Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

LEASES

We have several noncancellable operating leases, primarily for office space that expire at various dates over the next five years. These leases generally contain renewal options to extend for one lease term of five years. For leases that we are reasonably certain we will exercise the lease renewal options, the options were considered in determining the lease term, and associated potential option payments are included in the lease payments. The payments used in the renewal term were estimated using the percentage rate increase of historical rent payments for each location where the renewal will be exercised.

Payments due under the lease contracts include annual fixed payments for office space. Variable payments including payments for our proportionate share of the building’s property taxes, insurance, and common area maintenance are treated as non-lease components and are recognized in the period for which the costs occur.

We are obligated under finance leases covering certain IT equipment that expire at various dates during the next three years.

The components of lease cost were as follows (in thousands):

	Three Months Ended
	March 31, 2019
Operating lease expense	$	1,118
Finance lease expense:
Amortization of right of use assets	25
Interest on lease liabilities	4
Total finance lease expense	29
Total lease expense	$	1,147

Depreciation of assets held under capital leases is included in depreciation expense.

Leases with an initial term of 12 months or less ("short-term lease") are not recorded on the balance sheet and are recognized on a straight-line basis over the lease term. The short-term lease expense for the three months ended March 31, 2019 was $0.2 million.

Minimum rental lease payments under operating leases are recognized on a straight-line basis over the term of the lease including any periods of rent abatement and incentives. Rental expense for operating leases for the three months ended March 31, 2018 was $1.1 million.

Certain information regarding our operating and finance leases were as follows (in thousands):

	As of
	March 31, 2019
Operating leases:
Operating lease right of use assets	$	23,401
Operating lease liabilities, current portion	3,561
Operating lease liabilities, long-term portion	21,836
Total operating lease liabilities	$	25,397
Finance leases:
Finance lease right of use asset	$	235
Accumulated depreciation	(26		)
Total finance lease asset, net	$	209
Current installments of obligations under finance lease	$	121
Long-term portion of obligations under finance leases	135
Total finance lease liabilities	$	256

As of December 31, 2018, we were obligated under capital leases covering certain office equipment that expire at various dates over subsequent years. Amounts were reported in the condensed consolidated balance sheets as accrued liabilities and other non-current liabilities were as follows (in thousands):

	As of
	December 31, 2018
Capital leases:
Office equipment	$	515
Accumulated depreciation	(275		)
Capital leases, net	$	240

Other information related to leases were as follows (dollars in thousands):

	As of
	March 31, 2019
Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases	$	1,122
Financing cash flow from finance leases	29
ROU assets obtained in exchange for lease obligations:
Operating leases	$	24,212
Finance leases	235
Reductions to ROU assets resulting from reductions to lease obligations:
Operating leases	$	811
Finance leases	26
Weighted average remaining lease term:
Operating leases	4.7 years
Finance leases	2.1 years
Weighted average discount rate:
Operating leases	4.49%
Finance leases	5.73%

Amounts disclosed for ROU assets obtained in exchange for lease obligations include amounts added to the carrying amount of ROU assets resulting from lease modifications and reassessments including transition liabilities upon adoption of ASC 842 on January 1, 2019. We determined the discount rate for leases using an incremental borrowing rate to calculate the ROU assets and lease liabilities.

Maturities of lease liabilities under noncancellable leases were as follows (in thousands):

	As of
	March 31, 2019
	Operating leases			Finance leases
2019 - remaining	$	3,476		$	99
2020	4,689			126
2021	4,721			48
2022	4,569			—
2023	3,814			—
2024	3,899			—
Thereafter	4,181			—
Total undiscounted lease payments	29,349			273
Less imputed interest	(3,952		)	(17		)
Total lease liabilities	$	25,397		$	256

Under ASC 840, Leases, future minimum lease payments under noncancellable operating leases and future minimum capital lease payments were as follows (in thousands):

	As of
	December 31, 2018
	Operating leases		Finance leases
Year ending:
2019	$	5,366	$	132
2020	5,279		126
2021	4,147		47
2022	2,729		—
2023	1,698		—
Thereafter	2,647		—
Total minimum lease payments	$	21,866	305
Less amount representing interest, rates 5.22% to 5.99%			(21		)
Obligations under capital leases			$	284

Leases

LEASES

We have several noncancellable operating leases, primarily for office space that expire at various dates over the next five years. These leases generally contain renewal options to extend for one lease term of five years. For leases that we are reasonably certain we will exercise the lease renewal options, the options were considered in determining the lease term, and associated potential option payments are included in the lease payments. The payments used in the renewal term were estimated using the percentage rate increase of historical rent payments for each location where the renewal will be exercised.

