Leases

9 Months Ended

Sep. 30, 2020

LeasesThe Company’s lease portfolio includes various contracts for real estate, vehicles, information technology and other equipment. At contract inception, the Company determines a lease exists if the contract conveys the right to control an identified asset for a period of time in exchange for consideration. Control is considered to exist when the lessee has the right to obtain substantially all of the economic benefits from the use of an identified asset as well as the right to direct the use of that asset. If a contract is considered to be a lease, the Company recognizes a lease liability based on the present value of the future lease payments, with an offsetting entry to recognize a right-of-use asset. Options to extend or terminate a lease are included when it is reasonably certain an option will be exercised. As a majority of the Company’s leases do not provide an implicit rate within the lease, an incremental borrowing rate is used which is based on information available at the commencement date.

The following table includes a summary of the Company's lease portfolio and Balance Sheet classification:


In millions (except lease term and discount rate)	Classification	September 30, 2020			December 31, 2019
Assets
Operating lease right-of-use assets (1)	Other noncurrent assets	$	439.5		$	469.4
Liabilities
Operating lease current	Other current liabilities	144.0			145.0
Operating lease noncurrent	Other noncurrent liabilities	301.2			329.9

Weighted average remaining lease term		4.2 years			4.3 years
Weighted average discount rate		3.4		%	3.6		%

(1) Per ASC 842, prepaid lease payments and lease incentives are recorded as part of the right-of-use asset. The net impact was $5.7 million and $5.5 million at September 30, 2020 and December 31, 2019, respectively.

The Company accounts for each separate lease component of a contract and its associated non-lease component as a single lease component. In addition, the Company utilizes a portfolio approach for the vehicle, information technology and equipment asset classes as the application of the lease model to the portfolio would not differ materially from the application of the lease model to the individual leases within the portfolio.

The following table includes lease costs and related cash flow information for the three and nine months ended September 30:


	Three months ended				Nine months ended
In millions	2020		2019		2020		2019
Operating lease expense	$	43.8	$	42.2	$	130.2	$	121.4
Variable lease expense	6.6		5.6		19.0		17.8
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	43.8		41.8		129.8		120.0
Right-of-use assets obtained in exchange for new operating lease liabilities	30.5		35.4		98.0		132.3

Operating lease expense is recognized on a straight-line basis over the lease term. In addition, the Company has certain leases that contain variable lease payments which are based on an index, a rate referenced in the lease or on the actual usage of the leased asset. These payments are not included in the right-to-use asset or lease liability and are expensed as incurred as variable lease expense.

Maturities of lease obligations were as follows:


In millions	September 30, 2020
Operating leases:
Remaining three months of 2020	$	42.9
2021	148.9
2022	111.3
2023	76.3
2024	46.1
After 2024	61.2
Total lease payments	$	486.7
Less: Interest	(41.5)
Present value of lease liabilities	$	445.2