We are subject to laws and regulations relating to the protection of the environment. We provide for expenses associated with environmental remediation obligations when such amounts are probable and can be reasonably estimated. Such accruals are adjusted as new information develops or circumstances change and are generally not discounted. We have been designated as a potentially responsible party or have received claims in four active federal and state Superfund and other multiparty remediation sites. In addition to these sites, we may also have the obligation to remediate six other previously and currently owned facilities. At the Superfund sites, the Comprehensive Environmental Response, Compensation and Liability Act provides that our liability could be joint and several, meaning that we could be required to pay an amount in excess of our proportionate share of the remediation costs.

Our understanding of the financial strength of other potentially responsible parties at the multiparty sites and of other liable parties at the previously owned facilities has been considered, where appropriate, in the determination of our estimated liability. We believe that our recorded reserves, recorded in Accrued liabilities and other and Other noncurrent liabilities, are adequate to cover our share of the potential costs of remediation at each of the multiparty sites and the previously and currently owned facilities. It is not possible to quantify with certainty the potential impact of actions regarding environmental matters, particularly remediation and other compliance efforts that we may undertake in the future. However, in our opinion, compliance with the present environmental protection laws, before taking into account estimated recoveries from third parties, will not have a material effect on our consolidated results of operations, financial position or cash flows.

In April 2019, we received a subpoena from the SEC related to previous business dealings with the Brazilian Ministry of Education. The SEC and Department of Justice (“DOJ”) are investigating the matter, and we are cooperating as they conduct their investigations.

In addition, the Brazil authorities are also investigating the matter and in June 2021 the Company learned that Brazil's Comptroller General of the Union ("CGU") issued an administrative enforcement notice with charges related to previous business dealings between an administrative body of the Brazilian Ministry of Education and the Company's former Brazilian subsidiary, RR Donnelley Editora e Gráfica (“RRD-Brazil”). The administrative enforcement notice forms the basis of an administrative proceeding against the former Brazilian subsidiary (which filed for bankruptcy liquidation in March 2019) and its immediate parent, RR Donnelley Holdings B.V. The Company also is named as a party in this proceeding. The administrative enforcement notice alleges that former employees of RRD-Brazil engaged in anticompetitive and other business misconduct in connection with services provided to the Ministry of Education. We are pursuing our defenses in this matter and analyzing potential courses of action with local legal counsel.

From time to time, our clients and others file voluntary petitions for reorganization under United States bankruptcy laws. In such cases, certain pre-petition payments received by us from these parties could be considered preference items and subject to return.

We also regularly investigate matters reported to our whistleblower hotline and are currently investigating matters in certain foreign locations. In addition, we may be party to litigation arising in the ordinary course of business.

While these matters are subject to inherent uncertainties, we believe that the final resolution of these preference items, investigations, and litigation will not have a material effect on our consolidated results of operations, financial position or cash flows.

We determine if an arrangement is a lease at inception. Operating leases are recorded in Operating lease assets, Short-term operating lease liabilities and Long-term operating lease liabilities on the Consolidated Balance Sheets. Operating lease 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 assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date. Operating lease assets also include any lease payments made and are reduced by any lease incentives received. Our lease terms may include options to extend or not terminate the lease when we are reasonably certain that we will exercise any such options. Leases with an expected term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized on a straight-line basis over the expected lease term.

Our most significant leases are real estate leases for plants, warehouses, storage facilities, offices and other facilities. For real estate leases, we elected the practical expedient permitted under Topic 842 to combine lease and non-lease components. As a result, non-lease components, such as common area maintenance charges, are accounted for as a single lease element. Our remaining operating leases are primarily comprised of leases of machinery and technology equipment. Finance leases are not material.

Certain of our operating lease agreements include variable payments that are passed-through by the landlord, such as insurance, taxes and common area maintenance, payments based on the usage of the asset and rental payments adjusted periodically for inflation. Pass-through charges, payments due to change in usage of the asset and payments due to changes in inflation are included within variable rent expense.

Our lease agreements do not contain material residual value guarantees, restrictions or covenants.

The components of lease expense for the year ended December 31, 2021 and 2020 were as follows:

	Years Ended December 31,
	2021			2020
Operating lease cost	$	84.8		$	89.3
Variable lease cost		31.9			32.7
Sublease income		(1.6	)		(1.7	)
Total lease cost	$	115.1		$	120.3

Short-term lease cost is not material for the year ended December 31, 2021 and 2020 respectively.

