LEASES

9 Months Ended

Sep. 30, 2021

The Company's lease population of its right-of-use asset and lease liabilities under the Leases Topic of the FASB ASC is substantially related to the rental of office space. The Company enters into lease agreements as a lessee that may include options to extend or terminate early. Some of these real estate leases require variable payments of property taxes, insurance, and common area maintenance, in addition to base rent. Certain of the leases have provisions for free rent months during the lease term and/or escalating rent payments and, particularly for the Company’s longer-term leases for its corporate offices, it has received incentives to enter into the leases, such as receiving up to a specified dollar amount to construct tenant improvements. These leases do not include residual value guarantees, covenants, or other restrictions.

Beginning in the second quarter of 2020, in connection with the continuing developments from COVID-19, the Company expedited restructuring plans and either reduced or fully vacated leased office space. The Company is in the process of seeking to sublet some of the space where possible. The decision and change in the use of space resulted in a right-of-use asset impairment charge of $1.7 million and $4.4 million for the nine months ended September 30, 2021 and 2020, respectively. This loss was determined by comparing the fair value of the impacted right-of-use assets to the carrying value of the assets as of the impairment measurement date, in accordance with the Property, Plant and Equipment Topic of the FASB ASC. The fair value of the right-of-use assets was based on the estimated sublease income for the space taking into consideration the time period it will take to obtain a subtenant, the applicable discount rate, and the sublease rate. For the nine months ended September 30, 2021 and 2020, respectively, the Company wrote off a total of $0.2 million and $1.0 million of leasehold improvements and other property and equipment related to these locations. The measurement of the right-of-use asset impairments, using the assumptions described, is a Level 3 fair value measurement. See Note 10 - Fair Value Measurements for a description of Level 3 inputs.

The table below presents the lease-related assets and liabilities included on the condensed consolidated balance sheets:


Classification on Condensed Consolidated Balance Sheets:	September 30, 2021		December 31, 2020
	(amounts in thousands)
Operating lease right-of-use assets (a)	$	8,064	$	10,447
Operating lease liabilities - current (a)	$	4,362	$	4,509
Operating lease liabilities - non-current (a)	$	12,280	$	15,234


	September 30, 2021		December 31, 2020
Weighted-average remaining lease term	3.5 years		4.1 years
Weighted average discount rate	6.38	%	6.32	%

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(a) Amounts include lease assets and liabilities related to the eight locations added as part of the acquisition of WSG: operating lease right-of-use assets of $1.0 million, operating lease current liabilities of $0.3 million, and operating lease non-current liabilities of $0.7 million.

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities (which do not include short-term leases) recorded on the condensed consolidated balance sheets as of September 30, 2021:


Years Ending December 31:	(amounts in thousands)
2021	$	995
2022	5,639
2023	5,292
2024	3,960
2025	2,763
Total minimum lease payments	18,649
Less: amount of lease payments representing interest	(2,007)
Present value of future minimum lease payments	16,642
Less: operating lease liabilities - current	(4,362)
Operating lease liabilities - non-current	$	12,280

Other Information

The table below provides information regarding supplemental cash flows:


	Nine Months Ended
	September 30,
	2021		2020
	(amounts in thousands)
Supplemental Cash Flow Information:
Cash paid for amounts included in the measurement of operating lease liabilities	$	4,692	$	5,404
Right-of-use assets acquired under operating lease	$	1,088	$	915

The components of lease expense are as follows:


	Three Months Ended
	September 30,
	2021		2020
	(amounts in thousands)
Amounts Included in Condensed Consolidated Statements of Operations:
Operating lease expense	$	848	$	1,006
Short-term lease expense	$	1,033	$	1,077
Variable and other lease costs	$	419	$	444

	Nine Months Ended
	September 30,
	2021		2020
	(amounts in thousands)
Amounts Included in Condensed Consolidated Statements of Operations:
Operating lease expense	$	2,700	$	3,946
Short-term lease expense	$	2,523	$	4,373
Variable and other lease costs	$	1,638	$	1,490

Operating lease expense, short-term lease expense, and variable and other lease costs are included in selling, general and administrative expenses, direct operating expenses, and restructuring costs in the condensed consolidated statements of operations, depending on the nature of the leased asset. Operating lease expense is reported net of sublease income, which is not material.

As of September 30, 2021, the Company does not have any material operating leases which have not yet commenced. The Company has an immaterial amount of finance lease contracts related to other equipment rentals which are not included in the above disclosures.