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Leases

9 Months Ended

Sep. 30, 2019

6. Leases

After Adoption of ASU 2016-02

The Company has lease arrangements for warehouse, fulfillment center, office, and data center spaces. These leases expire at various dates through 2035. Operating lease expense was $31.8 million and $17.5 million in the three months ended September 30, 2019 and 2018, respectively, and $86.8 million and $48.1 million in the nine months ended September 30, 2019 and 2018, respectively.

The following table presents other information related to leases (in thousands):



	Nine months ended September 30, 2019
Supplemental cash flows information
Cash payments included in operating cash flows from lease arrangements	$	77,687
Right-of-use assets obtained in exchange for lease obligations	$	281,006

	September 30, 2019
Additional lease information
Weighted average remaining lease term	10 years
Weighted average discount rate	6.7		%

Future minimum lease payments under non-cancellable leases as of September 30, 2019 were as follows (in thousands):



	Amount
2019 (excluding the nine months ended September 30, 2019)	$	30,078
2020	138,735
2021	143,833
2022	137,419
2023	132,865
Thereafter	634,742
Total future minimum lease payments	1,217,672
Less: Imputed interest	(317,805		)
Total	$	899,867

The following table presents total operating leases (in thousands):



	September 30, 2019
Balance sheet line item
Other current liabilities	$	86,006
Operating lease liabilities	813,861
Total operating leases	$	899,867

As of September 30, 2019, the Company has entered into $332.6 million of additional operating leases, primarily related to build-to-suit warehouse leases that have not yet commenced. As the Company does not control the underlying assets during the construction period, the Company is not considered the owner of the construction projects for accounting purposes. These operating leases will commence between 2019 and 2021 with lease terms of 2 to 15 years.

Before Adoption of ASU 2016-02

The Company established assets and liabilities for the estimated construction costs incurred under lease arrangements where the Company is considered the owner for accounting purposes only to the extent the Company is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease. These are referred to as "build-to-suit leases". Upon occupancy of facilities under build-to-suit leases, the Company assesses whether these arrangements qualify for sales recognition under the sale-leaseback accounting guidance. If the Company continues to be the deemed owner, the facilities are accounted for as financing leases.

In the year ended December 31, 2018, the construction efforts related to three warehouse lease arrangements were completed. In the first warehouse lease arrangement, the Company concluded it had a letter of credit of $2.5 million and as a result the Company did not meet the sale-leaseback criteria for derecognition of the building assets and liabilities. In both the

second and third warehouse lease arrangements, the Company provided non-recourse financing to the lessor and as a result the Company did not meet the sale-leaseback criteria for derecognition of the building assets and liabilities.

Accordingly, these leases were accounted for as financing leases and $101.0 million was recorded in "Lease financing obligation, net of current portion" and "Property and equipment, net," respectively, in the Company’s consolidated and condensed balance sheet as of December 31, 2018.

Leases