Annual report pursuant to Section 13 and 15(d)

LEASES

v3.22.4
LEASES
 12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
LEASES LEASESThe Company has operating and finance leases for leased office and manufacturing facilities and equipment leases. We have concluded that when an agreement grants us the right to substantially all of the economic benefits associated with an identified asset, and we are able to direct the use of that asset throughout the term of the agreement, we have a lease. We lease certain office equipment under finance leases, and we lease certain production facilities, office equipment and vehicles under operating
leases. Some of our leases include options to extend or terminate the leases and these options have been included in the relevant lease term to the extent that they are reasonably certain to be exercised.
If the lease arrangement also contains non-lease components, the Company elected the practical expedient not to separate any combined lease and non-lease components for all lease contracts. For our real estate leases, the remaining fixed minimum rental payments used in the calculation of the new lease liability, include fixed payments and variable payments (if the variable payments are based on an index), over the remaining lease term. Variable lease payments based on indices have been included in the related right-of-use assets and lease liabilities on our Consolidated Balance Sheets, while variable lease payments based on usage of the underlying asset have been excluded, as they do not represent present rights or obligations. Variable lease components for leases relate primarily to common area maintenance charges and other separately billed lessor services, sales and real estate taxes. Variable lease costs are expensed in the period they are incurred. We have also elected to adopt the practical expedient under ASC 842 to not separate lease and non-lease components in contracts where the base lease payment contains both. In this situation, these lease agreements are accounted for as a single lease component for all classes of underlying assets. While we do have real estate leases with options to purchase the facility at a market value at the date of exercise, these are not included in the calculation of the lease liability, as these options are not expected to be exercised.
Any new additional operating and financing lease liabilities and corresponding right-of-use (“ROU”) assets are based on the present value of the remaining minimum rental payments. The Company's operating lease liability increased approximately $3.0 million as a result of acquiring ROU assets from new leases entered into during the year ended December 31, 2022. In determining the incremental borrowing rate, we have considered borrowing data for secured debt obtained from our lending institution.
The following is a summary of the Company's ROU assets and liabilities at December 31:
(In thousands) 2022 2021
Operating Leases:
Operating Right-of-Use Assets, Gross $ 29,466  $ 30,318 
Less Accumulated Right-of-Use Asset Impairment 1,710  1,710 
Less Accumulated Amortization 14,728  12,439 
Operating Right-of-Use Assets, Net $ 13,028  $ 16,169 
Short-term Operating Lease Liabilities $ 4,441  $ 6,778 
Long-term Operating Lease Liabilities 9,942  12,018 
Operating Lease Liabilities $ 14,383  $ 18,796 
Finance Leases:
Finance Right-of-Use Assets, Gross $ 231  $ 177 
Less Accumulated Amortization 138  106 
Finance Right-of-Use Assets, Net — Included in Other Assets $ 93  $ 71 
Short-term Finance Lease Liabilities — Included in Other Accrued Expenses
 $ 29  $ 72 
Long-term Finance Lease Liabilities — Included in Other Liabilities 67  — 
Finance Lease Liabilities $ 96  $ 72 
The following is a summary of the Company's total lease costs as of December 31:
(In thousands) 2022 2021
Finance Lease Cost:
Amortization of ROU Assets $ 94  $ 573 
Interest on Lease Liabilities 4  78 
Total Finance Lease Cost 98  651 
Operating Lease Cost 6,627  5,881 
Variable Lease Cost 1,757  1,546 
Short-term Lease Cost (excluding month-to-month) 602  271 
Less Sublease and Rental Income (1,329) (1,265)
Total Operating Lease Cost 7,657  6,433 
Total Net Lease Cost $ 7,755  $ 7,084 
The following is a summary of cash paid for amounts included in the measurement of lease liabilities as of December 31:
(In thousands) 2022 2021
Operating Cash Flow for Finance Leases $ 4  $ 78 
Operating Cash Flow for Operating Leases $ 7,873  $ 6,711 
Financing Cash Flow for Finance Leases $ 93  $ 901 
As permitted by ASC 842, leases with expected durations of less than 12 months from inception (i.e. short-term leases) were excluded from the Company’s calculation of its lease liability and ROU asset. Furthermore, as permitted by ASC 842, the Company elected to apply the package of practical expedients, which allows companies not to reassess: (a) whether its expired or existing contracts are or contain leases, (b) the lease classification for any expired or existing leases, and (c) initial direct costs for any existing leases.
The weighted-average remaining term for the Company's operating and financing leases are approximately 4 years and 3 years, respectively. The weighted-average discount rates for the Company's operating and financing leases are each approximately 3.6%.
The following is a summary of the Company's maturity of lease liabilities:
(In thousands) Operating Leases Financing Leases
2023 $ 4,876  $ 32 
2024 3,879  32 
2025 3,310  18 
2026 1,216  14 
2027 859  6 
Thereafter 1,298  — 
Total Lease Payments 15,438  102 
Less: Interest 1,055  6 
Total Lease Liability $ 14,383  $ 96 
These amounts exclude annual operating lease payments of approximately $1.7 million per year through 2033, which represents legal binding lease payments for leases signed, but not yet commenced.
