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Leases And Other Commitments | 12 Months Ended
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Dec. 31, 2020
Leases [Abstract] |
Leases And Other Commitments |
6. Leases And Other Commitments
Leases
We lease office, manufacturing and warehouse space facilities under various domestic and international non-cancellable operating lease arrangements that expire at various times through December 2030. We also have one land lease that expires in 2080. Certain of our leases have renewal options which allow us to extend the lease term typically between three and five years per option and some of our leases have multiple options to extend. The remaining lease terms of our leases range from less than one year to approximately twenty years and represent the non-cancellable periods of the leases, including extension options that we determined are reasonably certain to be exercised. Leases are classified as operating or financing at lease commencement. We adopted ASC 842 utilizing the modified retrospective transition method through a $2.1 million cumulative-effect adjustment to accumulated deficit at the beginning of the first quarter of 2019. We will continue to report financial information for fiscal years prior to 2019 under the previous lease accounting standards and as such prior comparative periods have not been recast. We elected the package of practical expedients permitted under the transition guidance in the new standard, which allowed us to carry forward the historical classification of leases that were in place as of January 1, 2019. Under the previous lease accounting standards we were deemed the owner of our Mesa, Arizona building during the construction period. As a result of our adoption of ASC 842, we have de-recognized the estimated fair value of the building shell and the related lease liability as of December 31, 2018 and recorded the difference between the asset and liability as an adjustment to retained earnings at the beginning of the first quarter of 2019. In addition, as a result of our adoption of ASC 842 we recorded operating lease right-of-use assets of $26.7 million, finance lease right-of-use assets of $15.3 million, operating lease liabilities of $40.4 million and finance lease liabilities of $15.9 million in our consolidated balance sheets at the beginning of the first quarter of 2019, with no material impact to our consolidated statements of operations. Operating lease right-of-use assets and lease liabilities are presented separately in our consolidated balance sheets. Finance lease right-of-use assets are included in property and equipment and finance lease liabilities are included in accounts payable and accrued liabilities and in other long-term liabilities in our consolidated balance sheets. As of December 31, 2020, the maturities of our operating and finance lease liabilities were as shown in the table below:
(In millions) | Operating Leases |  | Finance Leases
2020 | $ | 21.2 |  |  | $ | 10.7 |
2021 | 22.1 |  |  | 4.2 |
2022 | 22.4 |  |  | 4.3 |
2023 | 20.8 |  |  | 4.5 |
2024 | 20.0 |  |  | 4.6 |
Thereafter | 32.0 |  |  | 68.7 |
Total future lease cost (1) | 138.5 |  |  | 97.0 |
Less: Imputed interest | (20.2) |  |  | (34.2) |
Present value of future payments | 118.3 |  |  | 62.8 |
Less: Current portion | (16.5) |  |  | (8.8) |
Long-term portion | $ | 101.8 |  |  | $ | 54.0 |
(1) Total future lease cost excludes $16.3 million of legally binding minimum lease payments for leases signed but not yet commenced. Certain lease agreements require us to return designated areas of leased space to its original condition upon termination of the lease agreement, for which we record an asset retirement obligation and a corresponding capital asset in an amount equal to the estimated fair value of the obligation. In subsequent periods, the asset retirement obligation is accreted for the change in its present value and the capitalized asset is depreciated, both over the term of the associated lease agreement. Asset retirement obligations of $4.5 million and $2.6 million as of December 31, 2020 and 2019, respectively, are included under “Other long-term liabilities” in our consolidated balance sheets. The components of lease expense for the twelve months ended December 31, 2020 and 2019 were as follows:
| Twelve Months Ended December 31, |  |
(In millions) | 2020 |  | 2019 |  |
Finance lease cost: |  |  |  |  |
Amortization of right-of-use assets | $ | 2.0 |  |  | $ | 1.1 |  |  |
Interest on lease liabilities | 1.9 |  |  | 0.8 |  |  |
Operating lease cost | 18.4 |  |  | 12.2 |  |  |
Short-term lease cost (1) | 1.3 |  |  | 3.5 |  |  |
Variable lease cost (2) | 4.2 |  |  | 3.9 |  |  |
Total lease cost | $ | 27.8 |  |  | $ | 21.5 |  |  |
(1) Short-term lease cost is primarily related to temporary office space associated with the transition of certain operations to the Philippines. (2) Variable lease costs are primarily related to common area maintenance charges and property taxes. Prior to January 1, 2019, we recorded operating lease rent expense under ASC 840 on a straight-line basis over the non-cancellable lease term. Rent expense for the twelve months ended December 31, 2018 was $12.5 million. Other information related to leases was as shown in the table below. All figures include the leases recorded at the beginning of the first quarter of 2019 as a result of our adoption of ASC 842.
