Leases

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Leases

LeasesWe 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 from one year to eight years. Some of these leases include options to extend for up to 10 years. We have no finance leases and no related party lease agreements as of September 30, 2020. Operating lease costs were approximately $2.5 million and $7.6 million for the three and nine months ended September 30, 2020, respectively, and $2.6 million and $7.3 million for the three and nine months ended September 30, 2019, respectively.

The components of operating lease expense were as follows:

Lease Costs	Financial Statement Classification	Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019
Operating lease cost	Selling, general and administrative expenses	$	1,595	$	1,692	$	4,867	$	4,726
Short-term lease cost	Selling, general and administrative expenses	453		545		1,474		1,707
Variable lease cost	Selling, general and administrative expenses	458		370		1,306		901
Net lease cost		$	2,506	$	2,607	$	7,647	$	7,334

Right-of-use lease assets and lease liabilities for our operating leases were recorded in the condensed consolidated balance sheets as follows:

	September 30, 2020		December 31, 2019
Assets:
Operating lease right-of-use assets	$	15,321	$	18,992
Liabilities:
Operating leases, short-term	5,780		6,387
Operating leases, long-term	12,870		16,822
Total lease liabilities	$	18,650	$	23,209

Supplemental information related to leases is as follows:

Other Information	Nine Months Ended September 30,
	2020			2019
Cash flows:
Cash amounts paid included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	5,665		$	5,141
Right-of-use assets obtained in exchange for lease obligations (non-cash):
Operating leases	$	562		$	3,350
Lease term and discount rate:
Weighted average remaining lease term (years)	4			4
Weighted average discount rate	4.00		%	4.00		%

As of September 30, 2020, maturities of lease liabilities were as follows:

Year ending December 31,	Amount
2020 (Remaining 2020)	$	2,111
2021	6,405
2022	4,054
2023	3,017
2024	2,557
Thereafter	2,073
Total lease payments	20,217
Less: Interest	(1,567)
Present value of operating lease liabilities	$	18,650

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, and some 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 for the three and nine months ended September 30, 2020, totaled $284,000 and $850,000, respectively, and for the three and nine months ended September 30, 2019, totaled $261,000 and $815,000, respectively. Rental income is included in Hardware and other revenue on the condensed consolidated statements of income. As of September 30, 2020, future minimum operating rental income based on contractual agreements is as follows:

Year ending December 31,	Amount
2020 (Remaining 2020)	$	338
2021	1,372
2022	1,402
2023	1,432
2024	1,462
Thereafter	858
Total	$	6,864

As of September 30, 2020, we had no additional significant operating or finance leases that had not yet commenced.

Leases

LeasesWe 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 from one year to eight years. Some of these leases include options to extend for up to 10 years. We have no finance leases and no related party lease agreements as of September 30, 2020. Operating lease costs were approximately $2.5 million and $7.6 million for the three and nine months ended September 30, 2020, respectively, and $2.6 million and $7.3 million for the three and nine months ended September 30, 2019, respectively.

The components of operating lease expense were as follows:

Lease Costs	Financial Statement Classification	Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019
Operating lease cost	Selling, general and administrative expenses	$	1,595	$	1,692	$	4,867	$	4,726
Short-term lease cost	Selling, general and administrative expenses	453		545		1,474		1,707
Variable lease cost	Selling, general and administrative expenses	458		370		1,306		901
Net lease cost		$	2,506	$	2,607	$	7,647	$	7,334

Right-of-use lease assets and lease liabilities for our operating leases were recorded in the condensed consolidated balance sheets as follows:

	September 30, 2020		December 31, 2019
Assets:
Operating lease right-of-use assets	$	15,321	$	18,992
Liabilities:
Operating leases, short-term	5,780		6,387
Operating leases, long-term	12,870		16,822
Total lease liabilities	$	18,650	$	23,209

Supplemental information related to leases is as follows:

Other Information	Nine Months Ended September 30,
	2020			2019
Cash flows:
Cash amounts paid included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	5,665		$	5,141
Right-of-use assets obtained in exchange for lease obligations (non-cash):
Operating leases	$	562		$	3,350
Lease term and discount rate:
Weighted average remaining lease term (years)	4			4
Weighted average discount rate	4.00		%	4.00		%

As of September 30, 2020, maturities of lease liabilities were as follows:

Year ending December 31,	Amount
2020 (Remaining 2020)	$	2,111
2021	6,405
2022	4,054
2023	3,017
2024	2,557
Thereafter	2,073
Total lease payments	20,217
Less: Interest	(1,567)
Present value of operating lease liabilities	$	18,650

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, and some 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 for the three and nine months ended September 30, 2020, totaled $284,000 and $850,000, respectively, and for the three and nine months ended September 30, 2019, totaled $261,000 and $815,000, respectively. Rental income is included in Hardware and other revenue on the condensed consolidated statements of income. As of September 30, 2020, future minimum operating rental income based on contractual agreements is as follows:

Year ending December 31,	Amount
2020 (Remaining 2020)	$	338
2021	1,372
2022	1,402
2023	1,432
2024	1,462
Thereafter	858
Total	$	6,864

As of September 30, 2020, we had no additional significant operating or finance leases that had not yet commenced.