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Leases
12 Months Ended
Dec. 31, 2021
Leases [Abstract]  
Leases

14.

Leases

 

The Company leases office space and equipment under various operating lease arrangements.  The Company’s leases have remaining lease terms ranging from 20 months to 9 years.  Some building leases have options to extend, terminate, or retract the leased area.  During the year ended December 31, 2021, the Company exercised the contraction clause of one of its leases.  The Company incurred a $0.3 million contraction fee in conjunction with exercising the contraction clause.  The related lease ROU asset and lease liability were revalued when the Company exercised the contraction clause.  The Company did not factor in any other term extension, terminations, or space retractions into the lease terms used to calculate the right-of-use assets and lease liabilities since it was uncertain as to whether these options would be executed.

 

In conjunction with the sale of the renewal rights related to manufactured and dwelling homes products, lease ROU assets related to building space, parking, and equipment at the Company’s Scottsdale Arizona location were evaluated for impairment.  An impairment loss of $1.5 million was recognized and included in corporate and other operating expenses on the Company’s consolidated statements of operations for the year ended December 31, 2021.  The lease ROU assets and lease liabilities related to the Scottsdale Arizona building and parking lease were also re-measured due to the Company’s intention to exercise the early termination clause which allows the Company to reduce the length of the lease term from 131 months to 95 months.

 

As part of this sale, K2 is subleasing approximately one third of the Company’s Scottsdale, Arizona office.  If the Company exercises the early termination clause, it will receive $1.6 million in sublease payments from K2.  If it does not exercise the early termination clause, it will receive $2.4 million in sublease payments from K2 between October 2021 and November 2029.   Rental income derived from this sublease will be recognized on a straight-line basis over the operating lease term.

 

Please see Note 3 of the notes to the consolidated financial statements in Item 8 of Part II of this report for additional information on the sale of the renewal rights related to manufactured and dwelling homes products.  

 

 

The components of lease expenses were as follows:

 

 

 

Years Ended December 31,

 

(Dollars in thousands)

 

2021

 

 

2020

 

 

2019

 

Operating lease expenses

 

$

2,789

 

 

$

2,952

 

 

$

3,293

 

Short-term lease expenses

 

 

8

 

 

 

7

 

 

 

7

 

Sublease income

 

 

(55

)

 

 

 

 

 

 

Total lease expenses

 

$

2,742

 

 

$

2,959

 

 

$

3,300

 

 

 

Supplemental cash flow information related to leases was as follows:

 

 

 

Years Ended December 31,

 

(Dollars in thousands)

 

2021

 

 

2020

 

 

2019

 

Cash paid for amounts included in the measurement of liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Operating leases

 

$

2,797

 

 

$

2,012

 

 

$

2,530

 

Right-of-use assets obtained in exchange for new lease obligations:

 

 

 

 

 

 

 

 

 

 

 

 

Operating leases

 

$

783

 

 

$

772

 

 

$

13,858

 

 

Supplemental balance sheet information related to leases was as follows:

 

The table below presents the lease-related assets and liabilities recorded on the consolidated balance sheets.

 

 

 

 

 

December 31,

 

(Dollars in thousands)

 

Classification on the

consolidated balance sheets

 

2021

 

 

2020

 

Assets:

 

 

 

 

 

 

 

 

 

 

Operating lease assets

 

Lease right of use assets

 

$

16,051

 

 

$

21,077

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

Operating lease liabilities

 

Lease liabilities

 

$

19,079

 

 

$

22,950

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average remaining lease term

 

 

 

 

 

 

 

 

 

 

Operating leases

 

 

 

7.7 years

 

 

8.8 years

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average discount rate

 

 

 

 

 

 

 

 

 

 

Operating leases (1)

 

 

 

 

0.9

%

 

 

2.6

%

 

(1)

Represents the Company’s incremental borrowing rate

 

At December 31, 2021, future minimum lease payments under non-cancelable operating leases were as follows:

 

(Dollars in thousands)

 

Operating Leases

 

 

Expected Sublease Income

 

2022

 

$

2,661

 

 

$

285

 

2023

 

 

2,843

 

 

 

291

 

2024

 

 

2,780

 

 

 

297

 

2025

 

 

3,046

 

 

 

388

 

2026

 

 

2,904

 

 

 

342

 

Thereafter

 

 

5,504

 

 

 

 

Total future minimum lease payments

 

 

19,738

 

 

 

1,603

 

Less: amount representing interest

 

 

659

 

 

 

 

Present value of minimum lease payments

 

$

19,079

 

 

$

1,603