NOTE 5—LEASES

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases” (Topic 842) (“ASC 842”). ASC 842 requires companies to recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. We adopted ASC 842 using the effective date of January 1, 2019 as the date of our initial application of the standard. Consequently, financial information for the comparative periods will not be updated. The Company determines if a contract is, or contains, a lease at contract inception. The Company elected the package of practical expedients for leases that commenced prior to January 1, 2019 and will not reassess: (i) whether any expired or existing contracts are or contain leases; (ii) lease classification for any expired or existing leases; and (iii) initial direct costs capitalization for any existing leases. The Company elected upon adoption, including the use of hindsight in assessing factors that impact determination of the lease term, such as the likelihood that any renewal or purchase options are exercised. The Company elected to make an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet. The Company also elected not to separate non-lease components from lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component. The Company will recognize those lease payments in the consolidated statements of income on a straight-line basis over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments.

The Company leases its office space and office equipment under long-term operating lease agreements which expire at various dates through August 2026, some of which include options to extend the leases for up to 3 years, and some of which included options to terminate the leases within 1 year. Under the operating leases, the Company pays certain operating expenses relating to the office equipment and leased property.

The components of lease expense were as follows:


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2019		2019
Lease cost
Operating lease cost	$	725	$	2,235
Finance lease cost:
Amortization of right-of-use assets		6		9
Interest on lease liabilities		1		2
Short-term lease cost		9		19
Variable lease cost		76		247
Sublease income		(61)		(183)
Total lease cost	$	756	$	2,329

Supplemental cash flow information related to leases was as follows
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	5	$	8
Operating cash flows from operating leases	$	849	$	2,658
Financing cash flows from finance leases	$	1	$	2

Supplemental balance sheet information related to leases was as follows:


(In thousands, except lease term and discount rate)	September 30,
	2019
Operating leases
Operating lease right-of-use assets	$	7,059

Current operating lease liabilities (1)	$	3,062
Non-current operating lease liabilities		5,534
Total operating lease liabilities	$	8,596

Finance leases
Finance lease right-of-use assets	$	57

Current finance lease liabilities (1)	$	24
Non-current finance lease liabilities		34
Total finance lease liabilities	$	58

Weighted average remaining lease term (in years)
Operating leases		4.3
Finance leases		2.6
Weighted average discount rate
Operating leases		7.7%
Finance leases		7.9%

(1)

Current lease liabilities are included in “Accrued expenses and other current liabilities.”

Maturities of lease liabilities were as follows:


	Operating		Finance
	Leases		Leases
Year Ending December 31,
2019 (excluding the nine months ended September 30, 2019)	$	836	$	6
2020		3,100		25
2021		2,123		25
2022		1,359		8
2023		952		—
Thereafter		1,756		—
Total lease payments		10,126		64
Less imputed interest		(1,530)		(6)
Total	$	8,596	$	58

The minimum rental commitments under non-cancelable operating leases under ASC 840 as disclosed in our 2018 Annual Report, with initial or remaining terms of one year or more consist of the following at December 31, 2018:


	Operating
	Leases
2019	$	3,034
2020		2,654
2021		1,808
2022		1,218
2023		925
Thereafter		1,795
Total minimum lease payments	$	11,434