LEASES

Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. The Company has operating leases primarily consisting of facilities with remaining lease terms of one year to eleven years. The lease term represents the non-cancelable period of the lease. For certain leases, the Company has an option to extend the lease term. These renewal options are not considered in the remaining lease term unless it is reasonably certain that the Company will exercise such options.

The Company elected certain practical expedients under Topic 842 which are: (i) to not record leases with an initial term of twelve months or less on the balance sheet; (ii) to combine the lease and non-lease components in determining the lease liabilities and right-of-use assets, and (iii) to carry forward prior conclusions about lease identification and classification.

The Company’s lease contracts do not provide an implicit borrowing rate, hence the Company determined the incremental borrowing rate based on information available at lease commencement to determine the present value of lease liability. The Company uses the parent entity’s incremental borrowing rates as the treasury operations are managed centrally by the parent entity and, consequently, the pricing of leases at a subsidiary level is typically significantly influenced by the credit risk evaluated at the parent or consolidated group level on the basis of guarantees or other payment mechanisms that allow the lessor to look beyond just the subsidiary for payment.

During the second quarter of fiscal 2019, the Company entered into a lease for a new facility which is intended to become the Company’s new headquarters in 2020. The new lease commenced in May 2019, as the facility was made available to the Company for constructing leasehold improvements. The lease was assessed under Topic 842 to be an operating lease and has a term of approximately eleven years.

The new lease resulted in the balance sheet recognition of $10.3 million in “Operating lease right-of use assets”, $4.0 million in “Prepaid expenses and other current assets”, $14.0 million in “Other non-current liabilities”, and $0.3 million in “Accrued and other current liabilities”.

The components of lease expense are as follows (in thousands):



	Three months ended		Six months ended
	June 28, 2019		June 28, 2019
Operating lease cost	$	2,231	$	4,227
Variable lease cost	744		1,523
Total lease cost	$	2,975	$	5,750

Supplemental cash flow information related to leases are as follows (in thousands):



	Three months ended		Six months ended
	June 28, 2019		June 28, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,494	$	4,624
ROU assets obtained in exchange for operating lease obligations	$	10,305	$	10,305

Other information related to leases are as follows:



	Six months ended
	June 28, 2019
Operating leases
Weighted-average remaining lease term (years)	7.1 years
Weighted-average discount rate	6.7	%

Future minimum lease payments under non-cancelable operating leases as of June 28, 2019 are as follows (in thousands):



Years ending December 31,
2019 (remaining six months)	$	5,624
2020	9,525
2021	5,819
2022	4,444
2023	4,206
Thereafter	20,577
Total future minimum lease payments	$	50,195
Less: imputed interest	(11,259		)
Total	$	38,936

Future minimum lease payments under non-cancelable operating leases as of December 31, 2018, as defined under the previous lease accounting guidance of ASC Topic 840, were as follows (in thousands):



Years ending December 31,
2019	$	13,515
2020	10,139
2021	4,088
2022	2,523
2023	2,220
Thereafter	6,694
Total future minimum lease payments	$	39,179