Leases

6 Months Ended

Jun. 30, 2020

LEASES

The majority of our facilities are occupied under operating lease arrangements with various expiration dates through 2067, some of which include options to extend the life of the lease, and some of which include options to terminate the lease within one year. In certain instances, we are responsible for the real estate taxes and operating expenses related to these facilities. Additionally, we enter into operating leases for certain vehicles and office equipment in the normal course of business. We determine the expected term of any executed agreements using the non-cancelable lease term plus any renewal options by which the failure to renew imposes a penalty in such amount that renewal is reasonably assured. The derived expected term is then used in the determination of a financing or operating lease and in the calculation of straight-line rent expense. Rent escalations are considered in the calculation of minimum lease payments in our capital lease tests and in determining straight-line rent expense for operating leases. Minimum lease payments include the fixed lease component of the agreement, as well as fixed rate increases that are initially measured at the lease commencement date. Variable lease payments based on an index, payments associated with non-lease components and short-term rentals (leases with terms less than 12 months) are expensed as incurred. Consideration is allocated to the lease and non-lease components based on the estimated standalone prices.

We determine if an arrangement is a lease at its inception. Operating leases are included in operating lease right-of-use assets, accrued liabilities, and long-term operating lease liabilities in our consolidated balance sheets. Our financing leases are not material to our financial statements.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease liabilities and right-of-use assets are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an explicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Rent expense for lease payments is recognized on a straight-line basis over the lease term. The operating lease right-of-use assets also includes any rent prepayments, lease incentives upon receipt and straight-line rent expense impacts, which represent the difference between our operating lease liabilities and right-of-use assets.

Maturities of operating lease liabilities were as follows:


(in thousands, except lease term and discount rate)	June 30, 2020

2020 (remainder of year)	$	9,263
2021	19,956
2022	16,841
2023	11,714
2024	7,833
Thereafter	35,739
Total lease payments	101,346
Less imputed interest	(16,276)
Total	$	85,070

Current operating lease liabilities, included in accrued liabilities	$	16,473
Long-term operating lease liabilities	$	68,597

Weighted average remaining lease term - operating leases	9.9 years

Weighted average discount rate - operating leases	3.5		%

Total minimum future lease payments of approximately $1.3 million for leases that have not commenced as of June 30, 2020, are not included in the condensed consolidated financial statements, as we do not yet control the underlying assets. These leases are expected to commence between 2020 and 2021 with lease terms of approximately 5 years to 10 years.

Rent expense charged to operations under operating leases was approximately $5.2 million and $10.6 million during the three and six months ended June 30, 2020, respectively, and $5.1 million and $10.3 million during the three and six months ended June 30, 2019, respectively. Variable rent and short-term lease expenses were not material.

Supplemental cash flow information for leases was as follows:


(in thousands)	For the Six Months Ended June 30, 2020

Cash paid for amounts included in the measurement of operating leases liabilities	$	9,346
Right-of-use assets obtained in exchange for operating lease obligations, net of early lease terminations	$	10,738