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Note 9 - Leases

12 Months Ended

Dec. 31, 2020

9.	LEASES:

The Company adopted ASC Topic 842, “Leases” (“Topic 842”) on January 1, 2019 using the modified retrospective transition method which allowed it to continue to apply legacy guidance for periods prior to 2019. The Company elected the package of transition practical expedients which, among other things, allowed it to keep the historical lease classifications and not reassess the lease classification for any existing leases as of the date of adoption. The Company also made an accounting policy election to apply the short-term lease exception, which allows it to keep leases with an initial term of twelve months or less off the balance sheet. Upon adoption of Topic 842, the Company recognized right-of-use assets and lease liabilities for operating leases of approximately $8.0 million.

The Company has entered into various equipment and property leases. Certain lease agreements include renewals and/or purchase options set to expire at various dates, and certain lease agreements include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company determines if an arrangement is a lease at inception. Leases with an initial term of twelve months or less are not recorded on the balance sheet; costs for these leases are recognized on a straight-line basis over the lease term. Right-of-use assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of the Company's leases do not provide an implicit rate of return, the Company uses its asset-based lending rate in determining the present value of lease payments. Some of the Company’s lease agreements contain non-lease components, which are accounted for separately.

The following table summarizes the Company's leases recorded on the Consolidated Balance Sheets (in thousands):

	December 31,
	2020		2019
Right-of-use assets:
Finance leases, net, included in Property and equipment (1)	$	1,288	$	1,203
Operating leases		30,813		7,683
Total right-of-use assets	$	32,101	$	8,886

Lease liabilities:
Finance leases	$	1,729	$	1,641
Operating leases		30,115		7,889
Total lease liabilities	$	31,844	$	9,530

(1)

Finance lease right-of-use assets are presented net of accumulated amortization of $1.3 million and $0.9 million as of December 31, 2020 and 2019, respectively.

Lease cost consists of the following (in thousands):

	Year Ended December 31,
	2020		2019
Finance lease cost:
Amortization of right-of-use assets	$	422	$	435
Interest on lease liabilities		79		57
Operating lease cost		3,647		1,934
Short-term lease cost		745		1,442
Variable lease cost		199		141
Total lease cost	$	5,092	$	4,009

As the Company has not restated prior-year information for the adoption of Topic 842, total operating lease rental expense under ASC Topic 840, “Leases” for the year ended December 31, 2018 was $2.7 million.

The future maturities of lease liabilities as of December 31, 2020 are as follows (in thousands):

	Finance Leases			Operating Leases

2021	$	454		$	3,178
2022		433			2,819
2023		230			2,561
2024		544			2,416
2025		301			2,358
Thereafter		-			27,513
Total lease payments		1,962			40,845
Amount representing interest		(233	)		(10,730	)
Present value of lease liabilities		1,729			30,115
Current portion of lease liabilities (1)		(375	)		(2,204	)
Long-term lease liabilities (2)	$	1,354		$	27,911

(1)

Current portion of finance lease liabilities are included in Accrued liabilities.

(2)

Long-term finance lease liabilities, less current portion are included in Other long-term liabilities.

The following table summarizes the lease terms and discount rates for the lease liabilities:

	December 31,
	2020			2019
Weighted-average remaining lease term (years)
Finance leases		3.67			3.79
Operating leases		18.21			8.31
Weighted-average discount rate
Finance leases		5.22	%		5.40	%
Operating leases		3.36	%		4.50	%

The following table presents other information related to the operating and finance leases (in thousands):

	Year Ended December 31,
	2020			2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	(79	)	$	(57	)
Operating cash flows from operating leases		(3,481	)		(1,909	)
Financing cash flows from finance leases		(420	)		(434	)
Right-of-use assets obtained in exchange for finance lease liabilities		507			819
Right-of-use assets obtained in exchange for operating lease liabilities		4,471			1,335