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Note 10 - Leases

9 Months Ended

Sep. 30, 2020

Operating and Finance Leases [Text Block]

10.

LEASES

Lease Agreements Under Which the Company is the Lessee

The Company enters into agreements for land, land easements, access rights, IRUs, co-located data centers, buildings, equipment, pole attachments and personal property. These assets are utilized in the provision of broadband and telecommunications services to the Company’s customers. Operating leases are included in operating lease right of use assets and current and noncurrent operating lease liabilities on the consolidated balance sheet. Finance leases are included in property, plant and equipment and current portion of long-term obligations and long-term obligations on the consolidated balance sheet.

Certain leases include a provision for early termination, typically in return for an agreed amount of consideration. Early terminations recorded in the nine-month period ended September 30, 2020 were not material.

The Company entered into additional operating lease commitments that had not yet commenced as of September 30, 2020 with a present value totaling approximately $10,550. These leases consist primarily of an agreement with another carrier to lease dark fiber, a portion of which will be leased by the Company to another carrier. This lease is expected to commence in the fourth quarter of 2020 or in 2021 and has a term of 20 years. They also include agreements associated with the Company’s Connect America Fund (“CAF”) Phase II services which are expected to commence in 2020 and have terms of 7 to 25 years.

Short-term and variable lease cost recorded during the three and nine-month periods ended September 30, 2020 and 2019 were not material.

The Company did not enter into any sale and leaseback transactions during the nine-month period ended September 30, 2020.

The following table presents lease costs for agreements under which the Company is the lessee for the three and nine-month periods ended September 30, 2020 and 2019.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019

Finance lease cost:
Amortization of right-of-use assets	$	47	$	20	$	141	$	59
Interest on lease liabilities		67		67		200		203
Operating lease costs		2,235		1,972		6,435		5,882
Total lease cost	$	2,349	$	2,059	$	6,776	$	6,144

The following table provides information included on the consolidated balance sheet for agreements under which the Company is the lessee as of September 30, 2020 and December 31, 2019.

	2020			2019

Operating leases:
Right of use assets	$	89,517		$	80,991


Liabilities - current	$	3,189		$	2,795
Liabilities - noncurrent		80,498			78,767
Total liabilities	$	83,687		$	81,562

Finance leases:
Property, plant and equipment	$	5,800		$	5,800
Accumulated depreciation and amortization		(3,840	)		(3,699	)
Property, plant and equipment, net	$	1,960		$	2,101

Current portion of long-term obligations	$	63		$	53
Long-term obligations, net of current portion		2,628			2,676
Total finance lease liabilities	$	2,691		$	2,729

The following table provides the maturities of the Company’s operating lease liabilities as of September 30, 2020.

	Operating			Financing
	Leases			Leases

2020 (excluding the nine months ended September 30, 2020)	$	1,748		$	81
2021		7,966			327
2022		7,872			336
2023		7,563			345
2024		7,380			355
Thereafter		163,814			3,472
Total lease payments		196,343			4,916
Less imputed interest		(113,558	)		(2,225	)
Total present value of lease obligations		82,785			2,691
Present value of current obligations		(2,287	)		(63	)
Present value of long-term obligations	$	80,498		$	2,628

The following table presents other information about agreements under which the Company is the lessee as of and for the nine-month periods ended September 30, 2020 and 2019.

	2020			2019

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	200		$	203
Operating cash flows from operating leases		12,800			5,645
Financing cash flows from finance leases		38			28

Right-of-use assets obtained in exchange for operating lease liabilities		10,210			592

Weighted-average remaining lease term (in years):
Finance leases		13			14
Operating leases		28			30
Weighted-average discount rate:
Finance leases		9.8	%		9.8	%
Operating leases		6.9	%		6.9	%

Lease Agreements Under Which the Company is the Lessor

The Company’s agreements under which it is the lessor are primarily associated with the use of its network assets, including IRUs for fiber optic cable, colocation and buildings.

The Company does not have material sublease arrangements as the lessor or lease arrangements with related parties.

The Company did not have sales-type leases or direct financing leases as of September 30, 2020.

The underlying assets associated with the Company’s operating leases are accounted for under ASC 360, “Property, Plant and Equipment.” The assets are depreciated on a straight-line basis over their estimated useful life, including any periods in which the Company expects to utilize the asset subsequent to termination of the lease.

The following table presents lease income for agreements under which the Company is the lessor for the three and nine-month periods ended September 30, 2020 and 2019. Lease income is classified as revenue on the Statement of Comprehensive Income. The carrying value of the underlying leased assets is not material.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019

Total lease income	$	1,611	$	879	$	4,206	$	2,595

The following table presents the maturities of future undiscounted lease payments at September 30, 2020 for the periods indicated.

2020 (excluding the nine months ended September 30, 2020)	$	376
2021		1,248
2022		496
2023		472
2024		453
Thereafter		2,675
Total future undiscounted lease payments	$	5,720