Leases

6 Months Ended

Jun. 30, 2019

We lease office space, restaurant and production facilities, warehouse and storage space, land and equipment under operating leases that expire at various dates through the year ending December 31, 2064. Certain leases contain renewal options for varying periods and escalation clauses for adjusting rent to reflect changes in price indices or scheduled adjustments. We exercise judgment in determining the reasonably certain lease term based on the provisions of the underlying agreement, the economic value of leasehold improvements and other relevant factors. Certain leases require us to pay for insurance, taxes and maintenance applicable to the leased property. Under the terms of the land lease for our New Hampshire Brewery, we hold a first right of refusal to purchase the property should the lessor decide to sell the property.

We lease equipment under finance leases that expire at various dates through the year ending December 31, 2024. Ownership of the leased equipment transfers to us at the end of each lease term.

Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

If our leases do not provide an implicit rate, we develop an estimated incremental borrowing rate at the commencement date based on the estimated rate at which we would borrow, in the current economic environment, an amount equal to the lease payments over a similar term on a collateralized basis which is used to in determine the present value of lease payments. There were no new operating lease obligations recognized at adoption in comparison to our operating lease obligations disclosed as of December 31, 2018. Our accounting for finance (formerly capital) leases is substantially unchanged.

As described further in Note 2, we adopted ASC 842 as of January 1, 2019. Prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting under ASC 840.

Lease-related liabilities consisted of the following (in thousands):



	June 30, 2019			December 31, 2018
Operating lease liabilities:
Current lease liabilities included in Other accrued expenses	$	841		$	—
Long-term lease liabilities	19,382			—
Total operating lease liabilities	20,223			—
Financing lease liabilities:
Current portion included in Current portion of long-term debt and finance lease obligations	387			477
Long-term portion of lease liabilities in Long-term debt and finance lease obligations, net of current portion	954			1,101
Total financing lease liabilities	1,341			1,578
Total lease liabilities	$	21,564		$	1,578
Weighted-average remaining lease term:
Operating leases	27 years
Finance leases	4 years
Weighted-average discount rate:
Operating leases	4.91		%
Finance leases	3.56		%

As of June 30, 2019, the maturities of our operating lease liabilities were as follows (in thousands):



	Operating Leases
Remainder of 2019	$	957
2020	1,702
2021	1,713
2022	1,697
2023	1,480
Thereafter	29,077
Total minimum lease payments	36,626
Less: present value adjustment	(16,403		)
Operating lease liabilities	$	20,223

As of June 30, 2019, the maturities of our finance lease liabilities were as follows (in thousands):



	Finance Leases
Remainder of 2019	$	264
2020	333
2021	266
2022	199
2023	199
Thereafter	199
Total minimum lease payments	1,460
Less: present value adjustment	(119		)
Finance lease liabilities	$	1,341

We have additional operating lease liabilities of $4.8 million for lease contracts which have not yet commenced as of June 30, 2019, and, as such, have not been recognized on our Consolidated Balance Sheets. This lease is expected to commence during the third quarter of 2019 for a term of 3 years with an extension at our option for two 5-year periods.

Components of lease cost were as follows (in thousands):



	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Operating lease cost⁽¹⁾	$	864		$	1,738
Finance lease cost:
Amortization of right-of-use asset	42			85
Interest on lease liabilities	12			25
Sublease income	(69		)	(69		)
Total lease cost	$	849		$	1,779

(1) Includes short-term, month-to-month lease and variable lease costs, which were immaterial.

Total future minimum lease payments as of December 31, 2018 consisted of (in thousands):



	Operating Lease Obligations		Capital Lease Obligations
2019	$	11,208	$	529
2020	1,937		333
2021	1,863		266
2022	1,793		199
2023	1,465		199
Thereafter	25,446		199
	$	43,712	1,725
Amount representing interest			(148		)
			$	1,577

Leases