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Leases
 9 Months Ended
Sep. 30, 2021
Leases [Abstract]  
Leases Leases
The Company leases manufacturing equipment under non-cancelable finance leases expiring at various dates through December 2025. The Company also leases office and manufacturing facilities under non-cancelable operating leases expiring at various dates through June 2026. In October 2021, the Company entered into a lease agreement commencing on April 1, 2022 for a term of 65 months through August 31, 2027. In September 2021, the Company gave a notice to the landlord to terminate the lease of certain office space in Orlando, Florida. The amounts of operating lease right-of-use assets and liabilities associated with the termination were not material. Some of the Company’s leases include one or more options to renew, with renewal terms that if exercised by the Company, extend the lease term from one to six years. The exercise of these renewal options is at the Company’s discretion. The Company’s lease agreements do not contain any material terms and conditions of residual value guarantees or material restrictive covenants. The Company’s short-term leases and sublease income were not material.
The Company adopted ASC 842 using the modified retrospective method on January 1, 2021. The Company elected the available package of practical expedients and implemented internal controls to enable the preparation of financial information upon adoption. The most significant impact of the adoption of ASC 842 was the recognition of right-of-use, or ROU, assets and lease liabilities for operating leases of $10.8 million and $12.0 million, respectively, and a reversal of deferred rent of $1.2 million on January 1, 2021. The Company’s accounting for finance leases remained substantially unchanged. The adoption of ASC 842 did not have any impact on the Company’s operating results or cash flows.
The Company determines if an arrangement is or contains a lease at inception. Operating leases are included in operating lease right-of use assets and operating lease liabilities in the Company’s condensed consolidated balance sheets. Finance leases are included in property and equipment, and finance lease liabilities in the Company’s condensed consolidated balance sheets.
Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the commencement date based on an amount equal to the present value of lease payments over the lease term. The Company’s leases do not provide an implicit rate, therefore the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company uses the implicit rate when it is readily determinable. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed it to carry forward existing lease classification and to exclude leases with original terms of one year or less. Further, the Company elected to combine lease and non-lease components for all asset classes. Any variable lease components are expensed as incurred. The operating lease
right-of-use asset also includes adjustments related to prepaid or deferred lease payments and lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term.
The components of lease expenses for the three and nine months ended September 30, 2021 were as follows (in thousands):
Three Months EndedNine Months Ended
September 30, 2021September 30, 2021
Operating lease cost$1,202 $3,560 
Variable lease cost420 1,324 
Total operating lease cost$1,622 $4,884 
Finance lease cost:
Amortization of right-of-use assets$42 $126 
Interest on finance lease liabilities14 42 
Total finance lease cost$56 $168 
Supplemental cash flow information for the nine months ended September 30, 2021 related to leases was as follows (in thousands):
Amount
Cash paid for amounts included in the measurement of lease liabilities:
Cash paid for operating leases included in operating activities$(3,723)
Cash paid for finance leases included in financing activities(258)
Right of use assets obtained in exchange for lease obligations:
Operating leases2,876 
Finance leases— 
Supplemental balance sheet information related to leases was as follows (in thousands):
September 30, 2021
Operating leases:
Operating lease right-of-use assets$10,165 
Operating lease liabilities:
Operating lease liabilities, current$4,927 
Operating lease liabilities, non-current6,639 
Total operating lease liabilities$11,566 
Finance leases:
Property and equipment, gross$926 
Less: accumulated depreciation(321)
Property and equipment, net$605 
Finance lease liabilities, current$257 
Finance lease liabilities, non-current145 
Total finance lease liabilities$402 
Weighted average remaining terms were as follows (in years):
September 30, 2021
Weighted average remaining lease term
Operating leases3.13
Finance leases2.03
Weighted average discount rates were as follows:
September 30, 2021
Weighted average discount rate
Operating leases2.76 %
Finance leases9.92 %
Maturities of lease liabilities were as follows (in thousands):
Operating LeasesFinance Leases
Year Ending December 31,
2021 (remaining three months)$1,286 $78 
20224,963 240 
20233,515 71 
20241,283 28 
20251,205 26 
2026602 — 
Total lease payments12,854 443 
Less: imputed interest(1,288)(41)
Total leases liabilities$11,566 $402 
Disclosures under ASC 840, Leases
Rent expense was $1.3 million and $4.2 million for the three and nine months ended September 30, 2020, respectively.
