Leases Leases

6 Months Ended

Jun. 30, 2019

LEASES

The Company leases real estate, office equipment, and dealership operating assets under long-term lease agreements, and subleases certain real estate to third parties. The Company uses its incremental borrowing rate based on information available as of the measurement date. For leases effective on or after January 1, 2019, the Company determines if an arrangement is a lease at inception and recognizes ROU assets and lease liabilities at commencement date based on the present value of lease payments over the lease term. For such leases, the aggregate present value of the Company’s lease payments may include options to purchase the leased property or lease terms with options to renew or terminate the lease, when it is reasonably certain that the Company will exercise such an option. The exercise of lease renewals, terminations, or purchase options is generally at the Company’s discretion. The Company’s leases may also include rental payments adjusted periodically for inflation. Payments based on a change in an index or rates are not considered in the determination of lease payments for purposes of measuring the related lease liability. Subsequent to the recognition of its ROU assets and lease liabilities, the Company recognizes lease expense related to its operating lease payments on a straight-line basis over the lease term. None of the Company’s lease agreements contains material residual value guarantees or material restrictive covenants.

Additional information of the Company’s operating and finance leases are as follows (in thousands, except for lease term and discount rate information):



Leases	Balance Sheet Classification	June 30, 2019
Assets
Operating	Operating lease assets	$	202,719
Finance	Property and equipment, net	48,461
Total		$	251,180
Liabilities
Current
Operating	Current operating lease liabilities	$	23,504
Finance	Current maturities of long-term debt	6,225
Noncurrent
Operating	Operating lease liabilities, net of current portion	193,421
Finance	Long-term debt, net of current maturities	48,138
Total		$	271,288



Lease Expense	Income Statement Classification	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Operating	Selling, general and administrative expenses	$	10,249		$	21,094
Variable	Selling, general and administrative expenses	449			1,045
Sublease income	Selling, general and administrative expenses	(321		)	(641		)
Finance
Amortization of lease assets	Depreciation and amortization expense	1,263			2,386
Interest on lease liabilities	Other interest expense, net	1,050			2,022
Net lease expense		$	12,690		$	25,906



	June 30, 2019
Maturities of Lease Liabilities	Operating Leases			Finance Leases
2019 (excluding the six months ended June 30, 2019)	$	16,297		$	6,290
2020	37,710			7,630
2021	35,772			7,659
2022	31,370			7,553
2023	28,386			6,391
Thereafter	161,190			48,337
Total lease payments	310,725			83,860
Less: Interest	(93,800		)	(29,497		)
Present value of lease liabilities	$	216,925		$	54,363



Weighted-Average Lease Term and Discount Rate	June 30, 2019
Weighted-average remaining lease terms
Operating	11.3 years
Financing	12.4 years
Weighted-average discount rates
Operating	6.0	%
Financing	8.8	%



Other Information	Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	21,166
Operating cash flows from finance leases	$	2,022
Financing cash flows from finance leases	$	1,996
Right-of-use assets obtained in exchange for lease obligations
Operating leases, initial recognition	$	5,280
Operating leases, modifications and remeasurements	$	(10,673	)
Finance leases, initial recognition	$	436
Finance leases, modifications and remeasurements	$	8,257

Leases

LEASES

Additional information of the Company’s operating and finance leases are as follows (in thousands, except for lease term and discount rate information):



Leases	Balance Sheet Classification	June 30, 2019
Assets
Operating	Operating lease assets	$	202,719
Finance	Property and equipment, net	48,461
Total		$	251,180
Liabilities
Current
Operating	Current operating lease liabilities	$	23,504
Finance	Current maturities of long-term debt	6,225
Noncurrent
Operating	Operating lease liabilities, net of current portion	193,421
Finance	Long-term debt, net of current maturities	48,138
Total		$	271,288



Lease Expense	Income Statement Classification	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Operating	Selling, general and administrative expenses	$	10,249		$	21,094
Variable	Selling, general and administrative expenses	449			1,045
Sublease income	Selling, general and administrative expenses	(321		)	(641		)
Finance
Amortization of lease assets	Depreciation and amortization expense	1,263			2,386
Interest on lease liabilities	Other interest expense, net	1,050			2,022
Net lease expense		$	12,690		$	25,906



	June 30, 2019
Maturities of Lease Liabilities	Operating Leases			Finance Leases
2019 (excluding the six months ended June 30, 2019)	$	16,297		$	6,290
2020	37,710			7,630
2021	35,772			7,659
2022	31,370			7,553
2023	28,386			6,391
Thereafter	161,190			48,337
Total lease payments	310,725			83,860
Less: Interest	(93,800		)	(29,497		)
Present value of lease liabilities	$	216,925		$	54,363



Weighted-Average Lease Term and Discount Rate	June 30, 2019
Weighted-average remaining lease terms
Operating	11.3 years
Financing	12.4 years
Weighted-average discount rates
Operating	6.0	%
Financing	8.8	%



Other Information	Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	21,166
Operating cash flows from finance leases	$	2,022
Financing cash flows from finance leases	$	1,996
Right-of-use assets obtained in exchange for lease obligations
Operating leases, initial recognition	$	5,280
Operating leases, modifications and remeasurements	$	(10,673	)
Finance leases, initial recognition	$	436
Finance leases, modifications and remeasurements	$	8,257