Leases

9 Months Ended

Sep. 30, 2019

Leases of Lessee Disclosure [Text Block]

Leases

On January 1, 2019, the Company adopted ASC 842, Leases, and all related amendments using the modified retrospective method. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, current operating lease liabilities and long-term operating lease liabilities on the Company’s condensed consolidated balance sheet as of September 30, 2019. Finance leases are included in property, plant and equipment, net, debt payable within one year, and long-term debt on the Company’s condensed consolidated balance sheets.

Lease right-of-use assets are recognized at commencement date based upon the present value of the remaining future minimum lease payments over the lease term. The Company’s lease terms include options to renew or terminate the lease when it is reasonably certain that it will exercise the option. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based upon information available at the commencement date to determine the present value of future lease payments. The Company applies the portfolio approach for the incremental borrowing rate on its leases based upon similar lease terms and payments. The lease right-of-use asset also includes lease payments made in advance of lease commencement and excludes lease incentives. Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components. For real estate leases, these components are accounted for separately, while for equipment leases commencing on or after January 1, 2019, the Company accounts for the lease and non-lease components as a single lease component.

Variable lease expense includes payments based upon changes in a rate or index, such as consumer price indexes, as well as usage of the leased asset. Short-term lease expense includes leases with terms, at lease commencement, of 12 months or less and no purchase option reasonably certain to be exercised. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company primarily has operating and finance leases for certain manufacturing facilities, corporate offices and certain equipment. The Company’s leases have remaining lease terms of less than one year to 15 years, some of which may include one or more options to extend the leases for up to five years for each renewal.

The components of lease expense were as follows:



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease expense:	$	8,362	$	25,027
Short-term lease expense	796		2,607
Variable lease expense	517		1,051
Finance lease expense:
Amortization of right-of-use assets	614		1,629
Interest on lease liabilities	400		1,307
Total lease expense	$	10,689	$	31,621

Other information related to leases was as follows:



	Nine Months Ended September 30, 2019
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	25,671
Operating cash flows for finance leases	1,186
Financing cash flows for finance leases	735
Non-cash right-of-use assets obtained in exchange for lease obligations:
Operating leases	4,955
Finance leases	9,476

Weighted Average Remaining Lease Term (in years)
Operating leases	5.5
Finance leases	11.7

Weighted Average Discount Rate
Operating leases	4.7		%
Finance leases	9.7		%

Future minimum lease payments under non-cancellable leases as of September 30, 2019 were as follows:



Year	Operating Leases			Finance Leases
Remainder of 2019	$	7,683		$	696
2020	25,098			2,870
2021	17,388			2,679
2022	13,406			2,518
2023	11,282			2,294
Thereafter	25,913			21,056
Total future minimum lease payments	100,770			32,113
Less imputed interest	(12,664		)	(13,196		)
Total	$	88,106		$	18,917

Amounts recognized in the condensed consolidated balance sheet as of September 30, 2019
Operating lease right-of-use assets, net	$	87,849		$	—
Debt payable within one year	—			2,050
Current operating lease liabilities	24,004			—
Long-term debt	—			16,867
Long-term operating lease liabilities	64,102			—

As of September 30, 2019, assets recorded under finance leases, net of accumulated depreciation were $20,089. As of September 30, 2019, the Company had additional operating leases, primarily for real estate, that have not yet commenced with undiscounted lease payments of approximately $56,975. These operating leases will commence between 2019 and 2020 with lease terms up to 15 years.