Leases

12 Months Ended

Dec. 31, 2021

7. 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 25 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 December 31, 2021, the Company had railcar and storage tank leases valued at approximately $1,208,000, that had not commenced. These leases will commence in 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 Consolidated Statements of Income.

(In thousands)	Year ended December 31, 2021		Year ended December 31, 2020
Lease Cost
Operating lease cost	$	15,630	$	11,821
Short-term lease cost		6,570		4,922
Variable lease cost		892		1,135
Total lease cost	$	23,092	$	17,878
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases	$	14,885	$	11,843
Right-of-use assets obtained in exchange for operating lease liabilities		19,610		27,766

The following table outlines maturities of lease liabilities as of December 31, 2021:


(In thousands)
Undiscounted Cash Flows:
2022	$	15,573
2023		12,679
2024		8,055
2025		5,946
2026		4,329
Subsequent to 2026		36,439
Total Undiscounted Cash Flows	$	83,021
Less: Imputed interest		(12,447	)
Present value	$	70,574
Current operating lease liabilities ⁽¹⁾		13,906
Non-current operating lease liabilities		56,668
Total lease liabilities	$	70,574

(1)

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

Weighted-average remaining lease term-operating leases		10 Years
Weighted-average discount rate-operating leases		2.9 %