Leases

9 Months Ended

Sep. 30, 2019

LEASES

The Company's leases are classified as operating leases and consist of manufacturing facilities, distribution centers, office space, vehicles and equipment. For leases with terms greater than twelve months, at lease commencement the Company recognizes a right-of-use asset and a lease liability. The initial lease liability is recognized at the present value of remaining lease payments over the lease term. Leases with an initial term of twelve months or less are not recorded on the Company's consolidated balance sheet. The Company recognizes lease expense for operating leases on a straight-line basis over the lease term. The Company combines lease and non-lease components, such as common area maintenance costs, in calculating the related asset and lease liabilities for all underlying asset groups. Operating lease cost is included in income from operations and includes short-term leases and variable lease costs which are immaterial.

Most of the Company's leases include one or more options to renew, with renewal terms that can extend the respective lease term from one month to fifteen years. The exercise of lease renewal options is at the Company's sole discretion. As of September 30, 2019, the Company's renewal options are not part of the Company's operating lease assets and operating lease liabilities. Certain leases also include options to purchase at fair value the underlying leased asset at the Company's sole discretion.



(In thousands)	Classification	September 30, 2019
Assets	Operating lease assets	$	28,573

Liabilities
Current	Accrued expenses	$	8,350
Non-current	Non-current operating lease liabilities	20,461
		$	28,811



Lease cost (in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease cost	$	3,102	$	9,649



Other information (in thousands)	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of operating liabilities	$	8,635
Right-of-use assets obtained in exchange for new lease liabilities	$	5,974



Lease Term and Discount Rate	September 30, 2019
Weighted-average remaining lease term - operating leases	4.0		years
Weighted-average discount rate - operating leases	5.8	%



Maturity of lease liabilities	(In thousands)
2019 (October 1, 2019 through December 31, 2019)	$	2,680
2020	9,172
2021	7,526
2022	5,621
2023	4,902
After 2023	2,557
Total lease payments	32,458
Less: present value discount	(3,647		)
Present value of lease liabilities	$	28,811

The Company uses the its incremental borrowing rate based on information available at the commencement date of a lease in determining the present value of lease payments as the rates implicit in most of the Company's leases are not readily determinable.

Upon adoption of ASU 2016-02 on January 1, 2019, the unrecognized deferred gain related to sale-leaseback transactions was recorded as a cumulative-effect adjustment to increase retained earnings, net of related income tax effects.