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LEASES

3 Months Ended

Mar. 31, 2021

(11)LEASES

Operating leases are included in the Consolidated Balance Sheet as Operating lease assets, Current operating lease liabilities and Non-current operating lease liabilities. Finance leases are included in Property, plant and equipment, Other current liabilities and Other long-term liabilities in the Consolidated Balance Sheet. The Company primarily leases real estate and equipment under various arrangements that provide the Company the right of use for the underlying asset that require lease payments over the lease term. The Company determines the value of each lease by computing the present value of each lease payment using the interest rate implicit in the lease, if available; otherwise the Company estimates its incremental borrowing rate over the lease term. The Company determines its incremental borrowing rate based on its estimated credit risk with adjustments for each individual leases’ geographical risk and lease term. Operating lease assets also include prepaid rent and initial direct costs less any tenant improvements.

The Company’s real estate portfolio typically includes one or more options to renew, with renewal terms that generally can extend the lease term from one to 10 years. The exercise of these lease renewal options is at the Company’s discretion and is included in the lease term only if the Company is reasonably certain to exercise. The Company also has service arrangements whereby it controls specific space provided by a third-party service provider. These arrangements meet the definition of a lease and are accounted for under ASC 842. Lease expense for operating leases is recognized on a straight-line basis over the lease term and is included in the Consolidated Statements of Comprehensive Income (Loss). The Company’s lease agreements do not contain any material residual value guarantees or restrictive guarantees.

The components of lease expense for the three months ended March 31, 2021 and 2020 are as follows (in thousands):


	Location in Statements of	Three Months Ended March 31,
Description	Comprehensive Income (Loss)	2021		2020
Amortization of ROU assets - finance leases	Depreciation and amortization	$	1,804	$	1,916
Interest on lease liabilities - finance leases	Interest expense		40		56
Operating lease cost (cost resulting from lease payments)	Cost of services		10,439		12,038
Operating lease cost (cost resulting from lease payments)	Selling, general and administrative		606		542
Operating lease cost (cost resulting from lease payments)	Restructuring		240		—
Operating lease cost (cost resulting from lease payments)	Impairment		1,697		—
Operating lease cost (cost resulting from lease payments)	Other income (expense), net		310		242
Short-term lease cost	Cost of services		966		997
Variable lease cost (cost excluded from lease payments)	Cost of services		318		—
Less: Sublease income	Selling, general and administrative		(228)		(182)
Less: Sublease income	Other income (expense), net		(676)		(496)
Total lease cost		$	15,516	$	15,113

Other supplementary information for the three months ended March 31, 2021 and 2020 are as follows (dollar values in thousands):


	Three Months Ended March 31,
	2021		2020
Finance lease - operating cash flows	$	14	$	19
Finance lease - financing cash flows	$	1,792	$	2,132
Operating lease - operating cash flows (fixed payments)	$	13,498	$	14,137
New ROU assets - operating leases	$	3,362	$	6,548
Modified ROU assets - operating leases	$	—	$	—
New ROU assets - finance leases	$	95	$	508


	March 31, 2021		December 31, 2020
Weighted average remaining lease term - finance leases		2.34 years		2.46 years
Weighted average remaining lease term - operating leases		3.60 years		3.73 years
Weighted average discount rate - finance leases		1.72%		1.64%
Weighted average discount rate - operating leases		6.88%		6.95%

Operating and financing lease right-of-use assets and lease liabilities within the Consolidated Balance Sheet as of March 31, 2021 and December 31, 2020 are as follows (in thousands):



Description	Location in Balance Sheet	March 31, 2021		December 31, 2020
Assets
Operating lease assets	Operating lease assets	$	112,129	$	120,820
Finance lease assets	Property, plant and equipment, net		10,947		12,659
Total leased assets		$	123,076	$	133,479

Liabilities
Current
Operating	Current operating lease liabilities	$	43,043	$	43,651
Finance	Other current liabilities		5,558		6,193
Non-current
Operating	Non-current operating lease liabilities		89,967		98,277
Finance	Other long-term liabilities		3,766		4,763
Total lease liabilities		$	142,334	$	152,884

The future minimum operating lease and finance lease payments required under non-cancelable leases as of March 31, 2021 and December 31, 2020 are as follows (in thousands):

March 31, 2021


	Operating		Sub-lease		Finance
	Leases		Income		Leases
Year 1	$	49,738	$	(3,500)	$	5,609
Year 2		45,668		(3,488)		2,150
Year 3		26,224		(2,947)		1,402
Year 4		16,167		(2,940)		355
Year 5		6,467		(2,695)		—
Thereafter		7,581		—		—
Total minimum lease payments	$	151,845	$	(15,570)	$	9,516
Less imputed interest		(18,835)				(192)
Total lease liability	$	133,010			$	9,324

December 31, 2020


	Operating		Sub-lease		Finance
	Leases		Income		Leases
Year 1	$	51,120	$	(3,500)	$	6,237
Year 2		46,913		(3,489)		2,740
Year 3		31,085		(3,123)		1,631
Year 4		17,338		(2,905)		579
Year 5		8,288		(2,940)		—
Thereafter		8,397		(490)		—
Total minimum lease payments	$	163,141	$	(16,447)	$	11,187
Less imputed interest		(21,213)				(231)
Total lease liability	$	141,928			$	10,956

In 2008, the Company sub-leased one of its customer engagement centers to a third party for the remaining term of the lease. The sub-lease began on January 1, 2009 and rental income will be recognized on a straight-line basis over the term of the sub-lease through 2026. In 2017, the Company sub-leased one of its office spaces for the remaining term of the original lease. The sub-lease began on November 6, 2017 and ends May 31, 2021. In 2019, the Company sub-leased one of its office spaces for the remaining term of the original lease. The sub-lease began on March 1, 2019 and ends July 31, 2023. In 2020, the Company sub-leased one of its office spaces for the remaining term of the original lease. The sub-lease began on February 6, 2020 and ends June 14, 2023.