Leases

12 Months Ended

Dec. 31, 2023

NOTE 10 – LEASES

The Company leases office and research facilities, data centers and office equipment under operating leases with various expiration dates through 2030. Certain leases offer the option to renew for up to ten years and to terminate before the expiration date.

The Company subleases certain real estate to third parties. The sublease portfolio consists of operating leases for previously exited office space. Certain subleases include variable payments for operating costs. The subleases are generally co-terminus with the head lease, or shorter. Subleases do not include any residual value guarantees or restrictions or covenants imposed by the leases. Income from subleases is recognized as a reduction to selling, general and administrative expenses.

The Company began the effort of optimizing its global real estate footprint and decided to vacate and sublease certain offices following the Spin-Off in October 2022. For the years ended December 31, 2023 and 2022, the Company recorded impairment charges of $1.3 million and $4.8 million to reduce the carrying amount of certain operating lease ROU assets, respectively, along with writing off the related leasehold improvements of $0.4 million and $2.9 million, respectively. The Company determined that it may not be able to fully recover the carrying amount of the leased offices due to a change in the manner in which the offices are being used, a significant decrease in the expected market price of the leased asset, and expected delays in subleasing the space based on the current real estate leasing market. The Company estimated the fair value using a discounted cash flows approach with assumptions such as expectations of cash flows from projected sublease income, occupancy estimates, and its outlook for the local real estate market.

The components of operating lease costs were as follows (in thousands):


	Year Ended December 31,
	2023			2022			2021
Fixed lease cost (1)	$	20,306		$	20,581		$	20,619
Variable lease cost		5,130			5,365			5,030
Less: sublease income		(9,896	)		(9,498	)		(9,724	)
Total operating lease cost	$	15,540		$	16,448		$	15,925

(1)

Includes short-term leases expensed on a straight-line basis.

The following table presents supplemental cash flow information arising from lease transactions (in thousands):


	Year Ended December 31,
	2023		2022		2021
Cash payments included in the measurement of operating lease liabilities	$	19,968	$	20,307	$	20,826
Operating ROU assets obtained in exchange for lease obligations	$	11,563	$	14,360	$	6,131

The weighted-average remaining term of the Company’s operating leases and the weighted-average discount rate used to measure the present value of the operating lease liabilities are as follows:


	December 31,
	2023			2022
Weighted-average remaining lease term (in years)		3.37			3.69
Weighted-average discount rate		5.3	%		5.1	%

Future minimum lease payments and related lease liabilities as of December 31, 2023 were as follows (in thousands):


	Operating Lease Payments (1)			Sublease Income			Net Operating Lease Payments
2024	$	16,805		$	(5,843	)	$	10,962
2025		16,177			(6,108	)		10,069
2026		9,812			(1,412	)		8,400
2027		3,964			(368	)		3,596
2028		1,996			(379	)		1,617
Thereafter		1,101			(291	)		810
Total lease payments		49,855		$	(14,401	)	$	35,454
Less: imputed interest		(4,497	)
Present value of operating lease liabilities:	$	45,358

Less: operating lease liabilities, current portion		(14,760	)
Noncurrent operating lease liabilities	$	30,598

(1)

Future minimum lease payments exclude short-term leases as well as payments to landlords for variable common area maintenance, insurance and real estate taxes.