LEASES LEASESThe Company has operating and finance leases for leased office and manufacturing facilities and equipment leases. We have concluded that when an agreement grants us the right to substantially all of the economic benefits associated with an identified asset, and we are able to direct the use of that asset throughout the term of the agreement, we have a lease. We lease certain office equipment under finance leases, and we lease certain production facilities, office equipment and vehicles under operating
leases. Some of our leases include options to extend or terminate the leases and these options have been included in the relevant lease term to the extent that they are reasonably certain to be exercised.
If the lease arrangement also contains non-lease components, the Company elected the practical expedient not to separate any combined lease and non-lease components for all lease contracts. For our real estate leases, the remaining fixed minimum rental payments used in the calculation of the new lease liability, include fixed payments and variable payments (if the variable payments are based on an index), over the remaining lease term. Variable lease payments based on indices have been included in the related right-of-use assets and lease liabilities on our Consolidated Balance Sheets, while variable lease payments based on usage of the underlying asset have been excluded, as they do not represent present rights or obligations. Variable lease components for leases relate primarily to common area maintenance charges and other separately billed lessor services, sales and real estate taxes. Variable lease costs are expensed in the period they are incurred. We have also elected to adopt the practical expedient under ASC 842 to not separate lease and non-lease components in contracts where the base lease payment contains both. In this situation, these lease agreements are accounted for as a single lease component for all classes of underlying assets. While we do have real estate leases with options to purchase the facility at a market value at the date of exercise, these are not included in the calculation of the lease liability, as these options are not expected to be exercised.
Any new additional operating and financing lease liabilities and corresponding right-of-use (“ROU”) assets are based on the present value of the remaining minimum rental payments. The Company's operating lease liability increased approximately $3.0 million as a result of acquiring ROU assets from new leases entered into during the year ended December 31, 2022. In determining the incremental borrowing rate, we have considered borrowing data for secured debt obtained from our lending institution.
The following is a summary of the Company's ROU assets and liabilities at December 31:
(In thousands) 2022 2021
Operating Leases:
Operating Right-of-Use Assets, Gross $ 29,466  $ 30,318 
Less Accumulated Right-of-Use Asset Impairment 1,710  1,710 
Less Accumulated Amortization 14,728  12,439 
Operating Right-of-Use Assets, Net $ 13,028  $ 16,169 
Short-term Operating Lease Liabilities $ 4,441  $ 6,778 
Long-term Operating Lease Liabilities 9,942  12,018 
Operating Lease Liabilities $ 14,383  $ 18,796 
Finance Leases:
Finance Right-of-Use Assets, Gross $ 231  $ 177 
Less Accumulated Amortization 138  106 
Finance Right-of-Use Assets, Net — Included in Other Assets $ 93  $ 71 
Short-term Finance Lease Liabilities — Included in Other Accrued Expenses
 $ 29  $ 72 
Long-term Finance Lease Liabilities — Included in Other Liabilities 67  — 
Finance Lease Liabilities $ 96  $ 72 
The following is a summary of the Company's total lease costs as of December 31:
(In thousands) 2022 2021
Finance Lease Cost:
Amortization of ROU Assets $ 94  $ 573 
Interest on Lease Liabilities 4  78 
Total Finance Lease Cost 98  651 
Operating Lease Cost 6,627  5,881 
Variable Lease Cost 1,757  1,546 
Short-term Lease Cost (excluding month-to-month) 602  271 
Less Sublease and Rental Income (1,329) (1,265)
Total Operating Lease Cost 7,657  6,433 
Total Net Lease Cost $ 7,755  $ 7,084 
The following is a summary of cash paid for amounts included in the measurement of lease liabilities as of December 31:
(In thousands) 2022 2021
Operating Cash Flow for Finance Leases $ 4  $ 78 
Operating Cash Flow for Operating Leases $ 7,873  $ 6,711 
Financing Cash Flow for Finance Leases $ 93  $ 901 
As permitted by ASC 842, leases with expected durations of less than 12 months from inception (i.e. short-term leases) were excluded from the Company’s calculation of its lease liability and ROU asset. Furthermore, as permitted by ASC 842, the Company elected to apply the package of practical expedients, which allows companies not to reassess: (a) whether its expired or existing contracts are or contain leases, (b) the lease classification for any expired or existing leases, and (c) initial direct costs for any existing leases.
The weighted-average remaining term for the Company's operating and financing leases are approximately 4 years and 3 years, respectively. The weighted-average discount rates for the Company's operating and financing leases are each approximately 3.6%.
The following is a summary of the Company's maturity of lease liabilities:
(In thousands) Operating Leases Financing Leases
2023 $ 4,876  $ 32 
2024 3,879  32 
2025 3,310  18 
2026 1,216  14 
2027 859  6 
Thereafter 1,298  — 
Total Lease Payments 15,438  102 
Less: Interest 1,055  6 
Total Lease Liability $ 14,383  $ 96 
These amounts exclude annual operating lease payments of approximately $1.7 million per year through 2033, which represents legal binding lease payments for leases signed, but not yet commenced.