Leases

9 Months Ended

Sep. 30, 2020

We lease office space, distribution centers, land, vehicles and equipment. Lease agreements 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.

Certain lease agreements 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 our sole discretion. Some agreements also include options to purchase the leased property. The estimated 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 of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The following table provides information about the financial statement classification of our lease balances reported within the consolidated balance sheets as of September 30, 2020 and December 31, 2019 (in thousands):

Leases	Classification	September 30, 2020		December 31, 2019
Assets
Operating lease assets	Other assets	$	81,481	$	74,684
Finance lease assets	Property and equipment^(a)		2,326		3,297
Total lease assets		$	83,807	$	77,981
Liabilities
Current
Operating lease liabilities	Accrued expenses and other current liabilities	$	20,556	$	19,648
Finance lease liabilities	Current portion of long-term debt		1,422		1,691
Non-current
Operating lease liabilities	Other liabilities		67,421		60,285
Finance lease liabilities	Long-term debt		1,253		2,131
Total lease liabilities		$	90,652	$	83,755

(a)	Recorded net of accumulated amortization of $1,833,000 and $861,000 as of September 30, 2020 and December 31, 2019, respectively.

The following table provides information about the financial statement classification of our lease expenses reported within the consolidated statement of operations for the three and nine months ended September 30, 2020 (in thousands):

Lease cost	Classification	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
Operating lease cost ^{(a) (b)}	Selling and administrative expenses	$	6,460	$	19,412
Finance lease cost
Amortization of leased assets	Selling and administrative expenses		324		972
Interest on lease liabilities	Interest expense, net		24		84
Total lease cost		$	6,808	$	20,468

(a)	Includes immaterial amounts recorded to cost of goods sold.

(b)	Excludes short-term and variable lease costs, which are immaterial.

Future minimum lease payments under non-cancelable leases as of September 30, 2020 are as follows (in thousands):

	Operating leases			Finance leases			Total
Remainder of 2020	$	6,021		$	564		$	6,585
2021		22,194			1,077			23,271
2022		19,099			645			19,744
2023		13,477			449			13,926
2024		8,430			45			8,475
After 2024		28,999			—			28,999
Total lease payments		98,220			2,780			101,000
Less: Interest		(10,243	)		(105	)		(10,348	)
Present value of lease liabilities	$	87,977		$	2,675		$	90,652

Operating lease payments include $13.4 million related to options to extend lease terms that are reasonably certain of being exercised.

The following table provides information about the remaining lease terms and discount rates applied as of September 30, 2020:

	September 30, 2020		September 30, 2019
Weighted average remaining lease term (years)
Operating leases		6.13		6.19
Finance leases		2.45		1.69
Weighted average discount rate (%)
Operating leases		3.43		3.65
Finance leases		3.46		4.85

The following table provides other information related to leases for the three and nine months ended September 30, 2020 (in thousands):

	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,360	$	19,444
Leased assets obtained in exchange for new operating lease liabilities	$	577	$	23,178