In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”, which is a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets obtained in exchange for lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

The Company elected to adopt the standard, and available practical expedients, effective January 1, 2019. These practical expedients allowed the Company to keep the lease classification assessed under the previous lease accounting standard (ASC 840) without reassessment under the new standard, and allowed all separate lease components, including non-lease components, to be accounted for as a single lease component for all existing leases prior to adoption of the new standard. Furthermore, the Company made an accounting policy election to not recognize a lease liability and ROU asset for leases with lease terms of twelve months or less.

The Company adopted this new standard under the modified retrospective transition approach without adjusting comparative periods in the financial statements, as allowed under Topic 842, and implemented internal controls and key system functionality to enable the preparation of financial information on adoption.

The standard had a material impact on the Company’s consolidated balance sheets but did not have an impact on the consolidated income statements. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while accounting for finance leases remained substantially unchanged.

As a result of the adoption, the Company recorded a cumulative-effect adjustment to retained earnings of $52.6 million net of deferred tax asset adjustment of $0.7 million, representing the unamortized portion of a deferred gain previously recorded as a sale-leaseback transaction associated with the sale of an office building in 2011. The Company concluded the transaction resulted in the transfer of control of the office building to the buyer-lessor at market terms and would have qualified as a sale under Topic 842 with gain recognition in the period the sale was recognized.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and current and long-term operating lease liabilities in the consolidated balance sheets. Finance leases are included in other noncurrent assets, accrued expenses and other current liabilities and other long-term liabilities in the consolidated balance sheets.

ROU assets represent the Company’s 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 ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, incremental borrowing rates are used based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component. Additionally, for certain equipment leases, we apply a portfolio approach to effectively account for the operating lease ROU assets and liabilities.

The Company has operating and finance leases for corporate and project office spaces, vehicles, heavy machinery and office equipment. Our leases have remaining lease terms of one year to 10 years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the leases up to the seventh year. As of September 30, 2019, assets recorded under finance leases were $1.8 million and accumulated depreciation associated with finance leases was $0.5 million.

The components of lease costs for the three and nine months ended September 30, 2019 are as follows (in thousands):

	Three Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2019
Operating lease cost	$	17,969		$	53,835
Short-term lease cost		5,429			10,925
Amortization of right-of-use assets		120			455
Interest on lease liabilities		15			46
Sublease income		(712	)		(2,727	)
Total lease cost	$	22,821		$	62,534

Supplemental cash flow information related to leases for the nine months ended September 30, 2019 is as follows (in thousands):

	Nine Months Ended
	September 30, 2019
Operating cash flows for operating leases	$	52,056
Operating cash flows for financing activities		570
Right-of-use assets obtained in exchange for new operating lease liabilities		274,212
Right-of-use assets obtained in exchange for new finance lease liabilities	$	1,818

Supplemental balance sheet and other information related to leases as of September 30, 2019 is as follows (in thousands):

	September 30, 2019
Operating Leases:
Right-of-use assets	$	219,207
Lease liabilities:
Current	$	49,074
Long-term		188,571
Total operating lease liabilities	$	237,645
Finance Leases:
Other noncurrent assets	$	1,362
Lease liabilities:
Accrued expenses and other current liabilities	$	558
Other long-term liabilities		736
Total finance lease liabilities	$	1,294

Weighted Average Remaining Lease Term:
Operating leases	6 years
Finance leases	3 years
Weighted Average Discount Rate:
Operating leases		4.3	%
Finance leases		4.4	%

As of September 30, 2019, the Company has additional operating leases, primarily for office spaces, that have not yet commenced of $37.0 million. These operating leases will commence in 2019 with lease terms of 2 years to 11 years.

A maturity analysis of the future undiscounted cash flows associated with the Company’s operating and finance lease liabilities as of September 30, 2019 is as follows (in thousands):

	Operating Leases			Finance Leases
2019	$	15,409		$	160
2020		54,561			574
2021		50,333			421
2022		44,160			187
2023		36,996			25
Thereafter		64,423			-
Total lease payments		265,882			1,367
Less: imputed interest		(28,237	)		(73	)
Total present value of lease liabilities	$	237,645		$	1,294

As of December 31, 2018, $276.7 million of minimum rental commitments on operating leases was payable as follows: $67.9 million in 2019, $51.0 million in 2020, $42.5 million in 2021, $35.9 million in 2022, $29.4 million in 2023, and $50.0 million thereafter. Rental expense for the three and nine months ended September 28, 2018 was $21.7 million and $59.7 million, respectively.