RENTALS AND LEASES

12 Months Ended

Dec. 31, 2020

RENTALS AND LEASES

RENTAL AND LEASES

14. RENTALS AND LEASES

Lessee

The Company leases sales and administrative office facilities, distribution centers, research and manufacturing facilities, as well as vehicles and other equipment under operating leases. Certain of the Company’s lease arrangements are finance leases, which are immaterial individually and in the aggregate.

The Company’s operating lease cost was as follows:

(millions)	2020		2019
Operating lease cost*		$183.8		$179.8

*Includes immaterial short-term and variable lease costs

Future maturity of operating lease liabilities as of December 31, 2020 is as follows:

(millions)
2021	142
2022	110
2023	73
2024	44
2024	29
Thereafter	76
Total lease payments	474
Less: imputed interest	49
Present value of lease liabilities	$ 425

Total rental expense under the Company’s operating leases was $172 million in 2018.

The Company’s operating leases term and discount rate were as follows:

	December 31		December 31
	2020		2019
Weighted-average remaining lease terms (years)		5.52		5.83
Weighted-average discount rate		3.72%		4.00%

The Company’s other lease information was as follows:

	December 31		December 31
(millions)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		$164.2		$159.0
Leased assets obtained in exchange for new operating lease liabilities		60.4		116.5

Lessor

The Company leases warewashing and water treatment equipment to customers under operating leases.

Gross assets under operating leases recorded in Property, plant and equipment, net is $1,190.3 million and $1,091.7 million, and related accumulated depreciation is $646.1 million and $606.7 million, as of December 31, 2020 and 2019, respectively.

The Company’s operating lease revenue was as follows:

(millions)	2020		2019
Operating lease revenue*		$356.3		$412.7

*Includes immaterial variable lease revenue

Revenue from operating leases for existing contracts as of December 31, 2020 is as follows:

(millions)
2021	331
2022	253
2023	191
2024	122
2024	49
Thereafter	14
Total lease revenue	$ 960

The Company mitigates the risk of residual value subsequent to the lease term by redeploying assets. As such, the Company expects to receive revenue from the operating lease assets through the remaining useful life and therefore subsequent to the initial contract termination date.