13. LEASES

We maintain leases for real estate, office buildings, fiber and office equipment. Our leases have remaining terms ranging from 1 – 20 years, some of which include options to extend the leases.

We determine if an arrangement is a lease at inception. ROU assets on our Consolidated Balance Sheet represent our right to use an underlying asset for the operating lease term and lease liabilities on our Consolidated Balance Sheet represent our obligation to make lease payments arising from the operating lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Since the implicit rate of our leases is not easily determinable, we use our incremental borrowing rate, based on the information available at commencement date, in determining the present value of lease payments. The incremental borrowing rate is determined based on the rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. Management uses LIBOR and risk-adjusts that rate to approximate a collateralized rate for us, which will be updated on a quarterly basis for measurement of new lease liabilities. We apply the incremental borrowing rate on a portfolio basis to all asset classes. The operating lease ROU asset also includes any lease payments made and is adjusted for lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We account for variable lease payments, such as those amounts that are impacted by the consumer price index, as a separate component from lease expense in the subsequent period in which it applies. We account for lease and non-lease components within an operating lease arrangement as separate components.

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


	Three Months Ended
	March 31, 2019
Operating lease costs	$	1,533
Short-term lease costs		985
Variable lease costs		178

Total lease expense	$	2,696

Sub-lease income was not material.

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


	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,909

Right-of-use operating lease assets obtained in exchange for operating lease obligations (non-cash)	$	26,499

Weighted Average Remaining Lease Term:
Operating leases		6.5 years

Weighted Average Discount Rate:
Operating leases		4.6	%

Our future minimum annual rental payments of our operating leases as of March 31, 2019 are listed as follows (amounts in thousands):




Nine months ended December 31, 2019	$	4,454
2020		5,488
2021		5,282
2022		4,261
2023		2,617
Thereafter		7,570

Total lease payments	$	29,672
Imputed interest		4,429

Total operating lease liabilities	$	25,243

Under various lease and rental agreements for offices, warehouses and computer terminals, we had rental expense of $4.0 million, for the year ended December 31, 2018. Future minimum annual rental payments of our operating leases as of December 31, 2018 were as follows (dollars in thousands):


For the year ended
December 31,	Amount
2019	$	2,289
2020		1,831
2021		1,683
2022		1,454
2023		985
Thereafter		2,398

Total lease payments	$	10,640