NOTE 4 – LEASES

A lease is defined as a contract that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. The Company adopted ASC 842 on January 1, 2019 and recorded an initial right-of-use asset and related lease liability of $12.9 million and $16.6 million, respectively. There was no cumulative effect upon adoption.

Leases in which the Company is determined to be the lessee are primarily operating leases comprised of real estate property and office space for our corporate headquarters and profit centers with terms that extend to 2025. Certain properties contain portions that are subleased with terms that extend through 2020. In accordance with ASC 842, operating leases are required to be recognized as a right-of-use asset with a corresponding lease liability.

The following table represents the classification of the right-of-use asset and corresponding liability within the consolidated balance sheet. The Company elected to not include short-term leases with initial terms of twelve months or less, on the consolidated balance sheet.


			March 31,
			2019
Lease Right-of-Use Assets	Classification
Operating lease right-of-use asset	Other assets	$	12,229

Lease Liabilities	Classification
Operating lease liabilities	Other liabilities	$	15,833

The Company’s operating lease agreements typically include an option to renew the lease at the Company’s discretion. To the extent the Company is reasonably certain it will exercise the renewal option at the inception of the lease, the Company will include the extended term in the calculation of the right-of-use asset and lease liability. ASC 842 requires the use of the rate implicit in the lease when it is readily determinable. As this rate is typically not readily determinable, at the inception of the lease, the Company uses its collateralized incremental borrowing rate over a similar term. The amount of the right-of-use asset and lease liability are impacted by the discount rate used to calculate the present value of the minimum lease payments over the term of the lease.


	March 31,
	2019
Weighted-average remaining lease term
Operating leases	5.45 years

Weighted-average discount rate
Operating leases	3.69	%

The Company’s operating leases contain fixed and variable lease components and it has elected to account for all classes of underlying assets as a single lease component. Variable lease costs primarily represent common area maintenance and parking. The following table represents the Company’s net lease costs.


		March 31,
		2019
Lease Costs
Operating lease cost	$	783
Variable lease cost		388
Sublease income		(99)
Lease costs, net	$	1,072

The following table represents a maturity analysis of the Company’s operating lease liabilities on an annual basis for each of the first five years and total amounts thereafter as of March 31, 2019.


	Operating Leases
Twelve Months Ended
March 31, 2020	$	3,698
March 31, 2021		3,267
March 31, 2022		2,754
March 31, 2023		2,666
March 31, 2024		2,253
Thereafter		2,883
Total Future Minimum Lease Payments	$	17,521
Less: Imputed interest		(1,688)
Present Value of Net Future Minimum Lease Payments	$	15,833

The following presents minimum lease payments due pursuant to the leases as of December 31, 2018 for the years indicated.


Year	Operating Leases

2019	$	3,570
2020		3,374
2021		2,815
2022		2,675
2023		2,358
Thereafter		3,446
	$	18,238