Leases

6 Months Ended

Jun. 30, 2021

Leases

Leases

8. Leases

We lease certain facilities, vehicles and equipment under noncancelable operating leases. The most significant portion of these noncancelable operating leases are for the facilities occupied by our corporate office and our operating locations. Leases with an initial term of 12 months or less are not recorded in the Balance Sheet. We do not separate lease components from their associated non-lease components under the lease accounting guidance. We have certain leases with variable payments based on an index as well as some short-term leases on equipment and facilities. Variable lease expense and short-term lease expense were not material to our financial statements and aggregated to $3.6 million and $3.4 million in the first six months of 2021 and 2020, respectively. Lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The weighted average discount rate as of June 30, 2021 and December 31, 2020 was 4.1% and 4.2%, respectively. We recognize lease expense, including escalating lease payments and lease incentives, on a straight-line basis over the lease term. Lease expense for the three months ended June 30, 2021 and 2020 was $7.1 million and $6.9 million, respectively. Lease expense for the six months ended June 30, 2021 and 2020 was $14.4 million and $13.4 million, respectively.

The lease terms generally range from three to ten years. Some leases include one or more options to renew, which may be exercised to extend the lease term. We include the exercise of lease renewal options in the lease term when it is reasonably certain that we will exercise the option and such exercise is at our sole discretion. The weighted average remaining lease term was 7.2 years at June 30, 2021 and 7.5 years at December 31, 2020.

A majority of the Company’s real property leases are with individuals or entities with whom we have no other business relationship. However, in certain instances the Company enters into real property leases with current or former employees. Rent paid to related parties for the three months ended June 30, 2021 and 2020 was approximately $1.3 million and $1.6 million, respectively. Rent paid to related parties for both the six months ended June 30, 2021 and 2020 was approximately $2.5 million.

If we decide to cancel or terminate a lease before the end of its term, we would typically owe the lessor the remaining lease payments under the term of the lease. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. On rare occasions, we rent or sublease certain real estate assets that we no longer use to third parties.

The following table summarizes the lease assets and liabilities included in the consolidated Balance Sheet as follows (in thousands):

	June 30, 2021		December 31, 2020
Lease right-of-use assets	$	95,532	$	94,727
Lease liabilities:
Other current liabilities	$	16,769	$	16,586
Long-term lease liabilities		81,060		80,576
Total lease liabilities	$	97,829	$	97,162

The maturities of lease liabilities are as follows (in thousands):

Year ending December 31—
2021 (excluding the six months ended June 30, 2021)	$	10,625
2022		18,930
2023		16,355
2024		14,413
2025		13,521
Thereafter		40,038
Total Lease Payments		113,882
Less—Present Value Discount		(16,053)
Present Value of Lease Liabilities	$	97,829

Supplemental information related to leases was as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Cash paid for amounts included in the measurement of lease liabilities	$	5,347	$	5,305	$	10,700	$	9,778
Lease right-of-use assets obtained in exchange for lease liabilities	$	2,927	$	19,922	$	9,359	$	22,200