Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Lessee, Operating Leases [Text Block]

Leases

J2 Global leases certain facilities and equipment under non-cancelable operating and finance leases which expire at various dates through 2036. Office and equipment leases are typically for terms of three to five years and generally provide renewal options for terms up to an additional five years. Some of the Company’s leases include options to terminate within one year.

In certain agreements in which the Company leases office space where the Company is the tenant, it subleases the site to various other companies through a sublease agreement.

Finance leases are not material to the Company’s Condensed Consolidated Financial Statements and are therefore not included in the disclosures below.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Operating lease cost	$	9,114	$	5,377	$	16,218	$	11,175
Short-term lease cost	648		429		1,093		884
Total lease cost	$	9,762	$	5,806	$	17,311	$	12,059

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

	June 30, 2020		December 31, 2019
Operating leases
Operating lease right-of-use assets	$	110,031	$	125,822
Operating lease right-of-use assets classified as assets held for sale	271		—
Total operating lease right-of-use assets	$	110,302	$	125,822
Operating lease liabilities, current	$	26,602	$	26,927
Operating lease liabilities, current classified as assets held for sale	118		—
Operating lease liabilities, noncurrent	91,279		104,070
Operating lease liabilities, noncurrent classified as assets held for sale	156		—
Total operating lease liabilities	$	118,155	$	130,997

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

	Six Months Ended June 30,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	14,499	$	10,489
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	5,357	$	4,954

Other supplemental operating lease information consists of the following:

	June 30, 2020		December 31, 2019
Operating leases:
Weighted average remaining lease term	5.6 years		5.9 years
Weighted average discount rate	4.25	%	3.95	%

Maturities of operating lease liabilities as of June 30, 2020 were as follows (in thousands):

	Operating Leases
Fiscal Year:
2020 (remainder)	$	14,432
2021	27,781
2022	25,629
2023	20,022
2024	13,440
Thereafter	38,009
Total lease payments	$	139,313
Less: Imputed interest	21,158
Present value of operating lease liabilities	$	118,155

Sublease

Total sublease income for the three months ended June 30, 2020 and 2019 was $1.0 million and $0.6 million, respectively, and was $1.8 million and $1.5 million for the six months ended June 30, 2020 and 2019, respectively. Total estimated aggregate sublease income to be received in the future is $3.6 million.

In the second quarter of 2020, the Company recorded $2.1 million of impairment associated with one of its sublease tenants in default as a result of the economic effects of COVID-19. The impairment is presented in general and administrative expenses on the Condensed Consolidated Statement of Operations.

Significant Judgments

Discount Rate

The majority of the J2 Global’s leases are discounted using the Company’s incremental borrowing rate as the rate implicit in the lease is not readily determinable.

Options

The lease term is generally the minimum noncancelable period of the lease. The Company does not include option periods unless the Company determined it is reasonably certain of exercising the option at inception or when a triggering event occurs.

Practical Expedients

As a practical expedient, the Company has not separated lease components from nonlease components for its real property operating leases. Certain of the Company’s leases contain nonlease components such as maintenance and certain utility costs.

In addition, the Company elected and applied the available transition practical expedients upon adoption. By electing these practical expedients, the Company did:

•not reassess whether expired or existing contracts contain leases under the new definition of a lease;

•not reassess lease classification for expired or existing leases; and

•not reassess whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.