Leases

6 Months Ended

Jun. 30, 2019

Leases

8.Leases

We enter into operating and finance leases for, among other things, satellites, office space, data centers, warehouses and distribution centers, vehicles used for installation and Smart Home Services, wireless towers and other equipment. Our leases have remaining lease terms from one to 12 years, some of which include renewal options, and some of which include options to terminate the leases within one year.

Our Anik F3 satellite is accounted for as a financing lease. Substantially all of our remaining leases are accounted for as operating leases, including the remainder of our satellite fleet.

The components of lease expense were as follows:

	For the Three Months Ended		For the Six Months Ended
	June 30, 2019		June 30, 2019
	(In thousands)
Operating lease cost	$	83,914	$	164,984
Short-term lease cost (1)		3,742		6,226
Finance lease cost:
Amortization of right-of-use assets		3,805		9,913
Interest on lease liabilities		1,099		2,280
Total finance lease cost		4,904		12,193
Total lease costs	$	92,560	$	183,403

(1) Leases that have terms of 12 month or less.

Supplemental cash flow information related to leases was as follows:
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	For the Six Months Ended
	June 30, 2019
		(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	168,668
Operating cash flows from finance leases	$	2,295
Financing cash flows from finance leases	$	10,454
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	89,554
Finance leases	$	—
Right-of-use assets and liabilities recognized at January 1, 2019 upon adoption of ASC 842	$	733,584

Supplemental balance sheet information related to leases was as follows:

	As of June 30, 2019
	(In thousands)
Operating Leases:
Operating lease right-of-use assets (1)	$	679,412
Other current liabilities (1)	$	223,981
Operating lease liabilities (1)		455,917
Total operating lease liabilities	$	679,898
Finance Leases:
Property and equipment, gross	$	224,454
Accumulated depreciation		(182,653)
Property and equipment, net	$	41,801
Other current liabilities	$	18,466
Other long-term liabilities		37,657
Total finance lease liabilities	$	56,123
Weighted Average Remaining Lease Term:
Operating leases		3.6 years
Finance leases		2.8 years
Weighted Average Discount Rate:
Operating leases		9.1%
Finance leases		7.5%

(1) Approximately $530 million of our operating lease right-of-use assets and the related liabilities relates to satellites and real estate assets that will be transferred to us by EchoStar upon the closing of the Master Transaction Agreement. See Note 1 for further information. Upon the closing of the Master Transaction Agreement, these satellite and real estate assets will no longer be included in “Operating lease right-of-use assets,” “Other current liabilities” and “Operating lease liabilities,” but rather in “Property and equipment, net” on our Condensed Consolidated Balance Sheets. The assets will be initially recorded at EchoStar’s costs basis as the Master Transaction Agreement is between entities under common control.

Maturities of lease liabilities as of June 30, 2019 were as follows:

	Maturities of Lease Liabilities
	Operating		Finance
For the Years Ending December 31,	Leases		Leases		Total
	(In thousands)
2019 (remaining six months)	$	147,224	$	11,012	$	158,236
2020		243,264		22,024		265,288
2021		201,925		22,026		223,951
2022		129,071		7,363		136,434
2023		25,152		—		25,152
Thereafter		51,796		—		51,796
Total lease payments		798,432		62,425		860,857
Less: Imputed interest		(118,534)		(6,302)		(124,836)
Total		679,898		56,123		736,021
Less: Current portion		(223,981)		(18,466)		(242,447)
Long-term portion of lease obligations	$	455,917	$	37,657	$	493,574