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Right-of-Use Asset and Lease Liabilities | 9 Months Ended
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Sep. 30, 2021
Leases [Abstract] |
Right-of-Use Asset and Lease Liabilities | 6. Right-of-Use Asset and Lease Liabilities Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease expense attributable to lease payments is recognized on a straight-line basis over the lease term and is included in cost of sales and selling, general, and administrative expense on the Company’s condensed consolidated statements of operations. Finance leases result in the recognition of depreciation expense, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method. Depreciation expense attributable to finance leases is included in cost of sales on the Company’s condensed consolidated statements of operations. The Company presents the operating leases in long-term assets and current and long-term liabilities in the accompanying condensed consolidated balance sheets. Finance leases are reported in property, plant and equipment, net, accrued expenses and other current liabilities, and other liabilities on the Company’s condensed consolidated balance sheets. The Company sub-leases approximately 17,073 square feet of office space to a related party, Relay, Inc. (f/k/a Republic Wireless, Inc.) (“Relay”). Future minimum sub-lease receipts required under the non-cancellable lease are as follows:
| As of September 30,
| 2021
2021 (remaining) | $ | 115 |
2022 | 249 |
| $ | 364 |
As of September 30, 2021, the Company had various leased properties in the United States and internationally, with remaining lease terms of nine months to 5.25 years, some of which include options to extend the leases for up to 5 years. None of the options to extend the leases are recognized in operating lease ROU assets or lease liabilities. The Company has one lease with an early-termination option, which it does not expect to exercise. The Company has one lease not yet commenced, with a lease term of 20 years and two options to extend the lease by a term of ten years each, up to twenty additional years in total. The components of lease expense recorded in general and administrative expenses in the condensed consolidated statement of operations were as follows:
| Three months ended September 30, |  |  |  |  | Nine months ended September 30,
| 2020 |  | 2021 |  |  |  |  |  | 2020 |  | 2021
Operating lease cost | $ | 1,461 |  |  | $ | 1,699 |  |  |  |  |  |  | $ | 4,383 |  |  | $ | 5,002 |
Finance lease cost: |  |  |  |  |  |  |  |  |  |  |
Depreciation of assets | — |  |  | 60 |  |  |  |  |  |  | — |  |  | 165 |
Interest on lease liabilities | — |  |  | 5 |  |  |  |  |  |  | — |  |  | 14 |
Sublease income (1) | (96) |  |  | (96) |  |  |  |  |  |  | (288) |  |  | (288) |
Total net lease cost | $ | 1,365 |  |  | $ | 1,668 |  |  |  |  |  |  | $ | 4,095 |  |  | $ | 4,893 |
________________________ (1) See Note 16, “Related Parties” to these condensed consolidated financial statements, for additional details on sublease income. During the three and nine months ended September 30, 2020, short-term operating lease expense was $0. During the three and nine months ended September 30, 2021, short-term operating lease expense was $372 and $1,098, respectively. Supplemental balance sheet information related to leases was as follows:
|  | As of December 31, |  | As of September 30,
Leases | Classification | 2020 |  | 2021
Assets: |  |  |  |
Operating lease assets | Operating right-of-use asset, net (1) | $ | 19,491 |  |  | $ | 15,612 |
Finance lease assets | Property, plant and equipment, net (2) | 464 |  |  | 408 |
Total leased assets | $ | 19,955 |  |  | $ | 16,020 |
Liabilities: |  |  |  |
Current |  |  |  |
Operating | Operating lease liability, current | $ | 5,515 |  |  | $ | 6,015 |
Finance | Accrued expenses and other current liabilities | 183 |  |  | 190 |
Non-current |  |  |  |
Operating | Operating lease liability, net of current portion | 17,202 |  |  | 12,525 |
Finance | Other liabilities | 282 |  |  | 224 |
Total lease liabilities | $ | 23,182 |  |  | $ | 18,954 |
________________________ (1) Operating lease assets are recorded net of accumulated amortization of $9,083 and $13,298 as of December 31, 2020 and September 30, 2021, respectively. (2) Finance lease assets are recorded net of accumulated depreciation of $28 and $187 as of December 31, 2020 and September 30, 2021, respectively. Supplemental cash flow and other information related to leases was as follows:
|  |  | Nine months ended September 30,
|  |  |  |  | 2020 |  |  |  |  |  | 2021
Cash paid for amounts included in the measurement of lease liabilities |  |  |  |  |  |  |  |  |  |  |
Operating cash flows from operating leases |  |  |  |  | $ | 3,944 |  |  |  |  |  |  | $ | 4,535 |
