LEASES

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

LEASES

LEASES

The Company has entered into various non-cancellable operating and finance lease agreements for certain of the Company’s offices, manufacturing and warehouse facilities, retail and service locations, equipment, vehicles, and solar energy systems, worldwide. The Company has determined if an arrangement is a lease, or contains a lease, including embedded leases, at inception and records the leases in the Company’s financial statements upon later of ASC 842 adoption date of January 1, 2021, or lease commencement, which is the date when the underlying asset is made available for use by the lessor.

Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Our assessed lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Certain operating leases provide for annual increases to lease payments based on an index or rate. The Company estimates the annual increase in lease payments based on the index or rate at the lease commencement date, for both the Company’s historical leases and for new leases commencing after January 1, 2021. Differences between the estimated lease payment and actual payment are expensed as incurred. Lease expense for finance lease payments is recognized as amortization expense of the finance lease ROU asset and interest expense on the finance lease liability over the lease term.

The balances for the operating and finance leases where the Company is the lessee are presented as follows within the Company’s consolidated balance sheet (in thousands):

	As of September 30, 2021
Operating leases:
Operating lease right-of-use assets	$	143,782
Other current liabilities	$	14,611
Other long-term liabilities	169,433
Total operating lease liabilities	$	184,044
Finance leases:
Property, plant and equipment, net	7,825
Total finance lease assets	$	7,825
Finance lease liabilities, current portion	$	3,268
Finance lease liabilities, net of current portion	4,687
Total finance lease liabilities	$	7,955

The components of lease expense are as follows within the Company’s consolidated statement of operations (in thousands):

	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Operating lease expense:
Operating lease expense(1)	$	8,261	$	21,811
Variable lease expense	595		1,754
Finance lease expense:
Amortization of leased assets	$	800	$	2,032
Interest on lease liabilities	115		328
Total finance lease expense	$	915	$	2,360
Total lease expense	$	9,771	$	25,925

(1)Includes short-term leases, which are immaterial.

Other information related to leases where the Company is the lessee is as follows:

	As of September 30, 2021
Weighted-average remaining lease term (in years):
Operating leases	7.9
Finance leases	2.4
Weighted-average discount rate:
Operating leases	11.20	%
Finance leases	6.10	%

Supplemental cash flow information related to leases where the Company is the lessee is as follows (in thousands):

	Nine Months Ended September 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,516
Operating cash flows from finance leases (interest payments)	328
Financing cash flows from finance leases	1,915
Leased assets obtained in exchange for new operating lease liabilities	61,497
Leased assets obtained in exchange for new finance lease liabilities	70,756

As of September 30, 2021, the maturities of the Company’s operating and finance lease liabilities (excluding short-term leases) were as follows (in thousands):

	Operating Leases		Finance Leases
Three months ending September 30, 2021	$	8,969	$	939
2022	35,539		3,586
2023	35,043		3,234
2024	35,400		769
2025	34,484		—
Thereafter	132,938		—
Total minimum lease payments	282,373		8,528
Less: Interest	(98,329)		(573)
Present value of lease obligations	184,044		7,955
Less: Current portion	14,611		3,268
Long-term portion of lease obligations	$	169,433	$	4,687

As previously reported in the Company’s audited financial statements for the year ended December 31, 2020 and under legacy lease accounting (ASC 840), future minimum lease payments under non-cancellable leases as of December 31, 2020 are as follows (in thousands):

	Operating Leases		Finance Leases
2021	$	25,490	$	1,729
2022	28,837		1,547
2023	27,633		1,174
2024	28,207		9
2025	27,474		—
Thereafter	116,155		—
Total minimum lease payments	$	253,796	4,459
Less: Interest			(1,202)
Present value of lease obligations			3,257
Less: Current portion			(1,261)
Long-term portion of lease obligations			1,996

LEASES

LEASES

The Company has entered into various non-cancellable operating and finance lease agreements for certain of the Company’s offices, manufacturing and warehouse facilities, retail and service locations, equipment, vehicles, and solar energy systems, worldwide. The Company has determined if an arrangement is a lease, or contains a lease, including embedded leases, at inception and records the leases in the Company’s financial statements upon later of ASC 842 adoption date of January 1, 2021, or lease commencement, which is the date when the underlying asset is made available for use by the lessor.

Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Our assessed lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Certain operating leases provide for annual increases to lease payments based on an index or rate. The Company estimates the annual increase in lease payments based on the index or rate at the lease commencement date, for both the Company’s historical leases and for new leases commencing after January 1, 2021. Differences between the estimated lease payment and actual payment are expensed as incurred. Lease expense for finance lease payments is recognized as amortization expense of the finance lease ROU asset and interest expense on the finance lease liability over the lease term.

The balances for the operating and finance leases where the Company is the lessee are presented as follows within the Company’s consolidated balance sheet (in thousands):

	As of September 30, 2021
Operating leases:
Operating lease right-of-use assets	$	143,782
Other current liabilities	$	14,611
Other long-term liabilities	169,433
Total operating lease liabilities	$	184,044
Finance leases:
Property, plant and equipment, net	7,825
Total finance lease assets	$	7,825
Finance lease liabilities, current portion	$	3,268
Finance lease liabilities, net of current portion	4,687
Total finance lease liabilities	$	7,955

The components of lease expense are as follows within the Company’s consolidated statement of operations (in thousands):

	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Operating lease expense:
Operating lease expense(1)	$	8,261	$	21,811
Variable lease expense	595		1,754
Finance lease expense:
Amortization of leased assets	$	800	$	2,032
Interest on lease liabilities	115		328
Total finance lease expense	$	915	$	2,360
Total lease expense	$	9,771	$	25,925

(1)Includes short-term leases, which are immaterial.

Other information related to leases where the Company is the lessee is as follows:

	As of September 30, 2021
Weighted-average remaining lease term (in years):
Operating leases	7.9
Finance leases	2.4
Weighted-average discount rate:
Operating leases	11.20	%
Finance leases	6.10	%

Supplemental cash flow information related to leases where the Company is the lessee is as follows (in thousands):

	Nine Months Ended September 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,516
Operating cash flows from finance leases (interest payments)	328
Financing cash flows from finance leases	1,915
Leased assets obtained in exchange for new operating lease liabilities	61,497
Leased assets obtained in exchange for new finance lease liabilities	70,756

As of September 30, 2021, the maturities of the Company’s operating and finance lease liabilities (excluding short-term leases) were as follows (in thousands):

	Operating Leases		Finance Leases
Three months ending September 30, 2021	$	8,969	$	939
2022	35,539		3,586
2023	35,043		3,234
2024	35,400		769
2025	34,484		—
Thereafter	132,938		—
Total minimum lease payments	282,373		8,528
Less: Interest	(98,329)		(573)
Present value of lease obligations	184,044		7,955
Less: Current portion	14,611		3,268
Long-term portion of lease obligations	$	169,433	$	4,687

As previously reported in the Company’s audited financial statements for the year ended December 31, 2020 and under legacy lease accounting (ASC 840), future minimum lease payments under non-cancellable leases as of December 31, 2020 are as follows (in thousands):

	Operating Leases		Finance Leases
2021	$	25,490	$	1,729
2022	28,837		1,547
2023	27,633		1,174
2024	28,207		9
2025	27,474		—
Thereafter	116,155		—
Total minimum lease payments	$	253,796	4,459
Less: Interest			(1,202)
Present value of lease obligations			3,257
Less: Current portion			(1,261)
Long-term portion of lease obligations			1,996