Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

Note 4. Leases

Lessee

We have operating leases for office and retail spaces, vehicles and office equipment. In April 2019, we purchased the building located in Morrisville, North Carolina which we previously leased and classified as a finance lease. We no longer have any finance leases as of June 30, 2019 (Refer to Note 10 “Commitments and Contingencies” of the Notes to Condensed Consolidated Financial Statements for more information).

The supplemental balance sheet information for our operating leases consist of following (in thousands):

Balance Sheet Location	June 30, 2019
Operating lease right-of-use assets 1	$	57,269
Accrued liabilities	$	16,144
Operating lease liabilities	59,140
Total operating lease liabilities	$	75,284

¹   The balance is net of impairment charges recorded in the first quarter of 2019. Refer to Note 8“Impairments and Other Charges” of the Notes to Condensed Consolidated Financial Statements for more information.

The components of lease expenses consist of following (in thousands):

Lease Cost	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease cost 1	$	5,498	$	10,799
Variable lease cost	690		1,107
Total lease cost 2	$	6,188	$	11,906

¹   Includes short-term lease expense which are not material for the periods.

²   Included in operating expenses on our Condensed Consolidated Statement of Operations.

The following table provides a summary of our operating lease terms and discount rates:

Remaining Lease Term and Discount Rate	June 30, 2019
Weighted average remaining lease term (in years)	6.1
Weighted average discount rate	4.5	%

Maturities of operating lease liabilities as of June 30, 2019 are as follows (in thousands):

Fiscal Year Ending December 31,	Operating Leases
Remainder of 2019	$	10,334
2020	20,373
2021	18,381
2022	13,157
2023	9,323
Thereafter	13,081
Total lease payments	$	84,649
Less: Interest	(9,365		)
Total lease liabilities	$	75,284

As of June 30, 2019, we had additional operating leases that have not yet commenced of $12.9 million. These operating leases will commence between the remainder of fiscal year 2019 to 2021 with lease terms of 3 years to 5 years.

Minimum future lease payments previously disclosed under ASC 840 in our Annual Report on Form 10-K for the year ended December 31, 2018 are as follows (in thousands):

Fiscal Year Ending December 31,	Operating Leases
2019	$	21,429
2020	20,483
2021	18,897
2022	15,096
2023	12,400
Thereafter	18,371
Total minimum lease payments	$	106,676

Lessor

In April 2019, as part of the purchase of a building located in Morrisville, North Carolina, we assumed an existing lease with a third-party for a portion of the building which is classified as an operating lease.

Lease payments due to Align as of June 30, 2019 are as follows (in thousands):

Fiscal Year Ending December 31,	Operating Lease
Remainder of 2019	$	423
2020	859
2021	1,145
2022	1,199
2023	1,229
Thereafter	7,441
Total minimum lease payments	$	12,296

For the three and six months ended June 30, 2019, operating lease income was not material.

Leases

Leases

Lessee

We have operating leases for office and retail spaces, vehicles and office equipment. In April 2019, we purchased the building located in Morrisville, North Carolina which we previously leased and classified as a finance lease. We no longer have any finance leases as of June 30, 2019 (Refer to Note 10 “Commitments and Contingencies” of the Notes to Condensed Consolidated Financial Statements for more information).

The supplemental balance sheet information for our operating leases consist of following (in thousands):

Balance Sheet Location	June 30, 2019
Operating lease right-of-use assets 1	$	57,269
Accrued liabilities	$	16,144
Operating lease liabilities	59,140
Total operating lease liabilities	$	75,284

¹   The balance is net of impairment charges recorded in the first quarter of 2019. Refer to Note 8“Impairments and Other Charges” of the Notes to Condensed Consolidated Financial Statements for more information.

The components of lease expenses consist of following (in thousands):

Lease Cost	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease cost 1	$	5,498	$	10,799
Variable lease cost	690		1,107
Total lease cost 2	$	6,188	$	11,906

¹   Includes short-term lease expense which are not material for the periods.

²   Included in operating expenses on our Condensed Consolidated Statement of Operations.

The following table provides a summary of our operating lease terms and discount rates:

Remaining Lease Term and Discount Rate	June 30, 2019
Weighted average remaining lease term (in years)	6.1
Weighted average discount rate	4.5	%

Maturities of operating lease liabilities as of June 30, 2019 are as follows (in thousands):

Fiscal Year Ending December 31,	Operating Leases
Remainder of 2019	$	10,334
2020	20,373
2021	18,381
2022	13,157
2023	9,323
Thereafter	13,081
Total lease payments	$	84,649
Less: Interest	(9,365		)
Total lease liabilities	$	75,284

As of June 30, 2019, we had additional operating leases that have not yet commenced of $12.9 million. These operating leases will commence between the remainder of fiscal year 2019 to 2021 with lease terms of 3 years to 5 years.

Minimum future lease payments previously disclosed under ASC 840 in our Annual Report on Form 10-K for the year ended December 31, 2018 are as follows (in thousands):

Fiscal Year Ending December 31,	Operating Leases
2019	$	21,429
2020	20,483
2021	18,897
2022	15,096
2023	12,400
Thereafter	18,371
Total minimum lease payments	$	106,676

Lessor

In April 2019, as part of the purchase of a building located in Morrisville, North Carolina, we assumed an existing lease with a third-party for a portion of the building which is classified as an operating lease.

Lease payments due to Align as of June 30, 2019 are as follows (in thousands):

Fiscal Year Ending December 31,	Operating Lease
Remainder of 2019	$	423
2020	859
2021	1,145
2022	1,199
2023	1,229
Thereafter	7,441
Total minimum lease payments	$	12,296

For the three and six months ended June 30, 2019, operating lease income was not material.