Note 10 - Leases

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Lessee Operating and Finance Leases [Text Block]

10. LEASES

The Company leases various property and equipment under operating lease arrangements. On January 1, 2019, the Company adopted Topic 842 and ASU 2018-11 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. 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, 2021, the ROU asset had a balance of $18,029 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 $1,775 and $18,405, 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 3 to 15 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, 2021 and 2020 was $4,302 and $4,396, 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, 2021 and 2020 was $1,379 and $829, respectively.

Amortization expense recorded in connection with assets recorded under finance leases was $984 and $619 for the years ended December 31, 2021 and 2020, respectively.

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

	Year Ended December 31,
	2021			2020
Components of lease cost
Finance lease cost components:
Amortization of finance lease assets	$	984		$	619
Interest on finance lease liabilities		395			210
Total finance lease costs		1,379			829
Operating lease cost components:
Operating lease cost		2,965			2,939
Short-term lease cost		654			648
Variable lease cost (1)		870			992
Sublease income		(187	)		(183	)
Total operating lease costs		4,302			4,396
Total lease cost	$	5,681		$	5,225
Supplemental cash flow information related to our operating leases is as follows for the twelve months ended December 31, 2021 and 2020:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	3,581		$	3,551
Right-of-use assets obtained in exchange for new
operating lease liabilities	$	907		$	4,777
Weighted-average remaining lease term-finance leases at end of period (in years)		1.9			1.7
Weighted-average remaining lease term-operating leases at end of period (in years)		8.9			9.8
Weighted-average discount rate-finance leases at end of period		6.3	%		8.3	%
Weighted-average discount rate-operating leases at end of period		8.6	%		8.7	%

(1) 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 $270 and $291 for the years ended December 31, 2021 and 2020, respectively. 

As of December 31, 2021, future minimum lease payments under finance leases and operating leases were as follows:

	Finance			Operating
	Leases			Leases			Total
2022	$	2,322		$	3,475		$	5,797
2023		1,576			3,388			4,964
2024		693			2,933			3,626
2025		289			3,015			3,304
2026		101			3,059			3,160
2027 and thereafter		—			14,045			14,045
Total lease payments		4,981			29,915			34,896
Less—portion representing interest		(440	)		(9,735	)		(10,175	)
Present value of lease obligations		4,541			20,180			24,721
Less—current portion of lease obligations		(2,060	)		(1,775	)		(3,835	)
Long-term portion of lease obligations	$	2,481		$	18,405		$	20,886