Lease Commitments

6 Months Ended

Jun. 30, 2019

At June 30, 2019, Northern Trust was obligated under a number of non-cancelable operating leases, primarily for real estate. Certain leases contain rent escalation clauses based on market indices, renewal option clauses calling for increased rentals, and rental payments based on usage. There are no restrictions imposed by any lease agreement regarding the payment of dividends, debt financing or Northern Trust entering into further lease agreements.

The components of lease costs were as follows:

Table 50: Lease Cost Components



	Three Months Ended			Six Months Ended
(In Millions)	June 30, 2019
Operating Lease Cost	$	24.2		$	49.4
Variable Lease Cost	9.4			19.5
Sublease Income	(1.5		)	(3.0		)
Total Lease Cost	$	32.1		$	65.9

The following table presents a maturity analysis of lease liabilities as of June 30, 2019.

Table 51: Maturity of Lease Liabilities



(In Millions)	Maturity of Lease Liabilities
2019 (excluding the six months ended June 30, 2019)	$	50.9
2020	96.9
2021	81.3
2022	68.9
2023	57.5
Later Years	207.0
Total Lease Payments	562.5
Less: Imputed Interest	(70.5		)
Present Value of Lease Liabilities	$	492.0

As of June 30, 2019, Northern Trust has additional operating leases that have not yet commenced for office space which are expected to commence during 2020 and late 2021 with lease terms between 9 and 15 years.

The location and amount of lease right-of-use assets and lease liabilities recorded in the consolidated balance sheet as of June 30, 2019 are presented below.

Table 52: Location and Amount of Lease Assets and Liabilities



(In Millions)	Location of Lease Assets and Liabilities in the Balance Sheet	June 30, 2019
Assets
Operating Lease Right-of-Use Asset	Other Assets	$	436.5
Liabilities
Operating Lease Liability	Other Liabilities	$	492.0

The weighted-average remaining lease term and weighted-average discount rate applied to leases as of June 30, 2019 were as follows:

Table 53: Weighted-Average Remaining Lease Term and Discount Rate



	June 30, 2019
Operating Leases
Weighted-Average Remaining Lease Term	7.6 years
Weighted-Average Discount Rate	3.4%

The following table provides supplemental cash flow information related to leases for the three and six months ended June 30, 2019.

Table 54: Supplemental Cash Flow Information



	Three Months Ended		Six Months Ended
(In Millions)	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	22.0	$	50.3
Right-of-use assets obtained in exchange for new operating lease liabilities	2.2		3.2

Under the provisions of Accounting Standards Code (ASC) Topic 842, Northern Trust has elected not to restate comparative periods in the period of adoption. Therefore, disclosure with respect to minimum annual lease commitments as of December 31, 2018, for all non-cancelable operating leases with a term of one year or more is provided in the table below, as required by ASC Topic 840.

Table 55: Minimum Lease Payments as of December 31, 2018



(In Millions)	Future Minimum Lease Payments
2019	$	98.8
2020	97.8
2021	85.9
2022	77.2
2023	67.7
Later Years	335.7
Total Minimum Lease Payments	763.1
Less: Sublease Rentals	(23.4		)
Net Minimum Lease Payments	$	739.7

Operating lease rental expense, net of rental income, is recorded in occupancy expense and amounted to $79.0 million in 2018, $76.7 million in 2017, and $76.1 million in 2016.