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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q


(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-37511 
Sunrun Inc.
(Exact name of registrant as specified in its charter)

Delaware 26-2841711
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

225 Bush Street, Suite 1400
San Francisco, California 94104
(Address of principal executive offices and Zip Code)

(415) 580-6900
(Registrant’s telephone number, including area code) 


Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.0001 par value per share RUN Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
         
Non-accelerated filer Smaller reporting company
         
Emerging growth company


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of November 3, 2020, the number of shares of the registrant’s common stock outstanding was 197,530,444.




Table of Contents


1



Sunrun Inc.
Consolidated Balance Sheets
(In Thousands, Except Share Par Values)
(Unaudited)
September 30, 2020 December 31, 2019
Assets
Current assets:
Cash $ 276,052  $ 269,577 
Restricted cash 105,314  93,504 
Accounts receivable (net of allowances for doubtful accounts of $2,316 and $3,151 as of September 30, 2020 and December 31, 2019, respectively)
70,654  77,728 
State tax credits receivable —  6,466 
Inventories 177,967  260,571 
Prepaid expenses and other current assets 15,752  25,984 
Total current assets 645,739  733,830 
Restricted cash 148  148 
Solar energy systems, net 4,979,322  4,492,615 
Property and equipment, net 44,567  56,708 
Intangible assets, net 15,725  19,543 
Goodwill 95,094  95,094 
Other assets 526,239  408,403 
Total assets (1)
$ 6,306,834  $ 5,806,341 
Liabilities and total equity
Current liabilities:
Accounts payable $ 151,804  $ 223,356 
Distributions payable to noncontrolling interests and redeemable noncontrolling interests
18,161  16,062 
Accrued expenses and other liabilities 196,444  148,497 
Deferred revenue, current portion 79,378  77,643 
Deferred grants, current portion 8,268  8,093 
Finance lease obligations, current portion 7,541  10,064 
Non-recourse debt, current portion 122,812  35,348 
Pass-through financing obligation, current portion 11,832  11,031 
Total current liabilities 596,240  530,094 
Deferred revenue, net of current portion 665,583  651,856 
Deferred grants, net of current portion 211,668  218,568 
Finance lease obligations, net of current portion 7,689  12,895 
Recourse debt 224,910  239,485 
Non-recourse debt, net of current portion 2,137,154  1,980,107 
Pass-through financing obligation, net of current portion 324,576  327,974 
Other liabilities 199,320  141,401 
Deferred tax liabilities 11,093  65,964 
Total liabilities (1)
4,378,233  4,168,344 
Commitments and contingencies (Note 15)
Redeemable noncontrolling interests 508,061  306,565 
Stockholders’ equity:
Preferred stock, $0.0001 par value—authorized, 200,000,000 shares as of September 30, 2020 and December 31, 2019; no shares issued and outstanding as of September 30, 2020 and December 31, 2019
—  — 
Common stock, $0.0001 par value—authorized, 2,000,000 shares as of September 30, 2020 and December 31, 2019; issued and outstanding, 127,552 and 118,451 shares as of September 30, 2020 and December 31, 2019, respectively
13  12 
Additional paid-in capital 910,388  766,006 
Accumulated other comprehensive loss (123,020) (52,753)
Retained earnings 246,164  251,466 
Total stockholders’ equity 1,033,545  964,731 
Noncontrolling interests 386,995  366,701 
Total equity 1,420,540  1,331,432 
Total liabilities, redeemable noncontrolling interests and total equity $ 6,306,834  $ 5,806,341 


2







1)The Company’s consolidated assets as of September 30, 2020 and December 31, 2019 include $4,136,047 and $3,521,202, respectively, in assets of variable interest entities (“VIEs”) that can only be used to settle obligations of the VIEs. These assets include solar energy systems, net, as of September 30, 2020 and December 31, 2019 of $3,773,324 and $3,259,712, respectively; cash as of September 30, 2020 and December 31, 2019 of $155,201 and $133,362, respectively; restricted cash as of September 30, 2020 and December 31, 2019 of $14,495 and $2,746, respectively; accounts receivable, net as of September 30, 2020 and December 31, 2019 of $27,471 and $21,956, respectively; inventories as of September 30, 2020 and December 31, 2019 of $51,894 and 15,721, respectively; prepaid expenses and other current assets as of September 30, 2020 and December 31, 2019 of $1,583 and $554, respectively; and other assets as of September 30, 2020 and December 31, 2019 of $112,079 and $87,151, respectively. The Company’s consolidated liabilities as of September 30, 2020 and December 31, 2019 include $875,866 and $774,564, respectively, in liabilities of VIEs whose creditors have no recourse to the Company. These liabilities include accounts payable as of September 30, 2020 and December 31, 2019 of $25,535 and $11,531, respectively; distributions payable to noncontrolling interests and redeemable noncontrolling interests as of September 30, 2020 and December 31, 2019 of $17,776 and $16,012, respectively; accrued expenses and other current liabilities as of September 30, 2020 and December 31, 2019 of $15,053 and $10,740, respectively; deferred revenue as of September 30, 2020 and December 31, 2019 of $514,564 and $482,138, respectively; deferred grants as of September 30, 2020 and December 31, 2019 of $27,231 and $28,034, respectively; non-recourse debt as of September 30, 2020 and December 31, 2019 of $240,531 and $206,476, respectively; and other liabilities as of September 30, 2020 and December 31, 2019 of $35,176 and $19,633, respectively.
The accompanying notes are an integral part of these consolidated financial statements.
3


Sunrun Inc.
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Revenue:
Customer agreements and incentives $ 114,485  $ 96,249  $ 319,704  $ 288,538 
Solar energy systems and product sales 95,275  119,293  282,081  326,103 
Total revenue 209,760  215,542  601,785  614,641 
Operating expenses:
Cost of customer agreements and incentives 77,350  67,359  239,049  207,446 
Cost of solar energy systems and product sales
75,679  92,031  231,023  256,178 
Sales and marketing 70,720  77,478  210,691  203,469 
Research and development 5,205  6,435  14,222  18,464 
General and administrative 41,829  31,059  111,659  93,166 
Amortization of intangible assets 1,167  1,524  3,817  3,231 
Total operating expenses 271,950  275,886  810,461  781,954 
Loss from operations (62,190) (60,344) (208,676) (167,313)
Interest expense, net 51,368  43,911  152,013  127,560 
Other (income) expenses, net (864) 3,110  (766) 9,254 
Loss before income taxes (112,694) (107,365) (359,923) (304,127)
Income tax (benefit) expense (27,293) 5,169  (30,424) (102)
Net loss (85,401) (112,534) (329,499) (304,025)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests
(122,848) (141,524) (325,425) (317,860)
Net income (loss) attributable to common stockholders $ 37,447  $ 28,990  $ (4,074) $ 13,835 
Net income (loss) per share attributable to common stockholders
Basic $ 0.30  $ 0.25  $ (0.03) $ 0.12 
Diluted $ 0.28  $ 0.23  $ (0.03) $ 0.11 
Weighted average shares used to compute net income (loss) per share attributable to common stockholders
Basic 125,003  117,652  121,813  115,790 
Diluted 134,548  125,151  121,813  123,645 

The accompanying notes are an integral part of these consolidated financial statements.

4


Sunrun Inc.
Consolidated Statements of Comprehensive Income (Loss)
(In Thousands)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Net income (loss) attributable to common stockholders $ 37,447  $ 28,990  $ (4,074) $ 13,835 
Other comprehensive income (loss):
Unrealized loss on derivatives, net of income taxes (335) (25,178) (75,510) (68,301)
Interest expense (income) on derivatives recognized into earnings, net of income taxes 4,579  212  5,243  (755)
Other comprehensive income (loss) 4,244  (24,966) (70,267) (69,056)
Comprehensive income (loss) $ 41,691  $ 4,024  $ (74,341) $ (55,221)

5


Sunrun Inc.
Consolidated Statements of Redeemable Noncontrolling Interests and Equity
Three Months Ended September 30, 2020 and 2019
(In Thousands)
(Unaudited)

