Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Leases

The Company leases various cell sites, warehouses, retail stores, and office facilities for use in our business. These agreements include fixed rental payments as well as variable rental payments, such as those based on relevant inflation indices. The accounting lease term includes optional renewal periods that we are reasonably certain to exercise based on our assessment of relevant contractual and economic factors. The related lease payments are discounted at lease commencement using the Company's incremental borrowing rate in order to measure the lease liability and ROU asset.

The incremental borrowing rate is determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The Company uses the observable unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate. Under the new lease standard, leases are remeasured upon the occurrence of certain events or modifications.

Adoption of the new lease standard did not materially impact the Company's consolidated net earnings, cash flows, liquidity, or loan covenants.

The cumulative effect of the changes made to the consolidated January 1, 2019 balance sheet for the adoption of the new lease standard were as follows:

(in thousands)	December 31, 2018 As Previously Reported		Effect of the Adoption of ASC Topic 842 (Leases)			January 1, 2019 As Adjusted
Assets
Prepaid expenses and other	$	60,162	$	(11,580	)	$	48,582
Property, plant and equipment, net	701,359		1,789			703,148
Operating lease right-of-use assets	—		369,344			369,344
Intangible assets, net	366,029		(13,828		)	352,201
Liabilities
Current operating lease liabilities	—		38,773			38,773
Accrued liabilities and other	14,563		(412		)	14,151
Deferred Lease	22,436		(22,436		)	—
Noncurrent operating lease liabilities	—		328,156			328,156
Other liabilities	14,364		1,644			16,008

In addition to recognizing the operating lease liabilities and right-of-use assets, Topic 842 also reclassified prepaid and deferred rent balances, off-market leases, and lease incentives into the right-of-use assets.

The following table shows the components of lease income and costs:

(in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Lease income from operating leases - fixed	$	2,149	$	6,219
Operating lease expense	18,151		51,811
Amortization of finance lease assets	158		399
Interest on finance lease liabilities	14		59
Subtotal finance lease cost	172		458
Total lease expense	$	18,323	$	52,269

Substantially all of the Company's sublease income from operating leases relates to fixed lease payments.

All operating lease expenses, including short-term and variable lease expenses, are split between cost of service and selling, general and administrative expense in the condensed consolidated statements of operations based on the use of the facility that the rent is being paid on. Operating lease expense includes variable lease payments and short-term lease expense, both of which are immaterial. Variable lease expenses represent payments that are dependent on a rate or index, or on usage of the asset.

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

(in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating cash flows used by leases	$	16,002	$	46,546
Leased assets obtained in exchange for new operating lease liabilities	43,647		69,407

The following table summarizes the lease terms and discount rates:

	September 30, 2019
Weighted-average remaining lease term (years)
Operating leases	8
Finance leases	16
Weighted-average discount rate
Operating leases	4.6	%
Finance leases	5.2	%

The following table summarizes the expected maturity of lease liabilities at September 30, 2019:

(in thousands)	Operating Leases		Finance Leases		Total
2019	$	12,742	$	63	$	12,805
2020	64,474		174		64,648
2021	65,087		174		65,261
2022	63,341		174		63,515
2023	59,885		174		60,059
2024 and thereafter	242,115		1,704		243,819
Total lease payments	507,644		2,463		510,107
Less: Interest	103,481		748		104,229
Present value of lease liabilities	$	404,163	$	1,715	$	405,878

The Company's finance lease liabilities are presented in the accrued liabilities and other and the other liabilities lines of the unaudited condensed consolidated balance sheets. The related finance lease assets are included in the property, plant and equipment line.

Our commitments under leases existing as of December 31, 2018 were approximately $55.1 million for the year ending December 31, 2019, $104.4 million in total for the years ending December 31, 2020 and 2021, $97.6 million in total for the years ending December 31, 2022 and 2023 and $168.5 million in total for years thereafter.

The Company is also the lessor on agreements to lease assets such as collocation space at cell sites and dedicated fiber-optic strands to third parties. These agreements have been accounted for as operating leases both before and after adoption of the new lease standard. The new lease standard did not have a significant impact on the recognition of lease revenue associated with these agreements. The following table summarizes the total minimum rental receipts under lease agreements at September 30, 2019:

(in thousands)	Operating Leases
2019	$	1,774
2020	6,621
2021	4,526
2022	3,432
2023	1,801
2024 and thereafter	4,978
Total lease income	$	23,132

Leases

Leases

The Company leases various cell sites, warehouses, retail stores, and office facilities for use in our business. These agreements include fixed rental payments as well as variable rental payments, such as those based on relevant inflation indices. The accounting lease term includes optional renewal periods that we are reasonably certain to exercise based on our assessment of relevant contractual and economic factors. The related lease payments are discounted at lease commencement using the Company's incremental borrowing rate in order to measure the lease liability and ROU asset.

