Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

Leases

The Company leases certain manufacturing facilities, retail stores, warehouses, distribution centers, office space, land, and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company does not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes. As most of the Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

Some leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain lease agreements include rental payments that are variable based on usage or are adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Information on the Company’s leases is summarized as follows (in thousands):

	Classification	June 30, 2019
Assets
Operating lease assets	Operating lease assets	$	108,013
Finance lease assets	Property and equipment, net (1)	13,689
Total leased assets		$	121,702
Liabilities
Current
Operating lease liabilities	Current operating lease liabilities	$	35,084
Finance lease liabilities	Current portion of debt, finance lease obligations and notes payable	1,286
Long-term
Operating lease liabilities	Long-term operating lease liabilities	75,479
Finance lease liabilities	Finance lease obligations	15,780
Total lease liabilities		$	127,629

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $7,133,000 as of June 30, 2019.

Lease Cost	Classification	Three months ended June 30, 2019			Six months ended June 30, 2019
Operating lease cost (1)	Operating expenses and cost of sales	$	10,506		$	20,594
Finance lease cost
Amortization of leased assets	Operating expenses and cost of sales	375			744
Interest on lease liabilities	Interest expense	226			453
Sublease income	Other (income) expense, net	(578		)	(1,156		)
Total lease cost		$	10,529		$	20,635

⁽¹⁾ Includes short-term leases and variable lease costs, which are immaterial.

Maturity of Lease Liabilities	Operating Leases (1)		Finance Leases		Total
2019 (remainder)	$	20,019	$	1,074	$	21,093
2020	33,216		2,151		35,367
2021	23,589		2,139		25,728
2022	15,662		2,103		17,765
2023	11,110		2,103		13,213
Thereafter	15,029		12,111		27,140
Total lease payments	$	118,625	$	21,681	$	140,306
Less: interest	8,062		4,615
Present value of lease payments	$	110,563	$	17,066

⁽¹⁾ Operating lease payments include $4,211,000 related to options to extend lease terms that are reasonably certain of being exercised.

Leases that the Company has signed but have not yet commenced are immaterial.

Lease Term and Discount Rate	June 30, 2019
Weighted-average remaining lease term (years)
Operating leases	4.27
Finance leases	9.98
Weighted-average discount rate
Operating leases	3.36	%
Finance leases	5.11	%

Other Information	Six months ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	20,745
Operating cash flows from finance leases	321
Financing cash flows from finance leases	749
Leased assets obtained in exchange for new operating lease liabilities	8,105

Leases

Leases

The Company leases certain manufacturing facilities, retail stores, warehouses, distribution centers, office space, land, and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company does not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes. As most of the Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

Some leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain lease agreements include rental payments that are variable based on usage or are adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Information on the Company’s leases is summarized as follows (in thousands):

	Classification	June 30, 2019
Assets
Operating lease assets	Operating lease assets	$	108,013
Finance lease assets	Property and equipment, net (1)	13,689
Total leased assets		$	121,702
Liabilities
Current
Operating lease liabilities	Current operating lease liabilities	$	35,084
Finance lease liabilities	Current portion of debt, finance lease obligations and notes payable	1,286
Long-term
Operating lease liabilities	Long-term operating lease liabilities	75,479
Finance lease liabilities	Finance lease obligations	15,780
Total lease liabilities		$	127,629

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $7,133,000 as of June 30, 2019.

Lease Cost	Classification	Three months ended June 30, 2019			Six months ended June 30, 2019
Operating lease cost (1)	Operating expenses and cost of sales	$	10,506		$	20,594
Finance lease cost
Amortization of leased assets	Operating expenses and cost of sales	375			744
Interest on lease liabilities	Interest expense	226			453
Sublease income	Other (income) expense, net	(578		)	(1,156		)
Total lease cost		$	10,529		$	20,635

⁽¹⁾ Includes short-term leases and variable lease costs, which are immaterial.

Maturity of Lease Liabilities	Operating Leases (1)		Finance Leases		Total
2019 (remainder)	$	20,019	$	1,074	$	21,093
2020	33,216		2,151		35,367
2021	23,589		2,139		25,728
2022	15,662		2,103		17,765
2023	11,110		2,103		13,213
Thereafter	15,029		12,111		27,140
Total lease payments	$	118,625	$	21,681	$	140,306
Less: interest	8,062		4,615
Present value of lease payments	$	110,563	$	17,066

⁽¹⁾ Operating lease payments include $4,211,000 related to options to extend lease terms that are reasonably certain of being exercised.

Leases that the Company has signed but have not yet commenced are immaterial.

Lease Term and Discount Rate	June 30, 2019
Weighted-average remaining lease term (years)
Operating leases	4.27
Finance leases	9.98
Weighted-average discount rate
Operating leases	3.36	%
Finance leases	5.11	%

Other Information	Six months ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	20,745
Operating cash flows from finance leases	321
Financing cash flows from finance leases	749
Leased assets obtained in exchange for new operating lease liabilities	8,105