Three Months Ended September 30, 2020
Redeemable
Noncontrolling
Interests
Common Stock Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Stockholders'
Equity
Noncontrolling
Interests
Total
Equity
Shares Amount
Balance at June 30, 2020 $ 450,682  122,307  $ 12  $ 806,702  $ (127,264) $ 208,717  $ 888,167  $ 353,338  $ 1,241,505 
Exercise of stock options
—  2,791  —  20,469  —  —  20,469  —  20,469 
Issuance of restricted stock units
—  379  —  —  —  — 
Stock-based compensation
—  —  —  8,217  —  —  8,217  —  8,217 
Contributions from noncontrolling interests and redeemable noncontrolling interests
151,906  —  —  —  —  —  —  85,000  85,000 
Distributions to noncontrolling interests and redeemable noncontrolling interests
(10,082) —  —  —  —  —  —  (12,940) (12,940)
Net (loss) income (84,445) —  —  —  —  37,447  37,447  (38,403) (956)
Shares issued in connection with a subscription agreement —  2,075  —  75,000  —  —  75,000  —  75,000 
Other comprehensive income, net of taxes —  —  —  —  4,244  —  4,244  —  4,244 
Balance at September 30, 2020
$ 508,061  127,552  $ 13  $ 910,388  $ (123,020) $ 246,164  $ 1,033,545  $ 386,995  $ 1,420,540 

Three Months Ended September 30, 2019
Redeemable
Noncontrolling
Interests
Common Stock Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Stockholders'
Equity
Noncontrolling
Interests
Total
Equity
Shares Amount
Balance at June 30, 2019 $ 278,539  117,199  $ 11  $ 748,512  $ (47,954) $ 214,976  $ 915,545  $ 293,542  $ 1,209,087 
Exercise of stock options
—  507  —  2,766  —  —  2,766  —  2,766 
Issuance of restricted stock units, net of tax withholdings
—  218  (2,361) —  —  (2,360) (2,360)
Stock-based compensation
—  —  —  6,854  —  —  6,854  6,854 
Contributions from noncontrolling interests and redeemable noncontrolling interests
196,182  —  —  —  —  —  —  45,002  45,002 
Distributions to noncontrolling interests and redeemable noncontrolling interests
(3,466) —  —  —  —  —  —  (14,184) (14,184)
Net (loss) income (134,669) —  —  —  —  28,990  28,990  (6,855) 22,135 
Acquisition of noncontrolling interest
—  —  —  —  —  —  —  1,268  1,268 
Other comprehensive loss, net of taxes
—  —  —  —  (24,966) —  (24,966) —  (24,966)
Balance at September 30, 2019
$ 336,586  117,924  $ 12  $ 755,771  $ (72,920) $ 243,966  $ 926,829  $ 318,773  $ 1,245,602 


6


Sunrun Inc.
Consolidated Statements of Redeemable Noncontrolling Interests and Equity
Nine Months Ended September 30, 2020 and 2019
(In Thousands)
(Unaudited)

Nine Months Ended September 30, 2020
Redeemable
Noncontrolling
Interests
Common Stock Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Stockholders'
Equity
Noncontrolling
Interests
Total
Equity
Shares Amount
Balance at December 31, 2019
$ 306,565  118,451  $ 12  $ 766,006  $ (52,753) $ 251,466  $ 964,731  $ 366,701  $ 1,331,432 
Cumulative effect of adoption of new ASU (No. 2016-13)
—  —  —  —  —  (1,228) (1,228) —  (1,228)
Exercise of stock options
—  4,188  —  29,127  —  —  29,127  —  29,127 
Issuance of restricted stock units, net of tax withholdings
—  2,509  (1,026) —  —  (1,025) —  (1,025)
Shares issued in connection with the Employee Stock Purchase Plan
—  329  —  3,737  —  —  3,737  —  3,737 
Stock-based compensation
—  —  —  37,544  —  —  37,544  —  37,544 
Contributions from noncontrolling interests and redeemable noncontrolling interests
471,858  —  —  —  —  —  —  139,997  139,997 
Distributions to noncontrolling interests and redeemable noncontrolling interests
(25,179) —  —  —  —  —  —  (39,461) (39,461)
Net loss
(245,183) —  —  —  —  (4,074) (4,074) (80,242) (84,316)
Shares issued in connection with a subscription agreement —  2,075  —  75,000  —  —  75,000  —  75,000 
Other comprehensive loss, net of taxes
—  —  —  —  (70,267) —  (70,267) —  (70,267)
Balance at September 30, 2020
$ 508,061  127,552  $ 13  $ 910,388  $ (123,020) $ 246,164  $ 1,033,545  $ 386,995  $ 1,420,540 


Nine Months Ended September 30, 2019
Redeemable
Noncontrolling
Interests
Common Stock Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Stockholders'
Equity
Noncontrolling
Interests
Total
Equity
Shares Amount
Balance at December 31, 2018
$ 126,302  113,149  $ 11  $ 722,429  $ (3,124) $ 229,391  $ 948,707  $ 334,075  $ 1,282,782 
Cumulative effect of adoption of new ASU (No. 2018-02)
—  —  —  —  (740) 740  —  —  — 
Exercise of stock options
—  3,288  —  17,982  —  —  17,982  —  17,982 
Issuance of restricted stock units, net of tax withholdings
—  901  (8,534) —  —  (8,533) —  (8,533)
Shares issued in connection with the Employee Stock Purchase Plan
—  586  —  3,397  —  —  3,397  —  3,397 
Stock-based compensation
—  —  —  19,420  —  —  19,420  —  19,420 
Contributions from noncontrolling interests and redeemable noncontrolling interests
397,956  —  —  —  —  —  —  173,539  173,539 
Distributions to noncontrolling interests and redeemable noncontrolling interests
(10,144) —  —  —  —  —  —  (43,711) (43,711)
Net (loss) income (177,528) —  —  —  —  13,835  13,835  (140,332) (126,497)
Acquisition of noncontrolling interest
—  —  —  1,077  —  —  1,077  (4,798) (3,721)
Other comprehensive loss, net of taxes
—  —  —  —  (69,056) —  (69,056) —  (69,056)
Balance at September 30, 2019
$ 336,586  117,924  $ 12  $ 755,771  $ (72,920) $ 243,966  $ 926,829  $ 318,773  $ 1,245,602 

7


Sunrun Inc.
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Nine Months Ended September 30,
2020 2019
Operating activities:
Net loss $ (329,499) $ (304,025)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization, net of amortization of deferred grants 156,257  138,620 
Deferred income taxes (30,424) (102)
Stock-based compensation expense 37,544  19,420 
Interest on pass-through financing obligations 17,480  18,358 
Reduction in pass-through financing obligations (28,907) (29,408)
Other noncash items 31,247  16,500 
Changes in operating assets and liabilities:
Accounts receivable 2,727  (11,043)
Inventories 82,604  (30,310)
Prepaid and other assets (37,958) (67,329)
Accounts payable (57,513) 6,744 
Accrued expenses and other liabilities (25,964) 14,531 
Deferred revenue 15,647  121,936 
Net cash used in operating activities (166,759) (106,108)
Investing activities:
Payments for the costs of solar energy systems (619,012) (594,137)
Business acquisition —  (2,722)
Purchase of equity method investment (65,356) — 
Purchases of property and equipment, net (2,384) (21,184)
Net cash used in investing activities (686,752) (618,043)
Financing activities:
Proceeds from state tax credits, net of recapture 6,027  911 
Proceeds from issuance of recourse debt 126,950  140,000 
Repayment of recourse debt (141,525) (147,965)
Proceeds from issuance of non-recourse debt 442,950  682,050 
Repayment of non-recourse debt (208,371) (388,100)
Payment of debt fees (8,353) (9,759)
Proceeds from pass-through financing and other obligations 5,728  7,223 
Early repayment of pass-through financing obligation —  (7,597)
Payment of finance lease obligations (7,763) (10,449)
Contributions received from noncontrolling interests and redeemable noncontrolling interests 611,855  571,495 
Distributions paid to noncontrolling interests and redeemable noncontrolling interests (62,541) (52,893)
Acquisition of noncontrolling interest —  (4,600)
Net proceeds related to stock-based award activities 31,839  12,848 
Proceeds from shares issued in connection with a subscription agreement 75,000  — 
Net cash provided by financing activities 871,796  793,164 
Net change in cash and restricted cash 18,285  69,013 
Cash and restricted cash, beginning of period 363,229  304,399 
Cash and restricted cash, end of period $ 381,514  $ 373,412 
Supplemental disclosures of cash flow information
Cash paid for interest $ 85,503  $ 69,096 
Cash paid for income taxes $ —  $ — 
Supplemental disclosures of noncash investing and financing activities
Purchases of solar energy systems and property and equipment included in accounts payable and accrued expenses $ 82,301  $ 58,914 
Right-of-use assets obtained in exchange for new finance lease liabilities $ 1,092  $ 17,390 

8


The accompanying notes are an integral part of these consolidated financial statements.
9


Sunrun Inc.
Notes to Consolidated Financial Statements
(Unaudited)

Note 1. Organization
Sunrun Inc. (“Sunrun” or the “Company”) was originally formed in 2007 as a California limited liability company and was converted into a Delaware corporation in 2008. The Company is engaged in the design, development, installation, sale, ownership and maintenance of residential solar energy systems (“Projects”) in the United States.
Sunrun acquires customers directly and through relationships with various solar and strategic partners (“Partners”). The Projects are constructed either by Sunrun or by Sunrun’s Partners and are owned by the Company. Sunrun’s customers enter into an agreement to utilize the solar energy system (“Customer Agreement”) which typically has an initial term of 20 or 25 years. Sunrun monitors, maintains and insures the Projects. The Company also sells solar energy systems and products, such as panels and racking and solar leads generated to customers.
The Company has formed various subsidiaries (“Funds”) to finance the development of Projects. These Funds, structured as limited liability companies, obtain financing from outside investors and purchase or lease Projects from Sunrun under master purchase or master lease agreements. The Company currently utilizes three legal structures in its investment Funds, which are referred to as: (i) pass-through financing obligations, (ii) partnership-flips and (iii) joint venture (“JV”) inverted leases.


