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LEASES

12 Months Ended

Dec. 31, 2019

We lease office facilities for use in our operations, as well as transportation and other equipment. Most of our leases are non-cancelable operating lease agreements and they expire in one year to eight years. Some of these leases include options to extend for up to 10 years. We had no finance leases and no related party lease agreements as of December 31, 2019. Operating lease costs were approximately $9.9 million in 2019, $7.4 million in 2018, and $6.9 million in 2017.

The components of operating lease expense were as follows (in thousands):



Lease Costs	Financial Statement Classification	For the year ended
		2019
Operating lease cost	Selling, general and administrative expenses	$	6,379
Short-term lease cost	Selling, general and administrative expenses	2,269
Variable lease cost	Selling, general and administrative expenses	1,274
Net lease cost		$	9,922

As of December 31, 2019, ROU lease assets and lease liabilities for our operating leases were recorded in the consolidated balance sheet as follows (in thousands):



	December 31, 2019
Assets:
Operating lease right-of-use assets	$	18,992
Liabilities:
Operating leases, short-term	6,387
Operating leases, long-term	16,822
Total lease liabilities	$	23,209

Supplemental information related to leases was as follows:



Other Information	For the year ended
	2019
Cash Flows (in thousands):
Cash paid amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	7,267

Right-of-use assets obtained in exchange for lease obligations (non-cash):
Operating leases	$	3,466

Lease Term and Discount Rate:
Weighted average remaining lease term (years)	4
Weighted average discount rate	4.00		%

As of December 31, 2019, maturities of lease liabilities were as follows (in thousands):



Year ending December 31,	Amount
2020	$	7,684
2021	6,246
2022	3,960
2023	2,923
2024	2,478
Thereafter	2,042
Total lease payments	25,333
Less: Interest	(2,124		)
Present value of operating lease liabilities	$	23,209

As of December 31, 2018, the future minimum lease commitments related to lease agreements under Topic 840, the predecessor of Topic 842, were as follows (in thousands):



Year ending December 31,	Amount
2019	$	5,994
2020	5,146
2021	3,976
2022	1,925
2023	1,164
Thereafter	2,132
Total	$	20,337

Rental Income from third parties

We own office buildings in Bangor, Falmouth and Yarmouth, Maine; Lubbock and Plano, Texas; Troy, Michigan; Latham, New York; and Moraine, Ohio. We lease space in some of these buildings to third-party tenants. The property we lease to others under operating leases consists primarily of specific facilities where one tenant obtains substantially all of the economic benefit from the asset and has the right to direct the use of the asset. These non-cancelable leases expire between 2020 and 2025, some of which have options to extend the lease for up to five years. We determine if an arrangement is a lease at inception. None of our leases allow the lessee to purchase the leased asset.

Rental income from third-party tenants was $1.1 million in 2019, $1.2 million in 2018, and $1.5 million in 2017. Rental income is included in Hardware and other revenue on the consolidated statements of comprehensive income. Future minimum operating rental income based on contractual agreements is as follows (in thousands):



Year ending December 31,	Amount
2020	$	1,341
2021	1,372
2022	1,402
2023	1,432
2024	1,462
Thereafter	857
Total	$	7,866

As of December 31, 2019, we had no additional significant operating or finance leases that had not yet commenced.

LEASES