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Note 10 - Leases

12 Months Ended

Dec. 31, 2021

Lessee, Operating Leases and Finance Leases [Text Block]

10.

Leases

The Company determines if an arrangement is or contains a lease at contract inception. The Company recognizes a right of use (“ROU”) asset and lease liability at the lease commencement date based on the present value of the lease payments over the lease term. As the Company’s leases generally do not provide an implicit rate, the incremental borrowing rate is used to determine the present value of lease payments. The incremental borrowing rate is a collateralized rate determined based on the lease term, the Company’s credit rating, and other market information available at the commencement date. The ROU asset also includes any lease payments made prior to the commencement date and is reduced by any lease incentives. The lease term may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term, while lease expense for finance leases is recognized as depreciation and interest expense using the effective interest method. The Company’s variable lease expense generally consists of property tax and insurance payments that are variable in nature, however, these amounts are immaterial to the consolidated financial statements and are therefore not separately reported.

The Company has lease agreements with both lease and nonlease components, which it elected to account for as a single lease component. However, the Company did not elect to apply the recognition exception for short-term leases. The Company is applying these elections to all asset classes.

The Company leases certain manufacturing facilities, distribution centers, office space, warehouses, automobiles, machinery and computer equipment globally under both finance and operating leases. The Company’s leases have remaining lease terms of up to 20 years, of which certain leases, primarily within the buildings and improvements asset class, include options to extend the leases for up to 10 additional years. Further, the Company leases certain buildings from a noncontrolling interest holder, which the Company has determined to be arm's length transactions.

The Company is a lessor of certain of its C&I mobile products as part of a rental fleet, as well as two of its buildings that it leases to third parties. The lease income related to these arrangements is not material to the consolidated financial statements.

The Company records its operating lease cost and amortization of finance lease ROU assets within cost of goods sold or operating expenses in the consolidated statements of comprehensive income depending on the cost center of the underlying asset. The Company records its finance lease interest cost within interest expense in the consolidated statements of comprehensive income.

The components of total lease cost consist of the following:

	Year Ended December 31,
	2021		2020		2019

Operating lease cost	$	22,432	$	18,648	$	9,647
Finance lease cost:
Amortization of ROU assets		3,187		2,587		2,531
Interest on lease liabilities		2,021		2,237		2,227
Total lease cost	$	27,640	$	23,472	$	14,405

As of January 1, 2019, the date of the adoption of ASU 2016-02, the Company recognized ROU assets and lease liabilities related to operating leases of $42,024 and $42,056, respectively, and there was no cumulative effect adjustment made to retained earnings. Supplemental balance sheet information related to the Company’s leases is as follows:

	*December 31, 2021*			*December 31, 2020*
Operating Leases
Operating lease ROU assets (1)	$	101,266		$	62,030

Operating lease liabilities - current (2)	$	23,549		$	17,192
Operating lease liabilities - noncurrent (3)		80,370			46,558
Total operating lease liabilities	$	103,919		$	63,750

Finance Leases
Finance lease ROU assets, gross	$	47,119		$	34,929
Accumulated depreciation - finance lease ROU assets		(10,343	)		(7,660	)
Finance lease ROU assets, net (4)	$	36,776		$	27,269

Finance lease liabilities - current (5)	$	4,209		$	2,311
Finance lease liabilities - noncurrent (6)		34,966			25,060
Total finance lease liabilities	$	39,175		$	27,371

(1)

Recorded in the operating lease and other assets line within the consolidated balance sheets

(2)

Recorded in the other accrued liabilities line within the consolidated balance sheets

(3)

Recorded in the operating lease and other long-term liabilities line within the consolidated balance sheets

(4)

Recorded in the property and equipment, net line within the consolidated balance sheets

(5)

Recorded in the current portion of long-term borrowings and finance lease obligations line within the consolidated balance sheets

(6)

Recorded in the long-term borrowings and finance lease obligations line within the consolidated balance sheets

Supplemental cash flow information related to the Company’s leases is as follows:

	Year Ended December 31,
	2021		2020		2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	21,250	$	18,412	$	10,125
Operating cash flows from finance leases		1,972		1,871		1,864
Financing cash flows from finance leases		4,679		3,957		3,237

ROU assets obtained in exchange for lease liabilities
Operating leases		55,057		41,678		4,021
Finance leases		4,026		3,737		8,797

Weighted average remaining lease term and discount rate information related to the Company’s leases as of December 31, 2021 and 2020 is as follows:

	*December 31, 2021*			*December 31, 2020*
Weighted average remaining lease term (in years)
Operating Leases		5.21			4.92
Finance Leases		11.94			12.90

Weighted average discount rate
Operating Leases		3.58	%		4.48	%
Finance Leases		7.43	%		7.66	%

The maturities of the Company’s lease liabilities as of December 31, 2021 are as follows:

As of December 31, 2021
	*Finance Leases*			*Operating Leases*
2022	$	7,085		$	26,615
2023		6,014			26,220
2024		5,835			25,062
2025		5,432			15,751
2026		5,091			6,469
After 2026		30,646			15,047
Total minimum lease payments		60,103			115,164
Interest component		(20,928	)		(11,245	)
Present value of minimum lease payments	$	39,175		$	103,919