Note 2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the "SEC") regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2019.
Beginning in the quarter ended March 31, 2020, a strain of coronavirus (COVID-19) has spread throughout the world, and at this point, the extent to which the coronavirus may impact operations of the Company is uncertain. The extent of the impact of the coronavirus on the Company's business and operations will depend on several factors, such as the duration, severity, and geographic spread of the outbreak. The Company is monitoring the evolving situation closely and evaluating its potential exposure. The results of the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2020 or other future periods, particularly in light of the uncertain impact COVID-19 could have on the Company's business.
The consolidated financial statements reflect the accounts and operations of the Company and those of its subsidiaries, including Funds, in which the Company has a controlling financial interest. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity. However, a controlling financial interest may also exist in entities, such as variable interest entities (“VIEs”), through arrangements that do not involve controlling voting interests. In accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 810 (“ASC 810”) Consolidation, the Company consolidates any VIE of which it is the primary beneficiary. The primary beneficiary, as defined in ASC 810, is the party that has (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb the losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company evaluates its relationships with its VIEs on an ongoing basis to determine whether it continues to be the primary beneficiary. The consolidated financial statements reflect the assets and liabilities of VIEs that are consolidated. All intercompany transactions and balances have been eliminated in consolidation.
10



Use of Estimates
The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company regularly makes estimates and assumptions, including, but not limited to, revenue recognition constraints that result in variable consideration, the discount rate used to adjust the promised amount of consideration for the effects of a significant financing component, the estimates that affect the collectability of accounts receivable, the valuation of inventories, the useful lives of solar energy systems, the useful lives of property and equipment, the valuation and useful lives of intangible assets, the effective interest rate used to amortize pass-through financing obligations, the discount rate uses for operating and financing leases, the fair value of contingent consideration, the valuation of stock-based compensation, the determination of valuation allowances associated with deferred tax assets, the fair value of debt instruments disclosed and the redemption value of redeemable noncontrolling interests. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. In light of the uncertain impact COVID-19 could have on the Company's business, the Company's estimates may change in the future. Actual results may differ from such estimates.
Segment Information
The Company has one operating segment with one business activity, providing solar energy services and products to customers. The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer, who manages operations on a consolidated basis for purposes of allocating resources. When evaluating performance and allocating resources, the CODM reviews financial information presented on a consolidated basis.
Revenue from external customers for each group of similar products and services is as follows (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Customer agreements $ 102,213  $ 89,241  $ 294,991  $ 253,046 
Incentives 12,272  7,008  24,713  35,492 
Customer agreements and incentives 114,485  96,249  319,704  288,538 
Solar energy systems 52,238  67,230  168,094  192,235 
Products 43,037  52,063  113,987  133,868 
Solar energy systems and product sales 95,275  119,293  282,081  326,103 
Total revenue $ 209,760  $ 215,542  $ 601,785  $ 614,641 

Revenue from Customer Agreements includes payments by customers for the use of the system as well as utility and other rebates assigned by the customer to the Company in the Customer Agreement. Revenue from incentives includes revenue from the sale of commercial investment tax credits ("Commercial ITCs") and solar renewable energy credits (“SRECs”).
11


Cash and Restricted Cash
Restricted cash represents amounts related to obligations under certain financing transactions and future replacement of solar energy system components.
The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows. Cash and restricted cash consists of the following (in thousands):
Nine Months Ended September 30,
    2020 2019
Beginning of period:
   Cash $ 269,577  $ 226,625 
   Restricted cash, current and long-term 93,652  77,774 
Total $ 363,229  $ 304,399 
End of period:
   Cash $ 276,052  $ 324,698 
   Restricted cash, current and long-term 105,462  48,714 
Total $ 381,514  $ 373,412 

Accounts Receivable
Accounts receivable consist of amounts due from customers, as well as state and utility rebates due from government agencies and utility companies. Under Customer Agreements, the customers typically assign incentive rebates to the Company.
The opening balance of Accounts receivable, net was $66.4 million as of December 31, 2018. Accounts receivable, net, consists of the following (in thousands):
    September 30, 2020   December 31, 2019
Customer receivables $ 67,849  $ 79,899 
Other receivables 2,276  23 
Rebates receivable 2,845  957 
Allowance for doubtful accounts (2,316) (3,151)
Total $ 70,654  $ 77,728 
Deferred Revenue
When the Company receives consideration, or when such consideration is unconditionally due, from a customer prior to delivering goods or services to the customer under the terms of a Customer Agreement, the Company records deferred revenue. Such deferred revenue consists of amounts for which the criteria for revenue recognition have not yet been met and includes amounts that are collected or assigned from customers, including upfront deposits and prepayments, and rebates. Deferred revenue relating to financing components represents the cumulative excess of interest expense recorded on financing component elements over the related revenue recognized to date and will eventually net to zero by the end of the initial term. Amounts received related to the sales of SRECs which have not yet been delivered to the counterparty are recorded as deferred revenue.
12


The opening balance of deferred revenue was $591.6 million as of December 31, 2018. Deferred revenue consists of the following (in thousands):
  September 30, 2020 December 31, 2019
Under Customer Agreements:
Payments received, net $ 562,996  $ 558,630 
Financing component balance 50,124  44,874 
613,120  603,504 
Under SREC contracts:
Payments received, net 126,806  122,680 
Financing component balance 5,035  3,315 
131,841  125,995 
Total $ 744,961  $ 729,499 

In the three months ended September 30, 2020 and 2019, the Company recognized revenue of $22.5 million and $15.1 million, respectively, and in the nine months ended September 30, 2020 and 2019, the Company recognized revenue of $60.2 million and $44.6 million, respectively, from amounts included in deferred revenue at the beginning of the respective periods. Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized and includes deferred revenue as well as amounts that will be invoiced and recognized as revenue in future periods. Contracted but not yet recognized revenue was approximately $7.4 million as of September 30, 2020, of which the Company expects to recognize approximately 6% over the next 12 months. The annual recognition is not expected to vary significantly over the next 10 years as the vast majority of existing Customer Agreements have at least 10 years remaining, given that the average age of the Company's fleet of residential solar energy systems under Customer Agreements is less than four years due to the Company being formed in 2007 and having experienced significant growth in the last few years. The annual recognition on these existing contracts will gradually decline over the midpoint of the Customer Agreements over the following 10 years as the typical 20- or 25-year initial term expires on individual Customer Agreements.
Fair Value of Financial Instruments
The Company defines fair value as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses valuation approaches to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. The FASB establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:
Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and
Level 3—Inputs that are unobservable, significant to the measurement of the fair value of the assets or liabilities and are supported by little or no market data.

