XML 34 R17.htm IDEA: XBRL DOCUMENT

Lease Obligations

12 Months Ended

Dec. 31, 2021

10. Lease Obligations

The Company leases property and equipment throughout the United States primarily under finance and operating leases. For leases with initial lease terms at commencement that are greater than 12 months, the Company records the related asset and obligation at the present value of lease payments over the term. Many of the Company’s leases include rental escalation clauses, renewal options and/or termination options that are factored into the determination of lease payments when appropriate. The Company aggregates non-lease components with the related lease components when evaluating the accounting treatment for property, equipment, and billboard leases.

Many of the Company’s lease agreements include fixed rental payments. Certain of its lease agreements include fixed rental payments that are adjusted periodically for changes in the Consumer Price Index (“CPI”). Payments based on a change in an index or a rate, rather than a specified index or rate, are not considered in the determination of lease payments for purposes of measuring the related lease liability. While lease liabilities are not remeasured as a result of changes to the CPI, changes to the CPI are typically treated as variable lease payments and recognized in the period in which the obligation for those payments are incurred. Common area maintenance, property tax, and insurance associated with triple net leases, as well as payments based on revenue generated at certain leased locations, are included in variable lease costs, but are not included in the measurement of the lease liability.

Most of the Company’s real estate leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The exercise of lease renewal options is at the Company’s sole discretion. If it is reasonably certain that the Company will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of the operating lease assets and operating lease liabilities. The depreciable life of assets and leasehold improvements are limited to the shorter of the lease term or useful life if there is a transfer of title or purchase option reasonably certain of exercise.

The Company cannot readily determine the rate implicit in its leases. Therefore, the Company must estimate its incremental borrowing rate to discount the lease payments based on information available at lease

commencement. The Company estimates its incremental borrowing rate using a yield curve based on the credit rating of its collateralized debt and maturities that are commensurate with the lease term at the applicable commencement or remeasurement date.

The Company leases most of the properties for its retail locations through 240 operating leases and 9 finance leases. The Company also leases billboards and certain of its equipment. The related operating lease assets and finance lease assets are included in the operating lease assets and property equipment, respectively, in the accompanying consolidated balance sheets.

As of December 31, 2021 and 2020, finance lease assets of $75.7 million and $29.8 million, respectively, were included in property and equipment, net in the accompanying consolidated balance sheets.

The following presents certain information related to the costs for leases (in thousands):


	Year Ended December 31,
	2021		2020
Operating lease cost	$	120,096	$	121,238
Finance lease cost:
Amortization of finance lease assets		6,016		2,701
Interest on finance lease liabilities		2,353		1,248
Short-term lease cost		1,958		1,699
Variable lease cost		23,512		23,385
Sublease income		(1,915)		(1,876)
Net lease costs	$	152,020	$	148,395

The following presents supplemental cash flow information related to leases (in thousands):


	Year Ended December 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	121,394	$	121,708
Operating cash flows for finance leases		2,287		1,061
Financing cash flows for finance leases		2,923		2,355
Lease assets obtained in exchange for lease liabilities:
New, remeasured and terminated operating leases	$	44,041	$	25,296
New, remeasured and terminated finance leases		51,920		31,895

The following presents other information related to leases:


	December 31, 2021
Weighted average remaining lease term:
Operating leases	12.2	years
Financing leases	15.1	years
Weighted average discount rate:
Operating leases	6.4	%
Financing leases	5.0	%

The following reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the lease liabilities in the accompanying consolidated balance sheet as of December 31, 2021 (in thousands):


	Operating		Finance
	Leases		Leases
2022	$	113,499	$	8,777
2023		113,300		12,167
2024		108,952		7,001
2025		102,616		6,157
2026		96,706		6,134
Thereafter		701,911		77,357
Total lease payments		1,236,984		117,593
Less: Imputed interest		(399,878)		(37,877)
Total lease obligations		837,106		79,716
Less: current portion		(62,217)		(4,964)
Noncurrent lease obligations	$	774,889	$	74,752