Note 5 - Leases

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

5. LEASES

The Company leases administrative and sales offices and certain equipment under noncancellable operating leases, which contain various renewal options and, in some cases, require payment of common area costs, taxes and utilities. These operating leases expire at various times through 2028. The Company had no leases that were classified as a financing lease as of September 30, 2020 and December 31, 2019.

Leases with an initial term of 12 months or less are not recorded on the balance sheets, and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Long-term operating leases are included in operating lease right-of-used (ROU) assets and operating lease liabilities in the Company’s Condensed Consolidated Balance Sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized based on the present value of remaining lease payments over the lease term. In determining the present value of lease payments, implicit rate must be used when readily determinable. As the Company’s leases do not provide implicit rates, at the date of the Company’s adoption of the new lease standard, the discount rate is calculated using the Company’s incremental borrowing rate determined based on the information available. The operating lease ROU asset also includes any lease payments made and excludes lease incentives or tenant improvement allowance. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense for lease payments is recognized

on a straight-line basis over the lease term. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, and common area maintenance costs are not included in the ROU assets or operating lease liabilities. These are expensed as incurred and recorded as variable lease expense. 

Lease expense was comprised of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Operating lease expense	$	455	$	463	$	1,362	$	1,402
Short-term lease and variable lease expense		127		130		401		333
Total lease expense	$	582	$	593	$	1,763	$	1,735

Supplemental balance sheets information related to leases was as follows:

	September 30,			December 31,
	2020			2019
Weighted average remaining lease term under operating ROU leases (in years)		6.7			7.2
Weighted average discount rate for operating lease liabilities		5.24	%		5.25	%
Operating lease ROU assets obtained (in thousands)	$	151		$	333

Maturity of operating lease liabilities as of September 30, 2020, are as follows (in thousands):

Year Ending December 31,	Amount(a)
2020 (remaining three months)	$	392
2021		1,876
2022		1,626
2023		1,368
2024		1,073
2025 and thereafter		3,791
Total future minimum lease payments	$	10,126
Less: Interest(b)		(1,599	)
Present value of future minimum lease payments operating lease liabilities(c)	$	8,527

(a)	As of September 30, 2020, the total operating lease liability includes approximately $1.0 million related to an option to extend a lease term that is reasonably certain to be exercised.
(b)	Calculated using incremental borrowing interest rate for each lease.
(c)	Includes the current portion of operating lease liabilities of $1.8 million as of September 30, 2020.