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Leases

12 Months Ended

Dec. 31, 2019

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This pronouncement requires lessees to recognize a liability for lease obligations, which represents the discounted obligation to make future lease payments, and a corresponding right-of-use asset on the balance sheet. The Company adopted the ASU, along with related clarifications and improvements, as of January 1, 2019, using the modified retrospective approach. The cumulative effect of adoption was recorded as an adjustment to the opening balance of retained earnings in the period of adoption.

Adoption of the new standard resulted in the recording of net lease assets and lease liabilities of approximately $39.4 million and $41.5 million, respectively, as of January 1, 2019. The $2.1 million difference in the lease liabilities and net lease assets represents the net ASC 840 lease liabilities at the effective date that were netted against the initial right-of-use-asset, which included: straight-line rent, prepaid rent, and lease incentives. The $0.2 million transition adjustment to retained earnings was comprised of $1.0 million of build-to-suit assets and build-to-suit financing obligations that were derecognized and recorded as operating leases in transition and $0.5 million of initial impairment to right-of-use-assets, which were partially offset by the related deferred tax effect of $0.3 million.

Adoption of ASU 2016-02 did not materially impact the Company's consolidated net earnings or cash flows and did not have a notable impact on the Company's liquidity or debt-covenant compliance under the Company's current agreements.

Supplemental balance sheet information related to leases was as follows (in thousands):



	December 31, 2019
Operating leases:
Right of use assets	$	50,668
Finance leases:
Right of use assets, cost	815
Less: Accumulated amortization	(324		)
Right of use assets, net	491
Total right of use assets, net	$	51,159

Lease liabilities:
Current:
Operating	$	9,107
Finance	176
Non-current:
Operating	45,728
Finance	347
Total lease liabilities	$	55,358

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



	December 31, 2019
Operating lease cost	$	10,725
Variable lease cost	1,645
Short-term lease cost	1,871
Finance lease cost:
Amortization of right of use assets	91
Interest on lease liabilities	25
Total finance lease cost	116
Less: Sublease income	(268		)
Total lease cost	$	14,089

Average lease terms and discount rates were as follows:



	December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	6.79
Finance leases	2.98
Weighted-average discount rate
Operating leases	6.61	%
Finance leases	7.27	%

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



	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	8,649
Operating cash flows from finance leases	129
Total	$	8,778

The aggregate future lease payments for operating and finance leases as of December 31, 2019 are as follows (in thousands):



	Operating			Finance
2020	$	11,477		$	204
2021	12,222			204
2022	10,551			133
2023	7,975			29
2024	6,531			9
Thereafter	20,961			—
Total lease payments	69,717			579
Less: Interest	(14,882		)	(56		)
Present value of lease liabilities	$	54,835		$	523

The aggregate future lease payments for operating and capital leases as of December 31, 2018 were as follows (in thousands):



	Operating
2019	$	6,383
2020	5,017
2021	4,422
2022	3,245
2023	2,068
Thereafter	1,966
Total lease payments	$	23,101

Leases