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Leases | 3 Months Ended
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Mar. 31, 2020
Leases [Abstract] |
Leases |
7. | LEASES
The Company adopted ASU No. 2016-02, Leases (Topic 842), on January 1, 2019. This new accounting standard requires a dual approach for lessee accounting whereby a lessee accounts for lease arrangements as either finance leases or operating leases. The lease classification affects the pattern of expense recognition in the income statement. The most significant impact of adopting ASU No. 2016-02, Leases (Topic 842) is that a lessee is now required to recognize a “right-of-use” (ROU) asset and corresponding lease liability for operating lease agreements. ROU assets represent a right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Operating leases are expensed on a straight-line basis over the life of the lease beginning on the date the Company takes possession of the property. The Company’s operating leases are primarily comprised of railcars, real estate, storage tanks, autos, trailers and manufacturing/office equipment. Railcars and real estate comprise approximately 50 percent and 38 percent, respectively, of the Company’s consolidated ROU asset balance. With the exception of real estate, typical lease terms range from one to ten years. Real estate lease terms typically range from one to fifty years. The Company’s two principal real estate leases relate to land leases in the Philippines and Singapore. As of March 31, 2020, the Company had additional leases, primarily for equipment and storage tanks, that have not commenced of approximately $731,000. These leases will commence in the second quarter of 2020 with lease terms ranging from three to five years. Variability associated with the Company’s lease obligations typically relates to: (i) additional charges based on usage (i.e., railcar mileage in excess of a specified amount) and, (ii) periodic increases associated with Consumer Price Index (CPI) changes (i.e., land rental payments). Appropriate CPI at the inception of a lease is reflected in the Company’s lease liability balances whereas variability based on usage is typically excluded from lease liability amounts. Some of the Company’s leases include options to extend the lease term but these are typically not recognized as part of the ROU asset or lease liability at inception unless it is reasonably certain the renewal option will be exercised. Determining whether a renewal option is reasonably certain to be exercised requires judgment based on the existing facts and circumstances as well as expectations about future business needs. Renewal options are typically re-assessed within one year or less prior to lease termination when the Company is able to more accurately forecast future business needs. Some of the Company’s lease contracts include options to terminate leases early but these are typically not considered unless it is reasonably certain the early termination option will be exercised. The Company’s leases do not typically carry any residual value guarantees and typically payment is not considered probable when such guarantees are included in the contract. As most of the Company’s leases do not provide an implicit borrowing rate, the Company uses its incremental borrowing rate (IBR) based on the information available at the commencement date in determining the present value of lease payments. IBRs were specifically determined for the United States, the Philippines, Singapore, Brazil and China, typically for five-year increments. The U.S. IBR was used for all other countries as the leases in these countries are not material. The total value of leases that reside in the five countries identified above represents approximately 97 percent of the Company’s consolidated ROU asset balance.
(In thousands) |  | March 31, 2020 |
Lease Cost |  |  |  |
Operating lease cost |  | $ | 2,721 |
Short-term lease cost |  |  | 1,179 |
Variable lease cost |  |  | 298 |
Total lease cost |  | $ | 4,198 |
Other Information |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flow from operating leases |  | $ | 2,747 |
Right-of-use assets obtained in exchange for new operating lease liabilities |  |  | 666 |
(In thousands) |  |  |  |
Undiscounted Cash Flows: |  |  |  |
2020 (excluding the three months ended March 31, 2020) |  | $ | 7,484 |
2021 |  |  | 7,632 |
2022 |  |  | 6,421 |
2023 |  |  | 5,118 |
2024 |  |  | 3,060 |
Subsequent to 2024 |  |  | 16,437 |
Total Undiscounted Cash Flows |  | $ | 46,152 |
Less: Imputed interest |  |  | (9,888 | )
Present value |  | $ | 36,264 |
Current operating lease liabilities (1) |  |  | 8,304 |
Non-current operating lease liabilities |  |  | 27,960 |
Total lease liabilities |  | $ | 36,264 |
| (1) | This item is included in Accrued liabilities line on the Company’s Condensed Consolidated Balance Sheet.
Weighted-average remaining lease term-operating leases |  | 9 years |
Weighted-average discount rate-operating leases |  |  | 4.3 | %

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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