Leases

12 Months Ended

Dec. 31, 2023

9. Leases

The Company’s lease portfolio primarily consists of finance and operating real estate leases integral for facility operations. The original terms of the leases typically range from five to thirty years with optional renewal periods. A minimal portion of the Company’s lease portfolio consists of non-real estate leases, including copiers and equipment, which generally have lease terms of one to three years and have insignificant lease obligations.

The Company elected the accounting policy practical expedients by class of underlying asset in ASC 842 “Leases” to: (i) combine associated lease and non-lease components into a single lease component; and (ii) exclude recording short-term leases as right-of-use assets and liabilities on the consolidated balance sheets. Non-lease components, which are not significant overall, are combined with lease components.

Operating lease liabilities are recorded at the present value of remaining lease payments not yet paid for the lease term discounted using the incremental borrowing rate associated with each lease. Operating lease right-of-use assets represent operating lease liabilities adjusted for prepayments, accrued lease payments, lease incentives and initial direct costs. Certain of the Company’s leases include renewal or termination options. Calculation of operating lease right-of-use assets and liabilities include the initial lease term unless it is reasonably certain a renewal or termination option will be exercised. Variable components of lease payments fluctuating with a future index or rate, as well as those related to common area maintenance costs, are not included in determining lease liabilities and are expensed as incurred. Most of the Company’s leases do not contain implicit borrowing rates, and therefore, incremental borrowing rates were calculated based on information available at the lease commencement date. The Company reviews service agreements for embedded leases and records right-of-use assets and liabilities as necessary.

The Company recorded non-cash operating lease right-of-use asset impairment charges of $2.3 million related to the closure of certain facilities, which is included in loss on impairment in the condensed consolidated statements of operations.

Lease Position

The Company recorded the following at December 31, 2023 and 2022 on the consolidated balance sheets (in thousands):


Right-of-Use Assets	Balance Sheet Classification	December 31, 2023		December 31, 2022
Finance lease right-of-use assets	Property and equipment, net	$	7,872	$	8,250
Operating lease right-of-use assets	Operating lease right-of-use assets		117,780		135,238
Total		$	125,652	$	143,488

Lease Liabilities	Balance Sheet Classification	December 31, 2023		December 31, 2022
Current:
Finance lease liabilities	Other accrued liabilities	$	990	$	990
Operating lease liabilities	Current portion of operating lease liabilities		26,268		26,463
Noncurrent:
Finance lease liabilities	Other liabilities		10,896		10,858
Operating lease liabilities	Operating lease liabilities		100,808		116,429
Total		$	138,962	$	154,740

Weighted-average remaining lease terms and discount rates were as follows at December 31, 2023 and 2022:


	December 31,
	2023			2022
Weighted-average remaining lease term (in years):
Finance		20.9			21.9
Operating		8.1			8.4

Weighted-average discount rate:
Finance		5.1	%		5.1	%
Operating		5.7	%		5.0	%

Lease Costs

The Company recorded the following lease costs for the years ended December 31, 2023, 2022 and 2021 (in thousands):


	Year Ended December 31,
	2023		2022		2021
Finance lease costs:
Depreciation of leased assets		378		378		378
Interest of lease liabilities		1,028		1,041		2,174
Total finance lease costs	$	1,406	$	1,419	$	2,552

Operating lease costs		34,400		34,349		28,233
Variable lease costs		3,319		3,129		2,488
Short term lease costs		3,237		2,605		3,257
Other lease costs		5,596		5,379		4,541
Total rents and leases	$	46,552	$	45,462	$	38,519

Total lease costs	$	47,958	$	46,881	$	41,071

Other

Undiscounted future cash flows for finance and operating leases recorded on the consolidated balance sheet were as follows at December 31, 2023 (in thousands):


	Finance Leases		Operating Leases
2023	$	1,006	$	32,767
2024		1,089		28,062
2025		1,089		21,578
2026		1,089		14,670
2027		1,089		11,348
Thereafter		20,733		57,375
Total minimum lease payments		26,095		165,800
Less: amount of lease payments representing interest		14,209		38,724
Present value of future minimum lease payments		11,886		127,076
Less: Current portion of lease liabilities		990		26,268
Noncurrent lease liabilities	$	10,896	$	100,808

Supplemental data for the years ended December 31, 2023, 2022 and 2021 were as follows (in thousands):


	Year Ended December 31,
	2023			2022			2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	34,940		$	33,836		$	27,508
Operating cash flows for finance leases	$	1,028		$	1,041		$	2,174
Financing cash flows for finance leases	$	(38	)	$	(51	)	$	31,136

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	14,714		$	31,294		$	63,279
Finance leases	$	—		$	—		$	—