Leases

12 Months Ended

Dec. 31, 2019

Leases

LEASES

NOTE 16.    LEASES

The Company adopted authoritative guidance related to leases effective January 1, 2019 using the modified retrospective method. The comparative information presented in the Consolidated Financial Statements was not restated and is reported under the accounting standards in effect for the periods presented. See the section Leases in Note 1. Operations and Summary of Significant Accounting Policies and Estimates for a discussion of the significant changes resulting from adoption of the guidance.

The Company’s leases consist primarily of manufacturing and office space under non-cancelable operating leases expiring at various dates through 2033. Leases with an original term of twelve months or less are not reported in the Consolidated Balance Sheet; expense for these short-term leases is recognized on a straight-line basis over the lease term. Most leases include one or more options to renew. The exercise of these renewal options is at the Company’s

discretion. We regularly evaluate the renewal options and when they are reasonably certain of exercise, we include the renewal period in the lease term, the right-of-use assets and lease liabilities. 

Due to the Company’s centralized treasury function, the Company utilizes a portfolio approach to discount its lease obligations. The Company assesses the expected lease term at lease inception and discounts the lease using a fully secured annual incremental borrowing rate, adjusted for time value corresponding with the expected lease term.

New leases are negotiated and executed to meet business objectives on an on-going basis. During the first fiscal quarter of 2020, we expect to record additional right of use assets and related liabilities for facilities in Fort Collins, Colorado, USA. The lease extensions in Fort Collins, Colorado commenced in January 2020 and extended the expected lease terms to 16 years; the right of use asset and operating lease liability recorded at commencement will be $21.8 million.

Components of operating lease cost were as follows:

		Year Ended
		December 31, 2019
Operating lease cost	$	11,052
Short-term and variable lease cost		4,726
Total operating lease cost	$	15,778

Maturities of our lease liabilities for all operating leases at December 31, 2019 are as follows:

Year Ending December 31,
2020	$	22,351
2021		19,771
2022		13,503
2023		10,786
2024		9,601
Thereafter		56,355
Total lease payments		132,367
Less: Interest		(23,517)
Present value of lease liabilities	$	108,850

Other information related to leases, including supplemental cash flow information, consists of:

		Year Ended
		December 31, 2019
Weighted average remaining lease term (in years)		7.50
Weighted average discount rate		4.05	%
Cash paid for operating leases	$	12,101
Right-of-use assets obtained in exchange for operating lease liabilities(1)	$	84,551

(1) Included in 2019 are the right-of-use assets of $60.1 million obtained in connection with the acquisition of Artesyn in September 2019. See Note 2. Business Combinations for more details.

Comparative Information as Reported Under Previous Accounting Standards

The following comparative information is reported based upon previous accounting standards in effect for the periods presented.

Future minimum lease payments under operating leases were:

Year Ending December 31,
2019	$	9,093
2020		7,561
2021		6,938
2022		3,862
2023		3,448
Thereafter		18,349
Total lease payments	$	49,251

Rent expense for operating leases was approximately $7.4 million and $6.5 million during the years ended December 31, 2018 and 2017, respectively.