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Leases
 12 Months Ended
Dec. 31, 2021
Leases [Abstract]  
Leases LEASES
In January 1, 2019, we adopted Accounting Standards Update ("ASU") 2016-02, "Leases," which, together with amendments comprising ASC 842, requires lessees to identify arrangements that should be accounted for as leases and generally recognized, for operating and finance leases with terms exceeding twelve months, a right-of-use asset (or "ROU") and lease liability on the balance sheet. In addition to this main provision, this standard included a number of additional changes to lease accounting. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either the adoption date or the beginning of the earliest comparative period presented in the financial statements as its date of initial application. We used the adoption date as our date of initial application. As a result, historical financial information was not updated, and the disclosures required under the new standard are not provided as of and for periods before January 1, 2019. Adoption of ASU 2016-02 at January 1, 2019 resulted in a one-time loss to retained earnings of $0.7 million on our consolidated balance sheet and consolidated statement of changes in shareholders' equity related to the net difference of derecognition of existing assets and debt obligations associated with our leases historically accounted for as sale-leaseback financings, for which the ASU requires accounting for as a lease at the date of initial application.
We have operating and finance leases for certain of our technology centers, warehouses, office spaces, land, and equipment. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The lease term is determined to be the non-cancelable period including any lessee renewal options that are considered to be reasonably certain of exercise. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company used judgment to determine an appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term in a similar economic environment. Lease expense for fixed lease payments on operating leases is recognized over the expected term on a straight-line basis, while lease expense for fixed lease payments on finance leases is recognized using the effective interest method.
Certain of our lease agreements include rental payments based on an index or adjusted periodically for inflation. The changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. In addition, variable lease expense also includes elements of a contract that is based on usage during the term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Supplemental balance sheet information related to leases is summarized as follows:
December 31,
20212020
AssetsClassification
Operating lease assets, net
Other assets (1)
$104.2 $101.3 
Finance lease assets, net
Property, plant and equipment, net (2)
60.5 63.7 
Total leased assets$164.7 $165.0 
Liabilities
Current
Operating lease liabilitiesOther accrued liabilities$27.2 $28.8 
Finance lease liabilitiesCurrent portion of borrowings4.1 3.2 
Noncurrent
Operating lease liabilitiesOther liabilities79.3 75.6 
Finance lease liabilitiesLong-term borrowings58.4 60.8 
Total lease liabilities$169.0 $168.4 
(1)     Operating lease assets are recorded net of accumulated amortization of $50.3 million and $35.4 million for the years ended December 31, 2021 and 2020, respectively.
(2)     Finance lease assets are recorded net of accumulated amortization of $13.3 million and $8.9 million for the years ended December 31, 2021 and 2020, respectively.
Components of lease expense are summarized as follows:
Year Ended December 31,
202120202019
Finance lease cost
Amortization of right-of-use assets$4.4 $4.2 $4.1 
Interest on lease liabilities3.3 3.4 3.5 
Operating lease cost35.6 35.7 36.5 
Variable lease cost3.3 3.2 2.9 
Short-term lease cost0.5 0.4 1.2 
Net lease cost$47.1 $46.9 $48.2 
Supplemental cash flow information related to leases is summarized as follows:
Year Ended December 31,
202120202019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$36.4 $36.0 $36.8 
Operating cash flows for finance leases$3.3 $3.4 $3.5 
Financing cash flows for finance leases$2.6 $2.2 $1.9 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$30.1 $21.0 $23.3 
Finance leases$0.7 $0.3 $0.5 
Lease term and discount rate information are summarized as follows:
Year Ended December 31,
20212020
Weighted-average remaining lease term (years)
Operating leases6.25.2
Finance leases15.515.8
Weighted-average discount rate
Operating leases3.7 %4.1 %
Finance leases5.2 %5.2 %
Maturities of lease liabilities as of December 31, 2021 are as follows:
Operating LeasesFinance Leases
Year
2022$30.5 $7.3 
202324.4 4.9 
202417.3 6.0 
202512.8 6.0 
20269.3 6.1 
Thereafter25.5 72.0 
Total lease payments119.8 102.3 
Less: imputed interest13.3 39.8 
Present value of lease liabilities$106.5 $62.5 
Leases LEASES
In January 1, 2019, we adopted Accounting Standards Update ("ASU") 2016-02, "Leases," which, together with amendments comprising ASC 842, requires lessees to identify arrangements that should be accounted for as leases and generally recognized, for operating and finance leases with terms exceeding twelve months, a right-of-use asset (or "ROU") and lease liability on the balance sheet. In addition to this main provision, this standard included a number of additional changes to lease accounting. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either the adoption date or the beginning of the earliest comparative period presented in the financial statements as its date of initial application. We used the adoption date as our date of initial application. As a result, historical financial information was not updated, and the disclosures required under the new standard are not provided as of and for periods before January 1, 2019. Adoption of ASU 2016-02 at January 1, 2019 resulted in a one-time loss to retained earnings of $0.7 million on our consolidated balance sheet and consolidated statement of changes in shareholders' equity related to the net difference of derecognition of existing assets and debt obligations associated with our leases historically accounted for as sale-leaseback financings, for which the ASU requires accounting for as a lease at the date of initial application.
