Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Operating Leases

For some of our offices and data centers, we have entered into non-cancelable operating lease agreements with various expiration dates through 2035. Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into our determination of lease payments.

Total operating lease costs was $64.2 million, excluding short-term lease costs, variable lease costs and sublease income each of which were immaterial, for the year ended December 31, 2019. Total lease expenses recognized prior to our adoption of Topic 842 were $46.8 million and $42.8 million for the years ended December 31, 2018 and 2017, respectively.

For the year ended December 31, 2019, cash paid for amounts included in the measurement of operating lease liabilities was $44.1 million and operating lease liabilities arising from obtaining operating right-of-use assets totaled $115.0 million.

As of December 31, 2019, the weighted-average remaining lease term is 9.7 years, and the weighted-average discount rate is 3.7%.

Maturities of operating lease liabilities as of December 31, 2019 are presented in the table below (in thousands):



Years Ending December 31,
2020	$	67,629
2021	65,934
2022	62,754
2023	57,957
2024	45,820
Thereafter	230,605
Total operating lease payments	530,699
Less: imputed interest	(94,810		)
Present value of operating lease liabilities	$	435,889

In addition to the amounts above, as of December 31, 2019, we have operating leases, primarily for offices, that have not yet commenced with undiscounted cash flows of $445.7 million. These operating leases will commence between 2020 and 2022 with lease terms of 3 to 15 years.

Future minimum commitments under our non-cancelable operating leases as of December 31, 2018 are presented in the table below (in thousands):



Years Ending December 31,
2019	$	55,435
2020	60,996
2021	63,348
2022	67,707
2023	72,491
Thereafter	578,874
Total	$	898,851

Other Contractual Commitments

Other contractual commitments consist of data center and IT operations and sales and marketing activities related to our daily business operations. Future minimum payments under our non-cancelable purchase commitments as of December 31, 2019 are presented in the table below (in thousands):



	Purchase Obligations ⁽¹⁾
Years Ending December 31,
2020	$	70,819
2021	62,450
2022	32,572
2023	9,069
2024	2,699
Thereafter	2,630
Total	$	180,239


(1)	Not included in the table above are certain purchase commitments related to our future annual Knowledge user conferences and other customer or sales conferences to be held in 2021 and future years. If we had canceled these contractual commitments as of December 31, 2019 we would have been obligated to pay cancellation penalties of approximately $16.3 million in aggregate.

In addition to the amounts above, the repayment of our 2022 Notes with an aggregate principal amount of $782.5 million is due on June 1, 2022. Refer to Note 11 for further information regarding our Notes.

Also, approximately $6.1 million of unrecognized tax benefits have been recorded as liabilities as of December 31, 2019.

Letters of Credit

As of December 31, 2019, we had letters of credit in the aggregate amount of $22.9 million, primarily in connection with our customer contracts and operating leases.

Legal Proceedings

From time to time, we are party to litigation and other legal proceedings in the ordinary course of business. While the results of any litigation or other legal proceedings are uncertain, management does not believe the ultimate resolution of any pending legal matters is likely to have a material adverse effect on our financial position, results of operations or cash flows, except for those matters for which we have recorded a loss contingency. We accrue for loss contingencies when it is both probable that we will incur the loss and when we can reasonably estimate the amount of the loss or range of loss.

Generally, our subscription agreements require us to defend our customers for third-party intellectual property infringement and other claims. Any adverse determination related to intellectual property claims or other litigation could prevent us from offering our services and adversely affect our financial condition and results of operations.