LEASES

Financial Statement Impact of Adopting ASC 842, "Leases"

On January 1, 2019, the Company adopted ASC 842. The most significant impact of this standard relates to the Company's recognition of right of use, or ROU, assets and lease liabilities for its operating leases. ROU 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. The Company's accounting for finance leases, classified as capital leases under historical accounting guidance, was unchanged.

The following table summarizes the financial statement line items impacted by the Company's adoption of ASC 842 at January 1, 2019 (in thousands):



Balance Sheet - select financial statement line items	Ending balance			Effect of the adoption of				Beginning balance
	December 31, 2018			ASC 842				January 1, 2019
Operating lease right of use assets	$	—		$	15,099			$	15,099
Other assets	1,515			(504		)	(1)	1,011
Total assets	134,269			14,595				148,864
Other current liabilities	3,569			3,116			(2)	6,685
Total current liabilities	38,730			3,116				41,846
Long-term operating leases, net of current portion	—			14,310				14,310
Lease incentive obligation	2,154			(2,154		)		—
Other long-term liabilities	2,343			(657		)	(3)	1,686
Total liabilities	44,631			14,615				59,246
Accumulated other comprehensive loss	(1,707		)	(12		)		(1,719		)
Total stockholders' equity	89,638			(12		)		89,626
Total liabilities and stockholders' equity	$	134,269		$	14,595		(4)	$	148,864

(1) Derecognition of lease inception fees associated with certain leases previously amortized over the respective lives of those leases.

(2) Net effect of derecognizing the Company's current deferred rent and lease incentive obligations as of December 31, 2018 and recognizing current operating lease liabilities.

(3) Derecognition of the Company's long-term deferred rent as of December 31, 2018.

(4) The resulting incremental expense due to the Company's adoption of ASC 842 was not considered significant and is recorded as rent expense in General and administrative expense in the accompanying consolidated statement of operations for the year ended December 31, 2019.

Operating and Finance Lease Commitments

The Company leases office facilities and certain equipment under non-cancelable operating and finance leases. The Company determines if an arrangement is a lease and whether its classification is operating or finance at inception. Leases with an initial term of twelve months or less that are not expected to be renewed are not recorded on the balance sheet. For such leases, lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Certain operating leases include options to renew, with renewal terms extending up to 10 years, subject to certain conditions and notice obligations set forth in the lease agreements. The exercise of lease renewal options is at the Company's discretion.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the Company's best estimate of the collateralized borrowing rate over a similar term at the commencement date of the lease in determining the present value of future payments. The operating lease ROU assets also include any lease payments made and lease incentives and initial direct costs incurred. The lease terms may include options to extend the lease when it is reasonably certain that the Company will exercise that option.

The following table summarizes the Company's lease assets and liabilities as of December 31, 2019 (in thousands):



	As of December 31, 2019
Assets
Operating lease right of use assets	$	11,128
Finance lease assets, included in Property and equipment, net (1)	1,917
Total leased assets	$	13,045
Liabilities
Current
Operating lease liabilities, included in Other current liabilities	$	4,177
Finance lease liabilities, included in Other current liabilities	1,418
Long-term
Long-term operating leases, net of current portion	9,767
Finance leases, net of current portion	$	27
Total lease liabilities	$	15,389

(1) Finance leases are presented net of accumulated amortization of $4.4 million as of December 31, 2019.

The following table summarizes the components of lease expense for the year ended December 31, 2019 (in thousands):



	Year Ended December 31, 2019
Operating lease cost, included in General and administrative expense (1)	$	4,808
Finance lease cost:
Amortization of leased assets, included in General and administrative expense	2,041
Interest on lease liabilities, included in Other income (expense), net	140
Less: sublease income, reducing rent expense in General and administrative expense (2)	(168		)
Net lease cost	$	6,821

(1) Excludes short-term lease costs of $0.4 million for the year ended December 31, 2019.

(2) The Company subleases space to a third party for which it anticipates receiving $0.2 million in annual rental payments during the term of the sublease agreement, which is through August 2022.

The following table summarizes other information related to leases for the year ended December 31, 2019 (in thousands):



	Year Ended December 31, 2019
Supplemental cash flows information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	4,852
Operating cash outflows from finance leases	216
Financing cash outflows from finance leases	2,209
Weighted-average remaining lease term (years)
Operating leases	3.20
Finance leases	1.37
Weighted-average discount rate
Operating leases	5.50		%
Finance leases	7.28		%

The following table summarizes maturities of lease liabilities as of December 31, 2019 (in thousands):



	Operating Leases			Finance Leases
2020	$	4,840		$	1,523
2021	4,930			16
2022	4,240			12
2023	1,227			—
2024	—			—
Total lease payments	$	15,237		$	1,551
Less: imputed interest	(1,294		)	(105		)
Present value of lease liabilities	$	13,943		$	1,446

As of December 31, 2019, the Company had no material operating or finance leases that had not yet commenced.