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Leases

12 Months Ended

Dec. 31, 2020

The Company leases real estate, trucks and other equipment. The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement. Classification and initial measurement of the right-of-use asset and lease liability are determined at the lease commencement date. The Company elected the short-term lease measurement and recognition exemption; therefore, leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets.

The Company's arrangements include certain non-lease components such as common area and other maintenance for leased real estate, as well as mileage, fuel and maintenance costs related to leased vehicles. For all leased asset classes, the Company has elected to not separate non-lease components from lease components and will account for each separate lease component and non-lease component associated with the lease as a single lease component. The Company does not guarantee any residual value in its lease agreements, and there are no material restrictions or covenants imposed by lease arrangements. Real estate leases typically include one or more options to extend the lease. The Company regularly evaluates the renewal options, and when they are reasonably certain of exercise, the Company includes the renewal period in its lease term. For our leased vehicles, the Company uses the incremental borrowing rate in its leases with the lessor to discount lease payments at the lease commencement date. When the stated rate is not readily available, as is the case with our real estate leases, the Company uses quoted borrowing rates on our secured debt.

The following table summarizes the lease amounts included in our consolidated balance sheets as of December 31, 2020 and December 31, 2019:


(in thousands)	Classification on the Consolidated Balance Sheet	December 31, 2020		December 31, 2019
Assets
Operating	Operating lease right-of-use assets (a)	18,751		$	21,056
Finance	Property and equipment, net (b)	6,242		6,412
Total lease assets		$	24,993	$	27,468

Liabilities
Current
Operating	Current operating lease liabilities	3,929		$	3,750
Finance	Current portion of long-term debt	2,536		2,424
Noncurrent
Operating	Long-term operating lease liabilities	15,459		18,247
Finance	Long-term debt	3,923		4,161
Total lease liabilities		$	25,847	$	28,582

(a) Operating lease assets are recorded net of accumulated amortization of $11.9 million and $8.5 million at December 31, 2020 and December 31, 2019, respectively.

(b) Finance lease assets are recorded net of accumulated amortization of $5.3 million and $4.7 million at December 31, 2020 and December 31, 2019, respectively.

The following table summarizes the lease costs included in our consolidated statements of operations for the years ended December 31, 2020 and December 31, 2019:


(in thousands)	Classification on the Consolidated Statement of Operations	December 31, 2020		December 31, 2019
Operating lease cost	Cost of revenue(a)	$	3,527	$	3,497
Operating lease cost	Selling, general and administrative(a)	1,483		1,351
Finance lease cost
Amortization	Cost of revenue(b)	2,711		2,517
Interest	Interest income (expense), net(b)	363		333
Total lease cost		$	8,084	$	7,698

(a) Operating lease costs recorded in cost of sales includes $0.7 million of variable lease costs for the years ended December 31, 2020 and December 31, 2019, respectively. In addition, $0.3 million and $0.2 million of variable lease costs are included in selling, general and administrative expenses for the years ended December 31, 2020 and December 31, 2019, respectively. These variable costs consist of our proportionate share of operating expenses, real estate taxes, and utilities.

(b) Finance lease costs recorded in cost of revenue includes $2.4 million and $2.9 million of variable leases costs for the years ended December 31, 2020 and December 31, 2019, respectively. These variable lease costs consist of fuel, maintenance, and sales tax charges. No variable lease costs for finance leases were recorded in selling, general and administrative expenses for the years ended December 31, 2020 or December 31, 2019.

Future minimum commitments for finance and operating leases that have non-cancelable lease terms in excess of one year as of the year ended December 31, 2020 were as follows (in thousands):


Year ending December 31:	Finance Leases		Operating Leases
2021	$	2,826	$	4,908
2022	2,316		4,606
2023	1,320		3,516
2024	509		2,917
2025	4		2,409
Thereafter	—		4,043
Total minimum lease payments	$	6,975	$	22,399
Amounts representing interest	(516)
Present value of net minimum lease payments	$	6,459

The following is a summary of the lease terms and discount rates as of:


	December 31, 2020		December 31, 2019
Weighted average lease term (in years)
Operating	5.48		6.20
Finance	2.78		2.96

Weighted average discount rate
Operating	4.83	%	4.80	%
Finance	5.50	%	5.69	%

The following is a summary of other information and supplemental cash flow information related to finance and operating leases for the years ended:


(in thousands)	December 31, 2020		December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	5,164	$	4,722
Operating cash flows from finance leases	363		333
Financing cash flows from finance leases	2,664		2,469
Right-of-use assets exchanged for lease liabilities
Operating leases	$	1,096	$	3,355
Finance leases	2,624		3,578
Right-of-use assets disposed or adjusted modifying operating leases liabilities	$	621	$	1,651
Right-of-use assets disposed or adjusted modifying finance leases liabilities	$	(86)	$	(78)

Leases