Lease Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Lease Commitments and Contingencies:

Lease Commitments

The Partnership has commitments under various operating leases at its parks. The most significant lease commitment was for the land on which California's Great America is located in the City of Santa Clara, which had an initial term through 2039 with renewal options through 2074. On June 28, 2019, the Partnership purchased the land at California's Great America from the lessor, the City of Santa Clara, for $150.3 million. Following the purchase, the Partnership's remaining lease commitments were immaterial to the condensed consolidated financial statements at June 30, 2019. However, the Partnership assumed a material lease commitment when it completed its subsequent event acquisition on July 1, 2019 (see Note 15). The material lease commitment is for the land on which one of the acquired properties is located. This land lease is expected to result in the recognition of an additional right-of-use asset between $6 million and $8 million and an additional corresponding lease liability between $4 million and $6 million in the third quarter of 2019.

The Partnership leases a portion of the California's Great America parking lot to the Santa Clara Stadium Authority during Levi's Stadium events. The lease is effective through the life of the stadium, or approximately 25 years, from the opening of the stadium through 2039. The lease payments were prepaid and the corresponding income is being recognized over the life of the stadium.

The Partnership has also entered into various operating leases at its parks for office space, office equipment, vehicles, and revenue-generating assets. These lease commitments are immaterial to the condensed consolidated financial statements. As a practical expedient, the Partnership recognizes lease payments for short-term leases in the condensed consolidated statement of operations and comprehensive income on a straight-line basis over the lease term and has elected to not separate lease components from non-lease components.

The Partnership's total lease cost and related supplemental information as of June 30, 2019 is listed below:



(In thousands, except for lease term and discount rate)	June 30, 2019
Operating lease expense	$	3,935
Variable lease expense	803
Short-term lease expense	1,808
Sublease income	(244		)
Total lease cost	$	6,302

Weighted-average remaining lease term	6.2 years
Weighted-average discount rate	4.9		%
Operating cash flows for operating leases	$	4,113
Leased assets obtained in exchange for new operating lease liabilities (non-cash activity)	$	1,131

Lease expense, which includes short-term rentals for equipment and machinery, for the six months ended June 24, 2018 totaled $7.1 million.

Future undiscounted cash flows under the Partnership's operating leases and a reconciliation to the operating lease liabilities recognized as of June 30, 2019 is included below:



(In thousands)	June 30, 2019
Undiscounted cash flows
Remainder of 2019	$	1,049
2020	1,608
2021	777
2022	323
2023	159
Thereafter	931
Total	$	4,847

Present value of cash flows
Current lease liability	$	1,768
Lease Liability	2,365
Total	$	4,133

Difference between undiscounted cash flows and discounted cash flows	$	714

Contingencies

The Partnership is a party to a number of lawsuits arising in the normal course of business. In the opinion of management, none of these matters are expected to have a material effect in the aggregate on the Partnership's condensed consolidated financial statements.