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Leases

3 Months Ended

Mar. 31, 2020

8. Leases

The Company leases various office spaces under non-cancelable operating leases with original lease periods expiring between the third quarter of 2020 and 2024. The Company subleases one of its office spaces to a third party. The Company also enters into leases for equipment. A number of the Company’s leases include one or more options to renew, with renewal terms that can extend the lease term. The exercise of lease renewal options is typically at the sole discretion of the Company; therefore, all renewals to extend the lease terms are not included in the right-of-use (“ROU”) assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates the renewal options and when they are reasonably certain of exercise, includes the renewal period in the lease term. These operating leases do not contain material variable rent payments, residual value guarantees, covenants, or other restrictions.

The Company has elected the practical expedient to exclude short-term leases from its ROU assets and lease liabilities; therefore leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company elected the practical expedient not to separate non-lease components from all leases. As the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The Company’s incremental borrowing rate is the estimated rate that would be required to pay for a collateralized borrowing equal to the total lease payment over the lease term. The Company estimates its incremental borrowing rate based on an analysis of publicly traded debt securities of companies with credit and financial profiles similar to its own adjusted to be commensurate with the term of the underlying lease and the Company’s secured borrowing rate.

Operating lease assets and liabilities are classified on the condensed consolidated balance sheets as follows:


Leases	Classification	March 31, 2020		December 31, 2019
Assets		(in thousands)
Operating lease assets	Other assets	$	12,440	$	13,246
Total leased assets		$	12,440	$	13,246

Liabilities
Current
Operating lease liabilities	Accounts payable, accrued expenses and other liabilities	$	6,596	$	6,456
Noncurrent
Operating lease liabilities	Long-term other liabilities		8,164		9,222
Total operating lease liabilities		$	14,760	$	15,678

Operating lease costs for the three-month periods ended March 31, 2020 and 2019, are as follows:


		Three Months Ended
		March 31,
Lease Cost	Classification	2020		2019
		(in thousands)
Operating lease cost	Selling, general and administrative expenses	$	1,739	$	1,678
Short-term lease cost	Selling, general and administrative expenses		421		826
Variable lease cost	Selling, general and administrative expenses		247		224
Sublease income	Other income, net		(120)		(180)
Net lease cost		$	2,287	$	2,548

The weighted-average remaining term of the Company’s operating leases was 2.4 years and the weighted-average discount rate used to measure the present value of the Company’s operating lease liabilities was 3.9% as of March 31, 2020.

Cash payments included in the measurement of the Company’s operating lease liabilities reported in operating cash flows were $1.8 million and $1.9 million for the three months ended March 31, 2020 and 2019, respectively. During the three months ended March 31, 2020, the Company obtained a ROU asset of $1.0 million in exchange for new operating lease obligations of $1.0 million.

Maturities of the Company’s operating lease liabilities, which do not include short-term leases, as of March 31, 2020 are as follows:


Maturity of Lease Liabilities	Operating leases
	(in thousands)
2020	$	5,616
2021		6,475
2022		2,340
2023		895
2024		373
Thereafter		—
Total lease payments		15,699
Less: Present value discount		(939)
Total operating lease liabilities	$	14,760