Note 10 - Leases

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Leases of Lessee Disclosure [Text Block]

10. Leases

The Company determines if an arrangement is or contains a lease at contract inception. The Company recognizes a right of use (“ROU”) asset and lease liability at the lease commencement date based on the present value of the lease payments over the lease term. As the Company’s leases generally do not provide an implicit rate, the incremental borrowing rate is used to determine the present value of lease payments. The incremental borrowing rate is a collateralized rate determined based on the lease term, the Company’s credit rating, and other market information available at the commencement date. The ROU asset also includes any lease payments made prior to the commencement date and is reduced by any lease incentives. The lease term may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term, while lease expense for finance leases is recognized as depreciation and interest expense using the effective interest method. The Company’s variable lease expense generally consists of property tax and insurance payments that are variable in nature, however, these amounts are immaterial to the consolidated financial statements.

The Company has lease agreements with both lease and nonlease components, which it elected to account for as a single lease component. However, the Company did not elect to apply the recognition exception for short-term leases. The Company is applying these elections to all asset classes.

The Company leases certain manufacturing facilities, distribution centers, office space, warehouses, automobiles, machinery and computer equipment globally under both finance and operating leases. The Company’s leases have remaining lease terms of up to 20 years, of which certain leases, primarily within the buildings and improvements asset class, include options to extend the leases for up to 10 additional years. Further, the Company leases certain buildings from a noncontrolling interest holder, which the Company has determined to be arms’ length transactions.

The Company is a lessor of one building that it leases to a third party. The lease income related to this arrangement is not material to the consolidated financial statements.

The Company records its operating lease cost and amortization of finance lease ROU assets within cost of goods sold or operating expenses in the consolidated statements of comprehensive income depending on the cost center of the underlying asset. The Company records its finance lease interest cost within interest expense in the consolidated statements of comprehensive income.

The components of total lease cost consist of the following:

	Twelve Months Ended December 31, 2019
Operating lease cost	$	9,647
Finance lease cost:
Amortization of ROU assets		2,531
Interest on lease liabilities		2,227
Total lease cost	$	14,405

Prior to the adoption of ASC 842, lease expense consisted of payments on operating leases. Total rent expense related to operating leases for the years ended December 31, 2018 and 2017 was approximately $10,739 and $10,845, respectively.

As of January 1, 2019, the date of the adoption of ASU 2016-02, the Company recognized ROU assets and lease liabilities related to operating leases of $42,024 and $42,056, respectively, and there was no cumulative effect adjustment made to retained earnings. Supplemental balance sheet information related to the Company’s leases is as follows:

	December 31, 2019
Operating Leases
Operating lease ROU assets (1)	$	35,950
Operating lease liabilities - current (2)	$	7,231
Operating lease liabilities - noncurrent (3)		29,778
Total operating lease liabilities	$	37,009
Finance Leases
Finance lease ROU assets, gross	$	29,142
Accumulated depreciation - finance lease ROU assets		(3,079	)
Finance lease ROU assets, net (4)	$	26,063
Finance lease liabilities - current (5)	$	1,830
Finance lease liabilities - noncurrent (6)		24,132
Total finance lease liabilities	$	25,962

(1) Recorded in the operating lease and other assets line within the consolidated balance sheets

(2) Recorded in the other accrued liabilities line within the consolidated balance sheets

(3) Recorded in the operating lease and other long-term liabilities line within the consolidated balance sheets

(4) Recorded in the property and equipment, net line within the consolidated balance sheets

(5) Recorded in the current portion of long-term borrowings and finance lease obligations line within the consolidated balance sheets

(6) Recorded in the long-term borrowings and finance lease obligations line within the consolidated balance sheets

Supplemental cash flow information related to the Company’s leases is as follows:

	Three Months Ended December 31, 2019		Twelve Months Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,174	$	10,125
Operating cash flows from finance leases		471		1,864
Financing cash flows from finance leases		976		3,237
ROU assets obtained in exchange for lease liabilities
Operating leases		239		4,021
Finance leases		632		8,797

Weighted average remaining lease term and discount rate information related to the Company’s leases is as follows:

	December 31, 2019
Weighted average remaining lease term (in years)
Operating Leases		6.90
Finance Leases		13.87
Weighted average discount rate
Operating Leases		4.59	%
Finance Leases		7.83	%

The maturities of the Company’s lease liabilities are as follows:

	As of December 31, 2019
	Finance Leases			Operating Leases
2020	$	3,769		$	9,086
2021		3,352			7,029
2022		3,536			5,472
2023		2,659			4,629
2024		2,650			4,288
After 2024		29,371			14,232
Total minimum lease payments		45,337			44,736
Interest component		(19,375	)		(7,727	)
Present value of minimum lease payments	$	25,962		$	37,009