The incremental borrowing rate is determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The Company uses the observable unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate. Under the new lease standard, leases are remeasured upon the occurrence of certain events or modifications.

Adoption of the new lease standard did not materially impact the Company's consolidated net earnings, cash flows, liquidity, or loan covenants.

The cumulative effect of the changes made to the consolidated January 1, 2019 balance sheet for the adoption of the new lease standard were as follows:

(in thousands)	December 31, 2018 As Previously Reported		Effect of the Adoption of ASC Topic 842 (Leases)			January 1, 2019 As Adjusted
Assets
Prepaid expenses and other	$	60,162	$	(11,580	)	$	48,582
Property, plant and equipment, net	701,359		1,789			703,148
Operating lease right-of-use assets	—		369,344			369,344
Intangible assets, net	366,029		(13,828		)	352,201
Liabilities
Current operating lease liabilities	—		38,773			38,773
Accrued liabilities and other	14,563		(412		)	14,151
Deferred Lease	22,436		(22,436		)	—
Noncurrent operating lease liabilities	—		328,156			328,156
Other liabilities	14,364		1,644			16,008

In addition to recognizing the operating lease liabilities and right-of-use assets, Topic 842 also reclassified prepaid and deferred rent balances, off-market leases, and lease incentives into the right-of-use assets.

The following table shows the components of lease income and costs:

(in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Lease income from operating leases - fixed	$	2,149	$	6,219
Operating lease expense	18,151		51,811
Amortization of finance lease assets	158		399
Interest on finance lease liabilities	14		59
Subtotal finance lease cost	172		458
Total lease expense	$	18,323	$	52,269

Substantially all of the Company's sublease income from operating leases relates to fixed lease payments.

All operating lease expenses, including short-term and variable lease expenses, are split between cost of service and selling, general and administrative expense in the condensed consolidated statements of operations based on the use of the facility that the rent is being paid on. Operating lease expense includes variable lease payments and short-term lease expense, both of which are immaterial. Variable lease expenses represent payments that are dependent on a rate or index, or on usage of the asset.

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

(in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating cash flows used by leases	$	16,002	$	46,546
Leased assets obtained in exchange for new operating lease liabilities	43,647		69,407

The following table summarizes the lease terms and discount rates:

	September 30, 2019
Weighted-average remaining lease term (years)
Operating leases	8
Finance leases	16
Weighted-average discount rate
Operating leases	4.6	%
Finance leases	5.2	%

The following table summarizes the expected maturity of lease liabilities at September 30, 2019:

(in thousands)	Operating Leases		Finance Leases		Total
2019	$	12,742	$	63	$	12,805
2020	64,474		174		64,648
2021	65,087		174		65,261
2022	63,341		174		63,515
2023	59,885		174		60,059
2024 and thereafter	242,115		1,704		243,819
Total lease payments	507,644		2,463		510,107
Less: Interest	103,481		748		104,229
Present value of lease liabilities	$	404,163	$	1,715	$	405,878

The Company's finance lease liabilities are presented in the accrued liabilities and other and the other liabilities lines of the unaudited condensed consolidated balance sheets. The related finance lease assets are included in the property, plant and equipment line.

Our commitments under leases existing as of December 31, 2018 were approximately $55.1 million for the year ending December 31, 2019, $104.4 million in total for the years ending December 31, 2020 and 2021, $97.6 million in total for the years ending December 31, 2022 and 2023 and $168.5 million in total for years thereafter.

The Company is also the lessor on agreements to lease assets such as collocation space at cell sites and dedicated fiber-optic strands to third parties. These agreements have been accounted for as operating leases both before and after adoption of the new lease standard. The new lease standard did not have a significant impact on the recognition of lease revenue associated with these agreements. The following table summarizes the total minimum rental receipts under lease agreements at September 30, 2019:

(in thousands)	Operating Leases
2019	$	1,774
2020	6,621
2021	4,526
2022	3,432
2023	1,801
2024 and thereafter	4,978
Total lease income	$	23,132

Leases

Leases

The Company leases various cell sites, warehouses, retail stores, and office facilities for use in our business. These agreements include fixed rental payments as well as variable rental payments, such as those based on relevant inflation indices. The accounting lease term includes optional renewal periods that we are reasonably certain to exercise based on our assessment of relevant contractual and economic factors. The related lease payments are discounted at lease commencement using the Company's incremental borrowing rate in order to measure the lease liability and ROU asset.

