Leases

On December 30, 2018, we adopted ASU No. 2016-02- Leases (ASC 842) using the modified retrospective method. We chose to apply the transition provisions as of the period of adoption. Results for reporting periods beginning on or after December 30, 2018 are presented under ASC 842 while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under ASC 840.

Adoption of the new standard resulted in the recording of $20.8 million of operating lease right of use assets, $4.3 million of short-term operating lease liabilities, and $23.5 million of long-term operating lease liabilities. The difference between the operating lease liabilities and operating right of use assets is associated with existing deferred rent under ASC 840 and existing restructuring liabilities under ASC 420, which we removed from our balance sheet upon the adoption of ASC 842. The following table summarizes the amount by which each financial statement line item was affected upon the adoption of ASC 842 as compared with the guidance that was in effect before the change (in thousands):



	December 29, 2018		ASC 842 Adjustment			December 30, 2018
Assets
Operating lease right of use assets, net	—		20,832			20,832
Total assets	$	268,067	$	20,832		$	288,899

Liabilities, redeemable convertible preferred stock, and stockholders' equity
Accrued expenses and other current liabilities *	20,463		(1,071		)	19,392
Current operating lease liabilities	—		4,268			4,268
Total current liabilities	45,603		3,197			48,800
Other non-current liabilities *	6,806		(5,818		)	988
Non-current operating lease liabilities	—		23,453			23,453
Total liabilities	52,847		20,832			73,679
Stockholders' equity
Total stockholders' equity	162,213		—			162,213
Total liabilities, redeemable convertible preferred stock and stockholders' equity	$	268,067	$	20,832		$	288,899

* Accrued expense and other current liabilities and other non-current liabilities represents lease restructuring charges and deferred rent reflected as reductions in operating lease right of use assets, net.

We consider a lease to be a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. We lease office spaces in various locations throughout the United States and Europe. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

For these lease agreements, we have elected the practical expedient to not separate non-lease and lease components and instead to account for them as a single lease component.

Some leases include an option to renew, with renewal terms that can extend the lease term from one to ten years. The exercise of lease renewal options is at our sole discretion. None of these options to renew are recognized as part of our right-to-use asset or lease liability as of June 29, 2019, as renewal was determined to not be reasonably assured. The depreciable life of assets and leasehold improvements are limited by the expected lease term.

One of our leases includes variable lease payment based on an index rate, which is included in the lease liability using the index rate as of the lease commencement date. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, because we elected the practical expedient to not separate non-lease and lease components and instead account for them as a single lease component, our operating leases costs include variable lease costs associated with common area maintenance, insurance and real estate taxes.

We sublease certain real estate to third parties. Our subleases are primarily attributable to our headquarters office space in Waltham, Massachusetts. There are no variable lease payments or options to extend the subleases, nor do they contain any material residual value guarantees or material restrictive covenants.

As most of our leases do not provide an implicit rate, we used our incremental borrowing rate based on the information available at the adoption or commencement date, in determining the present value of lease payments.

The table below summarizes our lease costs as well as sublease income for the three and six months ended June 29, 2019 (in thousands):



		Three Months Ended			Six Months Ended
		June 29, 2019			June 29, 2019
Lease Costs	Statement of Operations Classification
Operating lease costs ⁽¹⁾	General and administrative	$	738		1,817
Variable lease costs - operating leases	General and administrative	239			573
Sublease income	General and administrative	(193		)	(355		)
Total lease costs		$	784		$	2,035

⁽¹⁾ Operating lease costs include short-term leases, which are immaterial.

The table below summarizes the maturity of our lease liabilities as of June 29, 2019 (in thousands). Operating lease payments exclude $5.3 million of legally binding lease payments for leases signed but not yet commenced.



Year	Operating Leases
2019 remaining	$	3,029
2020	$	6,147
2021	$	6,125
2022	$	5,523
2023	$	5,105
Thereafter	$	5,163
Total lease payments	$	31,092
Less: Discount to lease payments	(4,314		)
Present value of lease liabilities	$	26,778

The table below summarizes the weighted-average remaining lease term (in years) and the weighted-average incremental borrowing rate (in percentages):



Lease Term and Discount Rates	June 29, 2019
Weighted average remaining lease term
Operating leases	5.1
Weighted average incremental borrowing rate
Operating leases	5.7		%
Right of use asset impairment charge
Operating leases	$	1,137

Supplemental cash flow information related to operating leases for the six months ended June 29, 2019 are as follows (in thousands):



	Six Months Ended
	June 29, 2019
Cash payments of amounts included in lease liabilities
Operating leases	$	(2,798	)
Right of use assets obtained in exchange for new lease obligations
Operating leases	$	1,057