Leases

9 Months Ended

Sep. 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	September 30, 2019
Assets
Operating lease assets	Operating lease assets	$	107,906
Finance lease assets	Property and equipment, net (1)	12,451
Total leased assets		$	120,357
Liabilities
Current
Operating lease liabilities	Current operating lease liabilities	$	34,179
Finance lease liabilities	Current portion of debt, finance lease obligations and notes payable	1,229
Long-term
Operating lease liabilities	Long-term operating lease liabilities	76,390
Finance lease liabilities	Finance lease obligations	14,840
Total lease liabilities		$	126,638

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $7,024,000 as of September 30, 2019.

Lease Cost	Classification	Three months ended September 30, 2019			Nine months ended September 30, 2019
Operating lease cost (1)	Operating expenses and cost of sales	$	10,779		$	31,373
Finance lease cost
Amortization of leased assets	Operating expenses and cost of sales	364			1,108
Interest on lease liabilities	Interest expense	207			660
Sublease income	Other (income) expense, net	(581		)	(1,737		)
Total lease cost		$	10,769		$	31,404

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

Maturity of Lease Liabilities	Operating Leases (1)		Finance Leases		Total
2019 (remainder)	$	10,193	$	518	$	10,711
2020	35,027		2,075		37,102
2021	25,430		2,063		27,493
2022	17,561		2,026		19,587
2023	12,828		2,025		14,853
Thereafter	17,793		11,790		29,583
Total lease payments	$	118,832	$	20,497	$	139,329
Less: interest	8,263		4,428
Present value of lease payments	$	110,569	$	16,069

⁽¹⁾ Operating lease payments include $3,594,000 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	September 30, 2019
Weighted-average remaining lease term (years)
Operating leases	4.36
Finance leases	9.72
Weighted-average discount rate
Operating leases	3.34	%
Finance leases	5.17	%

Other Information	Nine months ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	31,538
Operating cash flows from finance leases	651
Financing cash flows from finance leases	935
Leased assets obtained in exchange for new operating lease liabilities	18,562

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	September 30, 2019
Assets
Operating lease assets	Operating lease assets	$	107,906
Finance lease assets	Property and equipment, net (1)	12,451
Total leased assets		$	120,357
Liabilities
Current
Operating lease liabilities	Current operating lease liabilities	$	34,179
Finance lease liabilities	Current portion of debt, finance lease obligations and notes payable	1,229
Long-term
Operating lease liabilities	Long-term operating lease liabilities	76,390
Finance lease liabilities	Finance lease obligations	14,840
Total lease liabilities		$	126,638

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $7,024,000 as of September 30, 2019.

Lease Cost	Classification	Three months ended September 30, 2019			Nine months ended September 30, 2019
Operating lease cost (1)	Operating expenses and cost of sales	$	10,779		$	31,373
Finance lease cost
Amortization of leased assets	Operating expenses and cost of sales	364			1,108
Interest on lease liabilities	Interest expense	207			660
Sublease income	Other (income) expense, net	(581		)	(1,737		)
Total lease cost		$	10,769		$	31,404

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

Maturity of Lease Liabilities	Operating Leases (1)		Finance Leases		Total
2019 (remainder)	$	10,193	$	518	$	10,711
2020	35,027		2,075		37,102
2021	25,430		2,063		27,493
2022	17,561		2,026		19,587
2023	12,828		2,025		14,853
Thereafter	17,793		11,790		29,583
Total lease payments	$	118,832	$	20,497	$	139,329
Less: interest	8,263		4,428
Present value of lease payments	$	110,569	$	16,069

⁽¹⁾ Operating lease payments include $3,594,000 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	September 30, 2019
Weighted-average remaining lease term (years)
Operating leases	4.36
Finance leases	9.72
Weighted-average discount rate
Operating leases	3.34	%
Finance leases	5.17	%

Other Information	Nine months ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	31,538
Operating cash flows from finance leases	651
Financing cash flows from finance leases	935
Leased assets obtained in exchange for new operating lease liabilities	18,562