The Company's financial instruments include cash, receivables, accounts payable, accrued expenses, distributions payable to noncontrolling interests, derivatives, contingent consideration, and recourse and non-recourse debt.
Revenue Recognition
The Company recognizes revenue when control of goods or services is transferred to its customers, in an amount that reflects the consideration it expected to be entitled to in exchange for those goods or services.
13


Customer agreements and incentives
Customer agreements and incentives revenue is primarily comprised of revenue from Customer Agreements in which the Company provides continuous access to a functioning solar system and revenue from the sales of SRECs generated by the Company’s solar energy systems to third parties.
The Company begins to recognize revenue on Customer Agreements when permission to operate ("PTO") is given by the local utility company or on the date daily operation commences if utility approval is not required. Revenue recognition does not necessarily follow the receipt of cash. The Company recognizes revenue evenly over the time that it satisfies its performance obligations over the initial term of the Customer Agreements. Customer Agreements typically have an initial term of 20 or 25 years. After the initial contract term, the Company's Customer Agreements typically automatically renew on an annual basis and the rate is initially set at up to a 10% discount to then-prevailing power prices.
SREC revenue arises from the sale of environmental credits generated by solar energy systems and is generally recognized upon delivery of the SRECs to the counterparty. For pass-through financing obligation Funds, the value attributable to the monetization of Commercial ITCs is recognized in the period a solar system is granted PTO - see Note 10, Pass-through Financing Obligations.
In determining the transaction price, the Company adjusts the promised amount of consideration for the effects of the time value of money when the timing of payments provides it with a significant benefit of financing the transfer of goods or services to the customer. In those circumstances, the contract contains a significant financing component. When adjusting the promised amount of consideration for a significant financing component, the Company uses the discount rate that would be reflected in a separate financing transaction between the entity and its customer at contract inception and recognizes the revenue amount on a straight-line basis over the term of the Customer Agreement, and interest expense using the effective interest rate method.
Consideration from customers is considered variable due to the performance guarantee under Customer Agreements and liquidating damage provisions under SREC contracts in the event minimum deliveries are not achieved. Performance guarantees provide a credit to the customer if the system's cumulative production, as measured on various PTO anniversary dates, is below the Company's guarantee of a specified minimum. Revenue is recognized to the extent it is probable that a significant reversal of such revenue will not occur.
The Company capitalizes incremental costs incurred to obtain a contract in Other Assets in the consolidated balance sheets. These amounts are amortized on a straight-line basis over the term of the Customer Agreements, and are included in Sales and marketing in the consolidated statements of operations.
Solar energy systems and product sales
For solar energy systems sold to customers, the Company recognizes revenue when the solar energy system passes inspection by the authority having jurisdiction. The Company’s installation projects are typically completed in less than 12 months.
Product sales consist of solar panels, racking systems, inverters, other solar energy products sold to resellers and customer leads. Product sales revenue is recognized at the time when control is transferred, upon shipment. Customer lead revenue, included in product sales, is recognized at the time the lead is delivered.
Taxes assessed by government authorities that are directly imposed on revenue producing transactions are excluded from solar energy systems and product sales.
Cost of Revenue
Customer agreements and incentives
Cost of revenue for customer agreements and incentives is primarily comprised of (1) the depreciation of the cost of the solar energy systems, as reduced by amortization of deferred grants, (2) solar energy system operations, monitoring and maintenance costs including associated personnel costs, and (3) allocated corporate overhead costs.
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Solar energy systems and product sales
Cost of revenue for solar energy systems and non-lead generation product sales consist of direct and indirect material and labor costs for solar energy systems installations and product sales. Also included are engineering and design costs, estimated warranty costs, freight costs, allocated corporate overhead costs, vehicle depreciation costs and personnel costs associated with supply chain, logistics, operations management, safety and quality control. Cost of revenue for lead generations consists of costs related to direct-response advertising activities associated with generating customer leads.
Recently Issued and Adopted Accounting Standards
Accounting standards adopted January 1, 2019:
    
In February 2018, the FASB issued Accounting Standards Update ("ASU") No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows companies to reclassify stranded tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. The Company adopted ASU No. 2018-02 effective January 1, 2019, which resulted in an adjustment of $0.7 million for the reclassification, as reflected in its consolidated statement of redeemable noncontrolling interests and equity. The Company uses the aggregate portfolio approach when reclassifying stranded tax effects from accumulated other comprehensive income.
Accounting standards adopted January 1, 2020:
In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which replaces the current incurred loss impairment methodology with a current expected credit losses model. The amendment applies to entities that hold financial assets and net investment in leases that are not accounted for at fair value through net income as well as loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables and any other financial assets not excluded from the scope that have the contractual right to receive cash. The Company adopted ASU No. 2016-13 effective January 1, 2020, using a modified retrospective transition method, which resulted in a cumulative-effect adjustment of $1.2 million for the establishment of a credit loss allowance for unbilled receivables related to Customer Agreements, as reflected in its consolidated statement of redeemable noncontrolling interests and stockholders' equity.
    
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements as part of its disclosure framework project. Under this amendment, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. However, for Level 3 fair value measurements, disclosures around the range and weighted average used to develop significant unobservable inputs will be required. The Company adopted ASU No. 2018-13 effective January 1, 2020, and there was no impact to its consolidated financial statements.
    
In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Topic 350, Intangibles—Goodwill and Other, to determine which implementation costs to capitalize as assets or expense as incurred. This ASU is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019, and can be applied either prospectively to implementation costs incurred after the date of adoption or retrospectively to all arrangements. The Company prospectively adopted ASU No. 2018-15 effective January 1, 2020, and there was no adoption date impact to its consolidated financial statements.
In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810), Targeted Improvements to Related Party Guidance for Variable Interest Entities, which aligns the evaluation of decision-making fees under the variable interest entity guidance. Under this new guidance, in order to determine whether decision-making fees represent a variable interest, an entity considers indirect interests held through related parties under common control on a proportionate basis. This ASU is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019, and must be applied retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The Company adopted ASU No. 2018-17 effective January 1, 2020, and there was no impact to its consolidated financial statements.
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Accounting standards to be adopted:
In November 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740), which simplifies the accounting for income taxes, primarily by eliminating certain exceptions to the guidance in ASC 740. This ASU is effective for fiscal periods beginning after December 15, 2020. The Company is currently evaluating this guidance and the impact it may have on the Company’s consolidated financial statements.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or other reference rates that are expected to be discontinued because of reference rate reform. This ASU is available for adoption as of the beginning of the interim period that includes March 12, 2020 through December 31, 2022, as contract modifications or hedging relationships entered into or evaluated after December 31, 2022 are excluded unless an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. For the Company’s cash flow hedges in which the designated hedged risk is LIBOR or another rate that is expected to be discontinued, the Company has adopted the portion of the guidance that allows it to assert that it remains probable that the hedged forecasted transaction will occur. The Company is currently evaluating the remainder of this guidance and the impact it may have on the Company's consolidated financial statements.
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40), simplifies the accounting for convertible instruments and the application of the derivatives scope exception for contracts in an entity’s own equity. This ASU is effective for fiscal periods beginning after December 15, 2021. The Company is currently evaluating this guidance and the impact it may have on the Company’s consolidated financial statements.

Note 3. Fair Value Measurement
At September 30, 2020 and December 31, 2019, the carrying value of receivables, accounts payable, accrued expenses and distributions payable to noncontrolling interests approximates fair value due to their short-term nature and falls under the Level 2 hierarchy. The carrying values and fair values of debt instruments are as follows (in thousands):
September 30, 2020 December 31, 2019
Carrying Value Fair Value Carrying Value Fair Value
Bank line of credit $ 224,910  $ 224,910  $ 239,485  $ 239,485 
Senior debt 812,368  813,561  625,519  626,023 
Subordinated debt 594,852  621,211  513,938  524,581 
Securitization debt 852,746  976,188  875,998  931,320 
Total $ 2,484,876  $ 2,635,870  $ 2,254,940  $ 2,321,409 
At September 30, 2020 and December 31, 2019, the fair value of the Company’s lines of credit, and certain senior, subordinated and SREC loans approximate their carrying values because their interest rates are variable rates that approximate rates currently available to the Company. At September 30, 2020 and December 31, 2019, the fair value of the Company’s other debt instruments are based on rates currently offered for debt with similar maturities and terms. The Company’s fair value of the debt instruments fell under the Level 2 hierarchy. These valuation approaches involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market.
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At September 30, 2020 and December 31, 2019, financial instruments measured at fair value on a recurring basis, based upon the fair value hierarchy, are as follows (in thousands):
September 30, 2020
Level 1 Level 2 Level 3 Total
Derivative assets:
Interest rate swaps $ —  $ 160  $ —  $ 160 
Total $ —  $ 160  $ —  $ 160 
Derivative liabilities:
Interest rate swaps $ —  $ 142,874  $ —  $ 142,874 
Total $ —  $ 142,874  $ —  $ 142,874 
Contingent consideration:        
Contingent consideration $ —  $ —  $ 6,088  $ 6,088 
Total $ —  $ —  $ 6,088  $ 6,088 

