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Leases (Notes) | 12 Months Ended
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Dec. 31, 2019
Leases [Abstract] |
Leases | Leases We adopted ASC 842 on January 1, 2019, and elected the modified retrospective approach in which the new standard is applied to all leases existing at the date of adoption through a cumulative-effect adjustment of less than $0.1 million to accumulated deficit. Consequently, financial information is not updated, and the disclosures required under the new standard are not provided for periods prior to January 1, 2019. As part of the adoption, we elected the package of practical expedients, the short-term lease exemption, and the practical expedient to not separate lease and non-lease components. Accordingly, we accounted for our existing operating leases as operating leases under the new standard, without reassessing (a) whether the contracts contain a lease under ASC 842, (b) whether classification of the operating leases would be different in accordance with ASC 842, or (c) whether any unamortized initial direct costs would have met the definition of initial direct costs in ASC 842 at lease commencement. We determine whether an arrangement is a lease at inception. Right-of-use (“ROU”) lease assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. ROU lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. When the implicit rate is not readily determinable, we use the estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Amortization of ROU lease assets is recognized in expense on a straight-line basis over the lease term. Short-term leases are leases having a term of twelve months or less. We recognize short-term leases on a straight-line basis and do not record a related lease asset or liability for such leases. Finance lease ROU assets consist primarily of equipment used in the manufacturing process with terms greater than twelve months to seven years. Operating lease ROU assets consist of the following:
• | Equipment used in the manufacturing process as well as office equipment with terms three years to seven years; and
• | Manufacturing plants and office facilities with terms two years to 20 years.
The following table presents components of lease expense for the year ended December 31, 2019:
|  | Financial Statement Line Item |  | Year Ended December 31, 2019
Lease cost: |  |  |  |
Finance lease cost |  |  |  |
Amortization of right-of-use assets |  | Depreciation and amortization |  | $ | 1,416 |
Interest expense |  | Interest expense |  | 284 |
Operating lease cost |  | Cost of sales and selling, general and administrative expense |  | 13,684 |
Short-term lease cost (1) |  | Cost of sales and selling, general and administrative expense |  | 479 |
Variable lease cost (2) |  | Cost of sales and selling, general and administrative expense |  | 36 |
Total lease cost |  |  |  | $ | 15,899 |
_______________________________ (1) Excludes expenses related to leases with a lease term of one month or less. (2) Represents changes to index-based lease payments. The following table presents the lease-related assets and liabilities recorded on the balance sheet as of December 31, 2019:
|  | Financial Statement Line Item |  | December 31, 2019
Assets |  |  |  |
Operating lease assets |  | Operating lease right-of-use assets |  | $ | 65,496 |
Finance lease assets |  | Property, plant and equipment, net |  | 18,415 |
Total lease assets |  |  |  | $ | 83,911 |
Liabilities |  |  |  |
Current liabilities |  |  |  |
Operating lease liabilities |  | Current portion of operating lease liabilities |  | $ | 6,652 |
Finance lease liabilities |  | Other current liabilities |  | 3,669 |
Non-current liabilities |  |  |  |
Operating lease liabilities |  | Operating lease liabilities, net of current portion |  | 66,980 |
Finance lease liabilities |  | Other non-current liabilities |  | 12,037 |
Total lease liabilities |  |  |  | $ | 89,338 |
The following table contains supplemental information related to leases for the year ended December 31, 2019:
Supplemental Cash Flows Information |  | Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities |  |
Operating cash flows from finance leases |  | $ | 273 |
Operating cash flows from operating leases |  | 21,726 |
Financing cash flows from finance leases |  | 3,390 |
Right-of-use assets obtained in exchange for new finance lease liabilities |  | $ | 10,571 |
Right-of-use assets obtained in exchange for new operating lease liabilities |  | $ | 8,508 |
As of December 31, 2019, the weighted average remaining lease term and weighted-average discount rate for finance and operating leases was as follows:
|  | Operating Leases |  | Finance Leases
Weighted-average remaining lease term (years) |  | 10.6 |  |  | 4.3 |
Weighted-average discount rate |  | 6.3 | % |  | 3.0 | %
The maturities of lease liabilities greater than twelve months as of December 31, 2019, is as follows:
|  | Operating Leases |  | Finance Leases
2020 |  | $ | 12,229 |  |  | $ | 4,099 |
2021 |  | 11,233 |  |  | 4,085 |
2022 |  | 10,941 |  |  | 3,867 |
2023 |  | 9,385 |  |  | 2,963 |
2024 |  | 9,150 |  |  | 1,477 |
Thereafter |  | 56,274 |  |  | 272 |
Total future minimum lease payments |  | 109,212 |  |  | 16,763 |
Less: imputed interest |  | 35,580 |  |  | 1,057 |
Total lease liabilities |  | $ | 73,632 |  |  | $ | 15,706 |
As of December 31, 2019, we have an additional operating lease commitment that would require us to pay a total of approximately $27.5 million base rent payments over the lease term of 15 years. We are expected to commence base rent payments during the third quarter of 2020. The following table presents the future minimum lease payments under operating leases with initial or non-cancelable lease terms in excess of one year prior to adoption of ASC 842 as reported in the 2018 Annual Report.
Year Ending December 31, |  |
2019 |  | $ | 13,337 |
2020 |  | 11,515 |
2021 |  | 10,557 |
2022 |  | 10,293 |
2023 |  | 8,752 |
Thereafter |  | 53,945 |
Total minimum payments |  | $ | 108,399 |
During the years ended December 31, 2018 and 2017, we recognized rent expense of $12.4 million and $7.6 million, respectively.
