Leases are classified as either finance or operating leases based on criteria in ASC 842. The Company has finance leases for its vehicle and equipment leases and operating leases for its real estate space and office equipment leases. The Company’s operating and finance leases generally have original lease terms between 1 year and 15 years, and in some instances include one or more options to renew. The Company includes options to extend the lease term if the options are reasonably certain of being exercised. The Company currently considers some of its renewal options to be reasonably certain to be exercised. Some leases also include early termination options, which can be exercised under specific conditions. The Company does not have material residual value guarantees or restrictive covenants associated with its leases.

In June 2021, with an effective adoption date of January 1, 2021, the Company adopted ASU 2016-02 using the modified retrospective approach, which permits application of this new guidance at the beginning of the period of adoption, with comparative periods continuing to be reported under ASC 840.

Finance and operating lease assets represent the right to use an underlying asset for the lease term, and finance and operating lease liabilities represent the obligation to make lease payments arising from the lease.

The Company calculates the present value of its finance and operating leases using an estimated incremental borrowing rate (“IBR”), which requires judgment. For real estate operating leases, the Company estimates the IBR based on prevailing market rates for collateralized debt in a similar economic environment with similar payment terms and maturity dates commensurate with the terms of the lease. For all other leases, the Company estimates the IBR based on the stated interest rate on the contract. Since many of the inputs used to calculate the rate implicit in the leases are not readily determinable from the lessee’s perspective, the Company will not use the implicit interest rate.

Certain leases contain variable payments, these payments are expensed as incurred and not included in the Company’s operating lease right-of-use assets and operating lease liabilities. These amounts primarily include payments for maintenance, utilities, taxes, and insurance and are excluded from the present value of the Company’s lease obligations.

As part of this adoption, the Company elected to not record operating lease right-of-use assets or operating lease liabilities for leases with an initial term of 12 months or less. The Company also elected to combine lease and non-lease components on all new or modified operating leases into a single lease component for all classes of assets.

Total rent expense under operating leases was $8.7 million for the year ended December 31, 2020 and was included in selling, general and administrative expense on the consolidated statement of operations. The amortization of assets under finance leases for the years ended December 31, 2020 was $2.2 million and was included in depreciation and amortization on the consolidated statements of operations.

The components of lease expense were as follows:


		Year Ended December 31,
	Statement of Operations Location	2022		2021
Operating lease cost
Lease cost	Selling, general and administrative expense	$	10,017	$	8,760
Variable lease cost	Selling, general and administrative expense		1,319		367
Impairment of ROU asset (1)	Other income (expense)		725		—
Total operating lease cost		$	12,061	$	9,127

Finance lease cost
Amortization of right of use assets	Depreciation and amortization	$	4,179	$	3,227
Interest on lease liabilities	Interest expense—net		467		401
Total finance lease cost			4,646		3,628
Total lease cost		$	16,707	$	12,755

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(1) During the year ended December 31, 2022, the Company vacated certain of its real estate space that is no longer needed for current operations. The impairment analysis on these ROU assets resulted in an impairment loss of $0.7 million.

Supplemental cash flows information related to leases was as follows:


	Year Ended December 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used in finance leases	$	467	$	401
Operating cash flows used in operating leases		9,662		8,531
Financing cash flows used in finance leases		3,967		3,191

Lease liabilities arising from new ROU assets
Operating leases	$	12,443	$	7,037
Finance leases		4,915		4,929

Weighted average remaining lease terms and weighted average discount rates were:


	Year Ended December 31,
	2022		2021
	Operating Leases	Finance Leases	Operating Leases	Finance Leases
Weighted average remaining lease term (years)	4.43	3.30	5.06	3.16
Weighted average discount rate	2.64%	5.37%	2.60%	4.94%

The following is a schedule by year of the maturities of lease liabilities with original terms in excess of one year:


	December 31,
	Operating Leases			Finance Leases
2023	$	8,504		$	4,219
2024		6,785			2,984
2025		4,850			2,084
2026		3,753			1,374
2027 and thereafter		5,100			565
Total undiscounted future minimum lease payments		28,992			11,226
Less imputed interest		(1,660	)		(965	)
Total discounted future minimum lease payments	$	27,332		$	10,261