December 31, 2019
Level 1 Level 2 Level 3 Total
Derivative assets:
Interest rate swaps $ —  $ 683  $ —  $ 683 
Total $ —  $ 683  $ —  $ 683 
Derivative liabilities:
Interest rate swaps $ —  $ 64,361  $ —  $ 64,361 
Total $ —  $ 64,361  $ —  $ 64,361 
Contingent consideration:
Contingent consideration: $ —  $ —  $ 11,809  $ 11,809 
Total $ —  $ —  $ 11,809  $ 11,809 
    
The above balances are recorded in other liabilities in the consolidated balance sheets, except for $11.9 million as of September 30, 2020, which is recorded in accrued expenses and other liabilities.
The Company determines the fair value of its interest rate swaps using a discounted cash flow model that incorporates an assessment of the risk of non-performance by the interest rate swap counterparty and an evaluation of the Company’s credit risk in valuing derivative instruments. The valuation model uses various inputs including contractual terms, interest rate curves, credit spreads and measures of volatility.
    The Company recorded contingent consideration in connection with a business combination that occurred in July 2019, which is dependent on the achievement of specified deployment milestones associated with the number of solar energy systems installed through 2022. The Company determined the fair value of the contingent consideration using a probability-weighted expected return methodology that considers the timing and probabilities of achieving these milestones and uses discount rates that reflect the appropriate cost of capital. Contingent consideration was valued with Level 3 inputs. The Company reassesses the valuation assumptions each reporting period, with any changes in the fair value accounted for in the consolidated statements of operations.
The change in the activity of Level 3 contingent consideration balance is as follows (in thousands):

Balance at December 31, 2019
$ 11,809 
Change in fair value recognized in earnings within sales and marketing expense (5,041)
Payable for solar systems that have met deployment milestones (680)
Balance at September 30, 2020
$ 6,088 


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Note 4. Inventories
Inventories consist of the following (in thousands):
September 30, 2020 December 31, 2019
Raw materials $ 164,346  $ 239,449 
Work-in-process 13,621  21,122 
Total $ 177,967  $ 260,571 

The Internal Revenue Service (“IRS”) provided taxpayers a safe harbor opportunity to retain access to the pre-2020 30% tax credit amount through specific rules released in Notice 2018-59. The Company has sought to avail itself of the safe harbor in order to retain the 30% Commercial ITC that was available in 2019 with respect to approximately 500 MW of projects by incurring certain costs and taking title to equipment in 2019. As of September 30, 2020, there was approximately $64.6 million related to the safe harbor program within raw materials.


Note 5. Solar Energy Systems, net
Solar energy systems, net consists of the following (in thousands):
September 30, 2020 December 31, 2019
Solar energy system equipment costs $ 5,027,861  $ 4,510,677 
Inverters 531,144  471,471 
Total solar energy systems 5,559,005  4,982,148 
Accumulated depreciation and amortization (833,928) (692,218)
Construction-in-progress 254,245  202,685 
Total solar energy systems, net $ 4,979,322  $ 4,492,615 
All solar energy systems, including construction-in-progress, have been leased to or are subject to signed Customer Agreements with customers. The Company recorded depreciation expense related to solar energy systems of $49.8 million and $42.8 million for the three months ended September 30, 2020 and 2019, respectively, and $144.2 million and $123.1 million for the nine months ended September 30, 2020 and 2019, respectively. The depreciation expense was reduced by the amortization of deferred grants of $2.0 million and $2.1 million for three months ended September 30, 2020 and 2019, respectively, and $6.1 million and $6.1 million for the nine months ended September 30, 2020 and 2019, respectively.

Note 6. Other Assets
Other assets consist of the following (in thousands): 
September 30, 2020 December 31, 2019
Costs to obtain contracts - customer agreements $ 310,410  $ 268,964 
Costs to obtain contracts - incentives 2,481  2,481 
Accumulated amortization of costs to obtain contracts (47,484) (36,925)
Unbilled receivables, net 136,670  105,574 
Allowance for credit loss on unbilled receivables (1,586) (1,228)
Operating lease right-of-use assets 28,783  34,678 
Equity method investment 65,356  — 
Other assets 31,609  34,859 
Total $ 526,239  $ 408,403 
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The Company recorded amortization of costs to obtain contracts of $3.7 million and $3.2 million for the three months ended September 30, 2020 and 2019, respectively, and $10.7 million and $8.7 million for the nine months ended September 30, 2020 and 2019, respectively, in Sales and marketing in the consolidated statements of operations.

The majority of unbilled receivables arise from fixed price escalators included in the Company's long-term Customer Agreements.  The escalator is included in calculating the total estimated transaction value for an individual Customer Agreement.  The total estimated transaction value is then recognized over the term of the Customer Agreement.  The amount of unbilled receivables increases while cumulative billings for an individual Customer Agreement are less than the cumulative revenue recognized for that Customer Agreement.  Conversely, the amount of unbilled receivables decreases when the actual cumulative billings become higher than the cumulative revenue recognized. At the end of the initial term of a Customer Agreement, the cumulative amounts recognized as revenue and billed to date are the same; therefore the unbilled receivable balance for an individual Customer Agreement will be zero. As a result of the adoption of ASU No. 2016-13, an allowance for credit loss on unbilled receivables was established as of January 1, 2020. The Company applies an estimated loss-rate in order to determine the current expected credit loss for unbilled receivables. The estimated loss-rate is determined by analyzing historical credit losses, residential first and second mortgage foreclosures and consumers' utility default rates, as well as current economic conditions. The Company reviews individual customer collection status of electricity billings to determine whether the unbilled receivables for an individual customer should be written off, including the possibility of a service transfer to a potential new homeowner.

Note 7. Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consist of the following (in thousands): 
September 30, 2020 December 31, 2019
Accrued employee compensation $ 46,455  $ 38,750 
Operating lease obligations 10,774  9,790 
Accrued interest 11,945  13,048 
Accrued professional fees 20,795  4,732 
Other accrued expenses 106,475  82,177 
Total $ 196,444  $ 148,497 
    
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Note 8. Indebtedness
As of September 30, 2020, debt consisted of the following (in thousands, except percentages):
Carrying Values, net of debt discount
Unused Borrowing Capacity(2)
Interest
Rate (1)
Maturity Date
Current Long Term Total
Recourse debt:
Bank line of credit $ —  $ 224,910  $ 224,910  $ 10,000 
3.43% - 3.60%
April 2022
Total recourse debt —  224,910  224,910  10,000 
Non-recourse debt:
Senior 29,254  783,114  812,368  1,229 
2.39% - 5.61%
April 2022 - August 2027
Subordinated 64,974  529,878  594,852  705 
6.00% - 10.50%
March 2023 - November 2030
Securitization Class A 28,079  815,846  843,925  — 
3.61% - 5.31%
July 2024 - February 2055
Securitization Class B 505  8,316  8,821  —  5.38% July 2024
Total non-recourse debt
122,812  2,137,154  2,259,966  1,934 
Total debt $ 122,812  $ 2,362,064  $ 2,484,876  $ 11,934 
(1)     Reflects contractual, unhedged rates. See Note 9, Derivatives for hedge rates.
(2)     Represents the additional amount the Company could borrow, if any, based on the state of its existing assets as of September 30, 2020. For a description of the amount of capital commitments the Company can draw from as it constructs new assets, please see Item 2. Management’s Discussion and Analysis of Financial Conditions and Result of Operations, Debt and Financing Fund Commitments.
As of December 31, 2019, debt consisted of the following (in thousands, except percentages):
Carrying Values, net of debt discount Unused
Borrowing
Capacity
Interest
Rate (1)
Maturity Date
Current Long Term Total
Recourse debt:
Bank line of credit $ —  $ 239,485  $ 239,485  $ — 
5.09% - 5.38%
April 2022
Total recourse debt —  239,485  239,485  — 
Non-recourse debt:
Senior 8,020  617,499  625,519  14,639 
3.94% - 5.61%
April 2022 - July 2027
Subordinated —  513,938  513,938  — 
6.93% - 10.80%
March 2023 - July 2030
Securitization Class A 26,838  839,981  866,819  — 
3.61% - 5.31%
July 2024 - February 2055
Securitization Class B 490  8,689  9,179  —  5.38% July 2024
Total non-recourse debt
35,348  1,980,107  2,015,455  14,639 
Total debt $ 35,348  $ 2,219,592  $ 2,254,940  $ 14,639 
(1)     Reflects contractual, unhedged rates. See Note 9, Derivatives for hedge rates.

