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Note D - Leases | 9 Months Ended
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Sep. 30, 2021
Notes to Financial Statements |
Lessee, Operating and Finance Leases [Text Block] | Note D - Leases We have operating and finance leases for corporate and business offices, service facilities, call centers and certain equipment. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet, unless the arrangement includes an option to purchase the underlying asset, or an option to renew the arrangement, that we are reasonably certain to exercise (short-term leases). Our leases have remaining lease terms of one year to six years, some of which include options to extend the leases for up to an additional five years, and some of which include options to terminate the leases within one year. We sublease our Fullerton (CA), Jacksonville (FL) and Uxbridge (UK) facilities. The leases and subleases for these three facilities expire at various dates, the latest being fiscal year 2023. As of September 30, 2021, assets recorded under finance and operating leases were approximately $0.8 million and $19.6 million respectively, and accumulated depreciation associated with finance leases was $0.7 million. As of December 31, 2020, assets recorded under finance and operating leases were approximately $1.0 million and $23.8 million respectively, and accumulated depreciation associated with finance leases was $0.5 million. Operating lease right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The discount rate used to determine the commencement date present value of lease payment is the interest rate implicit in the lease, or when that is not readily determinable, our incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Since none of our leases has readily determinable implicit interest rates, we use our incremental borrowing rate as the discount rate. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. During the nine months ended September 30, 2021, we impaired two leases for the facilities we no longer occupied. The resulting impairment charges are included in our restructuring expenses for the three and nine months ended September 30, 2021. Please refer to Note N, Restructuring Charges for further details. The following table presents supplemental balance sheet information related to our financing and operating leases:
In thousands |  | As of September 30, 2021 |  |  |  |  |
|  | Operating Leases |  |  | Finance Leases |  |  | Total |
Right-of-use Assets |  | $ | 19,569 |  |  | $ | 810 |  |  | $ | 20,379 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Short-term lease liabilities |  |  | 6,410 |  |  |  | 205 |  |  |  | 6,615 |
Long-term lease liabilities |  |  | 17,289 |  |  |  | 257 |  |  |  | 17,546 |
Total Lease Liabilities |  | $ | 23,699 |  |  | $ | 462 |  |  | $ | 24,161 |
In thousands |  | As of December 31, 2020 |  |  |  |  |
|  | Operating Leases |  |  | Finance Leases |  |  | Total |
Right-of-use Assets |  | $ | 23,793 |  |  | $ | 957 |  |  | $ | 24,750 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Short-term lease liabilities |  |  | 6,436 |  |  |  | 227 |  |  |  | 6,663 |
Long-term lease liabilities |  |  | 20,892 |  |  |  | 403 |  |  |  | 21,295 |
Total Lease Liabilities |  | $ | 27,328 |  |  | $ | 630 |  |  | $ | 27,958 |
For the three and nine months ended September 30, 2021 and 2020, the components of lease expense were as follows:
In thousands |  | Three Months Ended September 30, 2021 |  |  | Three Months Ended September 30, 2020 |
Operating lease cost |  | $ | 1,853 |  |  | $ | 1,951 |
Finance lease cost: |  |  |  |  |  |  |  |
Amortization of right-of-use assets |  |  | 49 |  |  |  | 59 |
Interest on lease liabilities |  |  | 6 |  |  |  | 10 |
Total Finance lease cost |  |  | 55 |  |  |  | 69 |
Variable lease cost |  |  | 577 |  |  |  | 604 |
Sublease income |  |  | (117 | ) |  |  | (228 | )
Total lease cost, net |  | $ | 2,368 |  |  | $ | 2,396 |
In thousands |  | Nine Months Ended September 30, 2021 |  |  | Nine Months Ended September 30, 2020 |
Operating lease cost |  | $ | 5,885 |  |  | $ | 6,435 |
Finance lease cost: |  |  |  |  |  |  |  |
Amortization of right-of-use assets |  |  | 147 |  |  |  | 191 |
Interest on lease liabilities |  |  | 21 |  |  |  | 37 |
Total Finance lease cost |  |  | 168 |  |  |  | 228 |
Variable lease cost |  |  | 2,131 |  |  |  | 2,246 |
Sublease income |  |  | (475 | ) |  |  | (228 | )
Total lease cost, net |  | $ | 7,709 |  |  | $ | 8,681 |
Other information related to leases was as follows:
In thousands |  | Nine Months Ended September 30, 2021 |  |  | Nine Months Ended September 30, 2020 |
Supplemental Cash Flows Information |  |  |  |  |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |
Operating cash flows from operating leases |  | $ | 11,179 |  |  | $ | 14,535 |
Operating cash flows from finance leases |  |  | 19 |  |  |  | 32 |
Financing cash flows from finance leases |  |  | 169 |  |  |  | 357 |
Weighted Average Remaining Lease term |  |  |  |  |  |  |  |
Operating leases |  |  | 5.8 |  |  |  | 3.0 |
Finance leases |  |  | 2.3 |  |  |  | 3.2 |
Weighted Average Discount Rate |  |  |  |  |  |  |  |
Operating leases |  |  | 3.50 | % |  |  | 4.67 | %
Finance leases |  |  | 5.36 | % |  |  | 5.28 | %
The maturities of the Company’s finance and operating lease liabilities as of September 30, 2021 are as follows:
In thousands |  | Operating Leases (1) |  |  | Finance Leases |
Year Ending December 31, |  |  |  |  |  |  |  |
Remainder of 2021 |  | $ | 1,997 |  |  | $ | 63 |
2022 |  |  | 6,698 |  |  |  | 209 |
2023 |  |  | 4,765 |  |  |  | 166 |
2024 |  |  | 3,327 |  |  |  | 48 |
2025 |  |  | 1,581 |  |  |  | 6 |
2026 |  |  | 7,505 |  |  |  | — |
Total future minimum lease payments |  |  | 25,873 |  |  |  | 492 |
Less: imputed interest |  |  | 2,174 |  |  |  | 30 |
Total lease liabilities |  | $ | 23,699 |  |  | $ | 462 |
(1) Non-cancelable sublease proceeds for the remainder of the fiscal year ending December 31, 2021 and the fiscal years ending December 31, 2022 and 2023 of $0.2 million, $0.6 million, and $0.2 million, respectively, are not included in the table above.

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