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Note 8 - Leases

12 Months Ended

Dec. 31, 2019

Lessee and Lessor, Operating and Finance Leases [Text Block]

8.	LEASES

As a lessee, the Company has operating leases for buildings, equipment, data centers, fiber optic networks and towers and finance leases for buildings and fiber optic networks. These leases have remaining lease terms ranging from under 1 year to 24 years, with some including an option to extend the lease for up to 15 additional years and some including an option to terminate the lease within 1 year.

As a lessor, the Company has operating leases for the use of its fiber optic networks, towers and customer premise equipment. These leases have remaining lease terms ranging from under 1 year to 15 years, with some including a lessee option to extend the leases for up to 5 additional years and some including an option to terminate the lease within 1 year.

Significant judgment is required when determining whether a fiber optic network access contract contains a lease, defining the duration of the lease term and selecting an appropriate discount rate, as discussed below:

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The Company concluded it was the lessee or lessor for fiber optic network access arrangements only when the asset is specifically identifiable and both substantially all the economic benefit is obtained by the lessee and the lessee’s right to direct the use of the asset exists.

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The Company’s lease terms are only for periods in which there are enforceable rights. For accounting purposes, a lease is no longer enforceable when both the lessee and the lessor each have the right to terminate the lease without requiring permission from the other party with no more than an insignificant penalty. The Company’s lease terms are impacted by options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

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Most of the Company’s leases do not contain an implicit interest rate. Therefore, the Company held discussions with lenders, evaluated its published credit rating and incorporated interest rates on currently held debt in determining discount rates that reflect what the Company would pay to borrow on a collateralized basis over similar terms for its lease obligations.

As of December 31, 2019, additional operating leases that have not yet commenced were not material. Additionally, lessor accounting disclosures were not material as of and for the year ended December 31, 2019.

Lessee Financial Information. The Company’s ROU assets and lease liabilities consisted of the following (in thousands):

	December 31, 2019
ROU Assets
Property, plant and equipment, net:
Finance leases	$	9,665
Other noncurrent assets:
Operating leases	$	16,924

Lease Liabilities
Accounts payable and accrued liabilities:
Operating leases	$	4,601
Current portion of long-term debt:
Finance leases	$	589
Long-term debt:
Finance leases	$	5,354
Other noncurrent liabilities:
Operating leases	$	11,146
Total:
Finance leases	$	5,943
Operating leases	$	15,747

The components of the Company’s lease expense were as follows (in thousands):

	2019
Finance lease expense:
Amortization of ROU assets	$	537
Interest on lease liabilities		302
Operating lease expense		5,260
Short-term lease expense		940
Variable lease expense		168
Total lease expense	$	7,207

Amortization of ROU assets is included within depreciation and amortization expense; interest on lease liabilities is included within interest expense; and operating, short-term and variable lease expense is included within operating expenses and selling, general and administrative expenses in the consolidated statement of operations and comprehensive income.

Supplemental lessee financial information for 2019 is as follows (in thousands):

	2019
Cash paid for amounts included in the measurement of lease liabilities:
Finance leases - financing cash flows	$	925
Finance leases - operating cash flows	$	302
Operating leases - operating cash flows	$	5,293
ROU assets obtained in exchange for lease liabilities:
Finance leases ⁽¹⁾	$	5,408
Operating leases ⁽²⁾	$	9,767

⁽¹⁾	^{Includes $3.9 million of ROU assets acquired in the Fidelity transaction.}
⁽²⁾	^{Includes $3.3 million and $1.4 million of ROU assets acquired in the Clearwave and Fidelity transactions, respectively.}

Supplemental lessee financial information as of December 31, 2019 is as follows:

	December 31, 2019
Weighted average remaining lease term:
Finance leases (in years)		14.1
Operating leases (in years)		4.7
Weighted average discount rate:
Finance leases		6.26	%
Operating leases		4.94	%

As of December 31, 2019, the future maturities of existing lease liabilities were as follows (in thousands):

Year Ending December 31,	Finance Leases			Operating Leases
2020	$	968		$	5,253
2021		979			3,977
2022		989			2,889
2023		996			2,456
2024		981			1,046
Thereafter		9,481			2,085
Total		14,394			17,706
Less: Present value discount		(8,451	)		(1,959	)
Lease liability	$	5,943		$	15,747

As of December 31, 2018, the Company’s outstanding lease obligations under the previous accounting guidance were as follows (in thousands):

Year Ending December 31,	Operating Leases
2019	$	1,767
2020		1,219
2021		911
2022		398
2023		204
Thereafter		299
Total	$	4,798