6. Leases

The Company has operating leases for certain properties for its offices and showrooms and for copiers. The Company adopted ASU 2016-02 as of January 1, 2019.

The Company determines if an arrangement contains a lease and the lease term at contract inception based on the terms of each arrangement. The Company’s operating leases contain options to extend and early termination options. The Company will evaluate the terms on a lease-by-lease basis and include options to extend or early termination options when it is reasonably certain that the Company will exercise the option. For arrangements that are identified as leases and are over twelve months, the Company records a ROU asset and a lease liability representing the present value of future lease payments. Under ASC 842, the present value of future lease payments must be discounted by using the interest rate implicit in the lease, or if not readily determinable, its incremental borrowing rate. The Company used an average cost of debt of 6.76% as the discount rate for the leases as it is representative of the interest rate that would be charged to borrow an amount equal to the lease payments on a fully collateralized basis.

The Company evaluates its ROU assets for impairment in accordance with ASC 360. No impairment of ROU assets existed as of March 31, 2020.

The operating lease assets and liabilities recorded on the condensed consolidated balance sheet as of March 31, 2020 are summarized as follows:


		March 31,
	Classification on Balance Sheet	2020
Assets		(in thousands)
Non-current	Right-of-use assets - operating leases	$	49,600

Liabilities
Current	Current portion of lease liabilities - operating leases	$	3,040
Non-current	Lease liabilities - operating leases, net of current portion		53,401
Total operating lease liabilities		$	56,441

Weighted average remaining lease term (in years)			13.1

Rent expense is recognized on a straight-line basis over the term of the lease. Rent expense for operating leases was $1.7 million and $1.6 million for the three months ended March 31, 2020 and 2019, respectively. Sublease income (in which we are the sublessor) is recognized on a straight-line basis over the term of the sublease, as a reduction to lease expense. Sublease income was $0.3 million and $0.1 million for the three months ended March 31, 2020 and 2019, respectively. All of the aforementioned amounts are included in continuing operations.

As of March 31, 2020, the maturities of the Company’s lease liabilities were as follows:


	Operating Leases
	(in thousands)
Remainder of 2020	$	5,082
2021		6,718
2022		6,721
2023		6,707
2024		6,856
Thereafter		53,809
Total minimum lease payments		85,893
Less: imputed interest		29,452
Lease liabilities	$	56,441