Leases

12 Months Ended

Dec. 31, 2019

Adoption of Topic 842

The Company adopted Topic 842 on January 1, 2019, using the modified retrospective approach. The adoption of Topic 842 resulted in an increase in long-term lease liabilities of $10,684 which was included in operating lease liabilities; an increase in short-term lease liabilities of $2,362 which was included in current portion of operating lease liabilities; an initial recognition of right of use (“ROU”) assets of $8,842 which was included in operating lease right of use assets; a derecognition of $3,346 related to lease liabilities under Topic 840 which was included in accrued liabilities; a decrease in deferred rent of $819 which was included in accrued liabilities; and a decrease of $39 in retained earnings as a cumulative effect of adoption.

As the Company did not have any finance leases upon adoption of Topic 842 at January 1, 2019, the largest driver of changes for the adoption of Topic 842 was the addition of the Company’s operating leases to the consolidated balance sheet, creating ROU assets and lease liabilities on the consolidated balance sheet as of December 31, 2019. Under Topic 840, operating leases were not included on the consolidated balance sheets, whereas under Topic 842, ROU assets and lease liabilities are calculated and recorded on the lease commencement date. The standard had a material impact in the Company’s consolidated balance sheets, but did not have a significant impact in its consolidated statements of income. In addition, the adoption of Topic 842 had no impact to cash provided by or used in operating, financing, or investing on the consolidated statements of cash flows.

Lease information

The Company has operating leases for offices, retail stores, and warehouse space that expire through 2027. The Company’s leases have remaining lease terms of 1 month to 8 years, some of which include options to extend the leases up to 10 years. The following summarizes the activities in the Company’s ROU assets and lease liabilities for the year ended December 31, 2019:


	Beginning Balance as of January 1, 2019		Adoption of Topic 842		Additions		Termination		Costs		Ending Balance as of December 31, 2019

Operating lease ROU assets	$	—	$	8,842	$	3,388	$	(97)	$	(2,497)	$	9,636

	Beginning Balance as of January 1, 2019		Adoption of Topic 842		Additions		Termination		Payments, less accretion		Ending Balance as of December 31, 2019

Operating lease liabilities	$	—	$	13,046	$	2,398	$	(101)	$	(2,645)	$	12,698

For the years ended December 31, 2019, 2018, and 2017, rent expense was $3,678, $3,217, and $2,847, respectively. Rent expense is recognized on a basis which approximates straight-line over the lease term and is recorded as a component of selling, general and administrative expense on the consolidated statement of operations. As of December 31, 2019, the Company had a weighted-average remaining lease term of 5.0 years and a weighted-average discount rate used to calculate the lease liability of 4.42%.

Future maturities of lease liabilities as of December 31, 2019 were as follows:


2020	$	3,300
2021	2,838
2022	2,737
2023	2,202
2024	1,402
Thereafter	1,739
Total lease payments	14,218
Less: imputed interest	(1,520)
Lease liabilities	$	12,698

No other leases have been entered into under which the Company has significant rights and obligations as the lessee except those noted above.

Minimum rental payments for operating leases required under Topic 840 as of December 31, 2018, are as follows:


2019	$	3,198
2020	2,842
2021	2,457
2022	2,517
2023	1,976
Thereafter	2,098
Total operating lease commitments	$	15,088