate to real estate leases that have initial contract lease terms ranging from 7 to 55 years. The Company’s most significant lease liabilities in aggregate value relate to equipment and vehicle leases that have initial contract lease terms of 3 years. Certain leases include renewal, termination or purchase options that were not deemed reasonably assured of exercise under ASC 840. Under ASC Topic 842, the lease term at the lease commencement date is determined based on the non-cancellable period for which the Company has the right to use the underlying asset, together with any periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option, periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option, and periods covered by an option to extend (or not to terminate) the lease in which the exercise of the option is controlled by the lessor. The Company considered a number of factors when evaluating whether the options in its lease contracts were reasonably certain of exercise, such as length of time before option exercise, expected value of the leased asset at the end of the initial lease term, importance of the lease to overall operations, costs to negotiate a new lease, and any contractual or economic penalties.

Operating leases result in a straight-line lease expense, while finance leases result in a front-loaded expense pattern. The assets associated with financing leases have been included in Property, Plant and Equipment in the consolidated balance sheet. Depreciation on financing lease assets is included in Depreciation and amortization on the consolidated statement of operations. The Company does not sublease any of its material leased assets to third parties and the Company is not party to any lease contracts with related parties. The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants.

ASC Topic 842 includes practical expedient and policy election choices. The Company elected the package of practical expedients available in the standard and as a result, did not reassess the lease classification of existing leases, did not reassess whether existing contracts are or contain leases and did not reassess the initial direct costs associated with existing leases. The Company did not elect the hindsight practical expedient, and so did not re-evaluate lease term for existing leases.

The Company has made an accounting policy election not to recognize right of use assets and lease liabilities for leases with a lease term of 12 months or less, including renewal options that are reasonably certain to be exercised, that also do not include an option to purchase the underlying asset that is reasonably certain of exercise. Instead, lease payments for these leases are recognized as lease cost on a straight-line basis over the lease term.

ASC Topic 842 includes a number of reassessment and re-measurement requirements for lessees based on certain triggering events or conditions, including whether a contract is or contains a lease, assessment of lease term and purchase options, measurement of lease payments, assessment of lease classification and assessment of the discount rate. The Company reviewed the reassessment and re-measurement requirements and did not identify any events or conditions during the year ended December 31, 2019 that required a reassessment or re-measurement. In addition, there were no impairment indicators identified during the year ended December 31, 2019 that required an impairment test for the Company’s right-of-use assets or other long-lived assets in accordance with ASC 360-10.

Certain of the Company’s leases include variable lease costs to reimburse the lessor for real estate tax and insurance expenses, and certain non-lease components that transfer a distinct service to the Company, such as common area maintenance services. The Company has elected not to separate the accounting for lease components and non-lease components, for all classes of leased assets.

The components of lease expense and supplemental cash flow information related to leases for the periods are as follows:

	Year Ended December 31, 2019
Lease cost
Finance lease cost
Amortization of right-of-use assets	$	15.5
Interest on lease liabilities	3.1
Operating lease cost	6.0
Short-term lease cost	6.2
Total lease cost	$	30.8
Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	3.1
Operating cash flows from operating leases	$	5.0
Financing cash flows from finance leases	$	35.7
Right-of-use assets obtained in exchange for new finance lease liabilities	$	19.2
Right-of-use assets obtained in exchange for new operating lease liabilities	$	7.0

The weighted average lease terms as of the end of period are as follows:

	December 31, 2019
Weighted average remaining lease terms
Weighted-average remaining lease term (in years) - finance leases	2.02
Weighted-average remaining lease term (in years) - operating leases	15.51

The weighted average discount rates for the periods are as follows:

	December 31, 2019
Discount rates
Weighted-average discount rate - finance leases	5.0	%
Weighted-average discount rate - operating leases	4.8	%

The supplemental balance sheet information related to leases for the period is as follows:

	December 31, 2019
Operating leases
Operating lease right-of-use assets	$	26.1
Accrued expenses	$	4.9
Other long-term liabilities	21.4
Total operating lease liabilities	$	26.3
Finance leases
Property and equipment, at cost	$	111.8
Accumulated depreciation	(30.5		)
Property and equipment, net	$	81.3
Current maturities of long-term debt	$	29.7
Long term debt, less current maturities	22.9
Total finance lease liabilities	$	52.6

Maturities of the Company’s lease liabilities are as follows:

Year Ending	Operating Leases			Finance Leases
2020	5.6			31.5
2021	5.0			17.5
2022	3.3			4.8
2023	2.5			1.3
2024	2.0			0.7
Thereafter	21.5			—
Total lease payments	39.9			55.8
Less: Imputed interest	(13.6		)	(3.2		)
Present value of lease liabilities	$	26.3		$	52.6