LEASES

12 Months Ended

Dec. 31, 2020

LEASES

We lease office and retail space, warehouse and distribution facilities, land, vehicles, and equipment. We determine if an agreement is or contains a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are based on the estimated present value of lease payments over the lease term and are recognized at the lease commencement date.

As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate in determining the present value of lease payments. The estimated incremental borrowing rate is derived from information available at the lease commencement date.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. A limited number of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements generally do not contain residual value guarantees or material restrictive covenants.

For real estate, equipment and vehicles that support selling, marketing and general administrative activities the Company accounts for the lease and non-lease components as a single lease component. These asset categories comprise the majority of our leases. The lease and non-lease components of real estate and equipment leases supporting production activities are not accounted for as a single lease component. Consideration for such contracts are allocated to the lease component and non-lease components based upon relative standalone prices either observable or estimated if observable prices are not readily available.

As a result of the impact of COVID-19 on our ability to operate certain parts of our business, during the year ended December 31, 2020, we received immaterial rent concessions primarily on select office space. We will continue to evaluate the nature and extent of potential COVID-19 impacts on our lease agreements.

The components of lease expense were as follows:


Lease expense	Classification	2020		2019
Operating lease cost	Cost of sales or SM&A (1)	$	44,547	$	42,580
Finance lease cost:
Amortization of ROU assets	Depreciation and amortization (1)	8,202		7,821
Interest on lease liabilities	Interest expense, net	4,475		4,467
Net lease cost (2)		$	57,224	$	54,868

(1)Supply chain-related amounts were included in cost of sales.

(2)Net lease cost does not include short-term leases, variable lease costs or sublease income, all of which are immaterial.

Information regarding our lease terms and discount rates were as follows:


	2020		2019
Weighted-average remaining lease term (years)
Operating leases	12.5		14.3
Finance leases	30.1		31.4

Weighted-average discount rate
Operating leases	3.8	%	3.8	%
Finance leases	5.9	%	6.0	%

Supplemental balance sheet information related to leases were as follows:


Leases	Classification	2020		2019
Assets
Operating lease ROU assets	Other non-current assets	$	224,268	$	220,678

Finance lease ROU assets, at cost	Property, plant and equipment, gross	101,426		101,142
Accumulated amortization	Accumulated depreciation	(13,361)		(7,225)
Finance lease ROU assets, net	Property, plant and equipment, net	88,065		93,917

Total leased assets		$	312,333	$	314,595

Liabilities
Current
Operating	Accrued liabilities	$	36,578	$	29,209
Finance	Current portion of long-term debt	4,868		4,079
Non-current
Operating	Other long-term liabilities	181,871		184,163
Finance	Long-term debt	75,887		75,564
Total lease liabilities		$	299,204	$	293,015

The maturity of our lease liabilities as of December 31, 2020 were as follows:


	Operating leases		Finance leases		Total
2021	$	43,841	$	8,616	$	52,457
2022	30,135		7,087		37,222
2023	19,628		4,974		24,602
2024	14,778		4,673		19,451
2025	13,144		4,714		17,858
Thereafter	160,247		161,244		321,491
Total lease payments	281,773		191,308		473,081
Less: Imputed interest	63,324		110,553		173,877
Total lease liabilities	$	218,449	$	80,755	$	299,204

Supplemental cash flow and other information related to leases were as follows:


	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	42,568	$	39,910
Operating cash flows from finance leases	$	4,475	$	4,467
Financing cash flows from finance leases	$	4,468	$	4,018

ROU assets obtained in exchange for lease liabilities:
Operating leases	$	38,464	$	27,890
Finance leases	$	3,992	$	7,943