Leases

12 Months Ended

Dec. 31, 2020

The Company adopted ASC 842, Leases (the "Lease Standard") as of January 1, 2019, using the modified retrospective approach and using the effective date as the date of initial application. Consequently, financial information for dates and periods before January 1, 2019 have not been updated or recast. In addition, the Company elected the practical expedients permitted under the transition guidance within the Lease Standard, which allowed the Company to carry forward prior conclusions about lease identification, lease classification, and initial direct costs. In accordance with the Company's accounting policy, the Company elected not to exclude short-term leases for any of its vehicle and equipment leases, as the lease terms associated with the Company's operating leases are routinely longer than 12 months. In addition, the Company elected not to separate lease and non-lease components for its ATM placement agreements that contain fixed payments and are deemed to contain an operating lease under the Lease Standard.

The Company leases facilities consisting of office and warehouse space as well as vehicles, office equipment and, to a limited extent, ATM equipment. The Company's facility leases have various remaining terms extending 10-11 years, some of which may include one or more options to extend the associated lease term by up to 5-10 years, and some may include options for the Company or the lessor to terminate the leases prior to the end of the lease term. The exercise of lease renewal options is at the Company's discretion. From time to time, the Company may sublease office or warehouse space. This sublease activity is currently not significant. The Company's vehicle and equipment leases currently have remaining lease terms extending up to nearly 5 years and these leases typically have original terms of approximately 4-6 years. The Company has not historically

extended its vehicle and equipment leases beyond their original term. Similarly, the Company has not historically subleased these assets.

In addition, certain ATM placement agreements are deemed to contain an operating lease of merchant space under the Lease Standard. These ATM placement agreements have remaining terms extending from less than 1 year to more than 5 years. These arrangements consist of semi-permanent or through-the-wall placements of company-owned ATMs at merchant or financial institution locations. These arrangements are deemed to contain a lease as the counterparty lacks the practical ability to substitute alternative space. The renewal provisions under ATM placement agreements vary.

Fixed payments related to the Company's through-the-wall ATM placement agreements are included in the lease payment that gives rise to the operating lease asset and operating lease liability recognized on the Company's Consolidated Balance Sheets. These placement agreements may also require variable merchant commissions based on the type and volume of transactions conducted at the ATMs at their respective location. To the extent the merchant commissions are variable, the commission payments to the merchants are not deemed part of the lease payment that gives rise to the operating lease asset and operating lease liability. In addition, the merchant commissions may also change, in accordance with the terms of these agreements, in response to changes in interchange fees or interest rates. Certain Company facility leases also require variable payments based on an index or external market rates. Variable lease payments that depend on an index or rate are included in lease payments that give rise to the lease asset and lease liability measured using the prevailing rate or index at the lease commencement date. The Company's vehicle and equipment leases do not generally include variable payments.

The Company recognizes the accounting impact of lease extension options when reasonably certain that a right to extend a lease will be exercised. The Company does not provide residual value guarantees within or in conjunction with any of its leases. As of December 31, 2020, all material leases of facilities, vehicles, equipment, and merchant space had commenced.

The Company is not currently party to any significant finance leases. As a result, the net assets recorded under finance leases and the associated liabilities are not material.

Balance sheet information related to operating leases is as follows:


	Classification	December 31, 2020		December 31, 2019
Assets		(In thousands)
Operating lease assets	Operating lease assets	$	60,368	$	76,548
Total operating lease assets		$	60,368	$	76,548

Liabilities
Current
Operating lease liabilities	Current portion of other long-term liabilities	$	18,683	$	20,345
Noncurrent
Noncurrent operating lease liabilities	Operating lease liabilities	56,683		69,531
Total operating lease liabilities		$	75,366	$	89,876

Operating lease costs during the years ended December 31, 2020 and 2019 were as follows:


		Year Ended		Year Ended
	Classification	December 31, 2020		December 31, 2019
		(In thousands)
Operating lease costs	Cost of ATM operating revenues (1)	$	19,809	$	27,027
Operating lease costs	Selling, general, and administrative expenses (2)	4,836		5,682
Total operating lease cost		$	24,645	$	32,709

(1)Includes the fixed and variable cost of facilities, vehicles, and equipment that are deemed direct operating lease costs. The variable lease cost associated with these leases was not significant. In addition, includes the fixed and variable cost associated with ATM placement agreements that are deemed to contain a lease. The variable cost associated with these placements were approximately $2.4 million and $3.8 million in the twelve months ended December 31, 2020 and 2019, respectively.

(2)Includes the fixed and variable cost of facilities, vehicles, and office equipment that are deemed general and administrative operating lease costs. The variable lease cost associated with these leases was not significant.

The decrease in operating lease costs in the year ended December 31, 2020 in comparison to the year ended December 31, 2019 is attributable to the decrease in the number of through-the-wall ATM placement agreements that include fixed payments, the decrease in variable fees associated with these placements due to transaction volume, and in certain cases the decrease in fixed fees paid while the ATMs were not in operation due to the Pandemic. In addition, operating lease costs were lower due to the exit of certain facilities and the timing of these exits in 2019 and 2020.

The following table presents the weighted-average remaining term and weighted-average discount rate associated with the Company's operating leases.


Lease Term and Discount Rate	December 31, 2020		December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	7.2		6.9
Weighted-average discount rate
Operating leases	3.68	%	3.47	%

Additional lease information is summarized below:


	Year Ended December 31, 2020		Year Ended December 31, 2019
	(In thousands)
Operating cash outflows resulting from payments of operating lease liabilities	$	19,315	$	19,708
New operating lease assets recognized during the period	$	10,400	$	14,161

The following table presents the undiscounted cash flows associated with the Company's recognized operating lease liabilities in the next five years and thereafter as of December 31, 2020.


Maturity of Recognized Operating Lease Liabilities	Operating Lease Payments(1)
	(In thousands)
2021	$	21,139
2022	13,039
2023	10,077
2024	8,506
2025	6,389
After 2025	26,591
Total lease payments	85,741
Less: Interest (2)	(10,375)
Present value of operating lease liabilities (3)	$	75,366

(1)Operating lease payments reflect the Company's current fixed obligations under the operating lease agreements. The Company has identified no extensions that are reasonably certain of being exercised and there are no significant lease agreements that have been signed and not yet commenced.

(2)Calculated using the estimated incremental borrowing rate for each lease.

(3)Includes current operating lease liabilities of approximately $18.7 million and noncurrent operating lease liabilities of approximately $56.7 million.