LEASES

We adopted ASU 2016-02, Leases (Topic 842), as of January 1, 2019. Prior period information was not restated and continues to be presented under ASC 840, Leases. We elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to not reassess existing contracts to determine if they contain a lease and to carry forward their historical lease classification upon transition. In addition, we have made a policy election to not apply the guidance of ASC 842 to leases with a term of 12 months or less as allowed by the standard. These leases are recognized as expense on a straight-line basis over the lease term.

Adoption of the new standard resulted in the recording of right-of-use lease assets and lease liabilities of $265.4 million and $273.3 million, respectively, as of January 1, 2019. The adoption of this standard did not materially impact our consolidated statement of operations or consolidated statements of cash flows.

We determine if our contractual agreements contain a lease at inception. A lease is identified when a contract allows us the right to control an identified asset for a period of time in exchange for consideration. Our lease agreements consist primarily of operating leases for office space, warehouses, office equipment and a small number of intermodal containers. We do not have material financing leases. Frequently, we enter into contractual relationships with a wide variety of transportation companies for freight capacity, and utilize those relationships to efficiently and cost-effectively arrange the transport of our customers’ freight. These contracts typically have a lease term of 12 months or less and do not allow us to direct the use or obtain substantially all of the economic benefits of a specifically identified asset. Accordingly, these agreements are not considered leases.

Our operating leases are included on the consolidated balance sheets as right-of-use lease assets and lease liabilities. A right-of-use lease asset represents our right to use an underlying asset over the term of a lease while a lease liability represents our obligation to make lease payments arising from the lease. Current and noncurrent lease liabilities are recognized at commencement date at the present value of lease payments, including non-lease components which consist primarily of common area maintenance charges. Right-of-use lease assets are also recognized at commencement date as the total lease liability plus prepaid rents and less any deferred rent liability that existed under ASC 840, Leases, upon transition. 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 lease payments.

Our lease agreements typically do not contain variable lease payments, residual value guarantees, purchase options or restrictive covenants. Many of our leases include the option to renew for a period of months to several years. The term of our leases may include the option to renew when it is reasonably certain that we will exercise that option although these occurrences are seldom. We have lease agreements with lease components (e.g. payments for rent) and non-lease components (e.g. payments for common area maintenance and parking), which are all accounted for as a single lease component.

We do not have material lease agreements that have not yet commenced that are expected to create significant rights or obligations as of March 31, 2019.

Information regarding lease expense, remaining lease term, discount rate and other select lease information is presented below as of and for the three months ended March 31, 2019 (dollars in thousands):



Lease Costs	Three Months Ended March 31, 2019
Operating lease expense	$	16,822
Short-term lease expense	2,341
Total lease expense	19,163

Other Lease Information	Three Months Ended March 31, 2019
Operating cash flows from operating leases	$	16,629
Right-of-use lease assets obtained in exchange for new lease liabilities	7,732

Lease Term and Discount Rate	As of March 31, 2019
Weighted average remaining lease term (in years)⁽¹⁾	7.9
Weighted average discount rate	3.6		%

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⁽¹⁾The weighted average remaining lease term is significantly impacted by a 15 year lease related to office space in Chicago, IL that commenced in 2018. Excluding this lease the weighted average remaining lease term of our agreements is 4.1 years.

The maturity of lease liabilities as of March 31, 2019 were as follows (in thousands):



Maturity of Lease Liabilities	Operating Leases
Remaining 2019	$	47,221
2020	57,086
2021	44,737
2022	32,178
2023	22,851
Thereafter	103,621
Total lease payments	307,694
Less: Interest	(42,956		)
Present value of lease liabilities	$	264,738

Minimum future lease commitments under noncancelable lease agreements in excess of one year as of December 31, 2018, are as follows (in thousands):



2019	$	53,675
2020	47,680
2021	36,832
2022	27,644
2023	19,406
Thereafter	81,465
Total lease payments	$	266,702

In addition to minimum lease payments, we are typically responsible under our lease agreements to pay our pro rata share of maintenance expenses, common charges, and real estate taxes of the buildings in which we lease space. Under ASC 842 we have elected to account for non-lease components such as common area maintenance and parking as a single lease component.