Note 6. Leases

The Company leases certain property, vehicles and equipment for use in its operations. The Company determines if an arrangement is or contains a lease at inception. The Company has lease agreements with lease and non-lease components and has elected to not separate these components for all classes of underlying assets. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheet. Leases with initial terms greater than 12 months are recorded as operating or financing leases on the condensed consolidated balance sheet. As of June 30, 2019, financing lease assets of $11.8 million are included in plant, property and equipment on the condensed consolidated balance sheet. The Company has recorded accumulated amortization on the financing leases of $1.9 million. Financing lease liabilities are included within the current and long-term portions of debt and finance lease obligations of $4.1 million and $8.0 million, respectively.

Operating lease assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company utilizes a collateralized incremental borrowing rate based on information available at the lease commencement date in determining the present value of future payments, unless the rate is implicit in the lease agreement. The operating and finance leases may contain variable payments for common-area maintenance, taxes and insurance, and repairs and maintenance. Variable payments are recognized when incurred and not included in the measurement of the right-of-use asset and lease liability. In instances where customer premise equipment (“CPE”) would qualify as a lease, the Company applies the practical expedient to combine the operating lease with the subscription revenue as a single performance obligation in accordance with revenue recognition accounting guidance as the subscription service is the predominant component.

The Company’s lease agreements may contain options to extend the lease term beyond the initial term, termination options, and options to purchase the underlying asset. The Company has not included these options in the lease term or the related payments in the measurement of the ROU asset and lease liabilities as the Company has determined the options are not reasonably certain to be exercised.

Lease cost components are classified as follows:


			Three months ended	Six months ended
	Classification		June 30, 2019	June 30, 2019
		(in millions)
Finance lease cost
Amortization of leased asset	Depreciation	$	1.4	$	1.9
Interest on lease liabilities	Interest expense		0.2		0.2
Operating lease cost (1)	Operating expense		2.5		4.4
Net lease cost		$	4.1	$	6.5

(1)

Includes short-term lease and variable lease costs of $0.5 million for both the three and six months ended June 30, 2019.

The following table presents aggregate lease maturities as of June 30, 2019:


	Finance Leases		Operating Leases		Total
	(in millions)
Remaining six months of 2019	$	4.5	$	3.9	$	8.4
2020		4.3		6.8		11.1
2021		3.3		6.0		9.3
2022		0.6		5.1		5.7
2023		0.1		3.6		3.7
Thereafter		—		7.1		7.1
Total Lease Payments		12.8		32.5		45.3
Less: Interest		(0.7)		(5.3)		(6.0)
Present value of lease liabilities	$	12.1	$	27.2	$	39.3

The following table presents aggregate lease maturities as of December 31, 2018:


	Finance Leases		Operating Leases		Total
	(in millions)
2019	$	1.3	$	7.2	$	8.5
2020		1.3		5.4		6.7
2021		1.2		4.7		5.9
2022		0.9		4.0		4.9
2023		0.4		2.4		2.8
Thereafter		—		6.5		6.5
Total Lease Payments	$	5.1	$	30.2	$	35.3

The following table presents the weighted average remaining lease term and discount rate:


	June 30, 2019

Weighted-average remaining lease term (in years)
Finance Leases	3.0
Operating Leases	5.5
Weighted-average discount rate
Finance Leases	4.91	%
Operating Leases	6.29	%

The following table presents other information related to operating and finance leases:


		Six months ended
		June 30, 2019
		(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3.0
Financing cash flows from finance leases		1.7
Right-of-use assets obtained in exchange for lease obligations:
Finance leases		9.3
Operating leases		5.1

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