The Company determines if an arrangement is a lease or contains a lease at inception. We lease certain revenue equipment and real estate, predominantly through operating leases, and we have an immaterial number of leases in which we are a lessor. Operating leases are expensed on a straight-line basis over the life of the lease beginning on the lease commencement date. We determine the lease term by assuming the exercise of renewal options that are reasonably certain. The lease term is used to determine whether a lease is finance or operating and is used to calculate rent expense. Additionally, the depreciable life of leased assets and leasehold improvements is limited by the expected lease term. Operating lease balances are classified as operating lease right-of-use (“ROU”) assets and current and long-term operating lease liabilities on our consolidated balance sheet. We have an immaterial amount of finance leases that are included in property and equipment, other current liabilities, and other long-term liabilities on our consolidated balance sheet.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate adjusted for duration and other factors to represent the rate we would have to pay to borrow on a collateralized basis based on the information available at commencement date in determining the present value of lease payments. Our lease terms may include options to extend or terminate the lease and we will adjust the life of the lease when it is reasonably certain that we will exercise these options.

We have lease agreements with lease and non-lease components, which are generally accounted for as a single lease component. We have variable lease components, including lease payments with payment escalation based on the Consumer Price Index, and other variable items, such as common area maintenance and taxes.

Key assumptions include discount rate, the impact of purchase options and renewal options on our lease term, as well as the assessment of residual value guarantees.

Our revenue equipment leases generally have purchase options. However, in most circumstances we are not typically certain of exercising the purchase option as we may sign a new lease, return the equipment to the lessor, or exercise the option as circumstances dictate. Our revenue equipment leases often contain residual value guarantees, but they are not reflected in our lease liabilities as our lease rates are such that residual value guarantees are not expected to be owed at the end of our leases. Wrecked units are expensed in full upon damage and paid out to the lessor.

Our real estate leases will often have an option to extend the lease, but we are typically not reasonably certain of exercising options to extend as we have the ability to move to more advantageous locations over time, relocate to other leased and owned locations, or discontinue service from particular locations over time as customer demand changes.

Leases (in millions)	Classification	2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	386.0
Finance lease assets	Net property and equipment		2.6
Total leased assets		$	388.6
Liabilities
Current
Operating	Current operating lease liabilities	$	120.8
Finance	Other current and accrued liabilities		0.2
Noncurrent
Operating	Operating lease liabilities		246.3
Finance	Claims and other liabilities		3.3
Total lease liabilities		$	370.6

Lease Cost (in millions)	Classification	Year Ended December 31, 2019
Operating lease cost^(a)	Purchased transportation; Fuel, operating expenses and supplies	$	168.0
Short-term cost	Purchased transportation; Fuel, operating expenses and supplies	14.2
Variable lease cost	Purchased transportation; Fuel, operating expenses and supplies	5.9
Finance lease cost
Amortization of leased assets	Depreciation and amortization	0.4
Interest on lease liabilities	Interest expense	0.5
Total lease cost		$	189.0

(a)

Operating lease cost represent non-cash amortization of ROU assets and accretion of the discounted lease liabilities and is segregated on the statement of consolidated cash flows.

Remaining Maturities of Lease Liabilities	Operating Leases		Finance Leases		Total
2020	$	154.4	$	0.6	$	155.0
2021		128.9		0.6		129.5
2022		77.8		0.6		78.4
2023		41.1		0.6		41.7
2024		16.3		0.7		17.0
After 2024		32.6		3.4		36.0
Total lease payments	$	451.1	$	6.5	$	457.6
Less: Interest		84.0		3.0		87.0
Present value of lease liabilities	$	367.1	$	3.5	$	370.6

Lease Term and Discount Rate

(years and percent)

Weighted-Average Remaining Lease Term

Weighted-Average Discount Rate

Operating leases

3.7

11.0%

Finance leases

9.8

11.3%

Other Information (in millions)	Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	154.6
Operating cash flows from finance leases	0.5
Financing cash flows from finance leases	0.3
Leased assets obtained in exchange for new operating lease liabilities	$	129.7

Below is the Company’s contractual cash obligation table as of December 31, 2018, that disclosed operating lease payments for the next five years and thereafter. We had no material capital leases as of December 31, 2018.

	Payments Due by Period
(in millions)	Total		Less than 1 year		1-3 years		3-5 years		After 5 years
Operating leases	$	429.2	$	138.4	$	212.0	$	63.3	$	15.5