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Leases
6 Months Ended
Mar. 31, 2020
Leases [Abstract]  
Leases Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the facts and circumstances present. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. At the lease commencement date, operating and finance lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable and, as such, the Company uses its incremental borrowing rate to discount the lease liabilities, which is the rate incurred to borrow on a collateralized basis over a similar term in a similar economic environment. Certain adjustments to the ROU asset may be required for items such as incentives received. The Company does not recognize on the balance sheet leases with terms of one year or less.

The Company has operating leases that are primarily comprised of buildings, office equipment, distribution center equipment, and vehicles. Some of the Company's leases include options to extend or early terminate the lease, which are included in the lease term when it is reasonably certain to exercise and there is a significant economic incentive to exercise that option. Certain lease agreements contain provisions for future rent increases. Lease payments included in the measurement of the lease liability comprise fixed payments. The Company combines lease and non-lease components as a single component. Operating lease cost is recognized over the expected lease term on a straight-line basis. Variable lease payments, which are primarily comprised of maintenance, taxes, and other payments based on usage, are recognized when the expense is incurred. The Company's leases do not contain residual value guarantees.

The following illustrates the components of lease cost for the periods presented:
(in thousands)
Three months ended March 31, 2020
 
Six months ended March 31, 2020
Operating lease cost
$
30,772

 
$
60,707

Short-term lease cost
1,265

 
2,791

Variable lease cost
3,688

 
8,544

Total lease cost
$
35,725

 
$
72,042



The Company recorded rental expense of $27.1 million and $53.9 million in the three and six months ended March 31, 2019, respectively.

The following summarizes balance sheet information related to operating leases:
(in thousands, except for lease term and discount rate)
 
March 31, 2020
Right of use assets
 
 
Other assets
 
$
484,933

 
 
 
Lease liabilities
 
 
Accrued expenses and other
 
$
97,897

Other long-term liabilities
 
428,061

Total lease liabilities
 
$
525,958

 
 
 
Weighted-average remaining lease term
 
7.49 years
Weighted-average discount rate
 
3.64%


Other cash flow information related to operating leases is as follows:
(in thousands)
 
Six months ended
March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities
 
 
Operating lease cash payments
 
$
57,390

 
 
 
Right-of-use assets obtained in exchange for lease liabilities
 
 
New operating leases
 
$
32,539

Leases recognized upon adoption of ASC 842
 
$
526,281



Future minimum rental payments under noncancellable operating leases were as follows:
Payments Due by Fiscal Year (in thousands)
 
As of March 31, 2020
2020
 
$
59,278

2021
 
114,431

2022
 
109,373

2023
 
99,508

2024
 
91,790

Thereafter
 
461,110

Total future undiscounted lease payments
 
935,490

Less: Future payments for leases that have not yet commenced 1
 
(300,346
)
Less: Imputed interest
 
(109,186
)
Total lease liabilities
 
$
525,958

 
 
 
1 The Company has certain leases that it has executed for which it does not control the underlying assets; therefore, lease liabilities and ROU assets were not recorded on the Company's Consolidated Balance Sheet as of March 31, 2020. These future commitments primarily relate to the Company's new general corporate and administrative office.


As previously disclosed in the Company's fiscal 2019 Annual Report on Form 10-K under the prior accounting guidance, the future minimum rental payments under noncancellable operating leases and financing obligations as of September 30, 2019 were as follows:
Payments Due by Fiscal Year (in thousands)
 
Operating
Leases
 
Financing Obligations 1
 
Total
2020
 
$
94,958

 
$
22,468

 
$
117,426

2021
 
84,002

 
29,790

 
113,792

2022
 
72,224

 
36,914

 
109,138

2023
 
63,507

 
35,950

 
99,457

2024
 
56,377

 
35,276

 
91,653

Thereafter
 
177,267

 
270,410

 
447,677

Total minimum lease payments
 
$
548,335

 
$
430,808

 
$
979,143

 
 
 
 
 
 
 
1 Represents the portion of future minimum lease payments related to facility leases where the Company was determined to be the accounting owner (see Note 1 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019 for a more detailed description of the Company's accounting for leases prior to the adoption of ASC 842). These payments were recognized as reductions to the financing obligation and as interest expense and excluded the future non-cash termination of the financing obligation.