Bank Line of Credit
The Company has outstanding borrowings under a syndicated working capital facility with banks for a total commitment of up to $250.0 million. The working capital facility is secured by substantially all of the unencumbered assets of the Company, as well as ownership interests in certain subsidiaries of the Company. Loans under the facility bear interest at LIBOR +3.25% per annum or the Base Rate +2.25% per annum. The Base Rate is the highest of the Federal Funds Rate +0.50%, the Prime Rate, or LIBOR +1.00%.
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Under the terms of the working capital facility, the Company is required to meet various restrictive covenants, such as the completion and presentation of audited consolidated financial statements, maintaining a minimum unencumbered liquidity of at least $25.0 million at the end of each calendar month, maintaining quarter end liquidity of at least $35.0 million, and maintaining a minimum interest coverage ratio of 3.50 or greater, measured quarterly as of the last day of each quarter. The Company was in compliance with all debt covenants as of September 30, 2020. As of September 30, 2020, the balance under this facility was $224.9 million with a maturity date in April 2022.
Senior and Subordinated Debt Facilities
Each of the Company's senior and subordinated debt facilities contains customary covenants, including the requirement to maintain certain financial measurements and provide lender reporting. Each of the senior and subordinated debt facilities also contain certain provisions in the event of default that entitle lenders to take certain actions including acceleration of amounts due under the facilities and acquisition of membership interests and assets that are pledged to the lenders under the terms of the senior and subordinated debt facilities. The facilities are non-recourse to the Company and are secured by net cash flows from Customer Agreements or inventories less certain operating, maintenance and other expenses that are available to the borrower after distributions to tax equity investors, where applicable. Under the terms of these facilities, the Company's subsidiaries pay interest and principal from the net cash flows available to the subsidiaries. The Company was in compliance with all debt covenants as of September 30, 2020.
As of September 30, 2020, certain subsidiaries of the Company had an outstanding balance of $352.5 million on secured credit facilities that were syndicated with various lenders due in October 2024 and August 2029. The credit facilities totaled $375.8 million and consisted of $363.3 million in term loans, and a $12.5 million revolving debt service reserve letter of credit facility. Term Loan A ("TLA") is a senior delayed draw term loan that bears interest at LIBOR +2.125% per annum for LIBOR loans or the Base Rate +1.125% per annum on Base Rate loans. Term Loan B ("TLB") is subordinated debt that bears interest at 9.25% per annum.
As of September 30, 2020, certain subsidiaries of the Company had an outstanding balance of $177.5 million on senior secured credit facilities that were syndicated with various lenders due in April 2024. These facilities are subject to the National Grid project equity transaction. The credit facilities totaled $202.0 million and consisted of a $195.0 million senior delayed draw term loan facility and a $7.0 million revolving debt service reserve letter of credit facility. Loans under the facility bear interest at LIBOR +2.25% per annum, for the initial four-year period for LIBOR loans or the Base Rate +1.25% per annum for Base Rate Loans. The Base Rate is the highest of the Federal Funds Rate +0.50%, the Prime Rate, or LIBOR +1.00%. The facilities are non-recourse to the Company and are secured by net cash flows from Customer Agreements and SRECs, less certain operating, maintenance and other expenses that are available to the borrower after distributions to tax equity investors. Prepayments are permitted under the delayed draw term loan facility.
As of September 30, 2020, certain subsidiaries of the Company had an outstanding balance of $239.2 million on secured credit facilities agreements, as amended, with a syndicate of banks due in March 2023. The facilities totaled $595.0 million and consisted of a revolving aggregation facility (“Aggregation Facility”), a term loan ("Term Loan") and a revolving debt service reserve letter of credit facility. Senior loans under the Aggregation Facility bear interest at LIBOR +2.50% per annum for the initial three-year revolving availability period, stepping up to LIBOR +2.75% per annum in the following two-year period. The subordinated Term Loan bears interest at LIBOR +5.00% per annum for the first three-year period, stepping up to LIBOR +6.50% per annum thereafter. Term Loan prepayment penalties range from 0% - 1% depending on the timing of prepayments.
As of September 30, 2020, a subsidiary of the Company had an outstanding balance of $14.0 million on a term loan due in April 2022. The loan is secured by the assets and related net cash flow of this subsidiary and is non-recourse to the Company's other assets. Loans under this facility bear interest at 4.50% per annum.
As of September 30, 2020, a subsidiary of the Company had an outstanding balance of $11.5 million on a secured, non-recourse loan agreement due in September 2022. The loan will be repaid through cash flows from a pass-through financing obligation arrangement previously entered into by the Company. The loan agreement contains customary covenants including the requirement to maintain certain financial measurements and provide lender reporting. The loan also contains certain provisions in the event of default that entitle the lender to take certain actions including acceleration of amounts due under the loan. Loans under this facility bear interest at LIBOR +2.25% per annum.
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As of September 30, 2020, a subsidiary of the Company had an outstanding balance of $130.9 million on a term loan due in January 2030. The loan is secured by the assets and related net cash flow of this subsidiary and is non-recourse to the Company’s other assets. Loans under this facility bear interest at 10.50% per annum.
As of September 30, 2020, a subsidiary of the Company had an outstanding balance of $64.6 million on a term loan due in July 2030. The loan is secured by the assets and related net cash flow of this subsidiary and is non-recourse to the Company’s other assets. Loans under this facility bear interest between 2.00% - 3.25% plus 6.75% per annum.
As of September 30, 2020, a subsidiary of the Company had an outstanding balance of $8.9 million on a term loan due in July 2027. The loan is secured by the assets and related net cash flow of this subsidiary and is non-recourse to the Company’s other assets. Loans under this facility bear interest at 5.61% per annum.
As of September 30, 2020, a subsidiary of the Company had an outstanding balance of $131.3 million on a term loan due in November 2025. The loan is secured by the assets and related net cash flow of this subsidiary and is non-recourse to the Company’s other assets. Loans under this facility bear interest at LIBOR (at a 2.00% floor) + 6.75% per annum.
As of September 30, 2020, certain subsidiaries of the Company had an outstanding balance of $54.0 million on secured credit facilities agreements with banks due in March 2024. The facilities totaled $134.0 million and consisted of two revolving aggregation facilities (“Aggregation Facilities”) and a revolving debt service reserve letter of credit facility. The senior loan under the Aggregation Facilities bear interest at LIBOR +3.00%. The subordinated loan under the Aggregation Facilities bears interest at LIBOR +9.00% per annum. These debt facilities are related to the Company's participation in the IRS's safe harbor program to retain access to the 30% Commercial ITC that was available in 2019.
As of September 30, 2020, certain subsidiaries of the Company had an outstanding balance of $222.7 million on secured credit facilities that were syndicated with various lenders due in August 2027 and November 2030. The credit facilities totaled $350.0 million and consisted of $340.0 million in term loans, and a $10.0 million revolving debt service reserve letter of credit facility. Senior loans under this facility bear interest at LIBOR +2.75% per annum through August 2024, stepping up to LIBOR + 3.00% thereafter for LIBOR loans or the Base Rate + 1.75% through August 2024, stepping up to Base Rate + 2.00% thereafter for Base Rate loans. Subordinated debt under this facility bears interest at 10.00% per annum.

Securitization Loans
Each of the Company's securitized loans contains customary covenants including the requirement to provide reporting to the indenture trustee and ratings agencies. Each of the securitized loans also contain certain provisions in the event of default which entitle the indenture trustee to take certain actions including acceleration of amounts due under the facilities and acquisition of membership interests and assets that are pledged to the lenders under the terms of the securitized loans. The facilities are non-recourse to the Company and are secured by net cash flows from Customer Agreements less certain operating, maintenance and other expenses that are available to the borrower after distributions to tax equity investors, where applicable. Under the terms of these loans, the Company's subsidiaries pay interest and principal from the net cash flows available to the subsidiaries. The Company was in compliance with all debt covenants as of September 30, 2020.
As of September 30, 2020, a subsidiary of the Company had an outstanding balance of $79.8 million on solar asset-backed notes secured by associated customer contracts (“Solar Assets”) held by a special purpose entity (“Issuer”). As of September 30, 2020 and December 31, 2019, these Solar Assets had a carrying value of $151.5 million and $157.6 million, respectively, and are included under solar energy systems, net, in the consolidated balance sheets. The notes were issued at a discount of 0.08%.
As of September 30, 2020, a subsidiary of the Company had an outstanding balance of $296.6 million on solar asset-backed notes secured by net cash flows from Customer Agreements less certain operating, maintenance and other expenses that are available to the issuer after distributions to tax equity investors. The notes were issued at a discount of 1.47%. The assets and cash flows generated by the Solar Assets are not available to the other creditors of the Company, and the creditors of the Issuer, including the Note holders, have no recourse to the Company's other assets.
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As of September 30, 2020, a subsidiary of the Company had an outstanding balance of $177.2 million on solar asset-backed notes secured by net cash flows from Customer Agreements less certain operating, maintenance and other expenses that are available to the issuer. The notes were issued at a discount of 0.01%.
As of September 30, 2020, a subsidiary of the Company had an outstanding balance of $299.2 million on solar asset-backed notes secured by net cash flows from Customer Agreements less certain operating, maintenance and other expenses that are available to the issuer. The notes were issued at a discount of 0.05%.

