18.Leases

The Company has operating and finance leases for office space, equipment and vehicles.

Management determines if a contract is or contains a lease at inception of the contract or modification of the contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset.

Finance and operating lease ROU assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at a commencement date. As the implicit rate is not determinable in most of the Company’s leases, management uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The expected lease term includes options to extend or terminate the lease when it is reasonably certain the Company will exercise such option. Lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease term.

The Company’s lease arrangements have lease and non-lease components. Leases with an expected term of 12 months or less are not accounted for on the balance sheet and the related lease expense is recognized on a straight-line basis over the expected lease term.

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

Leases recorded on the balance sheet consists of the following:


	September 30,
Leases	2019
Assets
Operating lease right-of-use assets, net (1)	$	19,602
Financing lease right-of-use assets, net (2)		7,683
Total assets	$	27,285
Liabilities
Current
Operating	$	5,408
Financing		2,909
Total current		8,317
Noncurrent
Operating		14,817
Financing		3,609
Total noncurrent		18,426
Total liabilities	$	26,743

(1)

Operating lease right-of-use assets are recorded net of accumulated amortization of $4.1 million as of September 30, 2019.

(2)

Financing lease right-of-use assets are recorded net of accumulated amortization of $5.6 million as of September 30, 2019

Other information related to lease term and discount rate is as follows:


	September 30,
	2019
Weighted Average Remaining Lease Term (in years)
Operating leases	5.35
Financing leases	1.39
Weighted Average Discount Rate
Operating leases (1)	4.78	%
Financing leases	5.34	%

(1)

Upon adoption of the new lease standard, discount rates used for existing operating leases were established on January 1, 2019.

The components of lease expense are as follows:


	Three Months Ended		Nine Month Ended
	September 30, 2019		September 30, 2019
Operating lease costs:
Operating lease cost	$	1,715	$	5,175
Short-term lease cost (1)		1,305		1,460
Financing lease costs:
Interest on lease liabilities		83		283
Amortization of right-of-use assets		579		1,733
Total lease cost	$	3,682	$	8,651

(1)

Includes expenses related to leases with a lease term of more than one month but less than one year.

Supplemental cash flow information related to leases is as follows:


	Nine Months Ended
	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	5,173
Operating cash flows for finance leases	$	283
Financing cash flows for finance leases	$	2,144
Non-cash activity:
ROU assets obtained in exchange for new operating lease liabilities	$	23,747
ROU assets obtained in exchange for new financing lease liabilities	$	229

Maturities of lease liabilities are summarized as follows


	Operating Leases		Finance Leases
Year ending December 31,
2019 (excluding the nine months ended September 30, 2019)	$	1,664	$	1,241
2020		5,898		2,909
2021		4,388		2,623
2022		2,869		49
2023		2,250		41
Thereafter		6,006		7
Total future minimum lease payments		23,075		6,870
Less - amount representing interest		2,850		352
Present value of future minimum lease payments		20,225		6,518
Less - current lease obligations		5,408		2,909
Long-term lease obligations	$	14,817	$	3,609