Leases Leases

12 Months Ended

Dec. 31, 2019

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 years or more. Such options are included in the lease term when it is reasonably certain that the option will be exercised. 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	December 31, 2019
Assets
Operating lease assets	Operating lease assets	$	110,153
Finance lease assets	Property and equipment, net ⁽¹⁾	12,721
Total leased assets		$	122,874
Liabilities
Current
Operating lease liabilities	Current operating lease liabilities	$	34,904
Finance lease liabilities	Current portion of debt, finance lease obligations and notes payable	1,259
Long-term
Operating lease liabilities	Long-term operating lease liabilities	77,926
Finance lease liabilities	Finance lease obligations	14,814
Total lease liabilities		$	128,903

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $7,757,000 as of December 31, 2019.



Lease Cost	Classification	For the Year Ended December 31, 2019
Operating lease cost ⁽¹⁾	Operating expenses and cost of sales	$	42,477
Finance lease cost
Amortization of leased assets	Operating expenses and cost of sales	1,486
Interest on lease liabilities	Interest expense	875
Sublease income	Other (income) expense, net	(2,382		)
Total lease cost		$	42,456

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



Maturity of Lease Liabilities	Operating Leases ⁽¹⁾		Finance Leases		Total
2020	$	38,095	$	2,119	$	40,214
2021	28,004		2,107		30,111
2022	19,289		2,070		21,359
2023	13,960		2,070		16,030
2024	8,913		2,085		10,998
Thereafter	12,967		9,940		22,907
Total lease payments	$	121,228	$	20,391	$	141,619
Less: interest	8,398		4,318
Present value of lease payments	$	112,830	$	16,073

⁽¹⁾ Operating lease payments include $3,429,000 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	December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	4.47
Finance leases	9.48
Weighted-average discount rate
Operating leases	3.29	%
Finance leases	5.18	%



Other Information	For the Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	42,687
Operating cash flows from finance leases	858
Financing cash flows from finance leases	1,254
Leased assets obtained in exchange for new operating lease liabilities	28,773