Leases

6 Months Ended

Jun. 30, 2021

We determine at its inception whether an arrangement that provides us control over the use of an asset is a lease. We recognize at lease commencement a right-of-use (ROU) asset and lease liability based on the present value of the future lease payments over the lease term. We have elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less. Certain of our leases include options to extend the term of the lease or to terminate the lease prior to the end of the initial term. When it is reasonably certain that we will exercise the option, we include the impact of the option in the lease term for purposes of determining total future lease payments. As most of our lease agreements do not explicitly state the discount rate implicit in the lease, we use our incremental borrowing rate on the commencement date to calculate the present value of future payments.

Some of our leases include future rent escalations that are based on the Consumer Price Index (CPI) or other similar indices. These future rent escalations are not included in the calculation of the ROU asset and lease liability because they cannot be forecasted at the lease inception date. These are considered variable lease payments and are expensed as incurred. In addition to the present value of the future lease payments, the calculation of the ROU asset also includes any lease pre-payments and initial direct costs of obtaining the lease, such as commissions.

In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar services, which are considered non-lease components for accounting purposes. For our real estate leases, we apply a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. For all other types of leases, non-lease components are excluded from our ROU assets and lease liabilities and expensed as incurred.

We have operating leases for office facilities, vehicles and office equipment. We do not have any material finance leases.

Lease expense is included in Cost of Revenue and General & Administrative Expenses on the condensed consolidated statements of operations, and is recorded net of immaterial sublease income. The components of lease expense were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Operating lease cost	$	1,683	$	2,355	$	3,477	$	4,684
Short-term lease cost	53		102		133		460
Total lease costs	$	1,736	$	2,457	$	3,610	$	5,144

Supplemental information related to leases was as follows (dollars in thousands):


	June 30, 2021			December 31, 2020
Operating lease right-of-use assets	$	17,752		$	20,862

Current portion of operating lease liabilities	$	5,382		$	5,523
Non-current portion of operating lease liabilities	13,878			16,260
Total operating lease liabilities	$	19,260		$	21,783

Cash paid for amounts included in the measurement of operating lease liabilities	$	3,476		$	11,188

Right-of-use assets obtained in exchange for operating lease liabilities	$	1,566		$	4,523

Weighted-average remaining lease term for operating leases (years)	4.8 years			5.6 years

Weighted-average discount rate for operating leases	3.4		%	3.8		%

The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities on our condensed consolidated balance sheet as of June 30, 2021 (in thousands):


Year ended December 31,
2021 (excluding the six months ended June 30, 2021)	$	3,087
2022	5,189
2023	4,011
2024	3,309
2025	2,844
Thereafter	2,713
Total future lease payments	21,153
Less: imputed interest	(1,893)
Present value of future lease payments	19,260
Less: current portion of lease liabilities	(5,382)
Long-term lease liabilities	$	13,878

During the second quarter of 2021, we disposed of $1.1 million of operating lease right-of-use assets and of $1.2 million of operating lease liabilities in connection with the sale of a United Kingdom operation, respectively.