Note 9. Derivatives
Interest Rate Swaps
The Company uses interest rate swaps to hedge variable interest payments due on certain of its term loans and aggregation facility. These swaps allow the Company to incur fixed interest rates on these loans and receive payments based on variable interest rates with the swap counterparty based on the one- or three-month LIBOR on the notional amounts over the life of the swaps.
The interest rate swaps have been designated as cash flow hedges. The credit risk adjustment associated with these swaps is the risk of non-performance by the counterparties to the contracts. In the nine months ended September 30, 2020, the majority of hedge relationships on the Company’s interest rate swaps have been assessed as highly effective as the critical terms of the interest rate swaps match the critical terms of the underlying forecasted hedged transactions. Accordingly, changes in the fair value of these derivatives are recorded as a component of accumulated other comprehensive income, net of income taxes. Changes in the fair value of these derivatives are subsequently reclassified into earnings, and are included in interest expense, net in the Company’s statements of operations, in the period that the hedged forecasted transactions affects earnings. To the extent that the hedge relationships are not effective, changes in the fair value of these derivatives are recorded in other expenses, net in the Company's statements of operations on a prospective basis.
All amounts in Accumulated other comprehensive income (loss) ("AOCI") in the consolidated statements of redeemable noncontrolling interests and equity relate to derivatives, refer to the consolidated statements of comprehensive (loss) income. The net (loss) gain on derivatives includes the tax effect of $1.6 million and $9.1 million for the three months ended September 30, 2020 and 2019, respectively, and $25.7 million and $25.0 million for the nine months ended September 30, 2020 and 2019, respectively.
During the next 12 months, the Company expects to reclassify $17.8 million of net losses on derivative instruments from accumulated other comprehensive income to earnings. There were no undesignated derivative instruments recorded by the Company as of September 30, 2020.
The Company’s master netting and other similar arrangements allow net settlements under certain conditions. When those conditions are met, the Company presents derivatives at net fair value. As of September 30, 2020, the information related to these offsetting arrangements were as follows (in thousands):
Instrument Description Gross Amounts of Recognized Assets / Liabilities Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Assets / Liabilities Included in the Consolidated Balance Sheet
Assets:
Derivatives $ 160  $ (160) $ — 
Liabilities:
Derivatives (142,874) 160  (142,714)
Total $ (142,714) $ —  $ (142,714)
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As of December 31, 2019, the information related to these offsetting arrangements were as follows (in thousands):
Instrument Description Gross Amounts of Recognized Assets / Liabilities Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Assets / Liabilities Included in the Consolidated Balance Sheet
Assets:
Derivatives $ 683  $ (615) $ 68 
Liabilities:
Derivatives (64,361) 615  (63,746)
Total $ (63,678) $ —  $ (63,678)
At September 30, 2020, the Company had the following derivative instruments (dollars in thousands):
Type Quantity Effective Dates Maturity Dates Hedge Interest Rates Notional Amount Fair Market Value
Interest rate swap 1/31/2020 4/30/2021
2.80%
$ 100,000  $ (1,488)
Interest rate swap
4/29/2016
8/31/2022
1.27% - 1.29%
10,541  (222)
Interest rate swaps
7/31/2017 - 1/31/2018
4/30/2024 - 10/20/2024
2.16% - 2.39%
276,982  (20,212)
Interest rate swaps 4/30/2021
10/30/2026 - 10/31/2026
2.89% - 3.08%
102,720  (14,865)
Interest rate swaps
10/31/2019 - 10/30/2020
4/30/2027 - 8/13/2027
0.57% - 1.89%
156,156  (2,132)
Interest rate swaps
10/31/2019
10/31/2031
1.44% - 1.50%
22,696  (1,332)
Interest rate swaps
1/31/2018 - 7/31/2027
4/30/2034 - 10/31/2034
2.62% - 3.33%
356,652  (52,689)
Interest rate swaps
7/31/2017 - 10/18/2024
4/30/2035 - 10/31/2035
2.56% - 2.95%
275,317  (33,299)
Interest rate swap
10/18/2024
1/31/2036
2.95%
14,656  (1,686)
Interest rate swaps
10/30/2026 - 10/31/2026
1/31/2038
3.01% - 3.16%
101,135  (14,198)
Interest rate swaps
10/30/2020 - 8/13/2027
1/31/2043
1.02% - 1.43%
122,030  (591)
Total $ 1,538,885  $ (142,714)

Note 10. Pass-through Financing Obligations
The Company's pass-through financing obligations ("financing obligations") arise when the Company leases solar energy systems to Fund investors who are considered commercial customers under a master lease agreement, and these investors in turn are assigned the Customer Agreements with customers. The Company receives all of the value attributable to the accelerated tax depreciation and some or all of the value attributable to the other incentives. Given the assignment of operating cash flows, these arrangements are accounted for as financing obligations. The Company also sells the rights and related value attributable to the Commercial ITC to these investors.
Under these financing obligation arrangements, wholly owned subsidiaries of the Company finance the cost of solar energy systems with investors for an initial term of typically 20 or 22 years. The solar energy systems are subject to Customer Agreements with an initial term of typically 20 or 25 years that automatically renew on an annual basis. These solar energy systems are reported under the line item solar energy systems, net in the consolidated balance sheets. As of September 30, 2020 and December 31, 2019, the cost of the solar energy systems placed in service under the financing obligation arrangements was $656.3 million and $657.9 million, respectively. The accumulated depreciation related to these assets as of September 30, 2020 and December 31, 2019 was $113.6 million and $95.9 million, respectively.
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The investors make a series of large up-front payments and, in certain cases, subsequent smaller quarterly payments (lease payments) to the subsidiaries of the Company. The Company accounts for the payments received from the investors under the financing obligation arrangements as borrowings by recording the proceeds received as financing obligations on its consolidated balance sheets, and cash provided by financing activities in its consolidated statement of cash flows. These financing obligations are reduced over a period of approximately 22 years by customer payments under the Customer Agreements, U.S. Treasury grants (where applicable) and proceeds from the contracted resale of SRECs as they are received by the investor. In addition, funds paid for the Commercial ITC value upfront are initially recorded as a refund liability and recognized as revenue as the associated solar energy system reaches PTO. The Commercial ITC value is reflected in the cash provided by operations on the consolidated statement of cash flows. The Company accounts for the Customer Agreements and any related U.S. Treasury grants, as well as the resale of SRECs, consistent with the Company’s revenue recognition accounting policies as described in Note 2, Summary of Significant Accounting Policies.
Interest is calculated on the financing obligations using the effective interest rate method. The effective interest rate, which is adjusted on a prospective basis, is the interest rate that equates the present value of the estimated cash amounts to be received by the investor over the lease term with the present value of the cash amounts paid by the investor to the Company, adjusted for amounts received by the investor. The financing obligations are nonrecourse once the associated assets have been placed in service and all the contractual arrangements have been assigned to the investor.
Under the majority of the financing obligations, the investor has a right to extend its right to receive cash flows from the customers beyond the initial term in certain circumstances. Depending on the arrangement, the Company has the option to settle the outstanding financing obligation on the ninth or eleventh anniversary of the Fund inception at a price equal to the higher of (a) the fair value of future remaining cash flows or (b) the amount that would result in the investor earning their targeted return. In several of these financing obligations, the investor has an option to require repayment of the entire outstanding balance on the tenth anniversary of the Fund inception at a price equal to the fair value of the future remaining cash flows.
Under all financing obligations, the Company is responsible for services such as warranty support, accounting, lease servicing and performance reporting to customers. As part of the warranty and performance guarantee with the customers, the Company guarantees certain specified minimum annual solar energy production output for the solar energy systems leased to the customers, which the Company accounts for as disclosed in Note 2, Summary of Significant Accounting Policies.

