Lease Commitments

12 Months Ended

Dec. 31, 2019

At December 31, 2019, Northern Trust was obligated under a number of non-cancelable operating leases, primarily for real estate. Certain leases contain rent escalation clauses based on market indices, renewal option clauses calling for increased rentals, and rental payments based on usage. There are no restrictions imposed by any lease agreement regarding the payment of dividends, debt financing or Northern Trust entering into further lease agreements.

The components of lease costs for the year ended December 31, 2019 were as follows.

TABLE 87: LEASE COST COMPONENTS



(In Millions)	DECEMBER 31, 2019
Operating Lease Cost	$	102.2
Variable Lease Cost	38.7
Sublease Income	(6.6		)
Total Lease Cost	$	134.3

The following table presents a maturity analysis of lease liabilities as of December 31, 2019.

TABLE 88: MATURITY OF LEASE LIABILITIES



(In Millions)	MATURITY OF LEASE LIABILITIES
2020	$	101.3
2021	85.8
2022	78.5
2023	70.5
2024	59.6
Later Years	300.0
Total Lease Payments	695.7
Less: Imputed Interest	(92.6		)
Present Value of Lease Liabilities	$	603.1

As of December 31, 2019, Northern Trust had commitments for operating leases in addition to the above that have not yet commenced for approximately $40.1 million. These operating leases are for the use of office space with lease terms between 9 and 15 years and are expected to commence early 2020 through late 2021.

Northern Trust uses its incremental borrowing rate to determine the present value of lease payments for operating leases. Operating lease ROU assets and lease liabilities may include options to extend or terminate the lease only when it is reasonably certain that Northern Trust will exercise that option. Northern Trust elects not to separate lease and non-lease components of a contract for its real estate leases. The location and amount of ROU assets and lease liabilities recorded in the consolidated balance sheets as of December 31, 2019 are presented in the following table.

TABLE 89: LOCATION AND AMOUNT OF LEASE ASSETS AND LIABILITIES



(In Millions)	LOCATION OF LEASE ASSETS AND LEASE LIABILITIES ON THE BALANCE SHEET	DECEMBER 31, 2019
Assets
Operating Lease Right-of-Use Asset	Other Assets	$	491.6
Liabilities
Operating Lease Liability	Other Liabilities	$	603.1

The weighted-average remaining lease term and weighted-average discount rate applied to leases as of December 31, 2019 were as follows:

TABLE 90: WEIGHTED-AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE



	DECEMBER 31, 2019
Operating Leases
Weighted-Average Remaining Lease Term	9.2 years
Weighted-Average Discount Rate	3.0	%

The following table provides supplemental cash flow information related to leases for the year ended December 31, 2019.

TABLE 91: SUPPLEMENTAL CASH FLOW INFORMATION



(In Millions)	DECEMBER 31, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities - operating cash flows	$	101.2
Supplemental non-cash information
Right-of-use assets obtained in exchange for new operating lease liabilities	$	108.3

Under the provisions of Accounting Standards Codification (ASC) Topic 842, Northern Trust has elected not to restate comparative periods in the period of adoption. Therefore, disclosure with respect to minimum annual lease commitments as of December 31, 2018, for all non-cancelable operating leases with a term of one year or more is provided in the table below, as required by ASC Topic 840.

TABLE 92: MINIMUM LEASE PAYMENTS



(In Millions)	FUTURE MINIMUM LEASE PAYMENTS
2019	$	98.8
2020	97.8
2021	85.9
2022	77.2
2023	67.7
Later Years	335.7

Total Minimum Lease Payments	763.1
Less: Sublease Rentals	(23.4		)

Net Minimum Lease Payments	$	739.7

Operating lease rental expense, net of rental income, is recorded in occupancy expense and amounted to $79.0 million in 2018, $76.7 million in 2017, and $76.1 million in 2016.