Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Leases

The Company leases office space, warehouses, automobiles, and equipment. The Company determines whether a contract is or contains a lease at the inception of the contract. A contract will be deemed to be or contain a lease if the contract conveys the right to control and direct the use of identified office space, warehouse or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all the economic benefits from the use of the office space, warehouse and equipment. The leases are recorded as right-of-use ("ROU") assets and lease liabilities for leases with terms greater than 12 months. The Company’s leases generally have terms of 1-10 years, with certain leases including renewal options to extend the leases for additional periods at the Company’s discretion. Generally, the lease term is the minimum of the noncancelable period of the lease, as the Company is not reasonably certain to exercise renewal options.

Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Tenant allowances used to fund leasehold improvements are recognized when earned and reduce the right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term.

Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent the right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company estimates

incremental secured borrowing rates corresponding to the maturities of the leases. The Company estimates this rate based on prevailing financial market conditions as rates are not implicitly stated in most leases. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leased assets are presented net of accumulated amortization. Variable lease payment amounts that cannot be determined at the commencement of the lease, such as increases in lease payments based on changes in index rates or usage, are not included in the ROU assets or liabilities; instead, these are expensed as incurred and recorded as variable lease expense.

Supplemental balance sheet information related to leases was as follows (in thousands):

	September 30, 2019
Operating leases
Right of use assets:
Right of use assets	$	51,425
Finance leases
Right of use assets:
Right of use assets, cost	$	579
Less: Accumulated amortization	(278		)
Right of use assets, net	$	301
Total right of use assets, net	$	51,726
Lease liabilities
Current
Operating	$	8,485
Finance	114
Non-current
Operating	$	46,865
Finance	229
Total lease liabilities	$	55,693

The components of lease cost were as follows (in thousands):

	September 30, 2019
Operating lease cost	$	7,649
Variable lease cost	866
Short-term lease cost	1,530
Finance lease cost:
Amortization of right of use assets	57
Interest on lease liabilities	16
Total finance lease cost	$	73
Less: Sublease income	(132		)
Total lease cost	$	9,986

Average lease terms and discount rates were as follows:

	September 30, 2019
Weighted-average remaining lease term (years)
Operating leases	6.96
Finance leases	2.92
Weighted-average discount rate
Operating leases	6.59	%
Finance leases	7.77	%

Supplemental cash flow information related to leases was as follows (in thousands):

	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	82
Operating cash flows from operating leases	5,828
Total	$	5,910

The aggregate future lease payments for operating and finance leases as of September 30, 2019 are as follows (in thousands):

	Operating			Finance
Remaining 2019	$	2,638		$	33
2020	11,089			133
2021	11,873			134
2022	10,292			71
2023	7,804			10
Thereafter	27,210			—
Total lease payments	$	70,906		$	381
Less: Interest	(15,556		)	(38		)
Present value of lease liabilities	$	55,350		$	343

The aggregate future lease payments for operating and capital leases as of December 31, 2018 were as follows (in thousands):

	Operating
2019	$	6,383
2020	5,017
2021	4,422
2022	3,245
2023	2,068
Thereafter	1,966
Total lease payments	$	23,101

Leases

Leases

The Company leases office space, warehouses, automobiles, and equipment. The Company determines whether a contract is or contains a lease at the inception of the contract. A contract will be deemed to be or contain a lease if the contract conveys the right to control and direct the use of identified office space, warehouse or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all the economic benefits from the use of the office space, warehouse and equipment. The leases are recorded as right-of-use ("ROU") assets and lease liabilities for leases with terms greater than 12 months. The Company’s leases generally have terms of 1-10 years, with certain leases including renewal options to extend the leases for additional periods at the Company’s discretion. Generally, the lease term is the minimum of the noncancelable period of the lease, as the Company is not reasonably certain to exercise renewal options.

Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Tenant allowances used to fund leasehold improvements are recognized when earned and reduce the right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term.

Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent the right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company estimates

incremental secured borrowing rates corresponding to the maturities of the leases. The Company estimates this rate based on prevailing financial market conditions as rates are not implicitly stated in most leases. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leased assets are presented net of accumulated amortization. Variable lease payment amounts that cannot be determined at the commencement of the lease, such as increases in lease payments based on changes in index rates or usage, are not included in the ROU assets or liabilities; instead, these are expensed as incurred and recorded as variable lease expense.

Supplemental balance sheet information related to leases was as follows (in thousands):

	September 30, 2019
Operating leases
Right of use assets:
Right of use assets	$	51,425
Finance leases
Right of use assets:
Right of use assets, cost	$	579
Less: Accumulated amortization	(278		)
Right of use assets, net	$	301
Total right of use assets, net	$	51,726
Lease liabilities
Current
Operating	$	8,485
Finance	114
Non-current
Operating	$	46,865
Finance	229
Total lease liabilities	$	55,693

The components of lease cost were as follows (in thousands):

	September 30, 2019
Operating lease cost	$	7,649
Variable lease cost	866
Short-term lease cost	1,530
Finance lease cost:
Amortization of right of use assets	57
Interest on lease liabilities	16
Total finance lease cost	$	73
Less: Sublease income	(132		)
Total lease cost	$	9,986

Average lease terms and discount rates were as follows:

	September 30, 2019
Weighted-average remaining lease term (years)
Operating leases	6.96
Finance leases	2.92
Weighted-average discount rate
Operating leases	6.59	%
Finance leases	7.77	%

Supplemental cash flow information related to leases was as follows (in thousands):

	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	82
Operating cash flows from operating leases	5,828
Total	$	5,910

The aggregate future lease payments for operating and finance leases as of September 30, 2019 are as follows (in thousands):

	Operating			Finance
Remaining 2019	$	2,638		$	33
2020	11,089			133
2021	11,873			134
2022	10,292			71
2023	7,804			10
Thereafter	27,210			—
Total lease payments	$	70,906		$	381
Less: Interest	(15,556		)	(38		)
Present value of lease liabilities	$	55,350		$	343

The aggregate future lease payments for operating and capital leases as of December 31, 2018 were as follows (in thousands):

	Operating
2019	$	6,383
2020	5,017
2021	4,422
2022	3,245
2023	2,068
Thereafter	1,966
Total lease payments	$	23,101