| Twelve Months Ended December 31,
(Dollars in millions) | 2020 |  | 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from operating leases | $ | 18.3 |  |  | $ | 14.3 |
Operating cash flows from finance leases | 0.7 |  | 0.8
Financing cash flows from finance leases | 8.5 |  | 0.5
Right-of-use assets obtained in exchange for lease liabilities: |  |  |
Operating leases | 33.5 |  | 80.6
Finance leases | $ | 41.7 |  |  | $ | 15.5 |
Weighted average remaining lease term: |  |  |
Operating leases | 6.1 years |  | 6.2 years
Finance leases | 23.3 years |  | 13.3 years
Weighted average discount rate: |  |  |
Operating leases | 5.0% |  | 5.0%
Finance leases | 5.2% |  | 5.0%
Amortization of operating lease right-of-use asset included in cash flows from operating activities in our consolidated statements of cash flows was $12.4 million for the twelve months ended December 31, 2020 and $9.1 million for the twelve months ended December 31, 2019.
Purchase Commitments
We are party to various purchase arrangements related to our manufacturing and research and development activities. As of December 31, 2020, we had approximately $335.6 million of open purchase orders and contractual obligations in the ordinary course of business, the majority of which are due within one year.
Leases And Other Commitments |
6. Leases And Other Commitments
Leases
We lease office, manufacturing and warehouse space facilities under various domestic and international non-cancellable operating lease arrangements that expire at various times through December 2030. We also have one land lease that expires in 2080. Certain of our leases have renewal options which allow us to extend the lease term typically between three and five years per option and some of our leases have multiple options to extend. The remaining lease terms of our leases range from less than one year to approximately twenty years and represent the non-cancellable periods of the leases, including extension options that we determined are reasonably certain to be exercised. Leases are classified as operating or financing at lease commencement. We adopted ASC 842 utilizing the modified retrospective transition method through a $2.1 million cumulative-effect adjustment to accumulated deficit at the beginning of the first quarter of 2019. We will continue to report financial information for fiscal years prior to 2019 under the previous lease accounting standards and as such prior comparative periods have not been recast. We elected the package of practical expedients permitted under the transition guidance in the new standard, which allowed us to carry forward the historical classification of leases that were in place as of January 1, 2019. Under the previous lease accounting standards we were deemed the owner of our Mesa, Arizona building during the construction period. As a result of our adoption of ASC 842, we have de-recognized the estimated fair value of the building shell and the related lease liability as of December 31, 2018 and recorded the difference between the asset and liability as an adjustment to retained earnings at the beginning of the first quarter of 2019. In addition, as a result of our adoption of ASC 842 we recorded operating lease right-of-use assets of $26.7 million, finance lease right-of-use assets of $15.3 million, operating lease liabilities of $40.4 million and finance lease liabilities of $15.9 million in our consolidated balance sheets at the beginning of the first quarter of 2019, with no material impact to our consolidated statements of operations. Operating lease right-of-use assets and lease liabilities are presented separately in our consolidated balance sheets. Finance lease right-of-use assets are included in property and equipment and finance lease liabilities are included in accounts payable and accrued liabilities and in other long-term liabilities in our consolidated balance sheets. As of December 31, 2020, the maturities of our operating and finance lease liabilities were as shown in the table below:
