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Commitments
 12 Months Ended
Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments

 

(12)Commitments

 

Leases

 

The Company leases its offices, warehouses and vehicles, substantially all of which are classified as operating leases. The Company currently has no material financing leases. The Company determines if an arrangement is a lease at inception. Operating lease assets and obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term.

 

In determining lease asset value, the Company considers fixed or variable payment terms, prepayments, incentives, and options to extend or terminate, depending on the lease. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. The Company generally uses its incremental borrowing rate based on information available at the lease commencement date for the location in which the lease is held in determining the present value of lease payments.

 

As of December 31, 2023, the weighted average remaining lease term was 5.1 years and the weighted average discount rate used to determine the operating lease liability was 3.0%. Rental expense related to operating leases was $5.8 million, $5.6 million, and $8.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. Operating lease payments included in operating cash flows totaled $5.3 million, $4.8 million, and $7.5 million in 2023, 2022, and 2021, respectively. Noncash additions to operating lease assets in totaled $4.8 million, $0.3 million, and $12.2 million in 2023, 2022, and 2021, respectively.

 

Maturities of lease liabilities subsequent to December 31, 2023 are as follows:

 

(In thousands)

 

2024  $6,370 
2025   6,031 
2026   5,276 
2027   5,389 
2028   5,372 
Thereafter   3,529 
    31,967 
Less imputed interest (based on 3.0% weighted-average discount rate)   (1,499)
   $30,468 
      

License Agreements

 

The Company is party to a number of licenses and other agreements for the use of trademarks and rights in connection with the manufacture and sale of its products expiring at various dates through 2039. In connection with certain of these license agreements, the Company is subject to minimum annual advertising commitments, minimum annual royalties and other commitments as follows:

 

(In thousands)

 

2024  $288,005 
2025   280,721 
2026   251,718 
2027   233,945 
2028   243,286 
Thereafter   1,055,918 
   $2,353,593 

 

Future advertising commitments are estimated based on planned future sales for the license terms that were in effect at December 31, 2023, without consideration for potential renewal periods. The above figures do not reflect the fact that our distributors share our advertising obligations. Royalty expense included in selling, general, and administrative expenses, aggregated $103.8 million, $87.0 million and $68.9 million, in 2023, 2022 and 2021, respectively, and represented 7.9%, 8.0% and 7.8% of net sales for the years ended December 31, 2023, 2022 and 2021, respectively.