LEASES (Notes)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

LEASES

On January 1, 2019, the Company adopted FASB Accounting Standards Codification ("ASC"), Topic 842, Leases ("ASC 842"), which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording them on the balance sheet as lease assets and lease liabilities. The new guidance requires the recognition of the right-of-use ("ROU") assets and related operating and finance lease liabilities on the balance sheet. The Company adopted the new guidance using the modified retrospective approach with a cumulative-effect adjustment recorded on January 1, 2019. As a result, the consolidated balance sheet as of December 31, 2018 was not restated and is not comparative.

The adoption of ASC 842 resulted in the recognition of ROU assets of $274,292 and lease liabilities for operating leases of $299,900 on the Company's consolidated balance sheet as of January 1, 2019, with no material impact to its consolidated statements of operations. The difference between the ROU assets and the operating lease liability represents the reclassification of (i) deferred rent balances, resulting from the historical operating leases, and (ii) certain accrued restructuring liabilities (See Note 7). The Company's accounting for finance leases remained substantially unchanged from its accounting for capital leases in prior periods.

The Company elected the package of practical expedients permitted within the standard, which allow an entity to forgo reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the definition of initial direct costs. Also, the Company elected the expedient allowing an entity to use hindsight to determine the lease term and impairment of ROU assets and the expedient related to land easements which allows the Company not to retrospectively treat land easements as leases; however, the Company must apply lease accounting prospectively to land easements if they meet the definition of a lease.

For contracts entered into on or after the effective date, at the inception of a contract the Company will assess whether the contract is, or contains, a lease. The Company's assessment is based on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtained the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset. Leases entered into prior to January 1, 2019, are accounted for under ASC 840 and were not reassessed for classification.

For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases, and is subsequently measured at amortized cost using the effective interest method. The Company generally uses its incremental borrowing rate as the discount rate for leases, unless an interest rate is implicitly stated in the lease. The lease term for all of the Company’s leases includes the noncancellable period of the lease plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. All ROU assets are reviewed for impairment.

Lease expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on a straight-line basis over the lease term. Lease expense for finance leases consists of the amortization of the asset on a straight-line basis over the earlier of the lease term or its useful life and interest expense determined on an amortized cost basis. The lease payments are allocated between a reduction of the lease liability and interest expense.

The Company's operating leases are comprised primarily of facility leases and finance leases are comprised primarily of vehicle leases.

Balance sheet information related to our leases is presented below:

	Balance Sheet location	September 30, 2019		January 1, 2019		December 31, 2018
Operating leases:
Right-of-use lease assets	Right-of-use operating lease assets	$	282,746	$	274,292	$	—
Right-of-use lease liability, current	Other current liabilities	38,104		48,033		—
Right-of-use lease liability, long-term	Right-of-use operating lease liability	270,564		251,867		—
Finance leases:
Right-of-use lease assets	Property, plant and equipment	49,380		30,891		30,891
Right-of-use lease liability, current	Current portion of long-term debt	12,117		5,928		5,928
Right-of-use lease liability, long-term	Long-term debt	34,972		19,262		19,262

The following provides details of the Company's lease expense:

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease expense, net	$	15,038	$	45,264
Finance lease expense:
Amortization of assets	2,538		5,730
Interest on lease liabilities	520		1,266
Total finance lease expense	3,058		6,996
	$	18,096	$	52,260

Other information related to leases is presented below:

	As of September 30, 2019
Right-of-use assets acquired in exchange for operating lease obligations	$	47,232
Cash Paid For Amounts Included In Measurement of Liabilities:
Operating cash flows from finance leases	1,266
Operating cash flows from operating leases	48,550
Weighted Average Remaining Lease Term:
Operating leases	9.5 years
Finance leases	3.9 years
Weighted Average Discount Rate:
Operating leases	6.02		%
Finance leases	5.39		%

The minimum future annual payments under non-cancellable leases during the next five years and thereafter, at rates now in force, are as follows:

	Financing leases			Operating leases
2019 (excluding the nine months ended September 30, 2019)	$	3,069		$	11,702
2020	15,100			51,110
2021	13,780			46,026
2022	10,796			47,496
2023	5,788			37,376
Thereafter	3,626			219,862
Total future minimum lease payments, undiscounted	52,159			413,572
Less: Imputed interest	(5,070		)	(104,904		)
Present value of future minimum lease payments	$	47,089		$	308,668

The following table presents the Company’s unadjusted lease commitments as of December 31, 2018 as a required disclosure for companies adopting the lease standard prospectively without revising comparative period information.

