Leases

9 Months Ended

Sep. 30, 2021

LEASES

The Company’s operating leases are primarily comprised of real estate, railcar, storage tank, warehouse, auto, trailer and manufacturing/office equipment leases. Real estate and railcars comprise approximately 60 percent and 26 percent, respectively, of the Company’s consolidated right of use (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 the corporate headquarters in Northbrook, Illinois and land leases in the Philippines, Singapore and Lake Providence, Louisiana. As of September 30, 2021, the Company had railcar, storage tank, and office equipment leases valued at approximately $2,049,000, that had not commenced. These leases will commence in the fourth 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 September 30, 2021		Nine months ended September 30, 2021
Lease Cost
Operating lease cost	$	3,949	$	11,519
Short-term lease cost		2,144		4,697
Variable lease cost		220		725
Total lease cost	$	6,313	$	16,941
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases	$	3,837	$	10,814
Right-of-use assets obtained in exchange for operating lease liabilities		4,659		18,289

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


(In thousands)
Undiscounted Cash Flows:
2021 (excluding the nine months ended September 30, 2021)	$	3,964
2022		14,530
2023		12,027
2024		7,806
2025		5,938
Subsequent to 2025		40,753
Total Undiscounted Cash Flows	$	85,018
Less: Imputed interest		(12,888	)
Present value	$	72,130
Current operating lease liabilities ⁽¹⁾		13,225
Non-current operating lease liabilities		58,905
Total lease liabilities	$	72,130

(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		2.9 %