LEASES

3 Months Ended

Mar. 31, 2020

LEASES

LEASES

15.  LEASES

The Company recognizes leases with duration greater than 12 months on the balance sheet by recording the related Right-Of-Use (ROU) asset and liability at the present value of lease payments over the term. Leases that include rental escalation clauses or renewal options have been factored into the determination of lease payments when appropriate. There are no residual value guarantees on the existing leases. The Company estimates its incremental borrowing rate, at lease commencement, to determine the present value of lease payments, since most of the Company’s leases do not provide an implicit rate of return. ROU assets exclude lessor incentives received.

The Company’s lease population consists primarily of real estate including its corporate headquarters, office space, and warehouses, in addition to vehicles, railcars, storage containers and office equipment. The Company does not have any finance leases. The Company has a significant population of month-to-month real estate leases that have been classified as short-term leases and therefore has not recognized a corresponding ROU asset or lease liability. The Company determines at contract inception, if an arrangement is a lease or contains a lease based on whether the Company obtains the right to control the use of specifically identifiable property, plant and equipment for a period of time in exchange for consideration. The Company has elected to not separate non-lease components from lease components for its leases. Variable lease payments relate primarily to taxes and insurance on real estate contracts and are recognized as expense when incurred.

The Company subleases certain real estate to third parties and its sublease portfolio consists solely of operating leases. As of March 31, 2020, the Company had no operating leases that had not yet commenced. During the quarter ended March 31, 2020, the Company entered into new leases or modified existing leases that resulted in an increase of ROU assets in exchange for operating lease liabilities as disclosed below.

Lease position:

The table below presents the assets and liabilities related to operating leases recorded on the balance sheet:

(in thousands)	Classification on the Consolidated Balance Sheet	March 31, 2020
Assets:
Operating lease assets	Operating lease right-of-use assets	$	33,250
Liabilities:
Current – operating leases	Current portion of operating lease liabilities	$	10,215
Non-current – operating leases	Long-term operating lease liabilities		27,529
Total lease liabilities		$	37,744

Lease costs:

The components of lease expense are included in costs of goods sold, and selling, general and administrative expenses in the consolidated statements of operations as disclosed below:

	Three months ended		Three months ended
(in thousands)	March 31, 2020		March 31, 2019
Operating lease cost	$	2,549	$	3,974
Short-term lease cost		1,733		1,774
Variable lease cost		141		26
Sublease income		(18)		(18)
Total lease cost	$	4,405	$	5,756

Other information:
Cash paid for amounts included in the measurement of lease liabilities – operating leases (in thousands)	$	2,230
ROU assets obtained in exchange for operating lease liabilities (in thousands)	$	1,630
Weighted average remaining lease term – operating leases		5.3	years
Weighted average discount rate – operating leases		3.38	%

	Operating
Maturity of lease liabilities (in thousands)	Leases
2020 (excluding the three months ended March 31, 2020)	$	8,664
2021		9,564
2022		6,579
2023		4,058
2024		2,951
Thereafter		8,566
Total lease payments		40,382
Less: Amounts representing interest		(2,638)
Present value of lease liabilities	$	37,744