LEASES Leases (Notes)

9 Months Ended

Sep. 30, 2019

LEASES

The Company’s lease portfolio primarily relates to real estate, which may be used for manufacturing or non-manufacturing purposes, and contains lease terms generally ranging between one and 18 years. Our lease portfolio also includes vehicles and other equipment such as forklifts. Substantially all of our leases are classified as operating leases. For leases with terms greater than 12 months, we record a right-of-use asset and lease liability equal to the present value of the lease payments. In determining the discount rate used to measure the right-of-use asset and lease liability, we utilize the Company’s incremental borrowing rate and consider the term of the lease, as well as the geographic location of the leased asset.

Where options to renew a lease are available, they are included in the lease term and capitalized on the balance sheet to the extent there would be a significant economic penalty not to elect the option. Certain real estate leases are subject to periodic changes in an index or market rate. While lease liabilities are not remeasured as a result of changes to an index or rate, these changes are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred. Variable lease expense also includes property tax and property insurance costs.

For the three and nine months ended September 30, 2019, operating lease costs were $6.3 and $18.6, respectively. Short-term lease costs, variable lease costs, and sublease income are not considered material.

Future operating lease payments under non-cancellable operating leases with an initial term in excess of 12 months as of September 30, 2019 are shown below.



2019	$	5.6
2020	20.3
2021	16.2
2022	13.1
2023	10.4
2024 and thereafter	58.6
Total lease payments	124.2
Less: amount of lease payments representing interest	(31.6		)
Present value of future lease payments	$	92.6

Short-term lease liability	$	18.2
Long-term lease liability	74.4
Present value of future lease payments	$	92.6

Future minimum operating lease payments under non-cancellable operating leases with an initial term in excess of 12 months as of December 31, 2018 are shown below.



2019	$	22.2
2020	16.8
2021	12.6
2022	10.2
2023	8.1
2024 and thereafter	46.4
Total minimum lease payments	$	116.3

Our lease portfolio has a weighted average remaining lease term of 13.7 years, and the weighted average discount rate is 3.2%. During the nine months ended September 30, 2019, we recognized non-cash right-of-use assets of $25.8 for new leases entered into during the period, primarily related to the lease renewal of a key manufacturing site in our Connect & Control segment. Operating cash outflows from operating leases during the nine months ended September 30, 2019 were $16.8.