The incremental borrowing rate is determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The Company uses the observable unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate. Under the new lease standard, leases are remeasured upon the occurrence of certain events or modifications.

Adoption of the new lease standard did not materially impact the Company's consolidated net earnings, cash flows, liquidity, or loan covenants.

The cumulative effect of the changes made to the consolidated January 1, 2019 balance sheet for the adoption of the new lease standard were as follows:

(in thousands)	December 31, 2018 As Previously Reported		Effect of the Adoption of ASC Topic 842 (Leases)			January 1, 2019 As Adjusted
Assets
Prepaid expenses and other	$	60,162	$	(11,580	)	$	48,582
Property, plant and equipment, net	701,359		1,789			703,148
Operating lease right-of-use assets	—		369,344			369,344
Intangible assets, net	366,029		(13,828		)	352,201
Liabilities
Current operating lease liabilities	—		38,773			38,773
Accrued liabilities and other	14,563		(412		)	14,151
Deferred Lease	22,436		(22,436		)	—
Noncurrent operating lease liabilities	—		328,156			328,156
Other liabilities	14,364		1,644			16,008

In addition to recognizing the operating lease liabilities and right-of-use assets, Topic 842 also reclassified prepaid and deferred rent balances, off-market leases, and lease incentives into the right-of-use assets.

The following table shows the components of lease income and costs:

(in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Lease income from operating leases - fixed	$	2,149	$	6,219
Operating lease expense	18,151		51,811
Amortization of finance lease assets	158		399
Interest on finance lease liabilities	14		59
Subtotal finance lease cost	172		458
Total lease expense	$	18,323	$	52,269

Substantially all of the Company's sublease income from operating leases relates to fixed lease payments.

All operating lease expenses, including short-term and variable lease expenses, are split between cost of service and selling, general and administrative expense in the condensed consolidated statements of operations based on the use of the facility that the rent is being paid on. Operating lease expense includes variable lease payments and short-term lease expense, both of which are immaterial. Variable lease expenses represent payments that are dependent on a rate or index, or on usage of the asset.

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

(in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating cash flows used by leases	$	16,002	$	46,546
Leased assets obtained in exchange for new operating lease liabilities	43,647		69,407

The following table summarizes the lease terms and discount rates:

	September 30, 2019
Weighted-average remaining lease term (years)
Operating leases	8
Finance leases	16
Weighted-average discount rate
Operating leases	4.6	%
Finance leases	5.2	%

The following table summarizes the expected maturity of lease liabilities at September 30, 2019:

(in thousands)	Operating Leases		Finance Leases		Total
2019	$	12,742	$	63	$	12,805
2020	64,474		174		64,648
2021	65,087		174		65,261
2022	63,341		174		63,515
2023	59,885		174		60,059
2024 and thereafter	242,115		1,704		243,819
Total lease payments	507,644		2,463		510,107
Less: Interest	103,481		748		104,229
Present value of lease liabilities	$	404,163	$	1,715	$	405,878

The Company's finance lease liabilities are presented in the accrued liabilities and other and the other liabilities lines of the unaudited condensed consolidated balance sheets. The related finance lease assets are included in the property, plant and equipment line.

Our commitments under leases existing as of December 31, 2018 were approximately $55.1 million for the year ending December 31, 2019, $104.4 million in total for the years ending December 31, 2020 and 2021, $97.6 million in total for the years ending December 31, 2022 and 2023 and $168.5 million in total for years thereafter.

The Company is also the lessor on agreements to lease assets such as collocation space at cell sites and dedicated fiber-optic strands to third parties. These agreements have been accounted for as operating leases both before and after adoption of the new lease standard. The new lease standard did not have a significant impact on the recognition of lease revenue associated with these agreements. The following table summarizes the total minimum rental receipts under lease agreements at September 30, 2019:

(in thousands)	Operating Leases
2019	$	1,774
2020	6,621
2021	4,526
2022	3,432
2023	1,801
2024 and thereafter	4,978
Total lease income	$	23,132

Leases

Leases

The Company leases various cell sites, warehouses, retail stores, and office facilities for use in our business. These agreements include fixed rental payments as well as variable rental payments, such as those based on relevant inflation indices. The accounting lease term includes optional renewal periods that we are reasonably certain to exercise based on our assessment of relevant contractual and economic factors. The related lease payments are discounted at lease commencement using the Company's incremental borrowing rate in order to measure the lease liability and ROU asset.

