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Leases | 12 Months Ended
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Dec. 31, 2020
Leases [Abstract] |
Leases | Leases The Company’s operating and finance leases generally have original lease terms between two and 11 years, and often include one or more options to renew. Some leases also include early termination options, which can be exercised under specific conditions. The Company includes options to extend the lease term if the options are reasonably certain of being exercised. The Company currently considers its renewal options to be reasonably certain to be exercised. The Company does not have residual value guarantees or material restrictive covenants associated with its leases. On January 1, 2020, the Company adopted ASU 2016-02 using the modified retrospective approach, which permits application of this new guidance at the beginning of the period of adoption, with comparative periods continuing to be reported under ASC 840. Operating lease assets represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. The Company calculates the present value of its operating leases using an estimated incremental borrowing rate, which requires judgment. The Company estimates the incremental borrowing rate for each operating lease based on prevailing market rates for collateralized debt in a similar economic environment with similar payment terms and maturity dates commensurate with the terms of the lease. Certain leases contain variable payments, which are expensed as incurred and not included in the Company’s operating lease right-of-use assets and operating lease liabilities. These amounts primarily include payments for maintenance, utilities, taxes, and insurance on the Company’s corporate, research and development, and manufacturing facilities and warehouse leases and are excluded from the present value of the Company’s lease obligations. Previously designated capital leases under ASC 840 are now considered finance leases under ASC 842. The Company calculates the present value of its finance leases using the interest rate implicit in the lease agreement. Upon adoption of ASU 2016-02, the Company recognized operating lease right-of-use assets of $11.9 million adjusted for $0.3 million previously recorded as deferred rent and $0.2 million previously recorded as prepaid rent on the Company’s consolidated balance sheets. The Company also recorded $1.4 million in current operating lease liabilities and $10.6 million in operating lease liabilities, net of current portion. As part of this adoption, the Company elected to not record operating lease right-of-use assets or operating lease liabilities for leases with an initial term of 12 months or less. Subsequent to the year ended December 31, 2020, on January 14, 2021, the Company entered into a 12-year lease with two 5-year renewal options to house its corporate headquarters, lab and innovation space in El Segundo, California. See Note 14.
(in thousands) |  | Statement of Operations Location |  | Year Ended December 31, 2020
Operating lease cost: |  |  |  |
Lease cost |  | Cost of goods sold |  | $ | 1,570 |
Lease cost |  | Research and development expenses |  | 621 |
Lease cost |  | Selling, general and administrative expenses |  | 569 |
Variable lease cost (1) |  | Cost of goods sold |  | 17 |
Operating lease cost |  |  |  | $ | 2,777 |
Short-term lease cost |  | Selling, general and administrative expenses |  | $ | 311 |
Finance lease cost: |  |  |  |
Amortization of right-of use assets |  | Cost of goods sold |  | $ | 75 |
Interest on lease liabilities |  | Interest expense |  | 13 |
Finance lease cost |  |  |  | $ | 88 |
Total lease cost |  |  |  | $ | 3,176 |
____________ (1) Variable lease cost primarily consists of common area maintenance, such as cleaning and repairs. Supplemental balance sheet information as of December 31, 2020 related to leases are as follows:
(in thousands) |  | Balance Sheet Location |  | December 31, 2020
Assets |  |  |  |
Operating leases |  | Operating lease right-of-use assets |  | $ | 14,570 |
Finance leases, net |  | Property, plant and equipment, net |  | 212 |
Total lease assets |  |  |  | $ | 14,782 |
Liabilities |  |  |  |
Current: |  |  |  |
Operating lease liabilities |  | Current portion of operating lease liabilities |  | $ | 3,095 |
Finance lease liabilities |  | Current portion of finance lease liabilities |  | 71 |
Long-term: |  |  |  |
Operating lease liabilities |  | Operating lease liabilities, net of current portion |  | 11,793 |
Finance lease liabilities |  | Finance lease obligations and other long-term liabilities |  | 149 |
