Leases

3 Months Ended

Mar. 31, 2019

The Company leases certain manufacturing facilities, retail stores, warehouses, distribution centers, office space, land, and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company does not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes.

Some leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain lease agreements include rental payments that are variable based on usage or are adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Information on the Company’s leases is summarized as follows (in thousands):



	Classification	March 31, 2019
Assets
Operating lease assets	Operating lease assets	$	112,286
Finance lease assets	Property and equipment, net ⁽¹⁾	13,689
Total leased assets		$	125,975
Liabilities
Current
Operating lease liabilities	Current operating lease liabilities	$	34,814
Finance lease liabilities	Current portion of debt, finance lease obligations and notes payable	1,293
Long-term
Operating lease liabilities	Long-term operating lease liabilities	79,736
Finance lease liabilities	Finance lease obligations	15,926
Total lease liabilities		$	131,769

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $6,581 as of March 31, 2019.



Lease Cost	Classification	Three months ended March 31, 2019
Operating lease cost ⁽¹⁾	Operating expenses and cost of sales	$	10,088
Finance lease cost
Amortization of leased assets	Operating expenses and cost of sales	369
Interest on lease liabilities	Interest expense	227
Sublease income	Other (income) expense, net	(578		)
Total lease cost		$	10,106

⁽¹⁾ Includes short-term leases and variable lease costs, which are immaterial.



Maturity of Lease Liabilities	Operating Leases ⁽¹⁾		Finance Leases		Total
2019 (remainder)	$	29,174	$	1,591	$	30,765
2020	31,363		2,124		33,487
2021	22,422		2,113		24,535
2022	15,379		2,076		17,455
2023	11,009		2,076		13,085
Thereafter	13,952		11,959		25,911
Total lease payments	$	123,299	$	21,939	$	145,238
Less: interest	8,749		4,720
Present value of lease payments	$	114,550	$	17,219

⁽¹⁾ Operating lease payments include $4,211,000 related to options to extend lease terms that are reasonably certain of being exercised.



Lease Term and Discount Rate	March 31, 2019
Weighted-average remaining lease term (years)
Operating leases	4.43
Finance leases	10.12
Weighted-average discount rate
Operating leases	3.37	%
Finance leases	5.08	%



Other Information	Three months ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	10,169
Operating cash flows from finance leases	147
Financing cash flows from finance leases	371
Leased assets obtained in exchange for new operating lease liabilities	4,042

Leases



	Classification	March 31, 2019
Assets
Operating lease assets	Operating lease assets	$	112,286
Finance lease assets	Property and equipment, net ⁽¹⁾	13,689
Total leased assets		$	125,975
Liabilities
Current
Operating lease liabilities	Current operating lease liabilities	$	34,814
Finance lease liabilities	Current portion of debt, finance lease obligations and notes payable	1,293
Long-term
Operating lease liabilities	Long-term operating lease liabilities	79,736
Finance lease liabilities	Finance lease obligations	15,926
Total lease liabilities		$	131,769

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $6,581 as of March 31, 2019.



Lease Cost	Classification	Three months ended March 31, 2019
Operating lease cost ⁽¹⁾	Operating expenses and cost of sales	$	10,088
Finance lease cost
Amortization of leased assets	Operating expenses and cost of sales	369
Interest on lease liabilities	Interest expense	227
Sublease income	Other (income) expense, net	(578		)
Total lease cost		$	10,106

⁽¹⁾ Includes short-term leases and variable lease costs, which are immaterial.



Maturity of Lease Liabilities	Operating Leases ⁽¹⁾		Finance Leases		Total
2019 (remainder)	$	29,174	$	1,591	$	30,765
2020	31,363		2,124		33,487
2021	22,422		2,113		24,535
2022	15,379		2,076		17,455
2023	11,009		2,076		13,085
Thereafter	13,952		11,959		25,911
Total lease payments	$	123,299	$	21,939	$	145,238
Less: interest	8,749		4,720
Present value of lease payments	$	114,550	$	17,219

⁽¹⁾ Operating lease payments include $4,211,000 related to options to extend lease terms that are reasonably certain of being exercised.



Lease Term and Discount Rate	March 31, 2019
Weighted-average remaining lease term (years)
Operating leases	4.43
Finance leases	10.12
Weighted-average discount rate
Operating leases	3.37	%
Finance leases	5.08	%



Other Information	Three months ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	10,169
Operating cash flows from finance leases	147
Financing cash flows from finance leases	371
Leased assets obtained in exchange for new operating lease liabilities	4,042