Leases

9 Months Ended

Sep. 30, 2019

Note 3. Leases

Significant Accounting Policy

We determine if an arrangement is a lease at inception. For operating leases, we include and report operating lease right-of-use (“ROU”) assets, sundry payables and accrued expenses, and noncurrent operating lease liabilities on our consolidated balance sheet for leases with a term longer than twelve months. Finance leases are reported on our consolidated balance sheets in property, plant and equipment, current portion of other debt, and long-term debt.

Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of the total lease payments over the lease term. Our ROU assets represent the right to use an underlying leased asset over the existing lease term, and the corresponding lease liabilities represent our obligation to make lease payments arising from the lease agreement. As most of our leases do not provide for an implicit rate, we use our secured incremental borrowing rate based on the information available when determining the present value of our lease payments. Our lease terms may include options to terminate, or extend, our lease when it is reasonably certain that we will execute the option. Lease agreements may contain lease and non-lease components, which are generally accounted for separately. Operating lease expense is recognized on a straight-line basis over the lease term.

Quantitative Lease Disclosures

We have operating and finance leases for our manufacturing facilities, warehouses, office space, automobiles, and certain equipment. Our leases have remaining lease terms of up to ten years, some of which may include one or more five-year renewal options. We have included the five-year renewal option for one of our leases in our operating lease payments as we concluded that it is reasonably certain that we will exercise the option. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Operating lease expense is recognized on a straight-line basis over the lease term. Finance leases are not material.

The following tables provide quantitative disclosures related to our operating leases (in thousands):

Balance Sheet Information	September 30, 2019
Assets
Operating lease right-of-use assets	$	34,055

Liabilities
Sundry payables and accrued expenses	$	7,899
Noncurrent operating lease liabilities		27,214
Total operating lease liabilities	$	35,113

Weighted Average Remaining Lease Term
Operating leases	6 Years

Weighted Average Discount Rate
Operating leases		3.8	%

Lease Expense	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019

Operating Lease Expense (a)	$	2,199	$	6,633

(a)

Excludes expenses of approximately $1.9 million related to non-lease components such as maintenance, property taxes, etc., and operating lease expense for leases with an initial term of 12 months or less, which is not material.

	Nine Months Ended September 30, 2019
Supplemental Cash Flow Information
Cash paid for the amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,490
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	856

Minimum Lease Payments

At September 30, 2019, we are obligated to make minimum lease payments through 2028, under operating leases, which are as follows (in thousands):

2019	$	2,158
2020		7,787
2021		7,088
2022		5,861
2023		5,279
Thereafter		11,316
Total lease payments	$	39,489
Less: Interest		(4,376	)
Present value of lease liabilities	$	35,113