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LEASES | 9 Months Ended
--- | ---
Sep. 30, 2020
Leases [Abstract] |
LEASES | LEASES The Company has operating and finance leases for corporate offices, research and development facilities, and certain equipment. Operating leases are reported separately in the Company's condensed consolidated balance sheets. Assets acquired under finance leases are included in Property and equipment, net, in the condensed consolidated balance sheets. The Company determines if an arrangement is a lease at inception. A contract is determined to contain a lease component if the arrangement provides the Company with a right to control the use of an identified asset. Lease agreements may include lease and non-lease components. In such instances for all classes of underlying assets, the Company does not separate lease and non-lease components but rather, accounts for the entire arrangement under leasing guidance. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for these leases is recognized on a straight-line basis over the lease term. Right-of-use assets and lease liabilities are initially measured based on the present value of the future minimum fixed lease payments (i.e., fixed payments in the lease contract) over the lease term at the commencement date. As the Company's existing leases do not have a readily determinable implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future minimum fixed lease payments. The Company calculates its incremental borrowing rate to reflect the interest rate that it would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term and considers its historical borrowing activities and market data from entities with comparable credit ratings in this determination. The measurement of the right-of-use asset also includes any lease payments made prior to the commencement date (excluding any lease incentives) and initial direct costs incurred. The Company assessed its right-of-use assets for impairment as of September 30, 2020 and December 31, 2019 and determined no impairment has occurred. Lease terms may include options to extend or terminate the lease and the Company incorporates such options in the lease term when it has the unilateral right to make such an election and it is reasonably certain that the Company will exercise that option. In making this determination, the Company considers its prior renewal and termination history and planned usage of the assets under lease, incorporating expected market conditions. For operating leases, lease expense for minimum fixed lease payments is recognized on a straight-line basis over the lease term. The expense for finance leases includes both interest and amortization expense components, with the interest component calculated based on the effective interest method and the amortization component calculated based on straight-line amortization of the right-of-use asset over the lease term. Lease contracts may contain variable lease costs, such as common area maintenance, utilities and tax reimbursements that vary over the term of the contract. Variable lease costs are not included in minimum fixed lease payments and as a result, are excluded from the measurement of the right-of-use assets and lease liabilities. The Company expenses all variable lease costs as incurred. In connection with the 2019 Restructuring Initiative, certain lease assets related to facilities will be partially or fully vacated as the Company consolidates its facilities. The Company has no plans to enter into sublease agreements for certain facilities. The Company ceased use of these facilities in the first quarter of 2020 and the third quarter of 2019. Accordingly, the Company accelerated the amortization of the associated lease assets through the planned cease-use date of each facility, resulting in additional amortization expense of $0.1 million in the nine months ended September 30, 2020. The Company did not record additional amortization expense in the three months ended September 30, 2020. The Company previously recorded $3.7 million of additional amortization expense in the year ended December 31, 2019, including $0.6 million and $3.5 million in the three and nine months ended September 30, 2019, respectively. The Company recorded $1.0 million in the aggregate in the year ended December 31, 2019 for estimated future variable lease costs. All of these amounts were recorded as Restructuring and related expense in the Company's condensed consolidated statements of operations. At September 30, 2020 and December 31, 2019, the Company had accruals of $0.8 million and $0.9 million, respectively, for all future anticipated variable lease costs related to these facilities. The Company may incur additional future expense if it is unable to sublease other locations included in the Facilities Initiative. The Company leases its corporate offices and other facilities under operating leases, which expire at various times through 2029. The Company's corporate headquarters is located in a leased facility in Westford, Massachusetts under a lease that expires in August 2028. The Company's finance leases primarily consist of equipment. At September 30, 2020, the Company had 107,800 square feet of building space in North Dallas, Texas under construction as part of the Facilities Initiative. The Company's leased Plano, Texas facility will be vacated upon completion of the construction of the North Dallas, Texas site. At that time, employees will relocate to the new site as part of the Facilities Initiative. The construction of the new North Dallas, Texas site is expected to be completed in 2020. The Company's right-of-use lease assets and lease liabilities at September 30, 2020 and December 31, 2019 were as follows (in thousands):
