7. Leases

We are the lessee under various operating leases for certain sales offices, call centers, office space, equipment and vehicles. Some leases include one or more options to renew, at our or the lessor’s discretion, for renewal terms of one year or more. Certain of our lease agreements include rental payments based on a percentage of sales generated at the location, and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain residual value guarantees or restrictive covenants which we believe to be material.

We recognize operating lease assets and operating lease liabilities associated with lease agreements with an initial term of greater than 12 months, while lease agreements with an initial term of 12 months or less are not recorded in our consolidated balance sheet. We generally do not include lease payments associated with renewal options, including those that are exercisable at our discretion, in the measurement of our operating lease assets and liabilities as we are not reasonably certain that such option will be exercised. The table below sets forth information regarding our lease agreements with an initial term of greater than 12 months (dollars in thousands):


	As of
	June 30,
	2019
Operating Lease Asset	$	23,395
Operating Lease Liability		24,584
Weighted Average Lease Term (in years) (1)		4.1
Weighted Average Discount Rate (2)		5.30%

(1)

Our weighted average lease term excludes one real estate lease that expires in May 2056.

(2)

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future lease payments. To estimate incremental borrowing rates, we consider various factors, including the rates applicable to our recently issued debt and credit facilities and prevailing financial market conditions. We use the incremental borrowing rate as of January 1, 2019 for operating leases that commenced prior to that date.

We generally recognize lease costs associated with our operating leases on a straight-line basis over the lease term, while variable lease payments that do not depend on an index or rate are recognized as variable lease costs in the period in which the obligation for those payments is incurred. The table below sets forth information regarding our lease costs which are reflected in selling, general and administrative expenses in our consolidated statement of operations and comprehensive income for the three and six months ended June 30, 2019 (in thousands):


	For the Three Months Ended		For the Six Months Ended
	June 30,		June 30,
	2019		2019
Fixed rental costs	$	1,772	$	3,894
Short-term lease cost		1,132		2,302
Variable lease cost		649		1,248
Total operating lease costs	$	3,553	$	7,444

The table below sets forth information regarding the maturity of our operating lease liabilities (in thousands):


As of June 30,	Operating Leases
2019	$	6,433
2020		5,550
2021		4,421
2022		4,063
2023		2,175
After 2023		12,121
Total lease payments	$	34,763
Less: Interest		10,179
Present value of operating lease liabilities	$	24,584

Upon the adoption of the new lease accounting standard on January 1, 2019 (as described in Note 2 above), we recognized an operating lease liability of $26.5 million and an operating lease asset of $25.6 million. The difference between the operating lease liability and operating lease asset primarily reflects the reclassification of accrued and prepaid straight-line rent from accrued liabilities and prepaid expenses to the operating lease assets in our consolidated balance sheet. The operating lease payments set forth in the table above exclude $0.5 million of minimum lease payments under lease agreements executed but not yet commenced as of June 30, 2019, as we have not received possession of the leased property. Included in our statement of cash flows under operating activities for the six months ended June 30, 2019 was $3.4 million of cash paid for amounts included in the measurement of lease liabilities. During the six months ended June 30, 2019, we obtained $1.1 million of right-of-use assets in exchange for new operating lease liabilities.