(In millions) | Operating Leases |  | Finance Leases
2020 | $ | 21.2 |  |  | $ | 10.7 |
2021 | 22.1 |  |  | 4.2 |
2022 | 22.4 |  |  | 4.3 |
2023 | 20.8 |  |  | 4.5 |
2024 | 20.0 |  |  | 4.6 |
Thereafter | 32.0 |  |  | 68.7 |
Total future lease cost (1) | 138.5 |  |  | 97.0 |
Less: Imputed interest | (20.2) |  |  | (34.2) |
Present value of future payments | 118.3 |  |  | 62.8 |
Less: Current portion | (16.5) |  |  | (8.8) |
Long-term portion | $ | 101.8 |  |  | $ | 54.0 |
(1) Total future lease cost excludes $16.3 million of legally binding minimum lease payments for leases signed but not yet commenced. Certain lease agreements require us to return designated areas of leased space to its original condition upon termination of the lease agreement, for which we record an asset retirement obligation and a corresponding capital asset in an amount equal to the estimated fair value of the obligation. In subsequent periods, the asset retirement obligation is accreted for the change in its present value and the capitalized asset is depreciated, both over the term of the associated lease agreement. Asset retirement obligations of $4.5 million and $2.6 million as of December 31, 2020 and 2019, respectively, are included under “Other long-term liabilities” in our consolidated balance sheets. The components of lease expense for the twelve months ended December 31, 2020 and 2019 were as follows:
| Twelve Months Ended December 31, |  |
(In millions) | 2020 |  | 2019 |  |
Finance lease cost: |  |  |  |  |
Amortization of right-of-use assets | $ | 2.0 |  |  | $ | 1.1 |  |  |
Interest on lease liabilities | 1.9 |  |  | 0.8 |  |  |
Operating lease cost | 18.4 |  |  | 12.2 |  |  |
Short-term lease cost (1) | 1.3 |  |  | 3.5 |  |  |
Variable lease cost (2) | 4.2 |  |  | 3.9 |  |  |
Total lease cost | $ | 27.8 |  |  | $ | 21.5 |  |  |
(1) Short-term lease cost is primarily related to temporary office space associated with the transition of certain operations to the Philippines. (2) Variable lease costs are primarily related to common area maintenance charges and property taxes. Prior to January 1, 2019, we recorded operating lease rent expense under ASC 840 on a straight-line basis over the non-cancellable lease term. Rent expense for the twelve months ended December 31, 2018 was $12.5 million. Other information related to leases was as shown in the table below. All figures include the leases recorded at the beginning of the first quarter of 2019 as a result of our adoption of ASC 842.
| Twelve Months Ended December 31,
(Dollars in millions) | 2020 |  | 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from operating leases | $ | 18.3 |  |  | $ | 14.3 |
Operating cash flows from finance leases | 0.7 |  | 0.8
Financing cash flows from finance leases | 8.5 |  | 0.5
Right-of-use assets obtained in exchange for lease liabilities: |  |  |
Operating leases | 33.5 |  | 80.6
Finance leases | $ | 41.7 |  |  | $ | 15.5 |
Weighted average remaining lease term: |  |  |
Operating leases | 6.1 years |  | 6.2 years
Finance leases | 23.3 years |  | 13.3 years
Weighted average discount rate: |  |  |
Operating leases | 5.0% |  | 5.0%
Finance leases | 5.2% |  | 5.0%
Amortization of operating lease right-of-use asset included in cash flows from operating activities in our consolidated statements of cash flows was $12.4 million for the twelve months ended December 31, 2020 and $9.1 million for the twelve months ended December 31, 2019.
Purchase Commitments
We are party to various purchase arrangements related to our manufacturing and research and development activities. As of December 31, 2020, we had approximately $335.6 million of open purchase orders and contractual obligations in the ordinary course of business, the majority of which are due within one year.

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