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Operating Leases | 12 Months Ended
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Dec. 31, 2019
Leases [Abstract] |
Lessee, Operating Leases [Text Block] | Operating Leases On January 1, 2019, the Company adopted ASC 842, Leases (“ASC 842”), using the initial date of adoption method, whereby the adoption does not impact any periods prior to 2019. The Company recorded an operating ROU asset and an operating lease liability of $20.9 million on its Consolidated Balance Sheets upon adoption. The Company elected to adopt the package of practical expedients and, accordingly, did not reassess any previously expired or existing arrangements and related classification under ASC 840, Leases (“ASC 840”). The Company leases certain office space and model homes under operating leases with remaining terms of one to six years. The Company sells model homes to investors with the express purpose of leasing the homes back as sales models for a specified period of time. Under ASC 842, the Company records the sale of the model home and the profit on the sale at the time of the home delivery. The Company determines if an arrangement is a lease at inception when the arrangement transfers the right to control the use of an identified asset to the Company. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make payments arising from the lease agreement. The Company has operating leases but does not have any material financing leases. Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. The lease term may include an option to extend or terminate a lease when it is reasonably certain that the option will be exercised. The exercise of these lease renewal options is generally at our discretion. The operating lease ROU assets include any lease payments made in advance and exclude any lease incentives. Lease payments include both lease and non-lease components as a single lease component. Lease expense is recognized on a straight-line basis over the lease term. The expense recognition pattern for our leases remained substantially unchanged as a result of the adoption of ASC 842. Variable lease payments consist of non-lease services related to the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are expensed as incurred. Short-term leases include leases with terms of less than one year without renewal options that are reasonably certain to be exercised and are recognized on a straight-line basis over the lease term. Due to our election of the practical expedient, leases with an initial term of twelve months or less are not recorded on the balance sheet. As the rate implicit in our leases is not readily determinable, the Company uses its estimated incremental borrowing rate at the commencement date in determining the present value of the lease payments. We give consideration to our recent debt issuances as well as to the current rate available under our Credit Facility when calculating our incremental borrowing rate. Our lease agreements do not contain any residual value guarantees or material restrictive covenants. As of December 31, 2019, the Company has additional operating leases, which have not yet commenced, of approximately $31 million. This balance relates primarily to a ten-year renewable lease for our new corporate headquarters expected to commence in 2020. During the twelve months ended December 31, 2019, the Company reduced both its operating ROU asset and operating lease liability by $2.5 million as a result of $5.2 million of additional ROU asset amortization and periodic lease expense (which is recorded within its Consolidated Statement of Cash Flows in the change in Other Assets and Other Liabilities), offset partially by $2.7 million attributable to additional leases and modifications to existing leases year to date. As of December 31, 2019, the Company’s ROU asset and operating lease liability had a balance of $18.4 million on its Consolidated Balance Sheets. The weighted-average remaining lease term was 4.0 years and the weighted-average discount rate was 5.0%. For the twelve months ended December 31, 2019, the Company had the following operating lease expense components:
(Dollars in thousands) |
Operating lease expense | $ | 6,188 |
Variable lease expense | 1,629 |
Short-term lease expense | 1,725 |
Total lease expense | $ | 9,542 |
The following table presents a maturity analysis of our annual undiscounted cash flows reconciled to the carrying value of our operating lease liabilities as of December 31, 2019:
(Dollars in thousands) |
2020 | $ | 5,479 |
2021 | 5,159 |
2022 | 4,345 |
2023 | 3,264 |
2024 | 1,741 |
Thereafter | 388 |
Total lease payments | 20,376 |
Less: Imputed interest | (1,961 | )
Total operating lease liability | $ | 18,415 |
At December 31, 2018, under ASC 840, the future minimum rental commitments totaled $22.5 million under non-cancelable operating leases with initial terms in excess of one year. The Company’s total rental expense was $8.2 million, $7.1 million, and $6.3 million for 2018, 2017 and 2016, respectively.

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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