LEASES

12 Months Ended

Dec. 31, 2021

The Company determines if an arrangement is a lease at inception. The Company considers any contract where there is an identified asset and that it has the right to control the use of such asset in determining whether the contract contains a lease. An operating lease right-of-use (“ROU”) asset represents the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are to be recognized at the commencement date based on the present value of lease payments over the lease term. As all of the Company’s operating leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available on the adoption date in determining the present value of lease payments. We estimate the incremental borrowing rate based on a yield curve analysis, utilizing the interest rate derived from the fair value analysis of our credit facility and adjusting it for factors that appropriately reflect the profile of secured borrowing over the expected term of the lease. The operating lease ROU assets include any lease payments made prior to the rent commencement date and exclude lease incentives. Our leases have remaining lease terms of one year to 20 years. Lease terms may include options to extend the lease term used in determining the lease obligation when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments are recognized on a straight-line basis over the lease term for operating leases.

Our operating lease cost for the years ended December 31, 2021 and 2020 was $15.8 million and $15.3 million, respectively. Our variable lease cost for the years ended December 31, 2021 and 2020 was zero and $0.6 million, respectively. The net change in ROU asset and operating lease liability are included in other assets in the consolidated cash flows for the years ended December 31, 2021 and 2020.

During the year ended December 31, 2020, the Company withheld portions of and/or delayed payments to certain of its landlords as the Company sought to renegotiate payment terms, in order to further maintain liquidity given the temporary closures of its facilities. In some instances, the negotiations with landlords have led to agreements for rent abatements or rental deferrals, while. Total payments withheld or deferred as of December 31, 2020 were approximately $0.5 million and were repaid as of December 31, 2021.

In accordance with the FASB’s Staff Q&A regarding rent concessions related to the effects of the COVID-19 pandemic, the Company has elected to account for agreed concessions by landlords that do not result in a substantial increase in the rights of the landlord or the obligations of the Company, as lessee, as though enforceable rights and obligations for those concessions existed in the original lease agreements and the Company has elected not to re-measure the related lease liabilities and right-of-use assets associated with rent concessions due to COVID-19. For qualifying rent abatement concessions, the Company has recorded negative lease expense for the amount of the concession during the period of relief, and for qualifying deferrals of rental payments, the Company has recognized a payable in lieu of recognizing a decrease in cash for the lease payment that would have been made based on the original terms of the lease agreement, which will be reduced when the deferred payment is made in the future. During the year ended December 31, 2020, the Company recognized $0.6 million of negative lease expense related to rent abatement concessions.

Supplemental cash flow information and non-cash activity related to our operating leases are as follows:

	December 31,
	2021		2020
Operating cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities	$	15,404	$	15,390
Non-cash activity:
Lease liabilities arising from obtaining right-of-use assets	$	45,456	$	14,890

As of December 31, 2021, there were 2 new leases and 9 lease modifications that resulted in noncash re-measurements of the related ROU asset and operating lease liability of $45.5 million. Approximately $40 million of this related to the sale leaseback transaction discussed in Note 7 with the remaining amount related to lease re-measurements.

Weighted-average remaining lease term and discount rate for our operating leases is as follows:

	Year Ended December 31,
	2021			2020
Weighted-average remaining lease term	11.47 years			6.11 years
Weighted-average discount rate		7.67	%		11.33	%

Maturities of lease liabilities by fiscal year for our operating leases as of December 31, 2021 are as follows:

Year ending December 31,
2022	$	18,353
2023		17,408
2024		15,047
2025		13,074
2026		10,600
Thereafter		64,031
Total lease payments		138,513
Less: imputed interest		(40,624	)
Present value of lease liabilities	$	97,889