LEASES LEASES (Notes)

3 Months Ended

Mar. 31, 2020

We have entered into a number of facility leases to support our research and development activities, sales operations, and other corporate and administrative functions in North America, Europe, and Asia, which qualify as operating leases under U.S. GAAP. We also have a limited number of equipment leases that also qualify as operating leases. We determine if contracts with vendors represent a lease or have a lease component under U.S. GAAP at contract inception. We do not have any finance leases as of March 31, 2020. Our leases have remaining terms ranging from less than one year to eight years. Some of our leases include options to extend or terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options.

Operating lease right of use assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the lease commencement date. As our leases generally do not provide an implicit rate, we use an estimated incremental borrowing rate in determining the present value of future payments. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular location and currency environment. We used an average incremental borrowing rate of 6% as of January 1, 2019, the adoption date of ASC 842, for our leases that commenced prior to that date. The operating leases are included in “Right of use assets,” “Accrued expenses and other current liabilities,” and “Long-term lease liabilities” on our condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019.

The weighted-average remaining lease term of our operating leases is 6.9 years as of March 31, 2020. Lease costs for minimum lease payments is recognized on a straight-line basis over the lease term. Our total lease costs were $2.6 million and $2.5 million for the three months ended March 31, 2020 and March 31, 2019 respectively. Related cash payments were $2.6 million and $2.4 million for the three months ended March 31, 2020 and March 31, 2019, respectively. Lease costs are included within research and development, marketing and selling, and general and administrative lines on the condensed consolidated statements of operations, and the related cash payments are included in the operating cash flows on the condensed consolidated statements of cash flows. Short-term lease costs, variable lease costs, and sublease income are not material.

The table below reconciles the undiscounted future minimum lease payments under non-cancelable leases with terms of more than one year to the total lease liabilities recognized on the condensed consolidated balance sheets as of March 31, 2020 (in thousands):



Year Ending December 31,	Operating Leases
2020 (excluding three months ended March 31, 2020)	$	6,235
2021	6,148
2022	5,384
2023	4,519
2024	4,402
Thereafter	15,340
Total future minimum lease payments	$	42,028
Less effects of discounting	(7,847		)
Total lease liabilities	$	34,181

Reported as of March 31, 2020
Accrued expenses and other current liabilities	$	6,118
Long-term lease liabilities	28,063
Total lease liabilities	$	34,181