Total lease liabilities |  |  |  | $ | 15,108 |
The following is a schedule by year of the maturities of lease liabilities with original terms in excess of one year, as of December 31, 2020:
|  | December 31, 2020
(in thousands) |  | Operating Leases |  | Finance Leases
2021 |  | $ | 3,455 |  |  | $ | 80 |
2022 |  | 3,290 |  |  | 70 |
2023 |  | 2,703 |  |  | 58 |
2024 |  | 1,662 |  |  | 30 |
2025 |  | 1,301 |  |  | — |
Thereafter |  | 3,914 |  |  | — |
Total undiscounted future minimum lease payments |  | 16,325 |  |  | 238 |
Less imputed interest |  | (1,437) |  |  | (18) |
Total discounted future minimum lease payments |  | $ | 14,888 |  |  | $ | 220 |
Weighted average remaining lease terms and weighted average discount rates were:
|  | December 31, 2020
|  | Operating Leases |  | Finance Leases
Weighted average remaining lease term (years) |  | 6.6 |  | 3.2
Weighted average discount rate |  | 2.7 | % |  | 5.3 | %
A schedule of the future minimum rental commitments under the Company’s capital lease agreements and non-cancelable operating lease agreements with an initial or remaining term in excess of one year as of December 31, 2019, in accordance with ASC 840 were as follows:
|  | December 31, 2019
(in thousands) |  | Capital Lease Obligations |  | Operating Lease Obligations
2020 |  | $ | 86 |  |  | $ | 1,878 |
2021 |  | 80 |  |  | 1,813 |
2022 |  | 71 |  |  | 1,817 |
2023 |  | 58 |  |  | 1,840 |
2024 |  | 30 |  |  | 1,353 |
Thereafter |  | — |  |  | 5,167 |
Total minimum lease payments |  |  |  | $ | 13,868 |
Total minimum lease payments |  | $ | 325 |  |  |
Less: imputed interest (4.1% to 15.9%) |  | (34) |  |  |
Total capital lease obligations |  | $ | 291 |  |  |
Less: current portion of capital lease obligations |  | (72) |  |  |
Long-term capital lease obligations |  | $ | 219 |  |  |
Leases | Leases The Company’s operating and finance leases generally have original lease terms between two and 11 years, and often include one or more options to renew. Some leases also include early termination options, which can be exercised under specific conditions. The Company includes options to extend the lease term if the options are reasonably certain of being exercised. The Company currently considers its renewal options to be reasonably certain to be exercised. The Company does not have residual value guarantees or material restrictive covenants associated with its leases. On January 1, 2020, the Company adopted ASU 2016-02 using the modified retrospective approach, which permits application of this new guidance at the beginning of the period of adoption, with comparative periods continuing to be reported under ASC 840. Operating lease assets represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. The Company calculates the present value of its operating leases using an estimated incremental borrowing rate, which requires judgment. The Company estimates the incremental borrowing rate for each operating lease based on prevailing market rates for collateralized debt in a similar economic environment with similar payment terms and maturity dates commensurate with the terms of the lease. Certain leases contain variable payments, which are expensed as incurred and not included in the Company’s operating lease right-of-use assets and operating lease liabilities. These amounts primarily include payments for maintenance, utilities, taxes, and insurance on the Company’s corporate, research and development, and manufacturing facilities and warehouse leases and are excluded from the present value of the Company’s lease obligations. Previously designated capital leases under ASC 840 are now considered finance leases under ASC 842. The Company calculates the present value of its finance leases using the interest rate implicit in the lease agreement. Upon adoption of ASU 2016-02, the Company recognized operating lease right-of-use assets of $11.9 million adjusted for $0.3 million previously recorded as deferred rent and $0.2 million previously recorded as prepaid rent on the Company’s consolidated balance sheets. The Company also recorded $1.4 million in current operating lease liabilities and $10.6 million in operating lease liabilities, net of current portion. As part of this adoption, the Company elected to not record operating lease right-of-use assets or operating lease liabilities for leases with an initial term of 12 months or less. Subsequent to the year ended December 31, 2020, on January 14, 2021, the Company entered into a 12-year lease with two 5-year renewal options to house its corporate headquarters, lab and innovation space in El Segundo, California. See Note 14.
