XML 23 R10.htm IDEA: XBRL DOCUMENT v3.21.2
LEASES
12 Months Ended
Dec. 31, 2020
LEASES [Abstract]  
LEASES
4.  LEASES

The Company leases certain real estate and warehouse equipment under long-term lease agreements.

On January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842) (“Topic 842”), and all subsequent amendments, using the optional transition method applied to leases existing on January 1, 2019, with no restatement of comparative periods.

Upon adoption of Topic 842, the Company recognized operating ROU assets (referred herein as “lease assets”) and lease liabilities based on the present value of its remaining minimum rental payments for existing operating leases as of the adoption date, utilizing the Company’s applicable incremental borrowing rate as of that date.  The adoption of Topic 842 resulted in the Company recognizing $17.6 million and $18.1 million of operating lease assets and lease liabilities, respectively, as of January 1, 2019.  The difference between the lease assets and liabilities was primarily due to the recognition of a $0.5 million pre-tax cumulative effect adjustment to retained earnings on January 1, 2019, resulting from the impairment of certain operating lease assets upon adoption.  The Company had no existing finance leases, previously termed capital leases under ASC 840, as of its adoption of Topic 842.  During the fourth quarter of 2020, the Company executed two financing leases for two forklifts used in the warehouse operations totaling less than $0.1 million.

The Company performs interim reviews of its operating and finance lease assets for impairment when evidence exists that the carrying value of an asset group, including a lease asset, may not be recoverable. During the year ended December 31, 2020, the Company recognized an impairment expense of approximately $0.6 million associated with certain operating lease assets.  Excluding the January 1, 2019 impairment charge to retained earnings upon the adoption of Topic 842, the Company recognized an impairment expense of less than $0.1 million associated with its operating lease assets during 2019.

Additional information regarding the Company’s operating leases is as follows (in thousands, except for lease term and discount rate information):

Leases
 
Balance Sheet Classification
 
December 31, 2020
  
December 31, 2019
 
(in thousands)
        
Assets:
        
Operating
 
Operating lease assets
 
$
11,772
  
$
13,897
 
Finance
 
Financing lease assets
  
44
   
-
 
Total assets
   
$
11,816
  
$
13,897
 
           
Liabilities:
          
Current
          
Operating
 
Operating lease liabilities
 
$
3,530
  
$
3,823
 
Finance
 
Current maturities of financing lease obligations
  
14
   
-
 
Non-current
          
Operating
 
Operating lease liabilities, non-current
  
9,245
   
10,655
 
Finance
 
Financing lease liabilities, net of current obligation
  
29
   
-
 
Total lease liabilities
   
$
12,818
  
$
14,478
 

Lease Cost
 
Income Statement Classification
 
December 31, 2020
  
December 31, 2019
 
(in thousands)
        
Operating lease cost
 
Operating expenses
 
$
3,809
  
$
4,151
 
Operating lease cost
 
Impairment expense
  
601
   
4
 
Variable lease cost (1)
 
Operating expenses
  
937
   
895
 
Finance:
          
Amortization of lease assets (2)
 
Operating expenses
  
-
   
-
 
Interest on lease liabilities (2)
 
Interest expense
  
-
   
-
 
Total lease cost
   
$
5,347
  
$
5,050
 

(1) Variable lease cost includes payment for certain real estate taxes, insurance, common area maintenance, and other charges related to lease agreements, which are not included in the measurement of the operating lease liabilities.
(2) Finance lease costs are less than $1,000 for December 31, 2020; we had no finance lease costs in 2019.

  
December 31, 2020
 
Maturity of Lease Liabilities
 
Operating Leases
  
Finance Leases
 
(in thousands)
      
2021
 
$
3,591
  
$
16
 
2022
  
2,835
   
16
 
2023
  
2,035
   
15
 
2024
  
1,564
   
-
 
2025
  
1,220
   
-
 
Thereafter
  
3,205
   
-
 
Total lease payments
 
$
14,450
  
$
47
 
Less:  Interest
  
(1,675
)
  
(4
)
Present value of lease liabilities
 
$
12,775
  
$
43
 

Lease Term and Discount Rate
 
December 31, 2020
  
December 31, 2019
 
Weighted-average remaining lease term (years):
      
Operating leases
  
5.9
   
6.0
 
Finance leases
  
2.9
   
-
 
Weighted-average discount rate:
        
Operating leases
  
4.4
%
  
4.1
%
Finance leases
  
6.5
%
  
-
 

Other Information
 
December 31, 2020
  
December 31, 2019
 
(in thousands)
      
Cash paid for amounts included in the measurement of lease liabilities:
      
Operating cash flows used in operating leases
 
$
3,866
  
$
4,079
 
Operating cash flows used in finance leases
  
-
   
-
 
Financing cash flows used in finance leases
  
1
   
-
 
         
Operating lease assets obtained in exchange for lease obligations
        
Operating leases, initial recognition
  
317
   
18,077
 
Operating leases, modifications and remeasurements
  
1,340
   
-
 
Finance leases, initial recognition
  
45
   
-