Financing cash flows from finance leases |  |  |  |  | — |  |  |  |  |  |  | 161 |
|  |  |  |  | $ | 3,944 |  |  |  |  |  |  | $ | 4,696 |
Weighted average remaining lease term (in years) |  |  |  |  |  |  |  |  |  |  |
Operating leases |  |  |  |  | 3.65 |  |  |  |  |  | 3.14
Finance leases |  |  |  |  | — |  |  |  |  |  |  | 2.56
Weighted average discount rate |  |  |  |  |  |  |  |  |  |  |
Operating leases |  |  |  |  | 4.99 | % |  |  |  |  |  | 4.77 | %
Finance leases |  |  |  |  | — | % |  |  |  |  |  | 4.00 | %
Maturities of lease liabilities were as follows:
|  |  | As of September 30, 2021
|  |  | Operating Leases |  | Finance Leases
2021 (remaining) |  |  | $ | 1,362 |  |  | $ | 59 |
2022 |  |  | 6,991 |  |  | 182 |
2023 |  |  | 6,615 |  |  | 109 |
2024 |  |  | 2,665 |  |  | 74 |
2025 |  |  | 1,640 |  |  | 11 |
Thereafter |  |  | 709 |  |  | — |
Total lease payments |  |  | 19,982 |  |  | 435 |
Less: imputed interest |  |  | (1,442) |  |  | (21) |
Total lease obligations |  |  | 18,540 |  |  | 414 |
Less: current obligations |  |  | (6,015) |  |  | (190) |
Long-term lease obligations |  |  | $ | 12,525 |  |  | $ | 224 |
On June 4, 2021, the Company purchased approximately 40 acres of undeveloped land (the “Property”) in Raleigh, North Carolina, from the State of North Carolina (the “State”). The Company paid $30,017 for the land. Additionally, as consideration for the Property, the Company agreed to construct, at its expense, a parking lot and related improvements (the “Parking Improvements”) on land owned by the State adjacent to the Property. The estimated cost of construction of the Parking Improvements was $7,752. Subsequent to the purchase of the Property, the Company sold a portion of the Property constituting approximately 23.76 acres (the “Conveyed Parcel”) to USEF Edwards Mill Owner, LLC (the “Developer”) for $17,462. In addition, the Developer agreed to construct, at its expense, the Parking Improvements in connection with the Company’s purchase of the Property from the State. The Company retained approximately 17.06 acres of the Property, which was recorded at cost and is included in the Company’s condensed consolidated balance sheet as a component property, plant and equipment, net. The Company recorded a liability to construct the Parking Improvements, which is included as a component of accrued expenses and other current liabilities in the condensed consolidated balance sheet as of September 30, 2021. The Company recorded an asset for the Developer’s obligation to construct the Parking Improvements at the Developer's expense, which is included as a component of prepaid expenses and other current assets in the condensed consolidated balance sheet as of September 30, 2021. A lease incentive of $3,193 was recognized for the difference between the consideration received from the Developer for the Conveyed Parcel and the cost basis of the Conveyed Parcel and is included as a component of other liabilities on the condensed consolidated balance sheet. On October 1, 2021, the developer delivered the completed parking improvements and the State released the Company from its liability. On May 27, 2021, the Company entered into a Lease Agreement (the “Lease”) with the Developer for the Conveyed Parcel, together with improvements for office and related infrastructure to be constructed thereon, collectively constituting approximately 534,000 gross square feet (the “Project”). The lease became effective upon closing of the sale of the Conveyed Parcel to the Developer. When construction of the Project is completed, the Company intends to relocate its corporate headquarters to the Project. The lease term will commence upon substantial completion of the final building to be delivered, as evidenced by a certificate of occupancy issued by the City of Raleigh (the “Commencement Date”), and continue for a period of twenty (20) years (the “Initial Term”). It is anticipated that the Commencement Date will occur in May 2023. The Company has the option to renew the Initial Term for two ten-year periods at a rental rate equal to 100% of the then-prevailing market rental rate for comparable buildings in the Raleigh, North Carolina, market. Upon the effective date, the Company deposited $2,500 with the Developer as security on the lease. The deposit is included in other long-term assets on the Company’s condensed consolidated balance sheet. Additionally, the Company placed $3,000 in escrow to fund the certain tenant improvements expected to be constructed as part of the development of the Project. No right-of-use assets or lease liabilities have been recognized in connection with the lease as of September 30, 2021. Future lease payments are included in Note 13, “Commitments and Contingencies”.

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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