Lease Commitments

12 Months Ended

Dec. 31, 2020

LEASES

Adoption of ASC ASU No. 2016-02, Leases On January 1, 2019, the Company adopted ASU No. 2016-02 using the modified retrospective method applied to existing leases in place as of January 1, 2019. Leases entered into after January 1, 2019 are presented under the provisions of ASU No. 2016-02, while prior periods are not adjusted and continue to be reported in accordance with previous accounting guidance. Leases commencing or renewing after the adoption date are evaluated based on the guidance in ASU No. 2016-02 and may result in more finance leases being recognized even for the renewal of previously classified operating leases.

The Company elected to adopt the ‘package of practical expedients’, which permitted the Company not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected the practical expedient pertaining to land easements, which allowed the Company to exclude evaluation of all existing land easements in connection with the adoption of the new lease requirements to assess whether they meet the definition of a lease. The Company did not elect the use-of-hindsight practical expedient and therefore did not reassess the lease terms for purposes of calculation of the lease liabilities and right-of-use assets at the adoption date. The Company elected the short-term lease recognition exemption for all leases that qualified. This means, for those leases that qualified, the Company did not recognize right-of-use assets or lease liabilities, and this included not recognizing right-of-use assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient to not separate lease and non-lease components for all leases other than leases of real estate, and this included not separating lease and non-lease components for all leases other than leases of real estate in transition.

The Company adopted ASU 2016-02 using the modified retrospective method, recognizing the cumulative effect of application as an adjustment to the opening balance sheet. The standard had a material impact on our consolidated balance sheets, but did not have a material impact on our consolidated statement of income or cash flows. The most significant impact was the recognition of the right-of-use asset and lease liabilities for operating leases. As of December 31, 2020 and 2019, we do not have any material finance leases.

Leases As of December 31, 2020, the Company was obligated under operating lease agreements for certain sales offices and manufacturing facilities, manufacturing equipment, vehicles, information technology equipment and warehouse space. Our leases have remaining lease terms of 1 year to 14 years, some of which may include options to extend the lease for up to 6 years, and some of which may include options to terminate the leases within 1 year.

As of December 31, 2020 and 2019, the Company’s operating lease components with initial or remaining terms in excess of one year were classified on the consolidated balance sheet as follows, together with certain supplemental balance sheet information:


(In thousands)	Classification	2020			2019
Assets
Right-of-use assets	Right-of-use assets	$	45,924		$	50,160
Liabilities
Short-term lease liability	Other accrued liabilities	9,960			10,025
Long-term lease liability	Long-term lease liability	39,730			43,827
Total lease liabilities		$	49,690		$	53,852
Lease Term and Discount Rate
Weighted average remaining lease term (years)		7.9			8.4
Weighted average discount rate		5.0		%	4.9		%

Expense for leases less than 12 months for the year ended December 31, 2020 and 2019 were not material. The components of lease expense for the year ended December 31, 2020 and 2019 are as follows:


(In thousands)	2020		2019
Operating lease cost	$	13,576	$	12,538

The Company combines the amortization of the right-of-use assets and the change in the operating lease liability in the same line item in the Statement of Cash Flows. Other information related to the Company’s operating leases for the year ended December 31, 2020 and 2019 are as follows:


(In thousands)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from leases	$	10,806	$	11,137
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	5,133	$	9,077

Future minimum lease payments for noncancellable operating leases as of December 31, 2020 and 2019, were as follows:


(In thousands)	2020		2019
2021	$	12,365	$	12,407
2022	8,571		10,221
2023	6,851		6,909
2024	5,752		6,055
2025	4,876		5,052
Thereafter	23,742		26,904
Total	$	62,157	$	67,548
Less: Interest	12,467		13,696
Present value of lease liabilities	$	49,690	$	53,852