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Leases

6 Months Ended

Jun. 30, 2019

9.LEASES

The Company rents certain equipment and facilities under both short-term agreements and non-cancelable operating lease agreements. The Company determines if an arrangement is or contains a lease at contract inception. The Company recognizes a right-of-use (“ROU”) asset and a lease liability at the lease commencement date. The lease liability is initially measured at the present value of the unpaid lease payments at the lease commencement date.

Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments.

The lease guidance requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, the Company generally uses its incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

The lease term for the Company’s leases includes the noncancelable period of the lease, plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

Lease payments included in the measurement of the lease liability comprise fixed payments or variable lease payments. The variable lease payments take into account annual changes in the consumer price index and common area maintenance charges, if known.

ROU assets for operating leases are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize.

The Company monitors for events or changes in circumstances that require a reassessment of one of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset.

The Company has elected not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less. The Company has elected to apply the short-term lease recognition and measurement exemption allowed for in the lease accounting standard. The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term.

Lease cost for operating leases for the three and six months ended June 30, 2019 was as follows:


	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Operating lease cost	$	9,657	$	19,190

Supplemental cash flow information and non-cash activity related to the Company’s operating leases are as follows:


	Six months ended
	June 30, 2019
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	18,873
Non-cash activity:
Right-of-use assets obtained in exchange for lease liabilities	$	4,554

Weighted-average remaining lease term and discount rate for the Company’s operating leases are as follows:


	Six months ended
	June 30, 2019
Weighted average remaining lease term	9.0	years
Weighted average discount rate	3.98	%

As of June 30, 2019, future minimum lease payments, as calculated under the new lease guidance and reconciled to the operating lease liability, are as follows:


Last 6 months of 2019	$	19,052
2020		36,032
2021		32,979
2022		31,617
2023		28,287
Thereafter		93,995
Minimum lease payments		241,962
Less: imputed interest		(40,878)
Present value of minimum lease payments		201,084
Less: current portion of operating lease liabilities		(30,255)
Long-term portion of operating lease liabilities	$	170,829

As of December 31, 2018, minimum lease payments under non-cancelable operating leases by period were expected to be as follows:


2019	$	37,902
2020		35,204
2021		32,259
2022		30,974
2023		27,882
Thereafter		94,205
	$	258,426

A summary of rent expense for both short-term agreements and non-cancelable operating lease agreements for the years ended December 31, 2018 and 2017 was as follows:


	2018		2017
Rent expense	$	42,646	$	43,383