18. Commitments and Contingencies

Lessor Obligations

As of December 31, 2019, the Company had noncancelable operating leases (as lessor), primarily associated with assets deployed at customer sites. These leases expire over the next one to seven years. Leases contain termination clauses with associated penalties, the amount of which cause the likelihood of cancellation to be remote.

Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2019 were as follows (in thousands):


2020	$	31,279
2021		30,316
2022		22,432
2023		18,346
2024 and thereafter		36,095
Total future minimum lease payments	$	138,468

Lessee Obligations

As of December 31, 2019, the Company had operating and finance leases, as lessee, primarily associated with sale/leaseback transactions that are partially secured by restricted cash, security deposits and pledged escrows (see also Note 1, Nature of Operations) as summarized below. These leases expire over the next one to nine years. Minimum rent payments under operating and finance leases are recognized on a straight‑line basis over the term of the lease. Leases contain termination clauses with associated penalties, the amount of which cause the likelihood of cancellation to be remote.

In prior periods, the Company entered into sale/leaseback transactions that were accounted for as finance leases and reported as part of finance obligations. The outstanding balance of finance obligations related to sale/leaseback transactions at December 31, 2019 and December 31, 2018 was $31.7 million and $81.9 million, respectively. The fair value of the finance obligation approximated the carrying value as of both December 31, 2019 and December 31, 2018.

The Company has sold future services to be performed associated with certain sale/leaseback transactions and recorded the balance as a finance obligation. The outstanding balance of this obligation at December 31, 2019 was $109.4 million, $15.5 million and $93.9 million of which was classified as short-term and long-term, respectively, on the accompanying consolidated balance sheet. The outstanding balance of this obligation at December 31, 2018 was $37.0 million, $5.7 million and $31.3 million of which was classified as short-term and long-term, respectively. The amount is amortized using the effective interest method. The fair value of this finance obligation approximated the carrying value as of December 31, 2019.

The Company has a finance lease associated with its property and equipment in Latham, New York. Liabilities relating to this lease of $2.2 million has been recorded as a finance obligation in the accompanying consolidated balance sheet as of December 31, 2019. The fair value of this finance obligation approximated the carrying value as of December 31, 2019.

Future minimum lease payments under operating and finance leases (with initial or remaining lease terms in excess of one year) as of December 31, 2019 were as follows (in thousands):


					Other		Total
	Operating		Finance		Leased		Finance
	Leases		Leases		Property		Obligations
2020	$	44,849	$	10,128	$	414	$	55,391
2021		44,919		9,276		407		54,602
2022		40,329		4,975		390		45,694
2023		35,738		3,150		366		39,254
2024 and thereafter		70,718		16,154		1,547		88,419
Total future minimum lease payments		236,553		43,683		3,124		283,360
Less imputed lease interest		(65,226)		(11,934)		(887)		(78,047)
Sale of future services		—		109,422		—		109,422
Total lease liabilities	$	171,327	$	141,171	$	2,237	$	314,735

Rental expense for all operating leases was $30.6 million and $15.8 million for the years ended December 31, 2019 and 2018, respectively.

The gross profit on sale/leaseback transactions for all operating leases was $26.2 million and $16.4 million for the years ended December 31, 2019 and 2018, respectively. Right of use assets obtained in exchange for new operating lease liabilities was $121.4 million and $46.3 million for the years ended December 31, 2019 and 2018, respectively.

At December 31, 2019 and 2018, security deposits associated with sale/leaseback transactions were $6.0 million and $6.8 million, respectively, and were included in other assets in the consolidated balance sheet.

Other information related to the operating leases are presented in the following table:


		Year ended		Year ended
		December 31, 2019		December 31, 2018
Cash payments (in thousands)	$	29,317	$	14,926
Weighted average remaining lease term (years)		5.61		4.36
Weighted average discount rate		12.1%		12.1%

Finance lease costs include amortization of the right of use assets (i.e. depreciation expense) and interest on lease liabilities (i.e. interest and other expense, net in the consolidated statement of operations). Finance lease costs were as follows (in thousands):


	Year ended		Year ended
	December 31, 2019		December 31, 2018
Amortization of right of use asset	$	3,178	$	7,549
Interest on finance obligations		4,863		6,908
Total finance lease cost	$	8,041	$	14,457

Right of use assets obtained in exchange for new finance lease liabilities were $5.9 million and $2.2 million for the years ended December 31, 2019 and 2018, respectively.

Other information related to the finance leases are presented in the following table:


		Year ended		Year ended
		December 31, 2019		December 31, 2018
Cash payments (in thousands)	$	61,237	$	33,715
Weighted average remaining lease term (years)		2.99		3.17
Weighted average discount rate		11.1%		11.8%

Restricted Cash

In connection with certain of the above noted sale/leaseback agreements, cash of $125.1 million was required to be restricted as security as of December 31, 2019, which restricted cash will be released over the lease term. As of December 31, 2019, the Company also had certain letters of credit backed by security deposits totaling $103.4 million that are security for the above noted sale/leaseback agreements.

The Company also had letters of credit in the aggregate amount of $0.5 million at December 31, 2019 associated with a finance obligation from the sale/leaseback of its building. We consider cash collateralizing this letter of credit as restricted cash.

Litigation

Legal matters are defended and handled in the ordinary course of business. The Company has established accruals for matters for which management considers a loss to be probable and reasonably estimable. It is the opinion of management that facts known at the present time do not indicate that such litigation, after taking into account insurance coverage and the aforementioned accruals, will have a material adverse impact on our results of operations, financial position, or cash flows.

Concentrations of credit risk

Concentrations of credit risk with respect to receivables exist due to the limited number of select customers with whom the Company has initial commercial sales arrangements. To mitigate credit risk, the Company performs appropriate evaluation of a prospective customer’s financial condition.

At December 31, 2019, two customers comprised approximately 63.4% of the total accounts receivable balance. At December 31, 2018, two customers comprised approximately 52.3% of the total accounts receivable balance.

For the year ended December 31, 2019, 49.6% of total consolidated revenues were associated primarily with two customers. For the year ended December 31, 2018 66.7% of total consolidated revenues were associated primarily with two customers. For purposes of assigning a customer to a sale/leaseback transaction completed with a financial institution, the Company considers the end user of the assets to be the ultimate customer.