The incremental borrowing rate is determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The Company uses the observable unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate. Under the new lease standard, leases are remeasured upon the occurrence of certain events or modifications.

Adoption of the new lease standard did not materially impact the Company's consolidated net earnings, cash flows, liquidity, or loan covenants.

The cumulative effect of the changes made to the consolidated January 1, 2019 balance sheet for the adoption of the new lease standard were as follows:

(in thousands)	December 31, 2018 As Previously Reported		Effect of the Adoption of ASC Topic 842 (Leases)			January 1, 2019 As Adjusted
Assets
Prepaid expenses and other	$	60,162	$	(11,580	)	$	48,582
Property, plant and equipment, net	701,359		1,789			703,148
Operating lease right-of-use assets	—		369,344			369,344
Intangible assets, net	366,029		(13,828		)	352,201
Liabilities
Current operating lease liabilities	—		38,773			38,773
Accrued liabilities and other	14,563		(412		)	14,151
Deferred Lease	22,436		(22,436		)	—
Noncurrent operating lease liabilities	—		328,156			328,156
Other liabilities	14,364		1,644			16,008

In addition to recognizing the operating lease liabilities and right-of-use assets, Topic 842 also reclassified prepaid and deferred rent balances, off-market leases, and lease incentives into the right-of-use assets.

The following table shows the components of lease income and costs:

(in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Lease income from operating leases - fixed	$	2,149	$	6,219
Operating lease expense	18,151		51,811
Amortization of finance lease assets	158		399
Interest on finance lease liabilities	14		59
Subtotal finance lease cost	172		458
Total lease expense	$	18,323	$	52,269

Substantially all of the Company's sublease income from operating leases relates to fixed lease payments.

All operating lease expenses, including short-term and variable lease expenses, are split between cost of service and selling, general and administrative expense in the condensed consolidated statements of operations based on the use of the facility that the rent is being paid on. Operating lease expense includes variable lease payments and short-term lease expense, both of which are immaterial. Variable lease expenses represent payments that are dependent on a rate or index, or on usage of the asset.

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

(in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating cash flows used by leases	$	16,002	$	46,546
Leased assets obtained in exchange for new operating lease liabilities	43,647		69,407

The following table summarizes the lease terms and discount rates:

	September 30, 2019
Weighted-average remaining lease term (years)
Operating leases	8
Finance leases	16
Weighted-average discount rate
Operating leases	4.6	%
Finance leases	5.2	%

The following table summarizes the expected maturity of lease liabilities at September 30, 2019:

(in thousands)	Operating Leases		Finance Leases		Total
2019	$	12,742	$	63	$	12,805
2020	64,474		174		64,648
2021	65,087		174		65,261
2022	63,341		174		63,515
2023	59,885		174		60,059
2024 and thereafter	242,115		1,704		243,819
Total lease payments	507,644		2,463		510,107
Less: Interest	103,481		748		104,229
Present value of lease liabilities	$	404,163	$	1,715	$	405,878

The Company's finance lease liabilities are presented in the accrued liabilities and other and the other liabilities lines of the unaudited condensed consolidated balance sheets. The related finance lease assets are included in the property, plant and equipment line.

Our commitments under leases existing as of December 31, 2018 were approximately $55.1 million for the year ending December 31, 2019, $104.4 million in total for the years ending December 31, 2020 and 2021, $97.6 million in total for the years ending December 31, 2022 and 2023 and $168.5 million in total for years thereafter.

The Company is also the lessor on agreements to lease assets such as collocation space at cell sites and dedicated fiber-optic strands to third parties. These agreements have been accounted for as operating leases both before and after adoption of the new lease standard. The new lease standard did not have a significant impact on the recognition of lease revenue associated with these agreements. The following table summarizes the total minimum rental receipts under lease agreements at September 30, 2019:

(in thousands)	Operating Leases
2019	$	1,774
2020	6,621
2021	4,526
2022	3,432
2023	1,801
2024 and thereafter	4,978
Total lease income	$	23,132