XML 26 R8.htm IDEA: XBRL DOCUMENT v3.19.3
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