Leases

6 Months Ended

Jun. 30, 2021

J2 Global leases certain facilities and equipment under non-cancelable operating and finance leases which expire at various dates through 2031. Office and equipment leases are typically for terms of three to five years and generally provide renewal options for terms up to an additional five years. Some of the Company’s leases include options to terminate within one year.

In certain agreements in which the Company leases office space where the Company is the tenant, it subleases the site to various other companies through a sublease agreement.

Finance leases are not material to the Company’s Condensed Consolidated Financial Statements and are therefore not included in the disclosures below.

The components of lease expense were as follows (in thousands):


	Three Months Ended June 30,			Six Months Ended June 30,
		2021		2020		2021		2020

Operating lease cost		$	10,889	$	9,114	$	17,837	$	16,218
Short-term lease cost		793		648		1,942		1,093
Total lease cost		$	11,682	$	9,762	$	19,779	$	17,311

Supplemental balance sheet information related to leases was as follows (in thousands):


	June 30, 2021		December 31, 2020
Operating leases
Operating lease right-of-use assets	$	82,961	$	105,845
Operating lease right-of-use assets classified as assets held for sale	15,181		—
Total operating lease right-of-use assets	$	98,142	$	105,845

Operating lease liabilities, current	$	30,818	$	32,211
Operating lease liabilities, current classified as assets held for sale	2,875		—
Operating lease liabilities, noncurrent	81,752		99,177
Operating lease liabilities, noncurrent classified as assets held for sale	11,915		—
Total operating lease liabilities	$	127,360	$	131,388

Supplemental cash flow information related to leases was as follows (in thousands):


	Six Months Ended June 30,
	2021		2020

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,277	$	14,499
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	9,274	$	5,357

Other supplemental operating lease information consists of the following:


	June 30, 2021		December 31, 2020

Operating leases:
Weighted average remaining lease term	5.0 years		5.2 years
Weighted average discount rate	3.85	%	3.93	%

Maturities of operating lease liabilities as of June 30, 2021 were as follows (in thousands):


	Operating Leases
Fiscal Year:
2021 (remainder)	$	18,250
2022	33,715
2023	27,952
2024	20,062
2025	11,672
Thereafter	31,658
Total lease payments	$	143,309
Less: Imputed interest	15,949
Present value of operating lease liabilities	$	127,360

Sublease

Total sublease income for the three months ended June 30, 2021 and 2020 was $0.5 million and $1.0 million, respectively, and was $0.9 million and $1.8 million for the six months ended June 30, 2021 and 2020, respectively. Total estimated aggregate sublease income to be received in the future is $5.8 million.

For the first six months of 2021 and 2020, the Company recorded impairments of $7.8 million and $2.1 million, respectively, associated with its sublease tenants in default as a result of the economic effects of COVID-19. The impairment is presented in general and administrative expense on the Condensed Consolidated Statement of Operations.

Significant Judgments

Discount Rate

The majority of the J2 Global’s leases are discounted using the Company’s incremental borrowing rate as the rate implicit in the lease is not readily determinable. Rates are obtained from various large banks to determine the appropriate incremental borrowing rate each quarter for collateralized loans with a maturity similar to the lease term.

Options

The lease term is generally the minimum noncancelable period of the lease. The Company does not include option periods unless the Company determined it is reasonably certain of exercising the option at inception or when a triggering event occurs.

Practical Expedients

As a practical expedient, the Company has not separated lease components from nonlease components for its real property operating leases. Certain of the Company’s leases contain nonlease components such as maintenance and certain utility costs.

In addition, the Company elected and applied the available transition practical expedients upon adoption. By electing these practical expedients, the Company did:

•not reassess whether expired or existing contracts contain leases under the new definition of a lease;

•not reassess lease classification for expired or existing leases; and

•not reassess whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.