We have operating and finance leases for certain of our technology centers, warehouses, office spaces, land, and equipment. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The lease term is determined to be the non-cancelable period including any lessee renewal options that are considered to be reasonably certain of exercise. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company used judgment to determine an appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term in a similar economic environment. Lease expense for fixed lease payments on operating leases is recognized over the expected term on a straight-line basis, while lease expense for fixed lease payments on finance leases is recognized using the effective interest method.
Certain of our lease agreements include rental payments based on an index or adjusted periodically for inflation. The changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. In addition, variable lease expense also includes elements of a contract that is based on usage during the term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Supplemental balance sheet information related to leases is summarized as follows:
December 31,
20212020
AssetsClassification
Operating lease assets, net
Other assets (1)
$104.2 $101.3 
Finance lease assets, net
Property, plant and equipment, net (2)
60.5 63.7 
Total leased assets$164.7 $165.0 
Liabilities
Current
Operating lease liabilitiesOther accrued liabilities$27.2 $28.8 
Finance lease liabilitiesCurrent portion of borrowings4.1 3.2 
Noncurrent
Operating lease liabilitiesOther liabilities79.3 75.6 
Finance lease liabilitiesLong-term borrowings58.4 60.8 
Total lease liabilities$169.0 $168.4 
(1)     Operating lease assets are recorded net of accumulated amortization of $50.3 million and $35.4 million for the years ended December 31, 2021 and 2020, respectively.
(2)     Finance lease assets are recorded net of accumulated amortization of $13.3 million and $8.9 million for the years ended December 31, 2021 and 2020, respectively.
Components of lease expense are summarized as follows:
Year Ended December 31,
202120202019
Finance lease cost
Amortization of right-of-use assets$4.4 $4.2 $4.1 
Interest on lease liabilities3.3 3.4 3.5 
Operating lease cost35.6 35.7 36.5 
Variable lease cost3.3 3.2 2.9 
Short-term lease cost0.5 0.4 1.2 
Net lease cost$47.1 $46.9 $48.2 
Supplemental cash flow information related to leases is summarized as follows:
Year Ended December 31,
202120202019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$36.4 $36.0 $36.8 
Operating cash flows for finance leases$3.3 $3.4 $3.5 
Financing cash flows for finance leases$2.6 $2.2 $1.9 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$30.1 $21.0 $23.3 
Finance leases$0.7 $0.3 $0.5 
Lease term and discount rate information are summarized as follows:
Year Ended December 31,
20212020
Weighted-average remaining lease term (years)
Operating leases6.25.2
Finance leases15.515.8
Weighted-average discount rate
Operating leases3.7 %4.1 %
Finance leases5.2 %5.2 %
Maturities of lease liabilities as of December 31, 2021 are as follows:
Operating LeasesFinance Leases
Year
2022$30.5 $7.3 
202324.4 4.9 
202417.3 6.0 
202512.8 6.0 
20269.3 6.1 
Thereafter25.5 72.0 
Total lease payments119.8 102.3 
Less: imputed interest13.3 39.8 
Present value of lease liabilities$106.5 $62.5