Leases

6 Months Ended

Jun. 30, 2019

Note 7—Leases

The Company recognizes right-of-use assets (“ROU Assets”) and lease liabilities (“Lease Liabilities”) for automobiles, office buildings, IT equipment, and small storage units for the temporary storage of operational equipment. The Company's leases have remaining lease terms ranging from less than 1 year to 10 years, and have extension options ranging from 1 year to 5 years. Most leases include the option to terminate the lease within 1 year.

Upon adopting ASC 842, the Company made accounting policy elections using practical expedients offered under the guidance to combine lease and non-lease components within leasing arrangements and to recognize the payments associated with short-term leases in earnings on a straight-line basis over the lease term, with the cost associated with variable lease payments recognized when incurred. These accounting policy elections impact the value of the Company’s ROU Assets and Lease Liabilities. The value of the Company’s ROU Assets is determined as the non-depreciated fair value of its leasing arrangements and is recorded to Property and Equipment, net on the Company's Consolidated Balance Sheet. The value of the Company’s Lease Liabilities is the present value of fixed lease payments not yet paid, discounted using either the rate implicit in the lease contract if that rate can be determined, or the Company’s incremental borrowing rate ("IBR") and is recorded in Other accrued expenses and Lease liabilities - long-term portion on the Company's Consolidated Balance Sheet. Any future lease payments that are not fixed based on the terms of the lease contract, or fluctuate based on a factor other than an index or rate, are considered variable lease payments and are not included in the value of the Company's ROU Assets or Lease Liabilities. The Company's IBR is determined as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

Components of lease expense required by ASC 842 are presented below for the three and six months ended June 30, 2019.


	Three Months Ended June 30,	Six Months Ended June 30,
	2019	2019
	(in thousands)
Lease cost¹
Operating lease cost	1,016	2,230
Short-term lease cost	340	561
Variable lease cost	131	284
Total lease cost	1,487	3,075

1.ASC 842 was adopted as of January 1, 2019. As such, prior period numbers remain unadjusted and in accordance with prior U.S. GAAP. Lease expense for the three and six months ended June 30, 2018 was $1.1 million and $2.0 million, respectively.

Supplemental information required by ASC 842 is presented below for the six months ended June 30, 2019.


	June 30, 2019
	(amounts in thousands)
Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,702
Weighted-average remaining lease term — operating leases	6.9 years
Weighted-average discount rate — operating leases	4.9		%

During the three months ended June 30, 2019, the Company's ROU Assets and Lease Liabilities were both reduced by less than $0.1 million due to lease cancellations which are accounted for as noncash transactions. During the six months ended June 30, 2019, the Company's ROU Assets and Lease Liabilities were both reduced by $0.1 million due to lease cancellations.

The following is a schedule by calendar year of future minimum lease payments under operating leases that have remaining terms as of June 30, 2019:


Period/Year	Operating Leases
	(in thousands)
July 1 to December 31, 2019	$	2,463
2020	4,579
2021	2,778
2022	1,598
2023	1,258
2024	1,285
Thereafter	5,514
Total minimum lease payments	$	19,475