LEASES LEASES (Notes)

3 Months Ended

Mar. 31, 2021

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 qualify as either operating or finance leases. We determine if contracts with vendors represent a lease or have a lease component under U.S. GAAP at contract inception. 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. As of March 31, 2021, the weighted average incremental borrowing rate was 6.0% and the weighted average remaining lease term was 6.3 years.

Finance 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. Each lease agreement provides an implicit discount rate used to determine the present value of future payments. As of March 31, 2021, the weighted-average discount rate was 2.3% and the weighted average remaining lease term was 2.5 years.

Lease costs for minimum lease payments is recognized on a straight-line basis over the lease term. Our total operating lease costs were $1.9 million and $2.6 million for the three months ended March 31, 2021 and March 31, 2020, respectively. Related cash payments were $2.1 million and $2.6 million for the three months ended March 31, 2021 and March 31, 2020, respectively. Operating 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. Finance lease costs, short-term lease costs, variable lease costs, and sublease income are not material.

The table below reconciles the undiscounted future minimum lease payments for operating and finance leases 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, 2021 (in thousands):


Year Ending December 31,	Operating Leases		Finance Leases
2021 (excluding three months ended March 31, 2021)	$	5,530	$	252
2022	6,478		255
2023	5,560		230
2024	4,917		—
2025	5,041		—
Thereafter	11,709		—
Total future minimum lease payments	$	39,235	$	737
Less effects of discounting	(6,929)		(19)
Total lease liabilities	$	32,306	$	718

Supplemental balance sheet information related to leases was as follows (in thousands):


Operating Leases	March 31, 2021
Right of use assets	$	27,538

Accrued expenses and other current liabilities	(5,393)
Long-term lease liabilities	(26,913)
Total lease liabilities	$	(32,306)


Finance Leases	March 31, 2021
Other assets	$	614

Accrued expenses and other current liabilities	(266)
Other long-term liabilities	(452)
Total lease liabilities	$	(718)