LEASES

12 Months Ended

Dec. 31, 2020

The Company has operating leases for corporate offices, distribution facilities, manufacturing plants, and certain vehicles. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheet. The Company has elected the practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized. Variable lease payment amounts that cannot be determined at the commencement of the lease, such as increases in lease payments that do not depend on changes in index rates or payments based on usage, are not included in the ROU assets or liabilities. These are expensed as incurred and recorded as variable lease expense.

ROU assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the net present value of fixed lease payments over the lease term. The Company’s lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. ROU assets also include any advance lease payments. As most of the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The components of lease costs for the year ended December 31, 2020 and 2019 were as follows (in thousands):


	Year Ended December 31,
	2020		2019
Operating lease costs (1):
Fixed lease expense	$	18,181	$	18,898
Variable lease expense	3,798		$	4,571
Total	$	21,979	$	23,469

(1) Expenses are recorded in selling, general and administrative expenses.

Rent and related expenses under operating leases was $18.4 million for the years ended December 31, 2018.

Supplemental cash flow information for the year ended December 31, 2020 and 2019 were as follows (in thousands):


	Year Ended December 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	15,802	$	17,851
Total	$	15,802	$	17,851


	Year Ended December 31,
	2020		2019
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	0	$	118,447
Total	$	0	$	118,447

Included in machinery, furniture and equipment at each of December 31, 2020 and 2019 is $0.4 million and $0.3 million, respectively, related to assets recorded under finance leases. Included in accumulated depreciation and amortization at December 31, 2020 and December 31, 2019 is $0.2 million and $0.1 million, respectively, related to assets recorded under finance leases.

In response to the COVID-19 pandemic, the Company negotiated COVID-19-related rent concessions for several of its leased properties. The majority of these rent concessions were in the form of deferred rent payments for one or more months. For these rent concessions the Company elected to account for these as if no changes to the lease were made and continued to recognize the straight-line lease expense for these leases in accordance with the FASB Question-and-Answer Document. COVID-19-related deferred rent payments at December 31, 2020 were $1.0 million and were recorded in accrued expenses in the condensed consolidated balance sheet at December 31, 2020. In addition, there were a limited number of rent concessions obtained by the Company in the form of rent abatement and changes in lease terms. These lease modifications were accounted for as a resolution to a contingency that fixes previously variable lease payments which resulted in the remeasurement of the right-of-use asset and lease liability. The remeasurement of the right-of-use and lease liability did not have a material effect on our consolidated financial statements or results of operations.

The aggregate future lease payments for operating leases as of December 31, 2020 were as follows (in thousands):


	Operating
2021	$	18,112
2022	18,199
2023	18,176
2024	17,857
2025	17,831
Thereafter	56,115
Total lease payments	146,290
Less: Interest	(32,455)
Present value of lease payments	$	113,835

The Company expects to make payments related to the deferrals obtained as a result of COVID-19-related rent concessions of $1.0 million in 2021, per the updated terms of the applicable lease agreements.

Average lease terms and discount rates were as follows:


	December 31, 2020		December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	8.2		9.1
Weighted-average discount rate
Operating leases	6.2	%	6.2	%