(in thousands) |  | Statement of Operations Location |  | Year Ended December 31, 2020
Operating lease cost: |  |  |  |
Lease cost |  | Cost of goods sold |  | $ | 1,570 |
Lease cost |  | Research and development expenses |  | 621 |
Lease cost |  | Selling, general and administrative expenses |  | 569 |
Variable lease cost (1) |  | Cost of goods sold |  | 17 |
Operating lease cost |  |  |  | $ | 2,777 |
Short-term lease cost |  | Selling, general and administrative expenses |  | $ | 311 |
Finance lease cost: |  |  |  |
Amortization of right-of use assets |  | Cost of goods sold |  | $ | 75 |
Interest on lease liabilities |  | Interest expense |  | 13 |
Finance lease cost |  |  |  | $ | 88 |
Total lease cost |  |  |  | $ | 3,176 |
____________ (1) Variable lease cost primarily consists of common area maintenance, such as cleaning and repairs. Supplemental balance sheet information as of December 31, 2020 related to leases are as follows:
(in thousands) |  | Balance Sheet Location |  | December 31, 2020
Assets |  |  |  |
Operating leases |  | Operating lease right-of-use assets |  | $ | 14,570 |
Finance leases, net |  | Property, plant and equipment, net |  | 212 |
Total lease assets |  |  |  | $ | 14,782 |
Liabilities |  |  |  |
Current: |  |  |  |
Operating lease liabilities |  | Current portion of operating lease liabilities |  | $ | 3,095 |
Finance lease liabilities |  | Current portion of finance lease liabilities |  | 71 |
Long-term: |  |  |  |
Operating lease liabilities |  | Operating lease liabilities, net of current portion |  | 11,793 |
Finance lease liabilities |  | Finance lease obligations and other long-term liabilities |  | 149 |
Total lease liabilities |  |  |  | $ | 15,108 |
The following is a schedule by year of the maturities of lease liabilities with original terms in excess of one year, as of December 31, 2020:
|  | December 31, 2020
(in thousands) |  | Operating Leases |  | Finance Leases
2021 |  | $ | 3,455 |  |  | $ | 80 |
2022 |  | 3,290 |  |  | 70 |
2023 |  | 2,703 |  |  | 58 |
2024 |  | 1,662 |  |  | 30 |
2025 |  | 1,301 |  |  | — |
Thereafter |  | 3,914 |  |  | — |
Total undiscounted future minimum lease payments |  | 16,325 |  |  | 238 |
Less imputed interest |  | (1,437) |  |  | (18) |
Total discounted future minimum lease payments |  | $ | 14,888 |  |  | $ | 220 |
Weighted average remaining lease terms and weighted average discount rates were:
|  | December 31, 2020
|  | Operating Leases |  | Finance Leases
Weighted average remaining lease term (years) |  | 6.6 |  | 3.2
Weighted average discount rate |  | 2.7 | % |  | 5.3 | %
A schedule of the future minimum rental commitments under the Company’s capital lease agreements and non-cancelable operating lease agreements with an initial or remaining term in excess of one year as of December 31, 2019, in accordance with ASC 840 were as follows:
|  | December 31, 2019
(in thousands) |  | Capital Lease Obligations |  | Operating Lease Obligations
2020 |  | $ | 86 |  |  | $ | 1,878 |
2021 |  | 80 |  |  | 1,813 |
2022 |  | 71 |  |  | 1,817 |
2023 |  | 58 |  |  | 1,840 |
2024 |  | 30 |  |  | 1,353 |
Thereafter |  | — |  |  | 5,167 |
Total minimum lease payments |  |  |  | $ | 13,868 |
Total minimum lease payments |  | $ | 325 |  |  |
Less: imputed interest (4.1% to 15.9%) |  | (34) |  |  |
Total capital lease obligations |  | $ | 291 |  |  |
Less: current portion of capital lease obligations |  | (72) |  |  |
Long-term capital lease obligations |  | $ | 219 |  |  |

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