Ambac adopted the New Lease Standard as further described in Note 2, Basis of Presentation and Significant Accounting Policies. A contract contains a lease if it conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. Ambac's evaluation of whether certain contracts contain leases may require judgment regarding what party controls the asset and whether the asset is physically distinct.

The New Lease Standard provides practical expedients that affect a reporting entity’s ongoing accounting. For contracts where Ambac is the lessee, we have elected the short-term lease recognition exemption for all leases that qualify. For those leases that qualify for that exemption, we will not recognize ROU assets or lease liabilities. For all contracts where Ambac is the lessee and lessor we have also elected the practical expedient to not separate lease and non-lease components.

Ambac is the lessee in operating leases of corporate offices, data centers and equipment. Our leases, in effect at June 30, 2019, have remaining lease terms ranging from 1 to 11 years. One data center lease has an automatic renewal of one-year unless either party elects to terminate by providing 120 days notice prior to the renewal. This renewal feature is not recognized in the lease liability or right-of-use asset as it is not reasonably certain we will elect to renew. No other leases contain extension or termination provisions.

Lease costs are included in operating expenses on the consolidated statement of comprehensive income. The components of lease costs, net of sub-lessor income, is as follows:



	Three Months Ended			Six Months Ended
	June 30, 2019			June 30, 2019
Operating lease cost	$	2,088		$	3,614
Variable Lease Cost	122			301
Sublease income	(280		)	(345		)
Total lease cost	$	1,930		$	3,570

Ambac is required to make variable lease payments under certain leases which primarily related to variable costs of the lessor. Such costs include taxes, insurance, maintenance and electricity.



	Three Months Ended		Six Months Ended
Three Months Ended	June 30, 2019		June 30, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,743	$	3,286
Right-of-use assets obtained in exchange for operating lease liabilities (non-cash)⁽¹⁾	14,939		29,299



	June 30, 2019
Operating leases:
Operating lease right of use assets	$	26,529
Operating lease liabilities	29,664
Weighted average remaining lease term:
Operating leases	10.0 years
Weighted average discount rate:
Operating leases	7.9		%

Operating lease right of use assets and operating lease liabilities are included in Other assets and Other liabilities, respectively, on the consolidated balance sheet. The discount rate used to initially measure the right of use assets and lease liabilities was based on Ambac's estimated secured borrowing rate. The Ambac Note, more fully described in Note 1. Background and Business Description in the Consolidated Financial Statements included Part II, Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, was a significant data point in estimating this rate.



As of June 30, 2019	Operating Leases
2019 (six months)	$	2,043
2020	4,099
2021	3,970
2022	3,970
2023	3,970
Thereafter	25,883
Total lease payments	43,935
Less: imputed interest	(14,271		)
Total	$	29,664

Ambac is the lessor in one operating sublease of corporate office space which has a remaining term of 10.5 years. There are no extension or termination provisions.



As of June 30, 2019	Operating Leases
2019 (six months)	$	172
2020	1,038
2021	1,051
2022	1,078
2023	1,131
Thereafter	7,571
Total lease receipts	$	12,041