As of December 31, 2020, future minimum lease payments under all noncancelable capital and operating leases with an initial lease term in excess of one year were as follows (in thousands):
Capital LeasesOperating Leases
2021$331 $5,834 
2022240 6,172 
202370 4,544 
202428 746 
202525 — 
Thereafter— — 
Total minimum lease payments694 $17,296 
Less: amount representing interest80 
Capital lease obligations$614 
Leases Leases
The Company leases manufacturing equipment under non-cancelable finance leases expiring at various dates through December 2025. The Company also leases office and manufacturing facilities under non-cancelable operating leases expiring at various dates through June 2026. In October 2021, the Company entered into a lease agreement commencing on April 1, 2022 for a term of 65 months through August 31, 2027. In September 2021, the Company gave a notice to the landlord to terminate the lease of certain office space in Orlando, Florida. The amounts of operating lease right-of-use assets and liabilities associated with the termination were not material. Some of the Company’s leases include one or more options to renew, with renewal terms that if exercised by the Company, extend the lease term from one to six years. The exercise of these renewal options is at the Company’s discretion. The Company’s lease agreements do not contain any material terms and conditions of residual value guarantees or material restrictive covenants. The Company’s short-term leases and sublease income were not material.
The Company adopted ASC 842 using the modified retrospective method on January 1, 2021. The Company elected the available package of practical expedients and implemented internal controls to enable the preparation of financial information upon adoption. The most significant impact of the adoption of ASC 842 was the recognition of right-of-use, or ROU, assets and lease liabilities for operating leases of $10.8 million and $12.0 million, respectively, and a reversal of deferred rent of $1.2 million on January 1, 2021. The Company’s accounting for finance leases remained substantially unchanged. The adoption of ASC 842 did not have any impact on the Company’s operating results or cash flows.
The Company determines if an arrangement is or contains a lease at inception. Operating leases are included in operating lease right-of use assets and operating lease liabilities in the Company’s condensed consolidated balance sheets. Finance leases are included in property and equipment, and finance lease liabilities in the Company’s condensed consolidated balance sheets.
Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the commencement date based on an amount equal to the present value of lease payments over the lease term. The Company’s leases do not provide an implicit rate, therefore the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company uses the implicit rate when it is readily determinable. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed it to carry forward existing lease classification and to exclude leases with original terms of one year or less. Further, the Company elected to combine lease and non-lease components for all asset classes. Any variable lease components are expensed as incurred. The operating lease
right-of-use asset also includes adjustments related to prepaid or deferred lease payments and lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term.
The components of lease expenses for the three and nine months ended September 30, 2021 were as follows (in thousands):
Three Months EndedNine Months Ended
September 30, 2021September 30, 2021
Operating lease cost$1,202 $3,560 
Variable lease cost420 1,324 
Total operating lease cost$1,622 $4,884 
Finance lease cost:
Amortization of right-of-use assets$42 $126 
Interest on finance lease liabilities14 42 
Total finance lease cost$56 $168 
Supplemental cash flow information for the nine months ended September 30, 2021 related to leases was as follows (in thousands):
Amount
Cash paid for amounts included in the measurement of lease liabilities:
Cash paid for operating leases included in operating activities$(3,723)
Cash paid for finance leases included in financing activities(258)
Right of use assets obtained in exchange for lease obligations:
Operating leases2,876 
Finance leases— 
Supplemental balance sheet information related to leases was as follows (in thousands):
September 30, 2021
Operating leases:
Operating lease right-of-use assets$10,165 
Operating lease liabilities:
Operating lease liabilities, current$4,927 
Operating lease liabilities, non-current6,639 
Total operating lease liabilities$11,566 
Finance leases:
Property and equipment, gross$926 
Less: accumulated depreciation(321)
Property and equipment, net$605 
Finance lease liabilities, current$257 
Finance lease liabilities, non-current145 
Total finance lease liabilities$402 
Weighted average remaining terms were as follows (in years):
September 30, 2021
Weighted average remaining lease term
Operating leases3.13
Finance leases2.03
Weighted average discount rates were as follows:
September 30, 2021
Weighted average discount rate
Operating leases2.76 %
Finance leases9.92 %
Maturities of lease liabilities were as follows (in thousands):
Operating LeasesFinance Leases
Year Ending December 31,
2021 (remaining three months)$1,286 $78 
20224,963 240 
20233,515 71 
20241,283 28 
20251,205 26 
2026602 — 
Total lease payments12,854 443 
Less: imputed interest(1,288)(41)
Total leases liabilities$11,566 $402 
Disclosures under ASC 840, Leases
Rent expense was $1.3 million and $4.2 million for the three and nine months ended September 30, 2020, respectively.
As of December 31, 2020, future minimum lease payments under all noncancelable capital and operating leases with an initial lease term in excess of one year were as follows (in thousands):
Capital LeasesOperating Leases
2021$331 $5,834 
2022240 6,172 
202370 4,544 
202428 746 
202525 — 
Thereafter— — 
Total minimum lease payments694 $17,296 
Less: amount representing interest80 
Capital lease obligations$614