Operating Leases (Notes)

12 Months Ended

Dec. 31, 2019

Leases of Lessee Disclosure [Text Block]

Leases

During the first quarter 2019, the Company adopted ASU No. 2016-02, “Leases (Topic 842),” which requires leases with durations greater than twelve months to be recognized on the balance sheet. The Company adopted the standard using the modified retrospective approach with an effective date as of January 1, 2019. Upon adoption the Company recorded $194,100 for right-of-use asset and $209,000 for lease liabilities. The Company did not apply the new standard to comparative periods and therefore, those amounts are not presented below.

The Company elected the package of three practical expedients. As such, the Company did not reassess whether expired or existing contracts are or contain a lease and did not need to reassess the lease classifications or reassess the initial direct costs associated with expired or existing leases. The Company did not elect the hindsight practical expedient or the land easement practical expedient, neither of which are applicable to the Company. Also, the Company has elected to take the practical expedient to not separate lease and non-lease components for all asset classes.

The Company leases office space, sample production space, warehouses, showrooms, storage and retail stores under operating leases. The Company’s portfolio of leases is primarily related to real estate and since most of our leases do not provide a readily determinable implicit rate, the Company estimated its incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Lease Position

The table below presents the lease-related assets and liabilities recorded on the balance sheet as of December 31, 2019:



	Classification on the Balance Sheet	December 31, 2019
Assets
Noncurrent ⁽¹⁾	Operating lease right-of-use asset	$	155,700

Liabilities
Current	Operating leases - current portion	$	38,624
Noncurrent	Operating leases - long-term portion	133,172
Total operating lease liabilities		$	171,796

Weighted-average remaining lease term		5.5 years
Weighted-average discount rate ⁽²⁾		4.4		%

(1) During the third quarter of 2019, the Company recorded a pre-tax charge related to the right-of-use asset of $1,883.

(2) Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019.

Lease Costs

The table below presents certain information related to lease costs for the year ended December 31, 2019:



Operating lease cost	$	48,387
Short-term lease cost	239
Less: sublease income	644
Total lease cost	$	47,982

Other Information

The table below presents supplemental cash flow information related to leases for the year ended December 31, 2019:



Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	46,324

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the lease liabilities recorded on the balance sheet as of December 31, 2019:



2020	$	46,035
2021	39,586
2022	30,474
2023	21,680
2024	18,020
Thereafter	38,119
Total minimum lease payments	193,914
Less: interest	22,118
Present value of lease liabilities	$	171,796

A majority of the retail store leases provide for contingent rental payments if gross sales exceed certain targets. In addition, many of the leases contain rent escalation clauses to compensate for increases in operating costs and real estate taxes. Rent expense for the years ended December 31, 2019, 2018 and 2017 was approximately $61,283, $58,332 and $56,027, respectively. Included in such amounts are contingent rents of $138, $516 and $424 in 2019, 2018 and 2017, respectively.

Rent expense is calculated by amortizing total base rental payments (net of any rental abatements, construction allowances and other rental concessions), on a straight-line basis, over the lease term. Accordingly, rent expense charged to operations differs from rent paid resulting in the Company recording deferred rent in 2018 and 2017.