Leases

9 Months Ended

Sep. 30, 2019

Leases

Leases

11. Leases

On January 1, 2019, the Company adopted ASU 2016-02, Leases, and related ASUs (“ASU 2016-02”), which increases transparency and comparability among organizations by establishing a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet with additional disclosures of key information about leasing arrangements.  The Company applied the required modified retrospective transition approach, applying the new standard to all leases existing at the date of initial application, and elected the effective date of the ASU as its initial date of application. The implementation of the new standard included recognition of new ROU assets and lease liabilities on our balance sheet as of January 1, 2019.

The Company has operating and finance leases for corporate office space and equipment.  Our leases have remaining lease terms of less than one year to seven years, some of which include options to extend leases for up to 20 years, and some of which include options to terminate the leases within one year.  Certain leases include variable lease payments in future periods based on a market index or rate.  We determine if an arrangement is a lease at inception (or the effective date of ASU 2016-02). Operating lease assets and liabilities are included in other non-current assets, other current liabilities, and other non-current liabilities in our consolidated balance sheet at September 30, 2019.  Finance leases are included in property and equipment, net, other current liabilities, and other non-current liabilities in our consolidated balance sheets.  

ROU 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 assets and liabilities are recognized at the commencement date (or the effective date of ASU 2016-02) based on the present value of lease payments over the lease term. The Company uses an incremental borrowing rate based on the information available at the commencement date (or the effective date of ASU 2016-02) in determining the present value of lease payments. The ROU assets also include any lease payments made and exclude lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are generally accounted for separately.  

The components of lease expense were as follows:

	For the three		For the nine
	months ended		months ended
	September 30, 2019		September 30, 2019
	(in thousands)
Operating Lease Cost	$	4,189	$	14,472
Finance Lease Cost:
Amortization of ROU assets	$	80	$	224
Interest on lease liabilities		8		23
Total	$	88	$	247

Supplemental cash flow information related to leases was as follows:

	For the nine
	months ended
	September 30, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	13,661
Operating cash flows from finance leases		23
Financing cash flows from finance leases		222
ROU assets obtained in exchange for lease obligations:
Operating leases		2,410
Finance leases		40

Supplemental balance sheet information related to leases was as follows:

	September 30, 2019
	(in thousands,
	except lease term
	and discount rate)
Operating Leases:
Operating lease ROU assets (Other non-current assets)	$	25,795
Other current liabilities	$	10,873
Other non-current liabilities		16,445
Total operating lease liabilities	$	27,318
Finance Leases:
Property and equipment, gross	$	1,054
Accumulated depreciation		(734)
Property and equipment, net	$	320
Other current liabilities	$	241
Other non-current liabilities		90
Total finance lease liabilities	$	331
Weighted average remaining lease term:
Operating leases		4 years
Finance leases		1 year
Weighted average discount rate:
Operating leases		4.32%
Finance leases		6.00%

Maturities of lease liabilities are as follows:

	Operating		Finance
	Leases		Leases
	(in thousands)
Year ended December 31,
2019 (excluding the nine months ended September 30, 2019)	$	3,361	68
2020		10,580	218
2021		6,468	45
2022		2,178	6
2023		2,090	—
Thereafter		4,703	—
Total lease payments		29,380	337
Less imputed interest		(2,062)	(6)
Total	$	27,318	331

The adoption of the lease standard using the effective date as the date of initial application requires the inclusion of the disclosures for periods prior to adoption, which are included below.

Minimum future rental commitments as of December 31, 2018 for all non-cancelable operating leases were as follows:

Year	Commitments
	(in thousands)
2019	$	16,488
2020		9,797
2021		5,757
2022		2,913
2023		2,320
Thereafter		5,161
	$	42,436

Rent expense was $5.8 million and $17.6 million for the three and nine months ended September 30, 2018, respectively.

As of December 31, 2018, we had property and equipment under capital leases with a cost of $1.6 million and accumulated depreciation of $1.1 million.