Leases (Notes)

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

Leases

Company as Lessor

The Company is a lessor in certain transactions in which the Company provides monitoring and related services but retains ownership of the security system as the Company has identified a lease component associated with the right-of-use of the security system and a non-lease component associated with monitoring and related services. For transactions in which the timing and pattern of transfer is the same for the lease and non-lease components, and the lease component would be classified as an operating lease if accounted for separately, the Company applies the practical expedient to aggregate the lease and non-lease components and accounts for the combined component based upon its predominant characteristic, which is the non-lease component. As a result, the Company accounts for the combined component as a single performance obligation under the applicable revenue guidance and the underlying assets are reflected within subscriber system assets, net in the Condensed Consolidated Balance Sheets.

Certain of the Company’s transactions do not qualify for the practical expedient as the lease component represents a sales-type lease, and as such, the Company separately accounts for the lease component and non-lease component. The Company’s sales-type leases are not material.

Company as Lessee

The Company leases real estate, vehicles, and equipment with various lease terms and maturities that extend out through 2030 from various counter parties as part of normal operations. The Company applies the practical expedient to not separate the lease

and non-lease components and accounts for the combined component as a lease. Additionally, the Company’s right-of-use assets and lease liabilities include leases with an initial lease term of 12 months or less.

The Company’s right-of-use assets and lease liabilities primarily represent (a) lease payments that are fixed at the commencement of a lease and (b) variable lease payments that depend on an index or rate. Lease payments are recognized as lease cost on a straight-line basis over the lease term, which is determined as the non-cancelable period, periods in which termination options are reasonably certain of not being exercised, and periods in which renewal options are reasonably certain of being exercised. The discount rate for a lease is determined using the Company’s incremental borrowing rate that coincides with the lease term at the commencement of a lease. The incremental borrowing rate is estimated based on publicly available data for the Company’s debt instruments and other instruments with similar characteristics.

Lease payments that are not fixed or that are not dependent on an index or rate and vary because of changes in usage or other factors are included in variable lease costs. Variable lease costs, which primarily relate to fuel, repair, and maintenance payments that vary based on the usage of leased vehicles, are recorded in the period in which the obligation is incurred.

The Company’s leases do not contain material residual value guarantees or restrictive covenants. The Company’s subleases are not material.

The following table presents the amounts reported in the Company’s Condensed Consolidated Balance Sheets related to operating and finance leases as of the periods presented below:

Leases (in thousands)	Classification	March 31, 2020		December 31, 2019
Assets
Current
Operating	Prepaid expenses and other current assets	$	1,065	$	1,191
Non-current
Operating	Other assets	144,115		122,464
Finance	Property and equipment, net(a)	62,948		66,001
Total right-of-use assets		$	208,128	$	189,656
Liabilities
Current
Operating	Accrued expenses and other current liabilities	$	32,341	$	29,745
Finance	Current maturities of long-term debt	27,705		26,949
Non-current
Operating	Other liabilities	120,010		99,999
Finance	Long-term debt	44,791		47,835
Total lease liabilities		$	224,847	$	204,528

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(a) Finance right-of-use assets are recorded net of accumulated depreciation of approximately $49 million and $44 million as of March 31, 2020 and December 31, 2019, respectively.

The following is a summary of the Company’s lease cost for the presented periods:

	For the Three Months Ended
Lease Cost (in thousands)	March 31, 2020		March 31, 2019
Operating lease cost	$	14,600	$	15,087
Finance lease cost
Amortization of right-of-use assets	6,077		4,447
Interest on lease liabilities	833		752
Variable lease costs	12,798		11,451
Total lease cost	$	34,308	$	31,737

The following is a summary of the cash flows and supplemental information associated with the Company’s leases for the presented periods:

	For the Three Months Ended
Other information (in thousands)	March 31, 2020		March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	14,213	$	15,137
Operating cash flows from finance leases	833		752
Financing cash flows from finance leases	6,642		3,112
Right-of-use assets obtained in exchange for new finance lease liabilities	4,627		15,272
Right-of-use assets obtained in exchange for new operating lease liabilities	15,999		11,116