LEASES

12 Months Ended

Dec. 31, 2021

4. LEASES

The Company leases certain real estate and warehouse equipment under long-term lease agreements.

On January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842) (“Topic 842”), and all subsequent amendments, using the optional transition method applied to leases existing on January 1, 2019, with no restatement of comparative periods.

The Company performs interim reviews of its operating and finance lease assets for impairment when evidence exists that the carrying value of an asset group, including a lease asset, may not be recoverable. The Company recognized no impairment expense related to its lease assets during the year ended December 31, 2021. During the years ended December 31, 2020, the Company recognized impairment expense of approximately $0.6 million associated with certain operating lease assets.

Additional information regarding the Company’s operating and finance leases is as follows (in thousands, except for lease term and discount rate information):

Leases	Balance Sheet Classification	December 31, 2021		December 31, 2020
(in thousands)
Assets:
Operating	Operating lease assets	$	10,438	$	11,772
Finance	Financing lease assets		37		44
Total assets		$	10,475	$	11,816

Liabilities:
Current
Operating	Current portion of operating lease liabilities	$	3,025	$	3,530
Finance	Current portion of finance lease liabilities		15		14
Non-current
Operating	Operating lease liabilities, non-current		8,194		9,245
Finance	Finance lease liabilities, non-current		15		29
Total lease liabilities		$	11,249	$	12,818

Lease Cost	Income Statement Classification	December 31, 2021		December 31, 2020
(in thousands)
Operating lease cost	Operating expenses	$	3,664	$	3,809
Operating lease cost	Impairment expense		-		601
Short-term lease cost	Operating expenses		45		-
Variable lease cost (1)	Operating expenses		946		937
Finance: (2)
Amortization of lease assets	Operating expenses		7		-
Interest on lease liabilities	Interest expense		2		-
Total lease cost		$	4,664	$	5,347

(1) Variable lease cost includes payment for certain real estate taxes, insurance, common area maintenance, and other charges related to lease agreements, which are not included in the measurement of the operating lease liabilities.

(2) Finance lease costs were less than $1,000 during the 2020 year.

	December 31, 2021
Maturity of Lease Liabilities	Operating Leases			Finance Leases
(in thousands)
2022	$	3,488		$	17
2023		2,665		$	15
2024		2,021		$	-
2025		1,386		$	-
2026		1,114		$	-
Thereafter		2,218		$	-
Total lease payments	$	12,892		$	32
Less: Interest		(1,673	)		(2	)
Present value of lease liabilities	$	11,219		$	30

Other Information	December 31, 2021		December 31, 2020
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases	$	3,876	$	3,866
Operating cash flows used in finance leases		2		-
Financing cash flows used in finance leases		14		-

Operating lease assets obtained in exchange for lease obligations
Operating leases, initial recognition		1,653		317
Operating leases, modifications and remeasurements		200		1,340
Finance leases, initial recognition		-		45

Lease Term and Discount Rate	December 31, 2021			December 31, 2020
Weighted-average remaining lease term (years):
Operating leases		5.3			5.9
Finance leases		1.9			2.9
Weighted-average discount rate:
Operating leases		4.5	%		4.4	%
Finance leases		6.5	%		6.5	%