Leases | Leases We adopted ASC 842 on January 1, 2019, and elected the modified retrospective approach in which the new standard is applied to all leases existing at the date of adoption through a cumulative-effect adjustment of less than $0.1 million to accumulated deficit. Consequently, financial information is not updated, and the disclosures required under the new standard are not provided for periods prior to January 1, 2019. As part of the adoption, we elected the package of practical expedients, the short-term lease exemption, and the practical expedient to not separate lease and non-lease components. Accordingly, we accounted for our existing operating leases as operating leases under the new standard, without reassessing (a) whether the contracts contain a lease under ASC 842, (b) whether classification of the operating leases would be different in accordance with ASC 842, or (c) whether any unamortized initial direct costs would have met the definition of initial direct costs in ASC 842 at lease commencement. We determine whether an arrangement is a lease at inception. Right-of-use (“ROU”) lease assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. ROU lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. When the implicit rate is not readily determinable, we use the estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Amortization of ROU lease assets is recognized in expense on a straight-line basis over the lease term. Short-term leases are leases having a term of twelve months or less. We recognize short-term leases on a straight-line basis and do not record a related lease asset or liability for such leases. Finance lease ROU assets consist primarily of equipment used in the manufacturing process with terms greater than twelve months to seven years. Operating lease ROU assets consist of the following:
• | Equipment used in the manufacturing process as well as office equipment with terms three years to seven years; and
• | Manufacturing plants and office facilities with terms two years to 20 years.
The following table presents components of lease expense for the year ended December 31, 2019:
|  | Financial Statement Line Item |  | Year Ended December 31, 2019
Lease cost: |  |  |  |
Finance lease cost |  |  |  |
Amortization of right-of-use assets |  | Depreciation and amortization |  | $ | 1,416 |
Interest expense |  | Interest expense |  | 284 |
Operating lease cost |  | Cost of sales and selling, general and administrative expense |  | 13,684 |
Short-term lease cost (1) |  | Cost of sales and selling, general and administrative expense |  | 479 |
Variable lease cost (2) |  | Cost of sales and selling, general and administrative expense |  | 36 |
Total lease cost |  |  |  | $ | 15,899 |
_______________________________ (1) Excludes expenses related to leases with a lease term of one month or less. (2) Represents changes to index-based lease payments. The following table presents the lease-related assets and liabilities recorded on the balance sheet as of December 31, 2019:
|  | Financial Statement Line Item |  | December 31, 2019
Assets |  |  |  |
Operating lease assets |  | Operating lease right-of-use assets |  | $ | 65,496 |
Finance lease assets |  | Property, plant and equipment, net |  | 18,415 |
Total lease assets |  |  |  | $ | 83,911 |
Liabilities |  |  |  |
Current liabilities |  |  |  |
Operating lease liabilities |  | Current portion of operating lease liabilities |  | $ | 6,652 |
Finance lease liabilities |  | Other current liabilities |  | 3,669 |
Non-current liabilities |  |  |  |
Operating lease liabilities |  | Operating lease liabilities, net of current portion |  | 66,980 |
Finance lease liabilities |  | Other non-current liabilities |  | 12,037 |
Total lease liabilities |  |  |  | $ | 89,338 |
The following table contains supplemental information related to leases for the year ended December 31, 2019:
Supplemental Cash Flows Information |  | Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities |  |
Operating cash flows from finance leases |  | $ | 273 |
Operating cash flows from operating leases |  | 21,726 |
Financing cash flows from finance leases |  | 3,390 |
Right-of-use assets obtained in exchange for new finance lease liabilities |  | $ | 10,571 |
Right-of-use assets obtained in exchange for new operating lease liabilities |  | $ | 8,508 |
As of December 31, 2019, the weighted average remaining lease term and weighted-average discount rate for finance and operating leases was as follows:
|  | Operating Leases |  | Finance Leases
Weighted-average remaining lease term (years) |  | 10.6 |  |  | 4.3 |
Weighted-average discount rate |  | 6.3 | % |  | 3.0 | %
The maturities of lease liabilities greater than twelve months as of December 31, 2019, is as follows:
|  | Operating Leases |  | Finance Leases
2020 |  | $ | 12,229 |  |  | $ | 4,099 |
2021 |  | 11,233 |  |  | 4,085 |
2022 |  | 10,941 |  |  | 3,867 |
2023 |  | 9,385 |  |  | 2,963 |
2024 |  | 9,150 |  |  | 1,477 |
Thereafter |  | 56,274 |  |  | 272 |
Total future minimum lease payments |  | 109,212 |  |  | 16,763 |
Less: imputed interest |  | 35,580 |  |  | 1,057 |
Total lease liabilities |  | $ | 73,632 |  |  | $ | 15,706 |
As of December 31, 2019, we have an additional operating lease commitment that would require us to pay a total of approximately $27.5 million base rent payments over the lease term of 15 years. We are expected to commence base rent payments during the third quarter of 2020. The following table presents the future minimum lease payments under operating leases with initial or non-cancelable lease terms in excess of one year prior to adoption of ASC 842 as reported in the 2018 Annual Report.
Year Ending December 31, |  |
2019 |  | $ | 13,337 |
2020 |  | 11,515 |
2021 |  | 10,557 |
2022 |  | 10,293 |
2023 |  | 8,752 |
Thereafter |  | 53,945 |
Total minimum payments |  | $ | 108,399 |
During the years ended December 31, 2018 and 2017, we recognized rent expense of $12.4 million and $7.6 million, respectively.

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