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Leases

12 Months Ended

Dec. 31, 2020

12. Leases

In the first quarter of 2019, we adopted ASC 842, Leases, which replaced the previous accounting standard on leases. The new lease standard is a right-of-use model, requiring most lessee agreements to be recorded on the balance sheet. The intent of the standard is to provide greater transparency about lessee obligations and activities. The primary impact to our financial statements is that most operating leases are recorded on our consolidated balance sheet and enhanced disclosures are required for both operating and finance leases. As permitted by ASC 842, our accounting policy is to evaluate lessee agreements with a minimum term greater than one year for recording on the balance sheet.

We adopted the standard using the modified retrospective approach, as of January 1, 2019. Prior year's financial results were not restated. On the adoption date, we recorded a right-of-use asset for $72 million in other assets, net, with a corresponding offset to other accrued liabilities and other noncurrent liabilities for $25 million and $47 million, respectively. There was no impact to retained deficit from adoption of the new standard.

For the year ended December 31, 2018, we recognized rent expense of $30 million. The following table presents the components of lease expense for the years ended December 31, 2020 and 2019 (in thousands):


	Year Ended December 31,
	2020		2019
Operating lease cost	$	25,442	$	27,035
Finance lease cost:
Amortization of right-of-use assets	$	6,743	$	7,073
Interest on lease liabilities	124		453
Total finance lease cost	$	6,867	$	7,526

The following table presents supplemental cash flow information related to leases (in thousands):


	Year Ended December 31,
	2020		2019
Supplemental Cash Flow Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases	$	23,694	$	28,374
Operating cash flows used in finance leases	124		453
Financing cash flows used in finance leases	4,600		6,731
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	89,328	$	27,116
Finance leases	$	—	$	397

The following table presents supplemental balance sheet information related to leases (in thousands):


	December 31,
	2020		2019
Operating Leases
Operating lease right-of-use assets	$	125,110	$	64,191
Other accrued liabilities	37,892		21,932
Other noncurrent liabilities	97,403		49,970
Total operating lease liabilities	$	135,295	$	71,902
Finance Leases
Property and equipment	34,931		35,349
Accumulated depreciation	(32,747)		(27,163)
Property and equipment, net	$	2,184	$	8,186
Other accrued liabilities	889		5,804
Other noncurrent liabilities	—		78
Total finance lease liabilities	$	889	$	5,882

The following table presents other supplemental information related to leases:


	December 31,
	2020		2019
Weighted Average Remaining Lease Term (in years)
Operating leases	7.9		4.9
Finance leases	1		1.2
Weighted Average Discount Rate
Operating leases	5.3	%	5.4	%
Finance leases	4.0	%	4.9	%

Sale and Leaseback Transaction

During the fourth quarter of 2020, we completed the sale of our two headquarters buildings for aggregate receipts, net of closing costs, of $69 million. Our carrying value for the buildings approximated the proceeds from the sale. Contemporaneously with the closing of the sale, we entered into two leases pursuant to which we leased back the properties for initial terms of 12 years and 18 months, respectively, with renewal options up to 10 years in certain circumstances. Both leases entered into as a result of the sale and leaseback transaction are classified as operating leases. In connection with these leases, lease liabilities representing the fair value of future lease payments of $46 million were recorded within the consolidated balance sheet as of December 31, 2020 and a non-cash net gain on sale of $10 million was recorded to Other, net, resulting in right-of-use assets of $56 million recorded within the consolidated balance sheet as of December 31, 2020. The net proceeds from the sale will be used for general operating purposes.

Lease Commitments

We lease certain facilities under long term operating leases. Collectively, we lease approximately 1.3 million square feet of office space in 70 locations in 38 countries. Certain of our lease agreements contain renewal options, early termination options and/or payment escalations based on fixed annual increases, local consumer price index changes or market rental reviews. We recognize rent expense with fixed rate increases and/or fixed rent reductions on a straight line basis over the term of the lease.

Our leases have remaining minimum terms that range between one and twelve years. Some of our leases include options to extend for up to ten additional years; others include options to terminate the agreement within two years. Future minimum lease payments under non-cancellable leases as of December 31, 2020 are as follows (in thousands):


Year Ending December 31,	Operating Leases		Finance Leases
2021	$	38,029	$	923
2022	21,620		—
2023	17,062		—
2024	15,615		—
2025	11,051		—
Thereafter	60,670		—
Total	164,047		923
Imputed Interest	(28,752)		(34)
Total	$	135,295	$	889

Leases