Supplemental cash flow information related to leases for the year ended December 31, 2021 and 2020 was as follows:

	Years Ended December 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows	$	79.2	$	81.8
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	62.5	$	109.0

As of December 31, 2021, the future lease payments under operating leases were as follows:

	Twelve Months Ended
	2021
Year Ended December 31	Operating Leases
2022	$	72.5
2023		60.2
2024		40.4
2025		28.7
2026		20.9
2027 and thereafter		37.8
Total lease payments		260.5
Less: Amount representing interest		39.8
Present value of lease obligation	$	220.7

Weighted average remaining lease term	5.1 years
Weighted average discount rate		6.6	%

Contingencies related to LSC Communication, Inc. and Subsidiaries (“LSC”) and Donnelley Financial Solutions, Inc. (“Donnelley Financial”)

As a result of the spinoff of LSC Communications, Inc. and Subsidiaries (“LSC”) and Donnelley Financial Solutions, Inc. (“Donnelley Financial”) on October 1, 2016, we are contingently liable for obligations under various operating leases for office, warehouse and manufacturing locations of LSC and Donnelley Financial. In the event that LSC or Donnelley Financial, or any successor lessee, fail to make lease payments or fail to pay other obligations under these lease agreements, we may be required to satisfy those obligations to the lessor. Our exposure to these potential contingent liabilities decreases over time as LSC and Donnelley Financial pay monthly lease obligations and as the leases expire. As of December 31, 2021 these potential contingent obligations were $29.0 million and $1.2 million for LSC and Donnelley Financial, respectively.

On April 13, 2020, LSC announced that it, along with most of its U.S. subsidiaries, voluntarily filed for business reorganization under Chapter 11 of the U.S. Bankruptcy Code. In September 2020, a third-party (the “Buyer”) purchased the assets and assumed certain obligations of LSC. Although the Buyer assumed the majority of LSC’s existing leases, we continue to be contingently liable for these leases until their termination or renewal.

In May and June 2020 we became aware that LSC failed to make required monthly contributions to certain of their multiemployer pension plans (“MEPP”). In accordance with laws and regulations governing multiemployer pension plans, we and Donnelley Financial, as former members of the control group, are contingently liable on a joint and several liability basis for LSC’s MEPP obligations. During the third quarter of 2020, we commenced negotiations with Donnelley Financial concerning how the obligation will be apportioned between the parties. As such, the parties agreed to enter into mediation, and then arbitration, after an agreement was not reached through the mediation process. The arbitration proceedings were concluded in the fourth quarter of 2021, with two-thirds of the LSC MEPP liabilities assigned to us and the remaining one-third assigned to Donnelley Financial.

During the year ended December 31, 2021, we recorded a $9.1 million expense within restructuring expense primarily representing the change in estimate resulting from the conclusion of the arbitration proceedings.

In 2021, we, and Donnelley Financial, commenced negotiations with each of the three MEPPs to settle the MEPP liabilities and, we successfully negotiated and executed settlements with two of the three plans. As of December 31, 2021 our remaining liability related to the unsettled plan was $15.6 million. Scheduled payments to the remaining plan are scheduled to conclude on December 1, 2033.

Cash payments made by us during the twelve months ended December 31, 2021 for the LSC MEPP and other obligations were $31.1 million, including $18.4 million related to the settlement of the two MEPP plans and $7.1 million paid to Donnelley Financial as a result of the arbitration decision.

In December 2021, we identified a systems intrusion in our technical environment. In response, we promptly implemented a series of containment measures to address the situation, including activating our incident response protocols, shutting down servers and systems and commencing a forensic investigation. We also engaged cybersecurity experts to examine the incident and oversee the implementation of appropriate remedial actions. However, we became aware in mid-January 2022 that certain of our corporate data, the nature of which is continuing to be actively examined, was accessed and exfiltrated. To the extent any confidential client data is found in this data, the Company has and will continue to inform impacted clients within a reasonable time. We also notified and continue to work with appropriate law enforcement authorities. As a precautionary measure, we isolated a portion of our technical environment in an effort to contain the intrusion.

At this time, we have restored the affected systems and returned to normal levels of operations, and believe that the steps taken to isolate and remediate the identified threat have been effective. While we do not currently believe that this security event has or will result in a material adverse impact to the Company, data review and assessment related to this event remain ongoing, and we may determine in the future that such event had or will have a material adverse impact on our business, results of operations, financial condition or cash flows.