Leases

12 Months Ended

Dec. 31, 2019

Note 8. Leases

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 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 3, 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):



	December 31,
	2019			2018
Operating lease liabilities:
Current lease liabilities included in Other accrued expenses	$	883		$	—
Long-term lease liabilities	24,037			—
Total operating lease liabilities	24,920			—

Current portion included in Current portion of long-term debt and finance lease obligations	296			477
Long-term portion of lease liabilities included in Long-term debt and finance lease obligations, net of current portion	804			1,100
Total financing lease liabilities	1,100			1,577
Total lease liabilities	$	26,020		$	1,577
Weighted-average remaining lease term:
Operating leases	24 years
Finance leases	4 years
Weighted-average discount rate:
Operating leases	4.72		%
Finance leases	3.70		%

As of December 31, 2019, the maturities of our operating lease liabilities were as follows (in thousands):



	Operating Leases
2020	$	2,012
2021	2,036
2022	2,091
2023	1,958
2024	1,933
Thereafter	32,301
Total minimum lease payments	42,331
Less: present value adjustment	(17,411		)
Operating lease liabilities	$	24,920

As of December 31, 2019, the maturities of our finance lease liabilities were as follows (in thousands):



	Finance Leases
2020	$	333
2021	266
2022	199
2023	199
2024	199
Thereafter	—
Total minimum lease payments	1,196
Less: present value adjustment	(96		)
Finance lease liabilities	$	1,100

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



	Year Ended December 31, 2019
Operating lease cost⁽¹⁾	$	3,571
Finance lease cost:
Amortization of right-of-use asset	169
Interest on lease liabilities	48
Sublease income	(215		)
Total lease cost	$	3,573

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

Leases