LEASES (Notes)

12 Months Ended

Dec. 31, 2021

Leases of Lessee Disclosure [Text Block]

LEASES

The Company leases office space and equipment from third-party lessors and accounts for leases in accordance with ASC Topic 842, determining whether an arrangement is a lease, or contains an embedded lease, at the inception of the contract. Right of use assets represent the Company’s right to use an underlying asset over the lease term and lease liabilities represent the Company’s obligation to make future lease payments arising from the lease.

Operating lease liabilities and finance lease liabilities with terms greater than 12 months are recorded at the present value of the lease payments at the commencement date. The related right of use assets are recorded on the same date at the amount of the initial liability, adjusted for incentives received, prepayments made to the lessor, and any initial direct costs incurred, as applicable. The Company uses the discount rate implicit in the lease when it is readily determinable. When it is not readily available, future lease payments are discounted using the incremental borrowing rate available to the Company. The incremental borrowing rate is the rate available to the Company for a fully collateralized, fully amortizing loan with the same term as the lease. Lease components, such as office space, are accounted for separately from the non-lease components, such as maintenance fees. Certain of the Company's leases may also include rent escalation clauses or options to extend or terminate the lease. These options are included in the present value recorded for the leases when it is reasonably certain that the Company will exercise that option. None of the Company’s current leases contain guarantees of residual value. Leases with an initial term of 12 months or less are considered short term and are not recorded on the balance sheet. The Company recognizes a lease expense for short term leases on a straight-line basis over the lease term.

At December 31, 2021 and 2020, net operating lease right of use assets were $4.6 million and $6.9 million, respectively, and operating lease liabilities were $5.8 million and $8.2 million, respectively. The Company presents right of use assets related to operating leases in its Consolidated Balance Sheets as a component of "Other assets". The current portion of operating lease liabilities is presented as a component of "Accrued expenses" and the long-term portion is presented as a component of "Other long-term liabilities". Generally, the Company’s operating leases relate to office space used in Mannatech’s operations, including its headquarters in Flower Mound, Texas and office space in international locations in which the Company does business.

At December 31, 2021 and 2020, net finance lease right of use assets were $0.2 million and $0.3 million, respectively, and finance lease liabilities were $0.1 million and $0.2 million, respectively. Right of use assets related to finance leases are presented on the Consolidated Balance Sheets as a component of “Property and equipment, net” with related lease liabilities recorded as “Current portion of finance leases” or as “Finance leases, excluding current portion”. As of December 31, 2021, all of the Company’s finance leases pertain to certain equipment used in the business.

As of December 31, 2021 and 2020, our leased assets and liabilities consisted of the following (in thousands):


Leases	Classification	December 31, 2021		December 31, 2020
Right of Use Assets
Operating leases	Other assets	$	4,625	$	6,943
Finance leases	Property and equipment, net	180		288
Total leased assets		4,805		7,231

Lease Liabilities
Current Portion
Operating leases	Accrued expenses	1,493		2,067
Finance leases	Current portion of finance leases	68		76

Long-Term Portion
Operating leases	Other long-term liabilities	4,318		6,124
Finance leases	Finance leases, excluding current portion	66		129
Total leased liabilities		$	5,945	$	8,396

Operating lease costs are recognized on a straight-line basis over the lease term. Finance lease costs are composed of the amortization of the right of use asset and the amounts recorded as interest. For the years ended December 31, 2021 and 2020, we incurred the following lease costs related to our operating and finance leases (in thousands):


Lease Cost	Classification	2021		2020
Operating leases
Operating lease costs	Other operating cost	$	2,201	$	2,074
Short term lease costs	Other operating cost	339		245

Finance leases
Amortization of leased assets	Depreciation and amortization	108		111
Interest on lease liabilities	Interest expense	28		17
Total lease cost		$	2,676	$	2,447

For the twelve months ended December 31, 2021 and 2020, cash paid for amounts included in the measurement of lease liabilities included (in thousands):


	2021		2020

Operating cash flows from operating leases	$	2,164	$	2,400
Financing cash flows from finance leases	$	87	$	103

As of December 31, 2021 and 2020 the Company's lease terms and discount rates were:


	2021		2020
Operating leases
Weighted-average remaining lease term (years)	5.04		5.15
Weighted-average discount rate	4.5	%	4.11	%

Finance leases
Weighted-average remaining lease term (years)	2.14		2.85
Weighted-average discount rate	6.57	%	6.55	%

As of December 31, 2021 future minimum lease payments were as follows (in thousands):


	December 31, 2021
Maturity of lease liabilities	Operating Leases		Finance Leases


2022	$	1,715	$	74
2023	1,166		47
2024	1,250		21
2025	868		1
2026	624		—
Thereafter	905		—
Total future minimum lease payments	$	6,528	$	143
Imputed interest	(716)		(10)
Present value of minimum lease payments	$	5,811	$	133