Leases

12 Months Ended

Dec. 31, 2019

NOTE 16 - LEASES

Effective January 1, 2019, we adopted ASU 2016-02, ASC 842, “Leases,” the new lease accounting standard, using the optional transition approach resulting in recognition of operating lease right-of-use (“ROU”) assets and lease liabilities of $18.2 million and $18.6 million, respectively, as well as a charge to eliminate previously deferred rent of $0.4 million.

The Company determines whether an arrangement is or contains a lease at the inception of the arrangement. Operating leases are included in other non-current assets, accrued expenses and other non-current liabilities in our consolidated balance sheets. Finance leases are included in property, plant and equipment, net, short-term debt and long-term debt (less current portion) in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. Since we generally do not have access to the interest rate implicit in the lease, the Company uses our incremental borrowing rate (for fully collateralized debt) at the inception of the lease in determining the present value of the lease payments. The implicit rate is, however, used where readily available. Lease expense under operating leases is recognized on a straight-line basis over the term of the lease. Certain of our leases contain both lease and non-lease components, which are accounted for separately.

The Company has operating and finance leases for office facilities, a data center and certain equipment. The remaining terms of our leases range from over one year to just under nine years. Certain leases include options to extend the lease term for up to ten years, as well as options to terminate both of which have been excluded from the term of the lease since exercise of these options is not reasonably certain.

Lease expense, cash flow, operating and finance lease assets and liabilities, average lease term and average discount rate are as follows:

	December 31, 2019
	Twelve Months Ended
Lease Expense
Finance lease expense:
Amortization of right-of-use assets	$	1,691
Interest on lease liabilities		83
Operating lease expense		3,509
Total lease expense	$	5,283

Cash Flow Components
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from finance leases	$	83
Operating cash outflows from operating leases		3,463
Financing cash outflows from finance leases		1,230
Right-of-use assets obtained in exchange for new finance lease liabilities, net of terminations and disposals		2,573
Right-of-use assets obtained in exchange for operating lease liabilities (including adoption impact of $18.2 million) net of terminations and disposals		18,961

	December 31, 2019
Balance Sheet Information
Operating leases:
Other non-current assets	$	15,201
Accrued liabilities	$	(2,949	)
Other non-current liabilities		(13,282	)
Total operating lease liabilities	$	(16,231	)

Finance leases:
Property and equipment gross	$	4,821
Accumulated depreciation		(2,118	)
Property and equipment, net	$	2,703
Current portion of long-term debt	$	(1,023	)
Long-term debt		(2,045	)
Total finance lease liabilities	$	(3,068	)

Lease Term and Discount Rates
Weighted-average remaining lease term - finance leases (years)	4.1
Weighted-average remaining lease term - operating leases (years)	6.4
Weighted-average discount rate - finance leases		2.9	%
Weighted-average discount rate - operating leases		3.9	%

Summarized future minimum payments under our leases are as follows:

	December 31,
	2019
	Finance Leases			Operating Leases
Lease Maturities (in thousands)
2020	$	1,175		$	3,508
2021		908			3,034
2022		502			2,505
2023		128			2,185
2024		123			2,030
Thereafter		434			4,941
Total		3,270			18,203
Less: Imputed interest		(202	)		(1,972	)
Total lease liabilities, net of interest	$	3,068		$	16,231

Summarized future minimum payments for our leases under ASC 840 are as follows:
	December 31,
	2018
	Operating Leases
Lease Maturities (in thousands)
2019	$	4,249
2020		3,232
2021		2,870
2022		2,635
2023		2,346
Thereafter		7,647
Total	$	22,979

The 2018 disclosure includes certain non-lease components that have been excluded from our ASC 842 accounting and disclosures for 2019.