Quarterly report pursuant to Section 13 or 15(d)

Right-of-Use Assets and Lease Liabilities

v3.22.1
Right-of-Use Assets and Lease Liabilities
 3 Months Ended
Mar. 31, 2022
Leases [Abstract]  
Right-of-Use Assets and Lease Liabilities Right-of-Use Assets and Lease LiabilitiesThe Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed, and if the arrangement creates enforceable rights and obligations. Under Topic 842,
a contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. See Note 2 — Recently Issued Accounting Pronouncements for more information on the Company’s accounting policies for leases.
The Company leases office facilities under operating lease agreements that have initial terms ranging from 1 to 12 years. Some leases include one or more options to extend the term of the lease, generally at the Company’s sole discretion, with renewal terms that can extend the lease term up to 5 years. In addition, certain leases give the Company, the lessor, or both parties the right to terminate. Options to extend a lease are included in the lease term when it is reasonably certain that the Company will exercise the option. Options to terminate a lease are excluded from the lease term when it is reasonably certain that the Company will not exercise the option. The Company’s leases generally do not contain any material restrictive covenants or residual value guarantees.
The Company’s operating leases were as follows:
March 31, 2022
(in thousands)
Right-of-use assets, net $ 9,759 
Current operating lease liabilities (1)
$ 4,936 
Operating lease liabilities, long-term 13,633 
Total operating lease liabilities $ 18,569 
(1) Current lease liabilities are recorded in other current liabilities on the Company’s condensed consolidated balance sheets.
The components of lease cost are recorded in selling, general, and administrative expenses for the three months ended March 31, 2022 and were as follows:
Three Months Ended March 31, 2022
(in thousands)
Operating lease cost $ 899 
Short-term lease cost 168 
Variable lease cost 12 
Total lease cost $ 1,079 
Operating lease cost is recognized on a straight-line basis over the lease term.
Supplemental cash flow information related to leases was as follows:
Three Months Ended March 31, 2022
(in thousands)
Cash paid for amounts included in measurement of operating lease liabilities $ 1,301 
ROU assets obtained in exchange for operating lease liabilities $ 10,445 
The weighted-average remaining lease term and weighted-average discount rate for the Company’s operating leases were as follows:
March 31, 2022
Weighted-average remaining lease term 4.6 years
Weighted-average discount rate 4.6  %
Maturities of the Company’s operating lease liabilities were as follows:
March 31, 2022
(in thousands)
2022 (excluding the three months ended March 31, 2022) $ 4,226 
2023 5,719 
2024 3,618 
2025 2,360 
2026 1,413 
Thereafter 3,392 
Total lease payments 20,728 
     Less amount representing interest (2,159)
          Total present value of lease liabilities $ 18,569 
Future minimum lease payments for operating leases under ASC 840, the predecessor to Topic 842, were as follows:
December 31, 2021
(in thousands)
2022 $ 6,757 
2023 6,782 
2024 4,030 
2025 2,934 
2026 2,190 
Thereafter 4,117 
Total $ 26,810 
Cease-use Liabilities
The Company periodically identifies opportunities for cost savings through office consolidations or by exit from certain underutilized facilities. Cease-use costs represent lease obligation charges and executory costs for exited facilities. The Company accounts for cease-use costs pursuant to guidance under ASC 420, Costs Related to Exit or Disposal Activities. Charges related to these cease-use costs are estimated based on the discounted future cash flows of rent expense and executory costs that the Company is obligated to pay under the lease agreements, partially offset by projected sublease income, which is calculated based on certain sublease assumptions. Cease-use costs were $0.2 million during the three months ended March 31, 2022 and are included as a component of selling, general and administrative expenses in the condensed consolidated statements of operations. No cease-use costs were incurred during the three months ended March 31, 2021.

As a result of the exit from certain facilities, the Company recorded a cease-use liability. The cease-use liability of $9.0 million was reclassified and treated as a reduction to the beginning ROU asset value recorded upon adoption of ASC 842, Leases, on January 1, 2022.
Cease-use costs are included in other non-current liabilities and accrued expenses and other current liabilities on the consolidated balance sheet as of March 31, 2022. The following table summarizes the activity for the liability for cease-use costs recognized for the periods presented:

Cease-use Liability
(in thousands)
Balance at December 31, 2021
 $ 11,588 
Cease-use costs 160 
Reclassified as a reduction to the beginning ROU asset value (9,001)
Accretion of liability (52)
Payments (368)
Foreign currency translation (57)
Balance at March 31, 2022
 $ 2,270