Leases (Notes)

6 Months Ended

Jun. 30, 2019

Leases of Lessor Disclosure [Text Block]

Leases

Company as Lessor

The Company is a lessor in certain transactions in which the Company provides monitoring and related services but retains ownership of the security systems as the Company has identified a lease component associated with the right-of-use of the security systems and a non-lease component associated with monitoring and related services. For transactions in which the timing and pattern of transfer is the same for the lease and non-lease components, and the lease component would be classified as an operating lease if accounted for separately, the Company applies the practical expedient to aggregate the lease and non-lease components and accounts for the combined component based upon its predominant characteristic, which is the non-lease component. As a result, the Company accounts for the combined component as a single performance obligation under the applicable revenue guidance and the underlying assets are reflected within subscriber system assets, net in the Condensed Consolidated Balance Sheets.

Certain of the Company’s transactions do not qualify for the practical expedient as the lease component represents a sales-type lease, as such, the Company separately accounts for the lease component and non-lease component. The Company’s sales-type leases are immaterial.

Leases of Lessee Disclosure [Text Block]

Leases

Company as Lessor

Company as Lessee

The Company leases real estate, vehicles, and equipment with various lease terms and maturities that extend out through 2030 from various counter parties as part of normal operations. The Company applies the practical expedient to not separate the lease and non-lease components and accounts for the combined component as a lease. Additionally, the Company’s right-of-use assets and lease liabilities include leases with an initial lease term of 12 months or less.

The Company’s right-of-use assets and lease liabilities primarily represent (a) lease payments that are fixed at the commencement of a lease and (b) variable lease payments that depend on an index or rate. Lease payments are recognized as lease cost on a straight-line basis over the lease term, which is determined as the non-cancelable period, periods in which termination options are reasonably certain of not being exercised, and periods in which renewal options are reasonably certain of being exercised. The discount rate for a lease is determined using the Company’s incremental borrowing rate that coincides with the lease term at the commencement of a lease. The incremental borrowing rate is estimated based on publicly available data for the Company’s debt instruments and other instruments with similar characteristics.

Lease payments that are not fixed or that are not dependent on an index or rate and vary because of changes in usage or other factors are included in variable lease costs. Variable lease costs, which primarily relate to fuel, repair, and maintenance payments that vary based on the usage of leased vehicles, are recorded in the period in which the obligation is incurred.

The Company’s leases do not contain material residual value guarantees or restrictive covenants. The Company’s subleases are immaterial.

The following table presents the amounts reported in the Company’s Condensed Consolidated Balance Sheets related to operating and finance leases as of the periods presented below:



Leases (in thousands)	Classification	June 30, 2019		January 1, 2019
Assets
Current
Operating	Prepaid expenses and other current assets	$	1,527	$	1,642
Non-current
Operating	Other assets	133,506		125,936
Finance	Property and equipment, net(a)	69,210		38,181
Total right-of-use assets		$	204,243	$	165,759
Liabilities
Current
Operating	Accrued expenses and other current liabilities	$	31,011	$	30,357
Finance	Current maturities of long-term debt	27,204		18,343
Non-current
Operating	Other liabilities	107,563		99,168
Finance	Long-term debt	54,205		31,568
Total lease liabilities		$	219,983	$	179,436

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(a)	Finance right-of-use assets are recorded net of accumulated amortization of approximately $34 million and $32 million as of June 30, 2019 and January 1, 2019, respectively.

The following is a summary of the Company’s lease cost for the presented periods:



Lease Cost (in thousands)	For the Quarter Ended June 30, 2019		For the Six Months Ended June 30, 2019
Operating lease cost	$	14,986	$	30,073
Finance lease cost
Amortization of right-of-use assets	6,071		10,518
Interest on lease liabilities	905		1,657
Variable lease costs	13,408		24,858
Total lease cost	$	35,370	$	67,106

The following is a summary of the cash flows and supplemental information associated with the Company’s leases for the presented period:



Other information (in thousands)	For the Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	23,628
Operating cash flows from finance leases	1,657
Financing cash flows from finance leases	9,996
Right-of-use assets obtained in exchange for new finance lease liabilities	43,004
Right-of-use assets obtained in exchange for new operating lease liabilities	33,398

The following is a summary of the weighted-average lease term and discount rate for operating and finance leases as of the presented period:



Lease Term and Discount Rate	June 30, 2019
Weighted-average remaining lease term (years)
Operating leases	4.9
Finance leases	3.4
Weighted-average discount rate
Operating leases	6.60	%
Finance leases	5.00	%

The following is a maturity analysis related to the Company’s operating and finance leases as of June 30, 2019:



Maturity of Lease Liabilities (in thousands)	Operating Leases		Finance Leases
2019	$	19,709	$	27,501
2020	37,436		25,295
2021	31,800		20,486
2022	28,390		13,807
2023	22,257		1,003
Thereafter	23,232		31
Total lease payments	$	162,824	$	88,123
Less interest	24,250		6,714
Total	$	138,574	$	81,409

The following is a maturity analysis related to the Company’s operating and finance leases as of December 31, 2018:



Maturity of Lease Liabilities (in thousands)	Operating Leases		Finance Leases
2019	$	40,192	$	20,604
2020	31,885		16,735
2021	26,336		10,728
2022	22,751		5,386
2023	16,731		696
Thereafter	17,727		—
Total lease payments	$	155,622	$	54,149
Less interest	—		4,238
Total	$	155,622	$	49,911