XML 32 R22.htm IDEA: XBRL DOCUMENT

LEASES

3 Months Ended

Mar. 31, 2022

The Company has operating and finance leases for corporate offices, research and development facilities, and certain equipment. Operating leases are reported separately in the Company's condensed consolidated balance sheets. Assets acquired under finance leases are included in Property and equipment, net, in the condensed consolidated balance sheets.

The Company determines if an arrangement is a lease at inception. A contract is determined to contain a lease component if the arrangement provides the Company with a right to control the use of an identified asset. Lease agreements may include lease and non-lease components. In such instances for all classes of underlying assets, the Company does not separate lease and non-lease components but rather, accounts for the entire arrangement under leasing guidance. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for these leases is recognized on a straight-line basis over the lease term.

Right-of-use assets and lease liabilities are initially measured based on the present value of the future minimum fixed lease payments (i.e., fixed payments in the lease contract) over the lease term at the commencement date. As the Company's existing leases do not have a readily determinable implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future minimum fixed lease payments. The Company calculates its incremental borrowing rate to reflect the interest rate that it would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term and considers its historical borrowing activities and market data from entities with comparable credit ratings in this determination. The measurement of the right-of-use asset also includes any lease payments made prior to the commencement date (excluding any lease incentives) and initial direct costs incurred. The Company assessed its right-of-use assets for impairment as of March 31, 2022 and December 31, 2021 and determined no impairment has occurred.

Lease terms may include options to extend or terminate the lease and the Company incorporates such options in the lease term when it has the unilateral right to make such an election and it is reasonably certain that the Company will exercise that option. In making this determination, the Company considers its prior renewal and termination history and planned usage of the assets under lease, incorporating expected market conditions.

For operating leases, lease expense for minimum fixed lease payments is recognized on a straight-line basis over the lease term. The expense for finance leases includes both interest and amortization expense components, with the interest component calculated based on the effective interest method and the amortization component calculated based on straight-line amortization of the right-of-use asset over the lease term. Lease contracts may contain variable lease costs, such as common area maintenance, utilities and tax reimbursements that vary over the term of the contract. Variable lease costs are not included in minimum fixed lease payments and as a result, are excluded from the measurement of the right-of-use assets and lease liabilities. The Company expenses all variable lease costs as incurred.

As of March 31, 2022, the Company had not recorded accelerated amortization of lease assets or accrued variable lease costs in connection with the 2022 Restructuring Plan.

In connection with the 2019 Restructuring Plan, certain lease assets related to facilities are being partially or fully vacated as the Company consolidates its facilities. The Company has no plans to enter into sublease agreements for certain facilities. The Company ceased use of these facilities in the first quarter of 2021, the first and fourth quarters of 2020, and the third quarter of 2019. Accordingly, the Company accelerated the amortization of the associated lease assets through the planned cease-use date of each facility, resulting in additional amortization expense of $3.4 million in the three months ended March 31, 2021. The Company also recorded expense of $1.4 million in the three months ended March 31, 2021 for all estimated future variable lease costs related to these facilities. The Company did not record expense for accelerated amortization or estimated future variable lease costs in connection with the 2019 Restructuring Plan in the three months ended March 31, 2022.

All accelerated amortization and accrual of future variable costs are recorded as Restructuring and related expense in the Company's condensed consolidated statements of operations. At March 31, 2022 and December 31, 2021, the Company had accruals of $1.4 million and $1.6 million, respectively, for all future anticipated variable lease costs related to these facilities. The Company may incur additional future expense if it is unable to sublease other locations included in the Facilities Initiative.

The Company leases its corporate offices and other facilities under operating leases, which expire at various times through 2032. The Company's right-of-use lease assets and lease liabilities at March 31, 2022 and December 31, 2021 were as follows (in thousands):


	Classification	March 31, 2022		December 31, 2021
Assets:
Operating lease assets	Operating lease right-of-use assets	$	49,549	$	53,147
Finance lease assets*	Property and equipment, net	195		287
Total leased assets		$	49,744	$	53,434

Liabilities:
Current:
Operating	Operating lease liabilities	$	16,622	$	17,403
Finance	Accrued expenses and other	398		503
Noncurrent:
Operating	Operating lease liabilities, net of current	51,599		55,196
Finance	Other long-term liabilities	—		64
Total lease liabilities		$	68,619	$	73,166

* Finance lease assets were recorded net of accumulated depreciation of $1.9 million and $1.8 million at March 31, 2022 and December 31, 2021, respectively.

The components of lease expense for the three months ended March 31, 2022 and 2021 were as follows (in thousands):


	Three months ended
		March 31, 2022		March 31, 2021

Operating lease cost*		$	4,630	$	8,837
Finance lease cost:
Amortization of leased assets		92		229
Interest on lease liabilities		6		26
Short-term lease cost		3,718		3,292
Variable lease costs (costs excluded from minimum fixed lease payments)**		826		2,158
Sublease income		(490)		(276)
Net lease cost		$	8,782	$	14,266

* Operating lease costs for the three months ended March 31, 2021 included $3.4 million of accelerated amortization for certain assets partially or fully vacated in 2021 with no intent or ability to sublease. No such accelerated amortization was recorded in the three months ended March 31, 2022.

** Variable lease costs for the three months ended March 31, 2021 included an accrual of $1.4 million for all future estimated variable expenses related to certain assets partially or fully vacated with no intent or ability to sublease. No such variable costs were accrued in the three months ended March 31, 2022.

Cash flow information related to the Company's leases for the three months ended March 31, 2022 and 2021 was as follows (in thousands):


	Three months ended
		March 31, 2022		March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases		$	5,578	$	5,561
Operating cash flows for finance leases		$	6	$	26
Financing cash flows for finance leases		$	198	$	272

Other information related to the Company's leases as of March 31, 2022 and December 31, 2021 was as follows:


	March 31, 2022		December 31, 2021
Weighted average remaining lease term (years):
Operating leases	6.25		6.25
Finance leases	0.82		1.00
Weighted average discount rate:
Operating leases	5.72	%	5.61	%
Finance leases	3.74	%	4.15	%

Future minimum fixed lease payments under noncancelable leases at March 31, 2022 were as follows (in thousands):


	March 31, 2022
	Operating		Finance
	leases		leases
Remainder of 2022	$	15,153	$	342
2023	17,802		63
2024	10,469		—
2025	7,539		—
2026	6,488		—
2027 and beyond	24,850		—
Total lease payments	82,301		405
Less: interest	(14,080)		(7)
Present value of lease liabilities	$	68,221	$	398

LEASES