Payments due under the lease contracts include annual fixed payments for office space. Variable payments including payments for our proportionate share of the building’s property taxes, insurance, and common area maintenance are treated as non-lease components and are recognized in the period for which the costs occur.

We are obligated under finance leases covering certain IT equipment that expire at various dates during the next three years.

The components of lease cost were as follows (in thousands):

	Three Months Ended
	March 31, 2019
Operating lease expense	$	1,118
Finance lease expense:
Amortization of right of use assets	25
Interest on lease liabilities	4
Total finance lease expense	29
Total lease expense	$	1,147

Depreciation of assets held under capital leases is included in depreciation expense.

Leases with an initial term of 12 months or less ("short-term lease") are not recorded on the balance sheet and are recognized on a straight-line basis over the lease term. The short-term lease expense for the three months ended March 31, 2019 was $0.2 million.

Minimum rental lease payments under operating leases are recognized on a straight-line basis over the term of the lease including any periods of rent abatement and incentives. Rental expense for operating leases for the three months ended March 31, 2018 was $1.1 million.

Certain information regarding our operating and finance leases were as follows (in thousands):

	As of
	March 31, 2019
Operating leases:
Operating lease right of use assets	$	23,401
Operating lease liabilities, current portion	3,561
Operating lease liabilities, long-term portion	21,836
Total operating lease liabilities	$	25,397
Finance leases:
Finance lease right of use asset	$	235
Accumulated depreciation	(26		)
Total finance lease asset, net	$	209
Current installments of obligations under finance lease	$	121
Long-term portion of obligations under finance leases	135
Total finance lease liabilities	$	256

As of December 31, 2018, we were obligated under capital leases covering certain office equipment that expire at various dates over subsequent years. Amounts were reported in the condensed consolidated balance sheets as accrued liabilities and other non-current liabilities were as follows (in thousands):

	As of
	December 31, 2018
Capital leases:
Office equipment	$	515
Accumulated depreciation	(275		)
Capital leases, net	$	240

Other information related to leases were as follows (dollars in thousands):

	As of
	March 31, 2019
Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases	$	1,122
Financing cash flow from finance leases	29
ROU assets obtained in exchange for lease obligations:
Operating leases	$	24,212
Finance leases	235
Reductions to ROU assets resulting from reductions to lease obligations:
Operating leases	$	811
Finance leases	26
Weighted average remaining lease term:
Operating leases	4.7 years
Finance leases	2.1 years
Weighted average discount rate:
Operating leases	4.49%
Finance leases	5.73%

Amounts disclosed for ROU assets obtained in exchange for lease obligations include amounts added to the carrying amount of ROU assets resulting from lease modifications and reassessments including transition liabilities upon adoption of ASC 842 on January 1, 2019. We determined the discount rate for leases using an incremental borrowing rate to calculate the ROU assets and lease liabilities.

Maturities of lease liabilities under noncancellable leases were as follows (in thousands):

	As of
	March 31, 2019
	Operating leases			Finance leases
2019 - remaining	$	3,476		$	99
2020	4,689			126
2021	4,721			48
2022	4,569			—
2023	3,814			—
2024	3,899			—
Thereafter	4,181			—
Total undiscounted lease payments	29,349			273
Less imputed interest	(3,952		)	(17		)
Total lease liabilities	$	25,397		$	256

Under ASC 840, Leases, future minimum lease payments under noncancellable operating leases and future minimum capital lease payments were as follows (in thousands):

	As of
	December 31, 2018
	Operating leases		Finance leases
Year ending:
2019	$	5,366	$	132
2020	5,279		126
2021	4,147		47
2022	2,729		—
2023	1,698		—
Thereafter	2,647		—
Total minimum lease payments	$	21,866	305
Less amount representing interest, rates 5.22% to 5.99%			(21		)
Obligations under capital leases			$	284