Leases

6 Months Ended

Jun. 30, 2021

LEASES

The Company’s operating leases are primarily comprised of railcar, real estate, storage tank, auto, trailer and manufacturing/office equipment leases. Railcars and real estate comprise approximately 23 percent and 63 percent, respectively, of the Company’s consolidated ROU asset balance. Except for real estate, typical lease terms range from one to ten years. Real estate lease terms typically range from one to fifty years. The Company’s four principal real estate leases consist of the office lease for new corporate headquarters in Northbrook, Illinois and land leases in the Philippines, Singapore and Lake Providence, Louisiana. As of June 30, 2021, the Company had railcar leases, valued at approximately $3,154,000, that had not commenced. These leases will commence in the third quarter of 2021 and the first quarter of 2022.

As most of the Company’s leases do not provide an implicit borrowing rate, the Company uses its incremental borrowing rate (IBR) based on the information available at the commencement date in determining the present value of lease payments. IBRs were specifically determined for the United States, Philippines, Singapore, Brazil and China, typically for five-year increments. The U.S. IBR was used for all other countries as the leases in these countries are not material. The total value of

leases that reside in the five countries identified above represents approximately 98 percent of the Company’s consolidated ROU asset balance. Lease cost is recognized in both the Cost of Sales and Operating Expenses sections of the Condensed Consolidated Statements of Income.

(In thousands)	Three months ended June 30, 2021		Six months ended June 30, 2021
Lease Cost
Operating lease cost	$	3,844	$	7,570
Short-term lease cost		1,284		2,553
Variable lease cost		222		505
Total lease cost	$	5,350	$	10,628
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases	$	3,688	$	6,977
Right-of-use assets obtained in exchange for operating lease liabilities		1,003		13,630

The following table outlines maturities of lease liabilities as of June 30, 2021:


(In thousands)
Undiscounted Cash Flows:
2021 (excluding the six months ended June 30, 2021)	$	7,432
2022		13,516
2023		11,119
2024		7,032
2025		5,336
Subsequent to 2025		39,610
Total Undiscounted Cash Flows	$	84,045
Less: Imputed interest		(13,301	)
Present value	$	70,744
Current operating lease liabilities ⁽¹⁾		12,564
Non-current operating lease liabilities		58,180
Total lease liabilities	$	70,744

(1)

This item is included in the Accrued liabilities line on the Company’s Condensed Consolidated Balance Sheet.

Weighted-average remaining lease term-operating leases		10 Years
Weighted-average discount rate-operating leases		3.0%