Note D - Leases

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Lessee, Operating and Finance Leases [Text Block]

Note D - Leases

We have operating and finance leases for corporate and business offices, service facilities, call centers and certain equipment. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet, unless the arrangement includes an option to purchase the underlying asset, or an option to renew the arrangement, that we are reasonably certain to exercise (short-term leases). Our leases have remaining lease terms of one year to eight years, some of which may include options to extend the leases for up to an additional five years.

We sublease our Fullerton (CA), Jacksonville (FL) and Uxbridge (UK) facilities. The leases and subleases for these three facilities expire at various dates, the latest being in fiscal year 2024.

As of December 31, 2022, assets recorded under finance and operating leases were approximately $0.6 million and $18.6 million respectively, and accumulated amortization associated with finance leases was $1.0 million. As of December 31, 2021 assets recorded under finance and operating leases were approximately $0.8 million and $21.4 million respectively, and accumulated depreciation associated with finance leases was $0.7 million. Operating lease right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The discount rate used to determine the commencement date present value of lease payment is the interest rate implicit in the lease, or when that is not readily determinable, we utilized our incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

During the year ended December 31, 2021, we impaired three leases for the facilities we no longer occupied.  The resulting impairment and early termination charges are included in our restructuring expenses for the year ended December 31, 2021.  There is no impairment of leases in the year ended  December 31, 2022.

The following tables present supplemental balance sheet information related to our financing and operating leases:

In thousands	As of December 31, 2022
	Operating Leases		Finance Leases		Total
Right-of-use Assets	$	18,574	$	595	$	19,169
Liabilities
Short-term lease liabilities		5,587		160		5,747
Long-term lease liabilities		16,523		52		16,575
Total Lease Liabilities	$	22,110	$	212	$	22,322

In thousands	As of December 31, 2021
	Operating Leases		Finance Leases		Total
Right-of-use Assets	$	21,382	$	760	$	22,142
Liabilities
Short-term lease liabilities		6,359		194		6,553
Long-term lease liabilities		19,004		211		19,215
Total Lease Liabilities	$	25,363	$	405	$	25,768

For the year ended  December 31, 2022 and 2021, the components of lease expense were as follows:  

In thousands	Year Ended December 31, 2022			Year Ended December 31, 2021
Operating lease cost	$	5,832		$	7,745
Finance lease cost
Amortization of right-of-use assets		166			195
Interest on lease liabilities		16			27
Total Finance lease cost		182			222
Variable lease cost		1,899			2,604
Sublease income		(828	)		(1,153	)
Total lease cost, net	$	7,085		$	9,418

Other information related to leases was as follows:

In thousands	Year Ended December 31, 2022			Year Ended December 31, 2021
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	12,698		$	15,287
Operating cash flows from finance leases		15			25
Financing cash flows from finance leases		194			227
Weighted Average Remaining Lease term
Operating leases		5.92			6.16
Finance leases		1.36			2.16
Weighted Average Discount Rate
Operating leases		3.55	%		3.45	%
Finance leases		5.70	%		5.41	%

The maturities of the Company’s finance and operating lease liabilities as of December 31, 2022 are as follows:

In thousands	Operating Leases (1)		Finance Leases
Year Ending December 31,
2023	$	6,226	$	166
2024		4,802		48
2025		2,391		6
2026		2,290		—
2027		2,290		—
2028 & Beyond		6,252		—
Total future minimum lease payments		24,251		220
Less: Imputed interest		2,141		8
Total lease liabilities	$	22,110	$	212

(1) Non-cancelable sublease proceeds for the fiscal year ending December 31, 2023, and 2024 of $0.4 million and $0.4 million, respectively, are not included in the table above.

As of December 31, 2022, we have no new operating leases that have not yet commenced.