| Classification |  | September 30, 2020 |  | December 31, 2019
Assets |  |  |  |  |
Operating lease assets | Operating lease right-of-use assets |  | $ | 61,648 |  |  | $ | 36,654 |
Finance lease assets* | Property and equipment, net |  | 1,472 |  |  | 2,420 |
Total leased assets |  |  | $ | 63,120 |  |  | $ | 39,074 |
Liabilities |  |  |  |  |
Current |  |  |  |  |
Operating | Operating lease liabilities |  | $ | 17,757 |  |  | $ | 7,719 |
Finance | Accrued expenses and other |  | 1,229 |  |  | 1,005 |
Noncurrent |  |  |  |  |
Operating | Operating lease liabilities, net of current |  | 51,328 |  |  | 37,202 |
Finance | Other long-term liabilities |  | 868 |  |  | 2,144 |
Total lease liabilities |  |  | $ | 71,182 |  |  | $ | 48,070 |
* Finance lease assets were recorded net of accumulated depreciation of $2.2 million and $2.0 million at September 30, 2020 and December 31, 2019, respectively. The components of lease expense for the three and nine months ended September 30, 2020 and 2019 were as follows (in thousands):
|  |  | Three months ended |  | Nine months ended
|  |  | September 30, 2020 |  | September 30, 2019 |  | September 30, 2020 |  | September 30, 2019
Operating lease cost* |  |  | $ | 5,350 |  |  | $ | 2,988 |  |  | $ | 13,911 |  |  | $ | 11,063 |
Finance lease cost |  |  |  |  |  |  |  |  |
Amortization of leased assets |  |  | 291 |  |  | 244 |  |  | 929 |  |  | 732 |
Interest on lease liabilities |  |  | 39 |  |  | 90 |  |  | 141 |  |  | 210 |
Short-term lease cost |  |  | 4,821 |  |  | 4,777 |  |  | 15,945 |  |  | 14,183 |
Variable lease costs (costs excluded from minimum fixed lease payments)** |  |  | 697 |  |  | 1,727 |  |  | 1,969 |  |  | 2,932 |
Sublease income |  |  | (307) |  |  | — |  |  | (871) |  |  | — |
Net lease cost |  |  | $ | 10,891 |  |  | $ | 9,826 |  |  | $ | 32,024 |  |  | $ | 29,120 |
* Operating lease cost for the nine months ended September 30, 2020 included $0.1 million of accelerated amortization for certain assets partially or fully vacated in 2020 with no intent or ability to sublease. The Company did not record accelerated amortization in the three months ended September 30, 2020. Operating lease cost for the three and nine months ended September 30, 2019 included $0.6 million and $3.5 million, respectively, of accelerated amortization for certain assets that were partially or fully vacated in 2019 with no possibility of sublease. ** Variable lease costs for the three and nine months ended September 30, 2019 included $0.9 million and $1.0 million, respectively, accrued for all future estimated variable expenses related to certain assets partially or fully vacated in 2019 with no intent or ability to sublease. No such variable lease costs were accrued in the three and nine months ended September 30, 2020. Cash flow information related to the Company's leases for the nine months ended September 30, 2020 and 2019 was as follows (in thousands):
|  |  | Nine months ended
|  |  |  |  | September 30, 2020 |  | September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities |  |  |  |  |  |  |
Operating cash flows for operating leases |  |  |  |  | $ | 13,933 |  |  | $ | 7,850 |
Operating cash flows for finance leases |  |  |  |  | $ | 141 |  |  | $ | 210 |
Financing cash flows for finance leases |  |  |  |  | $ | 971 |  |  | $ | 698 |
Other information related to the Company's leases as of September 30, 2020 and December 31, 2019 was as follows:
| September 30, 2020 |  | December 31, 2019
Weighted average remaining lease term (years) |  |  |
Operating leases | 4.98 |  | 6.73
Finance leases | 1.88 |  | 2.35
Weighted average discount rate |  |  |
Operating leases | 5.55 | % |  | 6.50 | %
Finance leases | 6.65 | % |  | 7.54 | %
Future minimum fixed lease payments under noncancelable leases at September 30, 2020 and December 31, 2019 were as follows (in thousands):
| September 30, 2020
| Operating |  | Finance
| leases |  | leases
Remainder of 2020 | $ | 5,186 |  |  | $ | 355 |
2021 | 20,048 |  |  | 1,189 |
2022 | 16,699 |  |  | 593 |
2023 | 13,999 |  |  | 73 |
2024 | 7,416 |  |  | — |
2025 and beyond | 16,796 |  |  | — |
Total lease payments | 80,144 |  |  | 2,210 |
Less: interest | (11,059) |  |  | (113) |
Present value of lease liabilities | $ | 69,085 |  |  | $ | 2,097 |
| December 31, 2019
| Operating |  | Finance
| leases |  | leases
2020 | $ | 10,290 |  |  | $ | 1,644 |
2021 | 9,468 |  |  | 1,159 |
2022 | 7,665 |  |  | 581 |
2023 | 7,067 |  |  | — |
2024 | 5,303 |  |  | — |
2025 and beyond | 15,738 |  |  | — |
Total lease payments | 55,531 |  |  | 3,384 |
Less: interest | (10,610) |  |  | (235) |
Present value of lease liabilities | $ | 44,921 |  |  | $ | 3,149 |
