Leases

6 Months Ended

Jun. 30, 2020

12.

Leases

The Company leases certain manufacturing facilities, warehouses, office space, railcars and equipment. Leases with an initial term of twelve months or less are not recorded on the condensed consolidated balance sheet. All recorded leases are classified as operating leases and lease expense is recognized on a straight-line basis over the lease term. For leases beginning in 2019, lease components (base rental costs) are accounted for separately from the nonlease components (e.g., common-area maintenance costs). For leases that do not provide an implicit rate, the Company uses its estimated secured incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

A summary of the Company’s lease information is as follows:

								June 30,				December 31,
			Classification					2020				2019
Assets
Right of use assets			Other Assets					$	156.9			$	150.7

Liabilities
Current lease liabilities			Accounts Payable and Accrued Expenses					$	17.9			$	16.4
Long-term lease liabilities			Deferred and Other Long-term Liabilities						149.3				144.0
Total lease liabilities								$	167.2			$	160.4

Other information
Weighted-average remaining lease term (years)									10.9				11.1
Weighted-average discount rate									4.8		%		4.9	%
	Three Months			Three Months		Six Months				Six Months
	Ended			Ended		Ended				Ended
	June 30, 2020			June 30, 2019		June 30, 2020				June 30, 2019
Statement of Income
Lease cost⁽¹⁾	$	6.8		$	6.0	$	13.4			$	11.6

Other information
Leased assets obtained in exchange for new lease liabilities⁽²⁾	$	6.3		$	55.8	$	16.5			$	57.1
Cash paid for amounts included in the measurement of lease liabilities	$	6.4		$	6.1	$	12.6			$	12.1

⁽¹⁾

Lease expense is included in cost of sales or SG&A expenses based on the nature of the leased item. Short-term lease expense is excluded from this amount and is not material. The Company also has certain variable leases which are not material. The noncash component of lease expense for the first six months of 2020 and 2019 was $9.7 and $8.6, respectively, and is included in the Amortization caption in the condensed consolidated statement of cash flows.

⁽²⁾

In March 2020, the Company approved a capital project to purchase additional machinery and equipment at one of its leased manufacturing facilities. This led to a lease modification to include a renewal option that would extend the lease for an additional five years through 2029. The modification resulted in an increase to the Company’s right of use assets and corresponding lease liabilities of approximately $7.3 recorded in the first quarter of 2020. In June 2019, the Company amended an operating lease for one of its manufacturing facilities to extend the lease an additional ten years through 2033. The amendment resulted in an increase to the Company’s right of use assets and corresponding lease liabilities of approximately $53.0 recorded in the second quarter of 2019.

The Company’s minimum annual rentals including reasonably assured renewal options under lease agreements are as follows:

	Operating
	Leases
2020	$	11.9
2021		25.6
2022		23.3
2023		17.9
2024		16.5
2025 and thereafter		121.7
Total future minimum lease commitments		216.9
Less: Imputed Interest		(49.7	)
Present value of lease liabilities	$	167.2