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Note 11. VIE Arrangements
The Company consolidated various VIEs at September 30, 2020 and December 31, 2019. The carrying amounts and classification of the VIEs’ assets and liabilities included in the consolidated balance sheets are as follows (in thousands):
September 30, 2020 December 31, 2019
Assets
Current assets
Cash $ 155,201  $ 133,362 
Restricted cash 14,495  2,746 
Accounts receivable, net 27,471  21,956 
Inventories 51,894  15,721 
Prepaid expenses and other current assets 1,583  554 
Total current assets 250,644  174,339 
Solar energy systems, net 3,773,324  3,259,712 
Other assets 112,079  87,151 
Total assets $ 4,136,047  $ 3,521,202 
Liabilities
Current liabilities
Accounts payable $ 25,535  $ 11,531 
Distributions payable to noncontrolling interests and redeemable noncontrolling interests
17,776  16,012 
Accrued expenses and other liabilities 15,053  10,740 
Deferred revenue, current portion 41,435  38,265 
Deferred grants, current portion 1,011  1,011 
Non-recourse debt, current portion 54,358  4,901 
Total current liabilities 155,168  82,460 
Deferred revenue, net of current portion 473,129  443,873 
Deferred grants, net of current portion 26,220  27,023 
Non-recourse debt, net of current portion 186,173  201,575 
Other liabilities 35,176  19,633 
Total liabilities $ 875,866  $ 774,564 
The Company holds a variable interest in an entity that provides the noncontrolling interest with a right to terminate the leasehold interests in all of the leased projects on the tenth anniversary of the effective date of the master lease. In this circumstance, the Company would be required to pay the noncontrolling interest an amount equal to the fair market value, as defined in the governing agreement of all leased projects as of that date.
The Company holds certain variable interests in nonconsolidated VIEs established as a result of six pass-through Fund arrangements as further explained in Note 10, Pass-through Financing Obligations. The Company does not have material exposure to losses as a result of its involvement with the VIEs in excess of the amount of the pass-through financing obligation recorded in the Company’s consolidated financial statements. The Company is not considered the primary beneficiary of these VIEs.

Note 12. Redeemable Noncontrolling Interests and Equity
During certain specified periods of time (the “Early Exit Periods”), noncontrolling interests in certain funding arrangements have the right to put all of their membership interests to the Company (the “Put Provisions”). During a specific period of time (the “Call Periods”), the Company has the right to call all membership units of the related redeemable noncontrolling interests.
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The carrying value of redeemable noncontrolling interests was greater than the redemption value except for ten and nine Funds at September 30, 2020 and December 31, 2019, respectively, where the carrying value has been adjusted to the redemption value.


Note 13. Stock-Based Compensation
Stock Options
The following table summarizes the activity for all stock options under all of the Company’s equity incentive plans for the nine months ended September 30, 2020 (shares and aggregate intrinsic value in thousands):
Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value
Outstanding at December 31, 2019 10,784  $ 7.38  6.52 $ 71,745 
Granted 1,556  12.85 
Exercised (4,187) 6.95 
Cancelled (382) 9.16 
Outstanding at September 30, 2020 7,771  $ 8.61  6.74 $ 532,004 
Options vested and exercisable at September 30, 2020 4,545  $ 6.33  5.41 $ 321,566 
Restricted Stock Units
The following table summarizes the activity for all restricted stock units (“RSUs”) under all of the Company’s equity incentive plans for the nine months ended September 30, 2020 (shares in thousands):
Number of Awards Weighted Average Grant Date Fair Value
Unvested balance at December 31, 2019 3,943  $ 11.42 
Granted 3,304  14.10 
Issued (2,509) 11.81 
Cancelled / forfeited (528) 11.01 
Unvested balance at September 30, 2020 4,210  $ 13.35 
Employee Stock Purchase Plan
Under the Company's 2015 Employee Stock Purchase Plan ("ESPP"), eligible employees are offered shares bi-annually through a 24-month offering period that encompasses four six-month purchase periods. Each purchase period begins on the first trading day on or after May 15 and November 15 of each year. Employees may purchase a limited number of shares of the Company’s common stock via regular payroll deductions at a discount of 15% of the lower of the fair market value of the Company’s common stock on the first trading date of each offering period or on the exercise date. Employees may deduct up to 15% of payroll, with a cap of $25,000 of fair market value of shares in any calendar year and 10,000 shares per employee per purchase period.
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Stock-Based Compensation Expense
The Company recognized stock-based compensation expense, including ESPP expenses, in the consolidated statements of operations as follows (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Cost of customer agreements and incentives $ 922  $ 594  $ 3,798  $ 1,849 
Cost of solar energy systems and product sales
205  209  1,148  566 
Sales and marketing 1,890  1,352  7,189  3,782 
Research and development 317  404  1,858  1,149 
General and administration 4,883  4,295  23,551  12,074 
Total $ 8,217  $ 6,854  $ 37,544  $ 19,420 



Note 14. Income Taxes    
The income tax benefit (expense) rate for the three months ended September 30, 2020 and 2019 was 24.5% and (4.8)%, respectively, and for the nine months ended September 30, 2020 and 2019 was 8.5% and 0.1%, respectively. The differences between the actual consolidated effective income tax rate and the U.S. federal statutory rate were primarily attributable to the allocation of losses on noncontrolling interests and an increase in valuation allowance and stock-based compensation.
The Company sells solar energy systems to investment Funds. As the investment Funds are consolidated by the Company, the gain on the sale of the assets has been eliminated in the consolidated financial statements, however gains on sale are recognized for tax purposes.
CARES Act
On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) into law. The CARES Act is a relief package that includes changes to the U.S. tax code including but not limited to, (1) modifications to the calculation of interest deductibility in 2019 and 2020, (2) changes to rules related to the uses and limitations of net operating loss carryforwards created from 2018 to 2020, and (3) technical corrections for qualified improvement property. The Company does not anticipate the CARES Act will have a material impact on income tax expense for 2020.
Uncertain Tax Positions
     
As of September 30, 2020 and December 31, 2019, the Company had no uncertain tax positions.
Tax Holidays
     
The Company received approval from a U.S. territory for a reduced income tax rate on February 3, 2020. The reduced income tax rate is retroactive to 2018 and is effective through December 31, 2043. The benefit from the reduced income tax rate of $1.3 million for the years ended December 31, 2019 and 2018 was included in income tax expense for the quarter ended September 30, 2020. The benefit from the reduced income tax rate for the quarter ended September 30, 2020 was $0.5 million.

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Note 15. Commitments and Contingencies
Letters of Credit
As of September 30, 2020 and December 31, 2019, the Company had $25.9 million and $20.1 million, respectively, of unused letters of credit outstanding, which carry fees of 2.13% - 3.25% per annum and 1.25% - 3.25% per annum, respectively.
Operating and Finance Leases
The Company leases real estate under non-cancellable-operating leases and equipment under finance leases.
The components of lease expense were as follows (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Finance lease cost:
Amortization of right-of-use assets $ 2,151  $ 3,647  $ 7,087  $ 10,879 
Interest on lease liabilities 173  322  597  994 
Operating lease cost 3,195  3,528  9,353  10,027 
Short-term lease cost 113  118  352  1,263 
Variable lease cost 1,176  854  2,957  2,750 
Sublease income (202) (197) (574) (546)
Total lease cost $ 6,606  $ 8,272  $ 19,772  $ 25,367 
Other information related to leases was as follows (dollars in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases $ 3,430  $ 3,029  $ 8,929  $ 8,564 
Operating cash flows from finance leases 161  291  578  732 
Financing cash flows from finance leases 2,217  4,004  7,763  10,449 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases —  3,136  32  23,286 
Finance leases 879  4,453  1,092  17,390 
Weighted average remaining lease term (years):
Operating leases 4.88 5.26 4.88 5.26
Finance leases 2.33 3.08 2.33 3.08
Weighted average discount rate:
Operating leases 5.5  % 5.2  % 5.5  % 5.2  %
Finance leases 4.1  % 4.2  % 4.1  % 4.2  %
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Future minimum lease commitments under non-cancellable leases as of September 30, 2020 were as follows (in thousands):
Operating Leases Sublease Income Net Operating Leases Finance Leases
2020 $ 12,706  $ 712  $ 11,994  $ 8,118 
2021 10,365  125  10,240  5,525 
2022 9,205  —  9,205  2,030 
2023 5,876  —  5,876  216 
2024 2,718  —  2,718  41 
Thereafter 5,949  —  5,949  — 
Total future lease payments 46,819  837  45,982  15,930 
Less: Amount representing interest 5,589  —  5,589  700 
Present value of future payments 41,230  837  40,393  15,230 
Less: Tenant incentives —  —  —  — 
Net present value of future payments 41,230  837