Leases

12 Months Ended

Dec. 31, 2020

10. Leases

The Company has operating leases for its corporate offices and operating facilities. The Company determines if an arrangement is a lease at the inception of a contract. Effective January 1, 2019, right-of-use assets and operating lease liabilities are included in the consolidated balance sheet. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent net present value of the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and operating lease liabilities are recognized at commencement date based on the net present value of the fixed lease payments over the lease term. The Company’s operating lease terms are generally five years or less. The Company’s lease terms include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. As most of the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Operating fixed lease expense is recognized on a straight-line basis over the lease term.

In accordance with ASC 842, the Company records on its consolidated balance sheet leases with a term greater than 12 months. The Company has elected, in compliance with current accounting standards, not to record leases with an initial term of 12 months or less in the consolidated balance sheet. ASC 842 requires the separation of the fixed lease components from the variable lease components. The Company has elected the practical expedient to account for separate lease components of a contract as a single lease cost thus causing all fixed payments to be capitalized. Non-lease and variable cost components are not included in the measurement of the right-of-use assets or operating lease liabilities. The Company also elected the package of practical expedients permitted within ASC 842, which among other things, allows the Company to carry forward historical lease classification. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage are not included in the right-of-use assets or operating lease liabilities. These are expensed as incurred and recorded as variable lease expense.

For the years ended December 31, 2020 and 2019, the components of lease expense were as follows (in thousands):

	Year Ended December 31,
	2020		2019
Operating lease cost	$	30,710	$	30,225
Short-term lease cost		1,454		1,212
Variable lease cost		5,752		6,074
Total lease cost^*	$	37,916	$	37,511

Sublease income was immaterial

Lease costs are reflected in the consolidated statements of net income in the line item – rent, supplies, contract labor and other.

For the years ended December 31, 2020 and 2019, supplemental cash flow information related to leases was as follows (in thousands):

	Year Ended December 31,
	2020		2019
Cash paid for amounts included in the measurement of operating lease liabilities (in thousands)	$	30,307	$	30,077

Right-of-use assets obtained in exchange for new operating lease liabilities (in thousands)^*	$	32,710	$	113,222

Includes the right-of-use assets obtained in exchange for lease liabilities for the year 2019 - $82.6 million which were recognized upon adoption of ASC Topic 842 at January 1, 2019.

The aggregate future lease payments for operating leases as of December 31, 2020 were as follows (in thousands):

Fiscal Year	Amount
2021	$	29,819
2022		23,861
2023		17,787
2024		11,487
2025 and therafter		12,294
Total lease payments	$	95,248
Less: imputed interest		5,751
Total operating lease liabilities	$	89,497

Average lease terms and discount rates were as follows:

	Year Ended December 31,
	2020			2019
Weighted-average remaining lease term - Operating leases	4.05 Years			4.05 Years

Weighted-average discount rate - Operating leases		3.1	%		3.9	%