Leases

12 Months Ended

Dec. 31, 2019


Note 17.			Leases

We have commitments for future payments related to office facilities leases. We determine if an arrangement is a lease at inception. Operating leases are included in Operating lease assets, Other current liabilities, and Long-term lease liabilities on our consolidated balance sheets effective as of January 1, 2019. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

Operating lease 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 our leases do not provide an implicit rate, we use our estimated incremental borrowing rate based on the information available in determining the present value of future payments. Operating lease assets also exclude lease incentives and initial direct costs incurred. Some of our leases include options to extend or terminate the lease. Our leases generally include one or more options to renew; however, the exercise of lease renewal options is at our sole discretion. For nearly all of our operating leases, upon adoption of the new guidance, we have not assumed any options to extend will be exercised as part of our calculation of the lease liability. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have operating leases for office space and data centers with remaining lease terms of 1 year to 5 years.

Details related to lease expense and supplemental cash flow were as follows (in thousands):


	Year ended December 31, 2019

Operating lease expense	$	5,600
Variable lease expense	877
Sublease income	(2,028)
Net lease expense	$	4,449

Operating cash outflows for lease liabilities	$	5,643

Details related to lease term and discount rate were as follows:

December 31,
2019

Weighted-average remaining lease term (in years)

4 years

Weighted-average discount rate

5.14

Future minimum lease payments as of December 31, 2019 are as follows (in thousands):


	Office Leases
2020	$	5,057
2021	3,276
2022	2,426
2023	2,348
2024	1,634
Thereafter	—
Total minimum payments^(a)	14,741
Less: Imputed interest	1,470
Present value of total minimum payments ^(b)	$	13,271

(a) Total minimum payments exclude executory costs, inclusive of insurance, maintenance, and taxes, of $6.1 million; minimum payments also have not been reduced by sublease rentals of $5.3 million due in the future under noncancelable subleases.

(b) $8.5 million is included in Long-term lease liabilities and $4.8 million is included in Accrued royalties, fulfillment, and other current liabilities on the consolidated balance sheets.

As of December 31, 2018, future minimum lease payments were $15.9 million in the aggregate, which consisted of the following: $3.7 million in 2019; $3.0 million in 2020; $2.7 million in 2021; $2.4 million in 2022; $2.3 million in 2023; and $1.6 million thereafter. Total minimum payments excluded executory costs, inclusive of insurance, maintenance, and taxes, of $6.2 million; minimum payments also have not been reduced by sublease rentals of $6.0 million due in the future under noncancelable subleases.

Rent expense during the year ended December 31, 2018 was $2.8 million.