Leases

12 Months Ended

Dec. 31, 2021

Consensus leases certain facilities and equipment under non-cancelable operating and finance leases which expire at various dates through 2031. Office and equipment leases are typically for terms of three to five years and generally provide renewal options for terms up to an additional five years.

The Company recorded total non-cash impairment charges of $7.5 million, zero, and zero during the years ended December 31, 2021, 2020, and 2019, respectively. The $7.5 million in impairment charge during 2021 consists of $6.5 million recognized in continuing operations and $1.0 million recognized in discontinued operations. For the impairment charge recognized in continuing operations, the Company decided to exit and seek subleases for certain leased facilities primarily due to a “partial remote” work model for a significant number of employees. The Company recorded a non-cash impairment charge of $6.5 million related to operating lease right-of-use assets for the affected facility. The impairment was determined by comparing the fair value of the impacted right-of-use asset to the carrying value of the asset as of the impairment measurement date, as required under ASC Topic 360, Property, Plant, and Equipment. The fair value of the right-of-use asset was based on the estimated sublease income for the affected facilities taking into consideration the time it will take to obtain a sublease tenant, the applicable discount rate and the sublease rate which represents Level 3 unobservable inputs. The carrying value of the asset was remeasured to exclude a five year optional lease term that was originally included in the initial assessment. The impairment is presented in general and administrative expenses on the Consolidated Statements of Income. No impairment was recorded in 2020 or 2019.

The components of lease expense, recorded in cost of revenues and general and administrative expenses on the Consolidated Statements of Income, were as follows for the year ended (in thousands):


	Years ended December 31,
	2021		2020
Operating lease cost	$	2,675	$	3,002
Short-term lease cost	875		186
Finance lease cost
Amortization of right-of-use assets	834		160
Interest on lease liabilities	—		—
Total lease cost	$	4,384	$	3,348

Supplemental balance sheet information related to leases was as follows (in thousands):


Lease-Related Assets and Liabilities	December 31, 2021		December 31, 2020
Operating lease right-of-use assets	$	7,233	$	25,711
Finance lease right-of-use assets (1)	2,648		800
Total right-of-use assets	$	9,881	$	26,511

Operating lease liabilities, current	$	2,421	$	2,578
Operating lease liabilities, noncurrent	14,108		25,549
Total operating lease liabilities	$	16,529	$	28,127

(1) Included in “Other assets” in the Consolidated Balance Sheet. The full amount of the finance leases were prepaid. Therefore, there is no corresponding lease liability associated with the finance right-of-use assets.

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


	Years ended December 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,501	$	1,344
Operating cash flows from finance leases	2,719		959

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	259	$	356
Finance leases	2,719		959

Other supplemental operating lease information consists of the following:


	December 31, 2021		December 31, 2020
Operating leases:
Weighted average remaining lease term	8.8 years		14.0 years
Weighted average discount rate	4.8	%	4.4	%

Maturities of lease liabilities as of December 31, 2021 were as follows (in thousands):


	Total
Fiscal Year:
2022	$	2,515
2023	2,315
2024	2,296
2025	2,259
2026	2,328
Thereafter	10,254
Total lease payments	$	21,967
Less: Imputed interest	(5,438)
Present value of operating lease liabilities	$	16,529

Significant Judgments

Discount Rate

The majority of the Company’s leases are discounted using the Company’s incremental borrowing rate as the rate implicit in the lease is not readily determinable. Rates are obtained from various large banks to determine the appropriate incremental borrowing rate each quarter for collateralized loans with a maturity similar to the lease term.

Options

The lease term is generally the minimum noncancelable period of the lease. The Company does not include option periods unless the Company determined it is reasonably certain of exercising the option at inception or when a triggering event occurs.

Facility lease

On October 28, 2021, Ziff Davis (the “Assignor”) and Consensus (the “Assignee”) entered into the Assignment and First Amendment to Office Lease (the “Amendment”) with the NREA-TRC 700 LLC (the “Landlord”), in regards to the lease which was previously entered into on April 24, 2019 between the Assignor and the Landlord for certain office space located at 700 South Flower Street, Los Angeles, California (the “Lease”), the lease has an expiration date of January 31, 2031. The Amendment granted the Landlord’s consent to the assignment of the Lease by the Assignor to Assignee.

Leases