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Leases | 9 Months Ended
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Sep. 30, 2019
Leases [Abstract] |
Leases | Leases Effective January 1, 2019, the Company adopted FASB ASC Topic 842, Leases (“ASC 842”). As a result, comparative prior periods have not been adjusted and continue to be reported under FASB ASC Topic 840, Leases. See Note 14 of the Notes to the Unaudited Condensed Consolidated Financial Statements included herein for additional information regarding the Company’s adoption of ASC 842. The policies described herein refer to those in effect as of January 1, 2019. The Company leases office space in North America, Europe, Asia, South America, and Australia. This space is primarily used for office and administrative purposes by the Company’s employees in performing professional services. These leases are classified as operating leases and expire between years 2019 through 2032. The Company’s finance leases are immaterial. The Company’s leasing policies are established in accordance with ASC 842, and accordingly, the Company recognizes on the balance sheet at the time of lease commencement a right-of-use lease asset and a lease liability, initially measured at the present value of the lease payments. Right-of-use lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. All right-of-use lease assets are reviewed for impairment. As the Company’s implicit rate in its leases is not readily determinable, in determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the commencement date. Lease payments included in the measurement of the lease liability are comprised of noncancelable lease payments, payments based upon an index or rate, payments for optional renewal periods where it is reasonably certain the renewal period will be exercised, and payments for early termination options unless it is reasonably certain the lease will not be terminated early. Lease costs are recognized in the Consolidated Statement of Operations over the lease term on a straight-line basis. Leasehold improvements are depreciated on a straight-line basis over the lesser of the term of the related lease or the estimated useful life of the asset. Some of the Company’s leases contain variable lease payments, including payments based upon an index or rate. Variable lease payments based upon an index or rate are initially measured using the index or rate in effect at the lease commencement date and are included within the lease liabilities. Lease liabilities are not remeasured as a result of changes in the index or rate, rather changes in these types of payments are recognized in the period in which the obligation for those payments is incurred. In addition, some of our leases contain variable payments for utilities, insurance, real estate tax, repairs and maintenance, and other variable operating expenses. Such amounts are not included in the measurement of the lease liability and are recognized in the period when the facts and circumstances on which the variable lease payments are based upon occur. The Company’s leases include options to extend or renew the lease through 2040. The renewal and extension options are not included in the lease term as the Company is not reasonably certain that it will exercise its option. From time to time, the Company enters into sublease arrangements both with unrelated third-parties and with our partner agencies. These leases are classified as operating leases and expire between years 2019 through 2032. Sublease income is recognized over the lease term on a straight-line basis. Currently, the Company subleases office space in North America, Europe and Australia. As of September 30, 2019, the Company has entered into two operating leases for which the commencement date has not yet occurred as this leased space is in the process of being prepared by the landlord for occupancy. Accordingly, these leases represent an obligation of the Company that is not on the Consolidated Balance Sheet as of September 30, 2019. The aggregate future liability related to these leases is approximately $12 million. The discount rate used for leases accounted for under ASC 842 is the Company’s collateralized credit adjusted borrowing rate. The following table presents lease costs and other quantitative information for the three and nine months ended September 30, 2019:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2019
Lease Cost: |  |  |
Operating lease cost | $ | 16,605 |  |  | $ | 50,519 |
Variable lease cost | 4,960 |  |  | 14,285 |
Sublease rental income | (2,376 | ) |  | (6,565 | )
Total lease cost | $ | 19,189 |  |  | $ | 58,239 |
Additional information: |  |  |
Cash paid for amounts included in the measurement of lease liabilities for operating leases |  |  |
Operating cash flows | $ | 16,988 |  |  | $ | 52,163 |
Right-of-use assets obtained in exchange for operating lease liabilities | $ | 8,783 |  |  | $ | 267,796 |
Weighted average remaining lease term (in years) - Operating leases | 7.0 |  |  | 7.0 |
Weighted average discount rate - Operating leases | 8.7 |  |  | 8.7 |
In the three months ended September 30, 2019, the Company recorded an impairment charge of $1.9 million to reduce the carrying value of a right-of-use lease asset and related leasehold improvements of one of its agencies within its Global Integrated Agencies segment. The Company evaluated the facts and circumstances related to the use of the asset which indicated that it may not be recoverable. Using adjusted quoted market prices to develop expected future cash flows, it was determined that the fair value of the asset was less than its carrying value. This impairment charge is included in Other Asset Impairment within the Unaudited Condensed Consolidated Statement of Operations. Operating lease expense is included in office and general expenses in the Unaudited Condensed Consolidated Statement of Operations. The Company’s lease expense for leases with a term of 12 months or less is immaterial. Rental expense for the three and nine months ended September 30, 2018 was $15,768 and $49,309, respectively, offset by $1,233 and $2,873, respectively in sublease rental income. The following table presents minimum future rental payments under the Company’s leases at September 30, 2019 and their reconciliation to the corresponding lease liabilities:
| Maturity Analysis
Remaining 2019 | $ | 17,454 |
2020 | 68,981 |
2021 | 58,759 |
2022 | 48,272 |
2023 | 43,732 |
Thereafter | 139,476 |
Total | 376,674 |
Less: Present value discount | (98,743 | )
Lease liability | $ | 277,931 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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