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LEASE COMMITMENTS

9 Months Ended

Sep. 30, 2019

NOTE 7 – LEASE COMMITMENTS

We lease certain warehouse, plant and office facilities as well as certain equipment under noncancelable operating and finance leases expiring at various dates through the year 2028. Most of the operating leases contain renewal options and certain leases include options to purchase the related asset during or at the end of the lease term.

Amortization expense related to finance leases is included in depreciation expense while rent expense related to operating leases is included within cost of sales and selling research & development and administrative expenses (“SG&A”). Rent expense related to operating leases (including taxes, insurance and maintenance when included in the rent) amounted to $8.3 million and $24.2 million in the three and nine months ended September 30, 2018, respectively, under the old lease accounting standard.

The components of lease expense for the current period were as follows:


	Three Months Ended		Nine Months Ended
	September 30, 2019		September 30, 2019
Operating lease cost	$	6,001	$	17,442

Finance lease cost:
Amortization of right-of-use assets	$	1,165	$	3,041
Interest on lease liabilities		344		984
Total finance lease cost	$	1,509	$	4,025

Short-term lease and variable lease costs	$	1,757	$	6,027

Supplemental cash flow information related to leases was as follows:


Nine Months Ended September 30,	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,874
Operating cash flows from finance leases		877
Financing cash flows from finance leases		3,365

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	11,673
Finance leases		12,401

Supplemental balance sheet information related to leases was as follows:


	September 30, 2019
Operating Leases
Operating lease right-of-use assets	$	72,481

Accounts payable and accrued liabilities	$	16,351
Operating lease liabilities		55,278
Total operating lease liabilities	$	71,629

Finance Leases
Property, plant and equipment, gross	$	43,042
Accumulated depreciation		(3,125)
Property, plant and equipment, net	$	39,917

Current maturities of long-term obligations, net of unamortized debt issuance cost	$	3,856
Long-term obligations, net of unamortized debt issuance cost		23,701
Total finance lease liabilities	$	27,557

Weighted Average Remaining Lease Term (in years)
Operating leases		6.0
Finance leases		7.1

Weighted Average Discount Rate
Operating leases		5.06	%
Finance leases		5.34	%

Maturities of lease liabilities as of September 30, 2019, were as follows:


	Operating		Finance
	Leases		Leases
Year 1	$	19,113	$	5,028
Year 2		15,763		4,470
Year 3		11,167		3,659
Year 4		9,515		2,794
Year 5		7,177		2,340
Thereafter		21,337		17,433
Total lease payments		84,072		35,724
Less imputed interest		(12,443)		(8,167)
Total	$	71,629	$	27,557

Maturities of lease liabilities as of December 31, 2018 under the old lease accounting standard were as follows:


	Operating		Capital
	Leases		Leases
Year 1	$	26,512	$	1,828
Year 2		21,386		1,653
Year 3		16,529		1,546
Year 4		12,549		1,160
Year 5		10,225		880
Thereafter		21,932		3,827
Total lease payments	$	109,133		10,894
Less imputed interest				(2,541)
Present value of future lease payments			$	8,353

As of September 30, 2019, we have additional operating and finance leases, primarily for buildings, that have not yet commenced of $3.8 million. These operating and finance leases will commence in years 2019 and 2020 with lease terms of 3 to 10 years.