Leases and Other Finance Obligations

6 Months Ended

Jun. 30, 2021

10. Leases and Other Finance Obligations

Right-of-use assets and lease liabilities consisted of the following (in thousands) as of:

	June 30, 2021		December 31, 2020
Assets
Operating lease right-of-use assets, net	$	429,940	$	274,562
Finance lease right-of-use assets, net (included in property, plant and equipment, net)		6,684		34,905
Total right-of-use assets	$	436,624	$	309,467
Liabilities
Current
Current portion of operating lease liabilities	$	91,134	$	61,625
Current portion of finance lease liabilities (included in current maturities of long-term debt)		1,771		12,178
Noncurrent
Noncurrent portion of operating lease liabilities		347,823		219,239
Noncurrent portion of finance lease liabilities (included in long-term debt, net of current maturities)		4,764		11,695
Total lease liabilities	$	445,492	$	304,737

Total lease costs consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020			2021		2020
Operating lease costs (1)	$	33,183	$	21,321	$	65,472	$	42,993
Finance lease costs:
Amortization of finance lease right-of-use assets		431		1,543		1,390		3,156
Interest on finance lease liabilities		71		345		265		659
Variable lease costs		6,709		4,413		13,481		8,662
Total lease costs	$	40,394	$	27,622	$	80,608	$	55,470

(1)

Includes short-term lease costs and sublease income which were not material for the three and six months ended June 30, 2021 and 2020.

Future maturities of lease liabilities as of June 30, 2021 were as follows (in thousands):

	Finance Leases			Operating Leases
2021 (from July 1, 2021)	$	1,101		$	56,262
2022		1,805			105,734
2023		1,580			88,985
2024		731			72,001
2025		517			50,337
Thereafter		1,571			149,311
Total lease payments		7,305			522,630
Less: amount representing interest		(770	)		(83,673	)
Present value of lease liabilities		6,535			438,957
Less: current portion		(1,771	)		(91,134	)
Long-term lease liabilities, net of current portion	$	4,764		$	347,823

Weighted average lease terms and discount rates were as follows:

	June 30, 2021		December 31, 2020
Weighted average remaining lease term (years)
Operating leases	6.3		6.3
Finance leases	5.1		2.1
Weighted average discount rate
Operating leases	5.5	%	6.3	%
Finance leases	4.4	%	5.9	%

The following table presents cash paid for amounts included in the measurement of lease liabilities (in thousands):

	Six Months Ended June 30,
		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	61,287	$	41,652
Operating cash flows from finance leases		265		659
Financing cash flows from finance leases		27,021		6,806

Residual value guarantees in our lease agreements are not material. Our lease agreements do not impose any significant restrictions or covenants on us. As of June 30, 2021, we do not have any material leases that have been signed, but have not yet commenced. Leases with related parties are not significant as of June 30, 2021 nor for the three and six months ended June 30, 2021 and 2020.

Other Finance Obligations

In addition to the operating and finance lease arrangements described above, the Company is party to 124 individual property lease agreements with a single lessor as of June 30, 2021. These lease agreements had initial terms ranging from nine to 15 years with renewal options in five-year increments providing for up to approximately 30-year total lease terms. A related agreement between the lessor and the Company gives the Company the right to acquire a limited number of the leased facilities at fair market value. These purchase rights represent a form of continuing involvement with these properties, which precluded sale-leaseback accounting. As a result, the Company treats all of the properties that it leases from this lessor as a financing arrangement.

We were deemed the owner of certain of our facilities during their construction period based on an evaluation made in accordance with the Leases topic of the Codification. Effectively, a sale and leaseback of these facilities occurred when construction was completed and the lease term began. These transactions did not qualify for sale-leaseback accounting. As a result, the Company treats the lease of these facilities as a financing arrangement.

As of June 30, 2021, other finance obligations consist of $208.8 million, with cash payments of $5.6 million and $10.7 million for the three and six months ended June 30, 2021, respectively. These other finance obligations are included on the condensed consolidated balance sheet as part of long-term debt. The related assets are recorded as components of property, plant, and equipment on the condensed consolidated balance sheet.

Future minimum commitments for other finance obligations as of June 30, 2021 were as follows (in thousands):

2021 (from July 1, 2021)	$	8,472
2022		16,811
2023		16,818
2024		16,835
2025		16,836
Thereafter		174,300
Total	$	250,072