LEASES

On January 1, 2019, we adopted the new requirements of ASC 842, under the modified retrospective approach, using the effective date method. Under the effective date method, financial information and disclosures prior to January 1, 2019 are not required to be restated.

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our condensed consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Operating lease ROU assets also exclude lease incentives received. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

We have operating leases for office buildings and one vehicle. Our leases have remaining lease terms of 1 year to 7 years. Supplemental information related to lease expense and valuation of the ROU assets and lease liabilities was as follows:



	Year Ended
	December 31, 2019
Operating lease cost	$	2,496
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	2,697
Leased assets obtained in exchange for new operating lease liabilities	1,440
Weighted average remaining lease term (in years)	4.97
Weighted average discount rate	5.49		%

Future minimum lease payments under non-cancellable leases as of December 31, 2019 were as follows:



Operating Lease Payments
Years ending December 31:
2020	1,810
2021	1,170
2022	1,144
2023	933
2024	822
2025	308
2026	308
Thereafter	77
Total operating lease payments	6,572
Less imputed interest	(815		)
Total operating lease liabilities	$	5,757

As of December 31, 2019, the Company had no operating lease liabilities that had not commenced.

As required, the following disclosure is provided for periods prior to adoption of ASC 842. Minimum lease commitments as of December 31, 2018 that had initial or remaining lease terms in excess of one year were as follows:



	Operating Leases
2019	1,856
2020	1,039
2021	708
2022	539
2023	492
2024	378

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

PIXELWORKS, INC Leases Disclosure

About Leases Disclosures

Other Available Disclosures