Leases

6 Months Ended

Jun. 30, 2019

Leases. The Company primarily leases office space, storage units, data centers and equipment, and determines if an arrangement is a lease at inception. Operating leases are included in operating lease assets and operating lease liabilities on the consolidated balance sheets. Operating lease assets represent the right to use the underlying leased assets over the corresponding lease terms. Finance leases are included in furniture and equipment and notes payable on the consolidated balance sheets. Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company's leases do not provide an implicit rate, the Company's incremental borrowing rate based on the information available at the lease commencement date is used in determining the present value of the future lease payments. Lease options to extend or terminate that the Company is reasonably certain to exercise are considered in the present value calculation.

Operating lease expense, which is calculated on a straight-line basis over the lease term and presented as part of other operating expenses in the statement of operations, is composed of the amortization of the lease asset and the accretion of the lease liability. Finance lease expense is composed of the depreciation of the lease asset and accretion of the lease liability and presented as part of depreciation and amortization and interest expense, respectively, in the condensed consolidated statement of income and comprehensive income.

The Company accounts for the lease and non-lease fixed payment components of a lease agreement as a single lease component for all its classes of assets. Variable lease payments are not capitalized and are recorded as lease expense when incurred or paid. Operating leases with initial terms of 12 months or less (short-term leases), which are not reasonably certain to be extended at the commencement date, are not capitalized on the balance sheet. Additionally, operating leases of equipment are not recorded on the balance sheet on the basis that they are relatively short-term in nature and considered as not material to the condensed consolidated balance sheet.

During the three and six months ended June 30, 2019, total operating lease expense was $11.4 million and $22.9 million, respectively, which included $1.1 million and $2.1 million, respectively, of lease expense related to short-term leases and equipment. Total finance lease expense was $0.5 million and $1.1 million, respectively, for the three and six months ended June 30, 2019.

Lease-related assets and liabilities as of June 30, 2019 are as follows ($000 omitted):



Assets:
Operating lease assets, net of accumulated amortization		102,134
Finance lease assets, net of accumulated depreciation		1,369
Total lease assets		103,503

Liabilities:
Operating lease liabilities		114,022
Finance lease liabilities		4,975
Total lease liabilities		118,997

Other information related to operating and finance leases during the six months ended June 30, 2019 is as follows:



	Operating		Finance

Cash paid for amounts included in the measurement of lease liabilities ($000)	22,167		1,734
Lease assets obtained in exchange for lease obligations ($000)	33,419		—
Weighted average remaining lease term (years):	4.7		2.7
Weighted average discount rate	4.6	%	5.0	%

Future minimum lease payments under operating and finance leases as of June 30, 2019 are as follows:



	Operating		Finance
	($000 omitted)
2019 (excludes the six months ended June 30, 2019)	20,396		1,342
2020	33,926		1,913
2021	25,264		957
2022	18,186		957
2023	12,907		80
Thereafter	21,809		—
Total future minimum lease payments	132,488		5,249
Less: imputed interest	(18,466	)	(274	)
Net future minimum lease payments	114,022		4,975

Leases

Lease-related assets and liabilities as of June 30, 2019 are as follows ($000 omitted):



Assets:
Operating lease assets, net of accumulated amortization		102,134
Finance lease assets, net of accumulated depreciation		1,369
Total lease assets		103,503

Liabilities:
Operating lease liabilities		114,022
Finance lease liabilities		4,975
Total lease liabilities		118,997

Other information related to operating and finance leases during the six months ended June 30, 2019 is as follows:



	Operating		Finance

Cash paid for amounts included in the measurement of lease liabilities ($000)	22,167		1,734
Lease assets obtained in exchange for lease obligations ($000)	33,419		—
Weighted average remaining lease term (years):	4.7		2.7
Weighted average discount rate	4.6	%	5.0	%

Future minimum lease payments under operating and finance leases as of June 30, 2019 are as follows:



	Operating		Finance
	($000 omitted)
2019 (excludes the six months ended June 30, 2019)	20,396		1,342
2020	33,926		1,913
2021	25,264		957
2022	18,186		957
2023	12,907		80
Thereafter	21,809		—
Total future minimum lease payments	132,488		5,249
Less: imputed interest	(18,466	)	(274	)
Net future minimum lease payments	114,022		4,975