LEASES | LEASES The Company has operating and finance leases for corporate offices, research and development facilities, and certain equipment. Operating leases are reported separately in the Company's condensed consolidated balance sheets. Assets acquired under finance leases are included in Property and equipment, net, in the condensed consolidated balance sheets. The Company determines if an arrangement is a lease at inception. A contract is determined to contain a lease component if the arrangement provides the Company with a right to control the use of an identified asset. Lease agreements may include lease and non-lease components. In such instances for all classes of underlying assets, the Company does not separate lease and non-lease components but rather, accounts for the entire arrangement under leasing guidance. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for these leases is recognized on a straight-line basis over the lease term. Right-of-use assets and lease liabilities are initially measured based on the present value of the future minimum fixed lease payments (i.e., fixed payments in the lease contract) over the lease term at the commencement date. As the Company's existing leases do not have a readily determinable implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future minimum fixed lease payments. The Company calculates its incremental borrowing rate to reflect the interest rate that it would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term and considers its historical borrowing activities and market data from entities with comparable credit ratings in this determination. The measurement of the right-of-use asset also includes any lease payments made prior to the commencement date (excluding any lease incentives) and initial direct costs incurred. The Company assessed its right-of-use assets for impairment as of September 30, 2020 and December 31, 2019 and determined no impairment has occurred. Lease terms may include options to extend or terminate the lease and the Company incorporates such options in the lease term when it has the unilateral right to make such an election and it is reasonably certain that the Company will exercise that option. In making this determination, the Company considers its prior renewal and termination history and planned usage of the assets under lease, incorporating expected market conditions. For operating leases, lease expense for minimum fixed lease payments is recognized on a straight-line basis over the lease term. The expense for finance leases includes both interest and amortization expense components, with the interest component calculated based on the effective interest method and the amortization component calculated based on straight-line amortization of the right-of-use asset over the lease term. Lease contracts may contain variable lease costs, such as common area maintenance, utilities and tax reimbursements that vary over the term of the contract. Variable lease costs are not included in minimum fixed lease payments and as a result, are excluded from the measurement of the right-of-use assets and lease liabilities. The Company expenses all variable lease costs as incurred. In connection with the 2019 Restructuring Initiative, certain lease assets related to facilities will be partially or fully vacated as the Company consolidates its facilities. The Company has no plans to enter into sublease agreements for certain facilities. The Company ceased use of these facilities in the first quarter of 2020 and the third quarter of 2019. Accordingly, the Company accelerated the amortization of the associated lease assets through the planned cease-use date of each facility, resulting in additional amortization expense of $0.1 million in the nine months ended September 30, 2020. The Company did not record additional amortization expense in the three months ended September 30, 2020. The Company previously recorded $3.7 million of additional amortization expense in the year ended December 31, 2019, including $0.6 million and $3.5 million in the three and nine months ended September 30, 2019, respectively. The Company recorded $1.0 million in the aggregate in the year ended December 31, 2019 for estimated future variable lease costs. All of these amounts were recorded as Restructuring and related expense in the Company's condensed consolidated statements of operations. At September 30, 2020 and December 31, 2019, the Company had accruals of $0.8 million and $0.9 million, respectively, for all future anticipated variable lease costs related to these facilities. The Company may incur additional future expense if it is unable to sublease other locations included in the Facilities Initiative. The Company leases its corporate offices and other facilities under operating leases, which expire at various times through 2029. The Company's corporate headquarters is located in a leased facility in Westford, Massachusetts under a lease that expires in August 2028. The Company's finance leases primarily consist of equipment. At September 30, 2020, the Company had 107,800 square feet of building space in North Dallas, Texas under construction as part of the Facilities Initiative. The Company's leased Plano, Texas facility will be vacated upon completion of the construction of the North Dallas, Texas site. At that time, employees will relocate to the new site as part of the Facilities Initiative. The construction of the new North Dallas, Texas site is expected to be completed in 2020. The Company's right-of-use lease assets and lease liabilities at September 30, 2020 and December 31, 2019 were as follows (in thousands):