	Financing leases		Operating leases
2019	$	5,928	$	47,905
2020	5,087		50,356
2021	3,969		43,362
2022	4,146		34,882
2023	3,828		25,234
Thereafter	2,232		167,941

LEASES

LEASES

On January 1, 2019, the Company adopted FASB Accounting Standards Codification ("ASC"), Topic 842, Leases ("ASC 842"), which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording them on the balance sheet as lease assets and lease liabilities. The new guidance requires the recognition of the right-of-use ("ROU") assets and related operating and finance lease liabilities on the balance sheet. The Company adopted the new guidance using the modified retrospective approach with a cumulative-effect adjustment recorded on January 1, 2019. As a result, the consolidated balance sheet as of December 31, 2018 was not restated and is not comparative.

The adoption of ASC 842 resulted in the recognition of ROU assets of $274,292 and lease liabilities for operating leases of $299,900 on the Company's consolidated balance sheet as of January 1, 2019, with no material impact to its consolidated statements of operations. The difference between the ROU assets and the operating lease liability represents the reclassification of (i) deferred rent balances, resulting from the historical operating leases, and (ii) certain accrued restructuring liabilities (See Note 7). The Company's accounting for finance leases remained substantially unchanged from its accounting for capital leases in prior periods.

The Company elected the package of practical expedients permitted within the standard, which allow an entity to forgo reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the definition of initial direct costs. Also, the Company elected the expedient allowing an entity to use hindsight to determine the lease term and impairment of ROU assets and the expedient related to land easements which allows the Company not to retrospectively treat land easements as leases; however, the Company must apply lease accounting prospectively to land easements if they meet the definition of a lease.

For contracts entered into on or after the effective date, at the inception of a contract the Company will assess whether the contract is, or contains, a lease. The Company's assessment is based on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtained the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset. Leases entered into prior to January 1, 2019, are accounted for under ASC 840 and were not reassessed for classification.

For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases, and is subsequently measured at amortized cost using the effective interest method. The Company generally uses its incremental borrowing rate as the discount rate for leases, unless an interest rate is implicitly stated in the lease. The lease term for all of the Company’s leases includes the noncancellable period of the lease plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. All ROU assets are reviewed for impairment.

Lease expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on a straight-line basis over the lease term. Lease expense for finance leases consists of the amortization of the asset on a straight-line basis over the earlier of the lease term or its useful life and interest expense determined on an amortized cost basis. The lease payments are allocated between a reduction of the lease liability and interest expense.

The Company's operating leases are comprised primarily of facility leases and finance leases are comprised primarily of vehicle leases.

Balance sheet information related to our leases is presented below:

	Balance Sheet location	September 30, 2019		January 1, 2019		December 31, 2018
Operating leases:
Right-of-use lease assets	Right-of-use operating lease assets	$	282,746	$	274,292	$	—
Right-of-use lease liability, current	Other current liabilities	38,104		48,033		—
Right-of-use lease liability, long-term	Right-of-use operating lease liability	270,564		251,867		—
Finance leases:
Right-of-use lease assets	Property, plant and equipment	49,380		30,891		30,891
Right-of-use lease liability, current	Current portion of long-term debt	12,117		5,928		5,928
Right-of-use lease liability, long-term	Long-term debt	34,972		19,262		19,262

The following provides details of the Company's lease expense:

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease expense, net	$	15,038	$	45,264
Finance lease expense:
Amortization of assets	2,538		5,730
Interest on lease liabilities	520		1,266
Total finance lease expense	3,058		6,996
	$	18,096	$	52,260

Other information related to leases is presented below:

	As of September 30, 2019
Right-of-use assets acquired in exchange for operating lease obligations	$	47,232
Cash Paid For Amounts Included In Measurement of Liabilities:
Operating cash flows from finance leases	1,266
Operating cash flows from operating leases	48,550
Weighted Average Remaining Lease Term:
Operating leases	9.5 years
Finance leases	3.9 years
Weighted Average Discount Rate:
Operating leases	6.02		%
Finance leases	5.39		%

The minimum future annual payments under non-cancellable leases during the next five years and thereafter, at rates now in force, are as follows:

	Financing leases			Operating leases
2019 (excluding the nine months ended September 30, 2019)	$	3,069		$	11,702
2020	15,100			51,110
2021	13,780			46,026
2022	10,796			47,496
2023	5,788			37,376
Thereafter	3,626			219,862
Total future minimum lease payments, undiscounted	52,159			413,572
Less: Imputed interest	(5,070		)	(104,904		)
Present value of future minimum lease payments	$	47,089		$	308,668

The following table presents the Company’s unadjusted lease commitments as of December 31, 2018 as a required disclosure for companies adopting the lease standard prospectively without revising comparative period information.

	Financing leases		Operating leases
2019	$	5,928	$	47,905
2020	5,087		50,356
2021	3,969		43,362
2022	4,146		34,882
2023	3,828		25,234
Thereafter	2,232		167,941