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Leases

12 Months Ended

Dec. 31, 2020

8. Leases

The Company leases its manufacturing and distribution facilities, corporate offices, showrooms and certain equipment under non-cancelable operating leases with various expiration dates through 2036. The Company’s office and manufacturing leases provide for initial lease terms up to 16 years, while retail showrooms have initial lease terms of up to five years. Certain leases may contain options to extend the term of the original lease. The exercise of lease renewal options is at the Company’s discretion. Any lease renewal options are included in the lease term if exercise is reasonably certain at lease commencement. In connection with leases entered into during 2020, the Company recorded an asset retirement obligation for the restoration of leased property in the amount of $0.9 million at inception of the lease and as of December 31, 2020. The Company also leases vehicles and other equipment under both operating and finance leases with initial lease terms of three to five years. The ROU asset for finance leases was $0.6 million at both January 1, 2020, the adoption date of ASC 842, and as of December 31, 2020.

The following table presents the Company’s lease costs (in thousands):

	Year Ended
	December 31, 2020
Operating lease costs	$	5,736
Variable lease costs		317
Short-term lease costs		34
Total lease costs	$	6,087

The table below reconciles the undiscounted cash flows for each of the first five years and total remaining years to the operating lease liabilities recorded on the consolidated balance sheet at December 31, 2020 (in thousands):

Year ended December 31,
2021	$	2,806
2022		7,078
2023		6,281
2024		6,274
2025		6,273
Thereafter		47,711
Total operating lease payments		76,423
Less – lease payments representing interest		(24,252	)
Present value of operating lease payments	$	52,171

As of December 31, 2020, the weighted-average remaining term of operating leases was 11.8 years and the weighted-average discount rate was 6.18% for operating leases recognized in the consolidated balance sheet.

The following table provides supplemental information related to the Company’s consolidated statement of cash flows for the year ended December 31, 2020:

	Year Ended December 31,
	2020
Cash paid for amounts included in present value of operating lease liabilities	$	1,732
Right-of-use assets obtained in exchange for operating lease liabilities		17,216

In 2019, the Company recognized rent expense on lease payments, including those with rent escalations and rent-free periods, on a straight-line basis over the expected lease term. During the year ended December 31, 2019, the Company recognized rent expense of $3.9 million and at December 31, 2019 had deferred rent of $5.1 million all of which was long-term and included in other long-term liabilities in the consolidated balance sheet.

Future minimum lease payments for each of the next five years and thereafter at December 31, 2019 are as follows (in thousands)

Year ended December 31,
2020	$	4,336
2021		4,944
2022		4,796
2023		4,040
2024		4,162
Thereafter		14,444
Total	$	36,722