10.

LEASES

The Company leases various property and equipment under operating lease arrangements. On

January 1, 2019,

the Company adopted Topic

842

and ASU

2018

using the cumulative effect method and has elected to apply each available practical expedient. The standard requires companies to recognize operating lease assets and liabilities on the balance sheet and to disclose key information regarding leasing arrangements. ASU

2018

also allows an exception so that companies do

not

have to make the new required lease disclosures for periods before the effective date. The Company has elected to apply the short-term lease exception to all leases of

one

year or less.

The adoption of Topic

842

resulted in the Company recognizing operating lease liabilities totaling

$19,508

with a corresponding right-of-use (“ROU”) asset of

$17,613

based on the present value of the minimum rental payments of such leases. The variance between the ROU asset balance and the lease liability is a deferred rent liability that existed prior to the adoption of Topic

842

and was offset against the ROU asset balance during the adoption. As of

December 31, 2020

, the ROU asset had a balance of

$19,321

which is included in the “Operating lease right-of-use assets” line item of these consolidated financial statements and current and non-current lease liabilities relating to the ROU asset of

$1,832

and

$19,569

respectively, and are included in the “Current portion of operating lease obligations” and “Long-term operating lease obligations, net of current portion” line items of these consolidated financial statements. The discount rates used for leases accounted for under Topic

842

are based on an interest rate yield curve developed for the leases in the Company's lease portfolio.

Lease terms generally range from

years with renewal options for extended terms. Some of the Company's facility leases include options to renew. The exercise of the renewal options is at the Company's discretion. Therefore, the majority of renewals to extend the lease terms are

not

included in ROU assets and lease liabilities as they are

not

reasonably certain of exercise. The Company regularly evaluates the renewal options and includes them in the lease term when the Company is reasonably certain to exercise them. Certain leases contain rent escalation clauses that require additional rental payments in the later years of the term. Rent expense for these types of leases is recognized on a straight-line basis over the lease term. Operating rental expense for the years ended

December 31, 2020

and

2019

was

$4,396

and

$4,264,

respectively.

In addition, the Company has entered into finance lease arrangements to finance property and equipment and assumed finance lease obligations in connection with certain acquisitions. Finance rental expense for the years ended

December 31, 2020

and

2019

was

$829

and

$666,

respectively.

Amortization expense recorded in connection with assets recorded under finance leases was

$619

and

$560

for the years ended

December 31, 2020

and

2019

, respectively.

Quantitative information regarding the Company's leases is as follows:

	Year Ended December 31,
	2020			2019
Components of lease cost
Finance lease cost components:
Amortization of finance lease assets	$	619		$	560
Interest on finance lease liabilities		210			106
Total finance lease costs		829			666
Operating lease cost components:
Operating lease cost		2,939			3,017
Short-term lease cost		648			629
Variable lease cost (1)		992			783
Sublease income		(183	)		(165	)
Total operating lease costs		4,396			4,264

Total lease cost	$	5,225		$	4,930

Supplemental cash flow information related to our operating leases is as follows for the twelve months ended December 31, 2020 and 2019:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	3,551		$	3,505
Right-of-use assets obtained in exchange for new
operating lease liabilities	$	4,777		$	17,613

Weighted-average remaining lease term-finance leases at end of period (in years)		1.7			1.1
Weighted-average remaining lease term-operating leases at end of period (in years)		9.8			10.8
Weighted-average discount rate-finance leases at end of period		8.3	%		8.4	%
Weighted-average discount rate-operating leases at end of period		8.7	%		9.0	%

(

)

Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company's leased facilities and equipment.

Amortization associated with new right-of-use assets obtained in exchange for new operating lease liabilities is

$291

and

$1,633

for the years ended

December 31, 2020

and

2019,

respectively.

During

January 2021,

the Company entered into a contract for an additional operating lease of

$907

that will commence during fiscal year

2021

and carries a lease term of

three

years.

As of

December 31, 2020

, future minimum lease payments under finance leases and operating leases were as follows:

	Finance			Operating
	Leases			Leases			Total
2021	$	1,665		$	3,655		$	5,320
2022		1,335			3,185			4,520
2023		666			3,073			3,739
2024		90			2,906			2,996
2025		49			3,015			3,064
2026 and thereafter		—			17,105			17,105
Total lease payments		3,805			32,939			36,744
Less—portion representing interest		(382	)		(11,538	)		(11,920	)
Present value of lease obligations		3,423			21,401			24,824
Less—current portion of lease obligations		(1,427	)		(1,832	)		(3,259	)
Long-term portion of lease obligations	$	1,996		$	19,569		$	21,565