Note 8 - Leases

3 Months Ended

Mar. 31, 2022

8. Leases

The Company is obligated under various non-cancelable operating leases primarily for office space. The initial terms of the leases expire on various dates through 2030. We determine if an arrangement is a lease at inception.

Leases are classified as eitheroperating or finance leases based on certain criteria. This classification determines the timing and presentation of expenses on the income statement, as well as the presentation of the related cash flows and balance sheet. Operating leases are recorded on the balance sheet beginning January 1, 2022 as operating lease right-of-use assets, accrued expenses and other liabilities, and long-term operating lease liabilities. The Company currently has no significant finance leases.

ROU assets and related liabilities are recorded at lease commencement based on the present value of the lease payments over the expected lease term. Lease payments include future increases unless the increases are based on changes in an index or rate. As the Company's leases do not provide an implicit rate, the Company’s incremental borrowing rate is used to calculate ROU assets and related liabilities. The incremental borrowing rate is determined based on the Company’s estimated credit rating, the term of the lease, the economic environment where the asset resides and full collateralization. Lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We generally use the base, non-cancelable, lease term when determining the lease assets and liabilities. Operating lease expense is recognized on a straight-line basis over the lease term and is allocated within operating expenses in the condensed consolidated statements of operations.

The components of the Company's operating lease expense are reflected in the condensed consolidated statements of income for the three months ended March 31, 2022 are as follows:

	(in thousands)
Operating lease expenses	$	1,151
Short-term lease expenses⁽¹⁾		814
Variable lease cost not included in the lease liability⁽²⁾		32
Total lease expense	$	1,997

( 1) Short-term lease expenses include rent expenses from leases of 12 months or less on the transition date or lease commencement.

( 2) Variable lease cost includes common area maintenance, property taxes, and fluctuations in rent due to a change in an index or rate.

Our lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. We elected to combine fixed payments for non-lease components, for all classes of underlying assets, with our lease payments and account for them together as a single lease component which increases the amount of our lease assets and liabilities.

During the three months ended March 31, 2022, ROU assets obtained in exchange for new operating lease liabilities amounted to $1.0 million.

Other information related to operating leases for the three months ended March 31, 2022 is as follows:

	(in thousands)
Cash paid for amounts included in the measurement of the lease liability:
Operating cash flows from operating leases	$	1,354

As of March 31, 2022, our operating leases had a weighted average remaining lease term of 5.1 years and a weighted average discount rate of 4.8%.

The maturity schedule of the operating lease liabilities as of March 31, 2022 is as follows:

Year Ending December 31:
	(in thousands)
2022 (nine months)	$	2,867
2023		4,080
2024		2,422
2025		1,882
2026		1,438
Thereafter		2,960
Total future lease payments	$	15,649
Less: Present value adjustment		(1,878	)
Present value of future lease payments ⁽¹⁾	$	13,771

(1) Includes the current portion of operating lease liabilities of $3.6 million, which is reflected in accrued expenses and other liabilities in the condensed consolidated balance sheets.

During the three months ended March 31, 2021, total rent expenses amounted to $1.5 million.

The future minimum rental payments under ASC 840 for all long-term non-cancelable property leases at December 31, 2021 were as follows:

Year Ending December 31:
	(in thousands)
2022	$	5,680
2023		3,808
2024		2,428
2025		1,840
2026		1,438
Thereafter		2,960
	$	18,154