LEASES

6 Months Ended

Jun. 30, 2019

In the ordinary course of business, the Company renews and enters into new leases for office property and equipment, which expire at various dates.

At the lease inception date, the Company assesses whether a contract is or contains a lease. At the commencement date, the Company determines the classification of each separate lease component as either a finance lease or an operating lease. The Company's leases are all currently classified as operating leases. For operating leases that have a lease term of more than 12 months, the Company recognizes a lease liability and a right-of-use asset in the Company's consolidated balance sheets at the present value of the lease payments at the lease commencement date.

At the commencement date, the Company determines lease terms by assuming the exercise of those renewal options that are deemed to be reasonably certain. The exercise of lease renewal options is at the sole discretion of the Company.

As the lease contracts generally do not provide an implicit discount rate, the Company uses its incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. The incremental borrowing rate is based on a borrowing with a term that is similar to the term of the associated lease. The Company has made an accounting policy election not to include renewal, termination, or purchase options that are not reasonably certain of exercise when determining the term of the borrowing.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the commencement date. For the three and six months ended June 30, 2019, the total lease expense was $4 million and $11 million, respectively.

The following table summarizes the amounts related to the Company’s total lease expense and the cash flows arising from lease transactions.



	Three months ended			Six months ended
	June 30, 2019			June 30, 2019

Lease cost:
Operating lease expense	$	4,134		$	11,064
Short-term lease expense⁽¹⁾	119			765
Sublease income⁽²⁾	(192		)	(734		)
Total lease expense	$	4,061		$	11,095

Other information:
Operating cash outflows from operating leases	$	6,384		$	12,920
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—		$	—
Weighted-average remaining lease term - operating leases⁽³⁾	8.7 years			8.7 years
Weighted-average discount rate - operating lease⁽⁴⁾	4.7		%	4.7		%

(1) Short-term lease expense is recognized on a straight-line basis over the lease term.

(2) Sublease income largely relates to office property in London, England.

(3) Weighted-average remaining lease term was calculated on the basis of the remaining lease term and the lease liability balance for each lease at the reporting date.

(4) Weighted-average discount was calculated on the basis of the discount rate for the lease that was used to calculate the lease liability balance for each lease at the reporting date and the remaining balance of the lease payments for each lease at the reporting date.

At June 30, 2019, the scheduled maturity of the Company's operating lease liabilities are expected to be as follows:



	Expected
	Cash Flows

Remainder of 2019	$	12,709
2020	21,558
2021	21,366
2022	21,989
2023	17,877
Later years	70,056
Discount	(32,298		)
Total discounted operating lease liabilities	$	133,257

The Company's lease for its current office property in Alpharetta, Georgia, expires on December 31, 2019. As a result, the Company executed a 15 year lease for a new office property in Alpharetta, Georgia. The Company is not involved in the construction or design of this office property and will not move into this property until January 1, 2020, the commencement date of the lease. Given that the commencement date is after the balance sheet date, the Company has not reflected this lease in the maturity table above or in the Company's consolidated balance sheets at June 30, 2019. The total contractual lease costs over the 15 year lease is $40 million.

At December 31, 2018, the Company's future minimum lease payments were expected to be as follows:




Year ended December 31,

2019	$	28,240
2020	25,331
2021	27,025
2022	28,012
2023	23,801
Later years	118,497
Total future minimum lease payments	$	250,906

For the three and six months ended June 30, 2018, the total lease expense was $8 million and $14 million, respectively.