Leases (Notes)

9 Months Ended

Jun. 30, 2020

Leases of Lessee Disclosure [Text Block]

Note 2 – Leases

The Company currently leases office space under non-cancelable operating leases with third parties as of June 30, 2020. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheet and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Certain office space leases include one or more options to renew, with renewal terms that can extend the lease term from three to ten years, and some of which include the Company’s option to terminate the leases within two years of the balance sheet date. The Company has not considered any renewal options in the lease terms of its office space leases as the Company does not believe it is reasonably certain that any of the rights will be exercised. In determining the term of certain office space leases, the Company has not included the periods covered by an option to terminate if the Company believes it is reasonably certain to do so.

As the office space leases do not provide an implicit rate, the Company applies a collateralized incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The Company applied a collateralized incremental borrowing rate as of October 1, 2019 for operating leases that commenced prior to that date. For office space leases executed by subsidiaries, including foreign subsidiaries, the Company has applied the incremental borrowing rate of the parent company. The Company believes this is a reasonable approach as its subsidiaries either do not have their own treasury functions or the credit facilities available to its subsidiaries do not permit the financing of right-of-use assets. Additionally, in certain instances, the parent company provides a guarantee of the lease payments to the lessor under office space leases executed by its subsidiaries. As such, the Company believes that the pricing of subsidiary leases is more significantly influenced by the credit standing of the parent company than that of its subsidiaries.

Certain office space leases contain variable lease payments related to fair market rent adjustments and local inflation index measures. The Company estimates variable lease payments based upon information available at the lease commencement date in determining the present value of lease payments. The Company applied information available as of October 1, 2019 for operating leases that commenced prior to that date.

The Company has elected to not separate lease components from nonlease components for all office space leases. The Company does not have any financing leases as of June 30, 2020. Operating lease expense is recognized on a straight-line basis over the lease term and is reported within ‘occupancy and equipment rental’ on the condensed consolidated statement of income.

As of June 30, 2020, the Company recorded operating lease right-of-use assets and operating lease liabilities of $75.0 million and $87.4 million, respectively.

The following table presents operating lease costs and other related information as of and for the three and nine months ended June 30, 2020 (in millions, except as stated):



	Three Months Ended June 30,		Nine Months Ended June 30,
	2020		2020
Operating lease costs ⁽¹⁾	$	4.1	$	11.1

Supplemental cash flow information and non-cash activity:
Cash paid for amounts included in the measurement of operating lease liabilities	$	2.9	$	8.4
Right-of-use assets obtained in exchange for operating lease liabilities	$	46.0	$	81.0

Lease term and discount rate information:
Weighted average remaining lease term (years)			11.64
Weighted average discount rate			3.9		%

⁽¹⁾ Includes short-term leases and variable lease costs, which are immaterial.

The maturities of the lease liabilities are as follows as of June 30, 2020 (in millions):



Remainder of 2020	$	3.8
2021	10.9
2022	11.1
2023	9.5
2024	7.7
After 2024	67.3
Total lease payments	110.3
Less: interest	22.9
Present value of lease liabilities	$	87.4

In accordance with the disclosure requirements for the adoption of Topic 842, the Company is presenting its operating lease commitment table as of September 30, 2019, which was previously disclosed in Note 12 of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2019 (in millions):



2020	$	11.2
2021	9.9
2022	7.5
2023	6.2
2024	5.8
Thereafter	2.6
	$	43.2