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Leases

3 Months Ended

Mar. 31, 2022

Note 9 - Leases

The components of lease expense were as follows (in thousands):


	Three Months Ended March 31,
	2022		2021
Finance lease right-of-use assets amortization	$	71	$	62
Finance lease interest expense	4		3
Total finance lease cost	75		65
Operating lease cost	1,192		1,088
Short-term lease cost	32		50
Variable lease cost	254		237
Sublease income	(83)		(80)
Total lease cost	$	1,470	$	1,360

The weighted-average remaining lease term and discount rate for operating and finance leases as of March 31, 2022 are as follows:


	Operating Leases		Finance Leases
Weighted-average remaining lease term	10.0 years		2.2 years
Weighted-average discount rate	5.4	%	3.6	%

The following table indicates the financial statement lines where the Company's operating and finance lease liabilities and right-of-use ("ROU") assets are included in the Condensed Consolidated Balance Sheets (in thousands):


	As of March 31, 2022		Balance Sheet Classification
Assets:
Operating lease ROU assets	$	19,852	Operating lease right-of-use assets
Finance lease ROU assets	512		Property and equipment, net
Total lease assets	$	20,364

Liabilities:
Current operating lease liabilities	$	3,458	Accrued expenses and other current liabilities
Current finance lease liabilities	274		Accrued expenses and other current liabilities
Non-current operating lease liabilities	33,346		Operating lease liabilities, net of current portion
Non-current finance lease liabilities	255		Other non-current liabilities
Total lease liabilities	$	37,333

Supplemental cash flow information related to leases is as follows (in thousands):


	Three Months Ended March 31, 2022
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows from operating leases	$	1,264
Operating cash flows from finance leases	$	3
Finance cash flows from finance leases	$	23
ROU assets obtained in exchange for new operating lease liabilities:	$	1,896
ROU assets obtained in exchange for new finance lease liabilities:	$	292

Future minimum lease payments under non-cancellable operating and finance leases as of March 31, 2022 are as follows (in thousands):


	Operating Leases		Finance Leases
2022 (remainder)	$	3,973	$	230
2023	5,419		189
2024	5,037		100
2025	4,613		28
2026	4,342		3
Thereafter	24,698		—
Total minimum lease payments	48,082		550
Less: Amounts representing interest	(11,281)		(21)
Present value of lease payments	$	36,801	$	529

Amounts listed in the future minimum lease payments table above do not include sublease income.

Impairment of ROU Assets and Restructuring Charges

During Q1 2022, the Company approved a strategic plan to optimize its structure and costs related to its leased facilities and print operations. As part of the plan, the Company approved a formal work from anywhere policy due to high interest in allowing employees to work remotely and investments in the Company's operating environments and technology enabling seamless day-to-day execution and increased productivity across a distributed workforce. Additionally, the Company closed one of its print locations due to the continued decline in customer print volumes and efficiencies gained through streamlining its print operations. The overall plan included vacating some or all of several of the Company's leased office facilities and one of its leased print operations facilities and making them available for sublease. The Company ceased using all of the facility space included in the plan by March 31, 2022.

As a result, during the three months ended March 31, 2022, the Company incurred $10.0 million of ROU asset impairments and $3.6 million of leasehold improvement and fixed asset impairments, which were recorded in impairment and restructuring on the Condensed Consolidated Statements of Operations. In calculating the impairment amount, the fair value of each asset was determined using an income approach based on the present value of future cash flows from estimated sublease income. This approach required the use of certain estimates, including a discount rate, sublease rental rates, period of vacancy, and sublease incentives, which were based in part by local real estate industry data. As these are subjective estimates based on unobservable inputs, the fair value of the assets are classified in Level 3 of the fair value hierarchy (refer to Note 13 - Fair Value Measurements).

Additionally, in accordance with ASC 420, Exit or Disposal Cost Obligations, the Company recognized exit obligation costs related to closing the print operations facilities, including one-time employee severance benefits, contract termination costs, and other costs associated with exiting the facility. These costs were recorded in impairment and restructuring on the Condensed Consolidated Statements of Operations, and were allocated to the Company's Print segment. Total costs recognized during three months ended March 31, 2022,

which included estimates of future costs to be incurred under the plan, were not material to the Company's financial statements. The plan to close the facility was substantially complete by March 31, 2022.

In the future if the Company determines it no longer intends to utilize some or all of its remaining leased office space, the Company may be required to record additional impairment or restructuring charges.

Leases