Leases

6 Months Ended

Jun. 30, 2020

Note 7—Leases

The Company recognizes ROU assets and lease liabilities (“Lease Liabilities”) for automobiles, office buildings, IT equipment, and small storage units for the temporary storage of operational equipment. The Company’s leases have remaining lease terms ranging from less than 1 year to 10 years, and have extension options ranging from 1 year to 5 years. Most leases include the option to terminate the lease within 1 year.

Upon adopting ASC 842, the Company made accounting policy elections using practical expedients offered under the guidance to combine lease and non-lease components within leasing arrangements and to recognize the payments associated with short-term leases in earnings on a straight-line basis over the lease term, with the cost associated with variable lease payments recognized when incurred. These accounting policy elections impact the value of the Company’s ROU Assets and Lease Liabilities. The value of the Company’s ROU Assets is determined as the non-depreciated fair value of its leasing arrangements and is recorded to Property and Equipment, net on the Company’s Consolidated Balance Sheets. The value of the Company’s Lease Liabilities is the present value of fixed lease payments not yet paid, discounted using either the rate implicit in the lease contract if that rate can be determined, or the Company’s incremental borrowing rate ("IBR") and is recorded in Other accrued expenses and Lease liability — long-term portion on the Company’s Consolidated Balance Sheets. Any future lease payments that are not fixed based on the terms of the lease contract, or fluctuate based on a factor other than an index or rate, are considered variable lease payments and are not included in the value of the Company’s ROU Assets or Lease Liabilities. The Company’s IBR is determined as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

Components of lease expense required by ASC 842 are presented below for the three and six months ended June 30, 2020 and 2019.


	Three Months Ended June 30,
	2020		2019
	(in thousands)
Lease cost
Operating lease cost	$	1,394	$	1,016
Short-term lease cost	124		340
Variable lease cost	116		131
Total lease cost	$	1,634	$	1,487


	Six Months Ended June 30,
	2020		2019
	(in thousands)
Lease cost
Operating lease cost	$	2,749	$	2,230
Short-term lease cost	253		561
Variable lease cost	262		284
Total lease cost	$	3,264	$	3,075

Supplemental information required by ASC 842 is presented below for the six months ended June 30, 2020 and 2019.


	Six Months Ended June 30,
	2020			2019
	(dollar amounts in thousands)
Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,793		$	2,702
Weighted-average remaining lease term — operating leases	5.1 years			6.9 years
Weighted-average discount rate — operating leases	4.9		%	4.9		%

During the three and six months ended June 30, 2020, the Company’s ROU Assets and Lease Liabilities were both reduced by $0.1 million and $0.3 million, respectively due to lease cancellations. During the three and six months ended June 30, 2019, the Company’s ROU Assets and Lease Liabilities were both reduced by less than $0.1 million and $0.1 million, respectively due to lease cancellations.

The following is a schedule by calendar year of future minimum lease payments under operating leases that have remaining terms as of June 30, 2020:


Period/Year	Operating Leases
	(in thousands)
July 1 to December 31, 2020	$	2,882
2021	4,789
2022	3,565
2023	1,741
2024	1,295
2025	1,311
Thereafter	4,204
Total minimum lease payments¹	$	19,787

^1.As of June 30, 2020, the Company's total Lease Liabilities in the Consolidated Balance Sheet were $17.5 million, net of imputed interest of $2.2 million.