| Classification |  | September 30, 2020 |  | December 31, 2019
Assets |  |  |  |  |
Operating lease assets | Operating lease right-of-use assets |  | $ | 61,648 |  |  | $ | 36,654 |
Finance lease assets* | Property and equipment, net |  | 1,472 |  |  | 2,420 |
Total leased assets |  |  | $ | 63,120 |  |  | $ | 39,074 |
Liabilities |  |  |  |  |
Current |  |  |  |  |
Operating | Operating lease liabilities |  | $ | 17,757 |  |  | $ | 7,719 |
Finance | Accrued expenses and other |  | 1,229 |  |  | 1,005 |
Noncurrent |  |  |  |  |
Operating | Operating lease liabilities, net of current |  | 51,328 |  |  | 37,202 |
Finance | Other long-term liabilities |  | 868 |  |  | 2,144 |
Total lease liabilities |  |  | $ | 71,182 |  |  | $ | 48,070 |
* Finance lease assets were recorded net of accumulated depreciation of $2.2 million and $2.0 million at September 30, 2020 and December 31, 2019, respectively. The components of lease expense for the three and nine months ended September 30, 2020 and 2019 were as follows (in thousands):
|  |  | Three months ended |  | Nine months ended
|  |  | September 30, 2020 |  | September 30, 2019 |  | September 30, 2020 |  | September 30, 2019
Operating lease cost* |  |  | $ | 5,350 |  |  | $ | 2,988 |  |  | $ | 13,911 |  |  | $ | 11,063 |
Finance lease cost |  |  |  |  |  |  |  |  |
Amortization of leased assets |  |  | 291 |  |  | 244 |  |  | 929 |  |  | 732 |
Interest on lease liabilities |  |  | 39 |  |  | 90 |  |  | 141 |  |  | 210 |
Short-term lease cost |  |  | 4,821 |  |  | 4,777 |  |  | 15,945 |  |  | 14,183 |
Variable lease costs (costs excluded from minimum fixed lease payments)** |  |  | 697 |  |  | 1,727 |  |  | 1,969 |  |  | 2,932 |
Sublease income |  |  | (307) |  |  | — |  |  | (871) |  |  | — |
Net lease cost |  |  | $ | 10,891 |  |  | $ | 9,826 |  |  | $ | 32,024 |  |  | $ | 29,120 |
* Operating lease cost for the nine months ended September 30, 2020 included $0.1 million of accelerated amortization for certain assets partially or fully vacated in 2020 with no intent or ability to sublease. The Company did not record accelerated amortization in the three months ended September 30, 2020. Operating lease cost for the three and nine months ended September 30, 2019 included $0.6 million and $3.5 million, respectively, of accelerated amortization for certain assets that were partially or fully vacated in 2019 with no possibility of sublease. ** Variable lease costs for the three and nine months ended September 30, 2019 included $0.9 million and $1.0 million, respectively, accrued for all future estimated variable expenses related to certain assets partially or fully vacated in 2019 with no intent or ability to sublease. No such variable lease costs were accrued in the three and nine months ended September 30, 2020. Cash flow information related to the Company's leases for the nine months ended September 30, 2020 and 2019 was as follows (in thousands):
|  |  | Nine months ended
|  |  |  |  | September 30, 2020 |  | September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities |  |  |  |  |  |  |
Operating cash flows for operating leases |  |  |  |  | $ | 13,933 |  |  | $ | 7,850 |
Operating cash flows for finance leases |  |  |  |  | $ | 141 |  |  | $ | 210 |
Financing cash flows for finance leases |  |  |  |  | $ | 971 |  |  | $ | 698 |
Other information related to the Company's leases as of September 30, 2020 and December 31, 2019 was as follows:
| September 30, 2020 |  | December 31, 2019
Weighted average remaining lease term (years) |  |  |
Operating leases | 4.98 |  | 6.73
Finance leases | 1.88 |  | 2.35
Weighted average discount rate |  |  |
Operating leases | 5.55 | % |  | 6.50 | %
Finance leases | 6.65 | % |  | 7.54 | %
Future minimum fixed lease payments under noncancelable leases at September 30, 2020 and December 31, 2019 were as follows (in thousands):
| September 30, 2020
| Operating |  | Finance
| leases |  | leases
Remainder of 2020 | $ | 5,186 |  |  | $ | 355 |
2021 | 20,048 |  |  | 1,189 |
2022 | 16,699 |  |  | 593 |
2023 | 13,999 |  |  | 73 |
2024 | 7,416 |  |  | — |
2025 and beyond | 16,796 |  |  | — |
Total lease payments | 80,144 |  |  | 2,210 |
Less: interest | (11,059) |  |  | (113) |
Present value of lease liabilities | $ | 69,085 |  |  | $ | 2,097 |
| December 31, 2019
| Operating |  | Finance
| leases |  | leases
2020 | $ | 10,290 |  |  | $ | 1,644 |
2021 | 9,468 |  |  | 1,159 |
2022 | 7,665 |  |  | 581 |
2023 | 7,067 |  |  | — |
2024 | 5,303 |  |  | — |
2025 and beyond | 15,738 |  |  | — |
Total lease payments | 55,531 |  |  | 3,384 |
Less: interest | (10,610) |  |  | (235) |
Present value of lease liabilities | $ | 44,921 |  |  | $ | 3,149 |

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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