|9 Months Ended|
Sep. 30, 2019
The Company has one operating lease pertaining to 17,698 square feet of corporate office space in Newark, California pursuant to a lease agreement that commenced January 16, 2014 and was amended on April 16, 2018. At September 30, 2019 the Company’s lease portfolio had a weighted average remaining term of 4.3 years, with an option to extend for an additional 5 years. The lease requires monthly lease payments that are subject to annual increases throughout the lease term. The optional period has not been considered in the determination of the right-of-use assets or lease liabilities associated with this lease as the Company did not consider it reasonably certain it would exercise the option.
The Company cannot determine the implicit rate in its lease, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company 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 currency environment. The Company used an incremental borrowing rate as of the date of adoption for leases that commenced prior to January 1, 2019. The weighted average discount rate for the Company’s lease portfolio at September 30, 2019 was 12.6%.
For the three and nine months ended September 30, 2019, the Company incurred $0.2 million and $0.4 million of lease costs included in operating expenses in the condensed consolidated statements of income and comprehensive income in relation to its operating lease, a portion of which was variable rent expense and not included within the measurement of the Company’s operating ROU assets and lease liabilities. The variable rent expense consists primarily of the Company’s proportionate share of operating expenses, property taxes, and insurance and is classified as lease expense due to the Company’s election to not separate lease and non-lease components. Short-term lease costs were not material. At September 30, 2019, the Company’s operating lease right-of-use asset totaled $0.2 million, and the operating lease liability totaled $2.2 million. The short term portion of the operating lease liability was $0.3 million and is contained within other accrued liabilities on the balance sheet, with the remaining $1.9 million liability reported on the balance sheet as long-term portion of operating lease liability
Rent expense for the three and nine months ended September 30, 2018 was $0.1 million and $0.3 million, respectively, a portion of which represents immaterial variable rent expense.
As of September 30, 2019, the maturities of the Company’s operating lease liabilities were as follows (in thousands):
The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef