4. LEASES

We determine if a contract is a lease at the inception of the arrangement. If an operating lease is identified, it is classified as one of three asset classes: building and land, vehicles or equipment. We lease space under non-cancelable operating leases for general office facilities, distribution centers, a training center and a call center. We also have operating leases for vehicles that consist mainly of tractor trailers and box trucks to transport newspapers from printing facilities to distribution centers, as well as office equipment consisting mostly of copiers.

Certain leases have rent holidays or leasehold improvement incentives which account for the difference between the ROU assets and the lease liabilities. Many of our leases include lease components (e.g., fixed rent payments) and non-lease components (e.g., common-area or other maintenance costs, utilities, or other lease costs imposed) which are accounted for as a single lease component, because we have elected the practical expedient to group lease and non-lease components for all leases.

None of our leases contain contingent rent provisions or concessions, residual value guarantees or restrictive covenants. Our leases have remaining terms of less than one year to 9 years, except for one parking lot lease with 43 years remaining.

Some of our distribution center, vehicle, and equipment leases have a combination of cancelable month-to-month lease terms and non-cancelable lease terms of less than one year. We have elected the practical expedient to exclude these short-term leases from our ROU assets and lease liabilities.

Most leases include escalating lease payments and one or more options to renew or terminate the lease. The exercise of lease renewal options is typically at our sole discretion; therefore, the renewals to extend the lease terms are not included in our ROU assets and lease liabilities as they are not reasonably certain of exercise. We regularly evaluate the renewal options and when they are reasonably certain of exercise, we include the renewal period in our lease term.

We have one financing lease for office furniture and fixtures located at one of our office facilities. The total financing lease payments are calculated to be approximately $1.1 million as of both March 31, 2019, and December 30, 2018, respectively. As of March 31, 2019, the payments run over the course of the remaining 6.58 years and are not material to the future lease payments schedules presented below. The finance lease asset is recorded within the other assets, line item of the condensed consolidated balance sheet. The finance lease short-term and long-term obligations are recorded within other accrued liabilities and other long-term liabilities line items of the condensed consolidated balance sheet, respectively.

As our lease contracts do not provide an implicit interest rate, we used the December 31, 2018, effective yield of our secured debt, that we refinanced in July 2018, as our secured incremental borrowing rate for leases with an 8-year tenure. The secured incremental borrowing rate was adjusted using the treasury yield curve at the transition date to determine the present value of each of the future payments.

The cost components of our operating and financing leases were as follows:


	Three Months Ended
	March 31,
(in thousands)	2019
Financing lease costs:
Amortization of ROU asset	$	24
Interest on lease liabilities		20
Operating lease costs		3,464
Variable lease cost		467
Short-term lease cost		713
Sublease income		(1,461)
Total lease costs	$	3,227

Variable lease costs for our leased facilities consist primarily of taxes and insurance, as well as common area maintenance true-up assessments which are paid based on actual costs incurred by the lessor. We also incur variable mileage costs related to our leased vehicles and variable usage costs related to leased equipment. Variable lease costs also include annual changes in monthly rent costs, mainly based on the consumer price index.

We sublease office space to other companies under non-cancelable agreements. There are no residual value guarantees or restrictions or covenants imposed as part of these sublease arrangements, except that the subtenant may not transfer the assignment of the sublease without prior permission or permit liens against the office space. Some sublease agreements included options to renew or terminate the lease, but only within the term of the master lease arrangement held by us.

The aggregate future lease payments for operating leases are as follows:


	Operating
(in thousands)	Leases
2019 (remainder)	$	10,280
2020		12,061
2021		9,898
2022		10,335
2023		10,138
2024		8,915
Thereafter		21,858
Total undiscounted cash flows		83,485
Less imputed interest		(24,328)
Total lease liability	$	59,157

Our future minimum lease commitments, net of sub-lease rental income, as of December 30, 2018, under ASC 840, the predecessor to Topic 842, was as follows:


	Operating		Sublease		Net Lease
(in thousands)	Leases		Income		Obligation
2019	$	16,408	$	(4,044)	$	12,364
2020		11,921		(1,306)		10,615
2021		9,797		(379)		9,418
2022		10,178		(334)		9,844
2023		10,160		(232)		9,928
Thereafter		31,139		—		31,139
Total	$	89,603	$	(6,295)	$	83,308

The weighted average remaining lease terms and discount rates for all of our operating and financing leases were as follows:


	March 31, 2019
	Operating		Financing
	Leases		Lease
Weighted average remaining lease term (years)	7.44		6.58
Weighted average discount rate	9.12	%	10.50	%

Supplemental cash flow information related to our operating and financing leases was as follows:


	Three Months Ended
	March 31,
(in thousands)	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	3,504
Operating cash outflow from financing lease		20
Financing cash outflow from financing lease		17
ROU assets obtained in exchange for new operating lease liabilities		263

As of March 31, 2019, we do not have any new financing leases or significant additional operating leases that have not yet commenced.