Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Leases

We determine if an arrangement is a lease at inception. Our lease portfolio principally consists of operating leases related to facilities, machinery, equipment and vehicles. Our lease terms do not include options to extend or terminate the lease until we are reasonably certain that we will exercise that option. Operating lease cost for lease payments is recognized on a straight-line basis over the lease term and principally consists of fixed payments for base rent.

The components of lease cost was as follows:



In millions	December 31, 2019
Operating lease cost	$	32.5
Sublease income	(1.0		)
Total lease cost	$	31.5

Supplemental cash flow information related to leases was as follows:



In millions	December 31, 2019
Operating cash flows from operating leases	$	26.8
Right-of-use assets obtained in exchange for lease obligations	$	91.1

Other information related to leases was as follows:



	December 31, 2019
Weighted-average remaining lease term of operating leases	5.2
Weighted-average discount rate of operating leases	6.3	%

Future minimum lease commitments under non-cancelable operating leases as of December 31, 2019 were as follows:



In millions	Operating Leases
2020	$	23.3
2021	18.8
2022	16.3
2023	13.9
2024	11.0
Thereafter	11.0
Total lease payments	94.3
Less: imputed interest	(14.2		)
Total	$	80.1

Future minimum lease commitments under non-cancelable operating leases based on accounting standards applicable as of December 31, 2018 were as follows:



In millions	Operating Leases
2019	$	23.2
2020	17.6
2021	13.3
2022	11.1
2023	9.5
Thereafter	13.8
Total	$	88.5

Warranties and guarantees

In connection with the disposition of our businesses or product lines, we may agree to indemnify purchasers for various potential liabilities relating to the sold business, such as pre-closing tax, product liability, warranty, environmental, or other obligations. The subject matter, amounts and duration of any such indemnification obligations vary for each type of liability indemnified and may vary widely from transaction to transaction.

Generally, the maximum obligation under such indemnifications is not explicitly stated and as a result, the overall amount of these obligations cannot be reasonably estimated. Historically, we have not made significant payments for these indemnifications. We believe that if we were to incur a loss in any of these matters, the loss would not have a material effect on our financial position, results of operations or cash flows.

We recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. In connection with the disposition of the Valves & Controls business, we agreed to indemnify Emerson Electric Co. for certain pre-closing tax liabilities. We have recorded a liability representing the fair value of our expected future obligation for this matter.

We provide service and warranty policies on our products. Liability under service and warranty policies is based upon a review of historical warranty and service claim experience. Adjustments are made to accruals as claim data and historical experience warrant.

The changes in the carrying amount of service and product warranties for the years ended December 31, 2019, 2018 and 2017 were as follows:



	Years ended December 31
In millions	2019			2018			2017
Beginning balance	$	33.9		$	38.1		$	36.3
Service and product warranty provision	53.8			50.8			60.8
Payments	(55.5		)	(54.6		)	(59.6		)
Foreign currency translation	(0.1		)	(0.4		)	0.6
Ending balance	$	32.1		$	33.9		$	38.1

Stand-by letters of credit, bank guarantees and bonds

In certain situations, Tyco guaranteed performance by the flow control business of Pentair Ltd. (“Flow Control”) to third parties or provided financial guarantees for financial commitments of Flow Control. In situations where Flow Control and Tyco were unable to obtain a release from these guarantees in connection with the spin-off of Flow Control from Tyco, we will indemnify Tyco for any losses it suffers as a result of such guarantees.

In the ordinary course of business, we are required to commit to bonds, letters of credit and bank guarantees that require payments to our customers for any non-performance. The outstanding face value of these instruments fluctuates with the value of our projects in process and in our backlog. In addition, we issue financial stand-by letters of credit primarily to secure our performance to third parties under self-insurance programs.

As of December 31, 2019 and 2018, the outstanding value of bonds, letters of credit and bank guarantees totaled $91.3 million and $123.6 million, respectively.

Other matters

In addition to the matters described above, from time to time, we are subject to disputes, administrative proceedings and other claims relating to the conduct of our business. These matters include, without limitation, claims relating to commercial or contractual disputes with suppliers, customers or parties to acquisitions and divestitures, intellectual property matters, environmental, safety and health matters, product liability, the use or installation of our products, consumer matters, and employment and labor matters. On the basis of information currently available to it, management does not believe that existing proceedings and claims will have a material impact on our Consolidated Financial Statements. However, litigation is unpredictable, and we could incur judgments or enter into settlements for current or future claims that could adversely affect our financial statements.