On December 30, 2018, the Company adopted the updated guidance on leases using the modified retrospective transition method. Results for reporting periods beginning on or after December 30, 2018 are presented under the updated guidance, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical lease accounting.

The adoption of the standard had a material impact on the Company’s consolidated balance sheets but did not have a material impact on its consolidated statements of net income. The Company recorded $155,178 as a right of use asset, $163,486 of lease liabilities and $0 for retained earnings for operating leases upon adoption of the updated guidance. The standard did not have a material impact on the Company’s finance lease contracts.

A lease is defined as an arrangement that contractually specifies the right to use and control an identified asset for a specific period of time in exchange for consideration. Operating leases are included in operating lease assets, portion of operating lease liabilities due within one year, and long-term operating lease liabilities in the Company’s consolidated balance sheets. Finance leases are included in property and equipment, net, other accrued liabilities, and other long-term liabilities in the Company’s consolidated balance sheets. 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. Lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term, using the Company’s incremental borrowing rate commensurate with the lease term, since the Company’s lessors do not provide an implicit rate, nor is one readily available. The incremental borrowing rate is calculated based on the Company’s credit yield curve and adjusted for collateralization, credit quality and economic environment impact, all where applicable. The lease asset includes scheduled lease payments and excludes lease incentives, such as free rent periods and tenant improvement allowances. The Company has certain leases that may include an option to renew and when it is reasonably probable to exercise such option, the Company will include the renewal option terms in determining the lease asset and lease liability. The Company does not have any renewal options that would have a material impact on the terms of the leases and that are also reasonably expected to be exercised as of January 2, 2021. A lease may contain both fixed and variable payments. Variable lease payments that are linked to an index or rate are measured based on the current index or rate at the implementation of the lease accounting standard, or lease commencement date for new leases, with the impact of future changes in the index or rate being recorded as a period expense. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company’s operating and finance leases are primarily for its studios, corporate offices, data centers and certain equipment, including automobiles.

At January 2, 2021 and December 28, 2019, the Company’s lease assets and lease liabilities were as follows:

	January 2, 2021		December 28, 2019
Assets:
Operating lease assets	$	119,102	$	151,983
Finance lease assets		207		259
Total leased assets	$	119,309	$	152,242

Liabilities:
Current
Operating	$	28,551	$	33,236
Finance		88		126
Noncurrent
Operating	$	101,561	$	128,464
Finance		93		96
Total lease liabilities	$	130,293	$	161,922

For the fiscal years ended January 2, 2021 and December 28, 2019, the components of the Company’s lease expense were as follows:

	Fiscal Year Ended
	January 2,			December 28,
	2021			2019
Operating lease cost:
Fixed lease cost	$	48,674		$	51,246
Lease termination cost		6,109			10
Variable lease cost		(30	)		0
Total operating lease cost	$	54,753		$	51,256
Finance lease cost:
Amortization of leased assets		192			487
Interest on lease liabilities		12			20
Total finance lease cost	$	204		$	507
Total lease cost	$	54,957		$	51,763

Total rent expense charged to operations for office and rental facilities operating leases for the fiscal year ended December 29, 2018 was $44,130.

At January 2, 2021 and December 28, 2019, the Company’s weighted average remaining lease term and weighted average discount rates were as follows:

	January 2, 2021		December 28, 2019
Weighted Average Remaining Lease Term (years)
Operating leases		7.08		7.06
Finance leases		2.35		2.43

Weighted Average Discount Rate
Operating leases		6.95		7.02
Finance leases		5.51		5.97

The Company’s leases have remaining lease terms of 0 to 12 years with a weighted average lease term of 7.07 years as of January 2, 2021.

At January 2, 2021, the maturity of the Company’s lease liabilities in each of the next five fiscal years and thereafter were as follows:

	Operating Leases		Finance Leases		Total
2021	$	36,503	$	95	$	36,598
2022		28,880		65		28,945
2023		21,224		27		21,251
2024		16,043		6		16,049
2025		11,604		—		11,604
Thereafter		54,505		—		54,505
Total lease payments	$	168,759	$	193	$	168,952
Less imputed interest		38,647		12		38,659
Present value of lease liabilities	$	130,112	$	181	$	130,293

Supplemental cash flow information related to leases for the fiscal years ended January 2, 2021 and December 28, 2019 were as follows:

	Fiscal Year Ended
	January 2,		December 28,
	2021		2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	49,043	$	51,326
Operating cash flows from finance leases	$	12	$	20
Financing cash flows from finance leases	$	192	$	487

Leased assets obtained in exchange for new operating lease liabilities	$	5,113	$	41,693
Leased assets obtained in exchange for new finance lease liabilities	$	132	$	105

The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company not to reassess whether any expired or existing contracts contained leases, to carry forward existing lease classifications and not to reassess initial direct costs for existing leases. In addition, the Company elected the benefit of hindsight practical expedient in determining the lease term for existing leases upon adoption of the updated guidance.

The Company has lease agreements with lease and non-lease components and has elected the practical expedient not to separate non-lease components from lease components and instead to account for each separate lease component and non-lease component as a single lease component.

The Company has elected the short-term lease exception accounting policy, whereby the recognition requirements of the updated guidance is not applied and lease expense is recorded on a straight-line basis with respect to leases with an initial term of 12 months or less.