|12 Months Ended|
Dec. 31, 2019
We are the lessee under various operating leases for certain sales offices, call centers, office space, equipment and vehicles. Some leases include one or more options to renew, at our discretion, for renewal terms of one year or more. Certain of our lease agreements include rental payments based on a percentage of sales generated at the location, and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain residual value guarantees or restrictive covenants which we believe to be material.
We recognize operating lease assets and operating lease liabilities associated with lease agreements with an initial term of 12 months or greater, while lease agreements with an initial term of 12 months or less are not recorded in our consolidated balance sheets. We generally do not include lease payments associated with renewal options, including those that are exercisable at our discretion, in the measurement of our operating lease assets and liabilities as we are not reasonably certain that such option will be exercised. The table below sets forth information regarding our lease agreements with an initial term of greater than 12 months (dollars in thousands):
(1)Our weighted average lease term excludes one real estate lease that expires in May 2056.
(2)As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future lease payments. To estimate incremental borrowing rates, we consider various factors, including the rates applicable to our recently issued debt and credit facilities and prevailing financial market conditions. We used the incremental borrowing rate as of January 1, 2019 for operating leases that commenced prior to that date.
We generally recognize lease costs associated with our operating leases on a straight-line basis over the lease term, while variable lease payments that do not depend on an index or rate are recognized as variable lease costs in the period in which the obligation for those payments is incurred. The table below sets forth information regarding our lease costs which are included as selling, general and administrative expenses in our consolidated statement of operations and comprehensive income for the year ended December 31, 2019 (in thousands):
The table below sets forth information regarding the maturity of our operating lease liabilities (in thousands):
Upon the adoption of the new lease accounting standard on January 1, 2019 (as described in Note 2 above), we recognized an operating lease liability of $26.5 million and an operating lease asset of $25.6 million. The difference between the operating lease liability and operating lease asset primarily reflects the reclassification of accrued and prepaid straight-line rent from accrued liabilities and prepaid expenses to the operating lease assets in our consolidated balance sheet as of December 31, 2019. The operating lease payments set forth in the table above exclude two leases for space for call center operations we plan to occupy in 2020 and 2021 as we had not received possession of the leased property as of December 31, 2019. Included in our statement of cash flows under operating activities for the year ended December 31, 2019 was $6.9 million of cash paid for amounts included in the measurement of lease liabilities. During the year ended December 31, 2019, we obtained $1.6 million of right-of-use assets in exchange for new operating lease liabilities.
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.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef