Leases

12 Months Ended

Dec. 31, 2022

NOTE 8 - LEASES

Under Topic 842, a contract is a lease, or contains a lease, if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. To determine whether a contract conveys the right to control the use of an identified asset for a period of time, an entity shall assess whether, throughout the period of use, the entity has both of the following: (a) the right to obtain substantially all of the economic benefits from use of the identified asset; and (b) the right to direct the use of the identified asset.

The Company leases office and research facilities, and office equipment under operating leases which expire through 2027. The Company’s leases have remaining lease terms of two to five years, some of which may include options to extend the leases for five years or longer, and some of which may include options to terminate the leases within the next 5 years or less. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets; expense for these leases is recognized on a straight-line basis over the lease term. Variable lease payments are expensed as incurred and are not included within the lease liability and right-of-use assets calculation. As a practical expedient, the Company elected, for all office and facility leases, not to separate nonlease components (e.g., common-area maintenance costs) from lease components (e.g., fixed payments including rent) and instead to account for each separate lease component and its associated non-lease components as a single lease component. As most of the leases do not provide an implicit rate, the Company generally, for purposes of discounting lease payments, uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date.

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


	Years Ended December 31,
	2022		2021		2020
Fixed lease cost (1)	$	2,177	$	3,387	$	3,962
Variable lease cost		598		1,002	$	166
Total operating lease cost	$	2,775	$	4,389	$	4,128

(1)

Includes short-term leases costs, which were immaterial.

Other information related to leases was as follows (in thousands, except lease term and discount rate):


	Years Ended December 31,
	2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,227	$	4,039	$	3,357
ROU assets obtained in exchange for new lease liabilities:
Operating leases	$	1,153	$	764	$	—


	Years ended December 31,
	2022			2021
Weighted-average remaining lease term (years):
Operating leases	3.19			2.18
Weighted-average discount rate:
Operating leases		5.4	%		2.0	%

Future minimum lease payments and related lease liabilities as of December 31, 2022 were as follows (in thousands):


	Operating Lease Payments (1)
2023	$	2,429
2024		2,524
2025		1,975
2026		290
2027		299
Total lease payments		7,517
Less: imputed interest		(615	)
Present value of lease liabilities:	$	6,902

Less: current obligations under leases (accrued liabilities)		(2,108	)
Noncurrent operating lease liabilities	$	4,794

(1)

Future minimum lease payments exclude short-term leases as well as payments to landlords for variable common area maintenance, insurance and real estate taxes.