LEASES

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

LEASES

LEASES

We lease office facilities for use in our operations, as well as transportation and other equipment. Most of our leases are non-cancelable operating lease agreements and they expire in one year to 10 years. Some of these leases include options to extend for up to 10 years. We had no finance leases and no related party lease agreements as of December 31, 2021. Operating lease costs were approximately $15.1 million in 2021, $10.2 million in 2020, and $9.9 million in 2019.

The components of operating lease expense were as follows (in thousands):

Lease Costs	Years ended December 31,
	2021		2020
Operating lease cost	$	11,095	$	6,524
Short-term lease cost	2,308		1,940
Variable lease cost	1,659		1,760
Net lease cost	$	15,062	$	10,224

As of December 31, ROU lease assets and lease liabilities for our operating leases were recorded in the consolidated balance sheets as follows (in thousands):

	2021		2020
Assets:
Operating lease right-of-use assets	$	39,720	$	18,734
Liabilities:
Operating leases, short-term	10,560		5,904
Operating leases, long-term	36,336		16,279
Total lease liabilities	$	46,896	$	22,183

Supplemental information related to leases is as follows:

Other Information	For the year ended			For the year ended
	2021			2020
Cash Flows (in thousands):
Cash paid amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	11,432		$	8,131
Right-of-use assets obtained in exchange for lease obligations (non-cash):
Operating leases	$	20,140		$	5,524
Lease Term and Discount Rate:
Weighted average remaining lease term (years)	6			3
Weighted average discount rate	1.81		%	3.28		%

As of December 31, 2021, maturities of lease liabilities were as follows (in thousands):

Year ending December 31,	Amount
2022	$	12,070
2023	9,059
2024	7,687
2025	5,592
2026	3,809
Thereafter	11,431
Total lease payments	49,648
Less: Interest	(2,752)
Present value of operating lease liabilities	$	46,896

Rental income from third parties

We own office buildings in Bangor, Falmouth and Yarmouth, Maine; Lubbock and Plano, Texas; Troy, Michigan; Latham, New York; and Moraine, Ohio. We lease space in some of these buildings to third-party tenants. The property we lease to others under operating leases consists primarily of specific facilities where one tenant obtains substantially all of the economic benefit from the asset and has the right to direct the use of the asset. These non-cancelable leases expire between 2022 and 2027, and some have options to extend the lease for up to 10 years. We determine if an arrangement is a lease at inception. None of our leases allow the lessee to purchase the leased asset.

Rental income from third-party tenants was $1.2 million in 2021, $1.1 million in 2020, and $1.1 million in 2019. Rental income is included in hardware and other revenue on the consolidated statements of comprehensive income. Future minimum operating rental income based on contractual agreements is as follows (in thousands):

Year ending December 31,	Amount
2022	$	1,519
2023	1,557
2024	1,589
2025	1,047
2026	84
Thereafter	7
Total	$	5,803

As of December 31, 2021, we had no additional significant operating or finance leases that had not yet commenced.

LEASES

LEASES

We lease office facilities for use in our operations, as well as transportation and other equipment. Most of our leases are non-cancelable operating lease agreements and they expire in one year to 10 years. Some of these leases include options to extend for up to 10 years. We had no finance leases and no related party lease agreements as of December 31, 2021. Operating lease costs were approximately $15.1 million in 2021, $10.2 million in 2020, and $9.9 million in 2019.

The components of operating lease expense were as follows (in thousands):

Lease Costs	Years ended December 31,
	2021		2020
Operating lease cost	$	11,095	$	6,524
Short-term lease cost	2,308		1,940
Variable lease cost	1,659		1,760
Net lease cost	$	15,062	$	10,224

As of December 31, ROU lease assets and lease liabilities for our operating leases were recorded in the consolidated balance sheets as follows (in thousands):

	2021		2020
Assets:
Operating lease right-of-use assets	$	39,720	$	18,734
Liabilities:
Operating leases, short-term	10,560		5,904
Operating leases, long-term	36,336		16,279
Total lease liabilities	$	46,896	$	22,183

Supplemental information related to leases is as follows:

Other Information	For the year ended			For the year ended
	2021			2020
Cash Flows (in thousands):
Cash paid amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	11,432		$	8,131
Right-of-use assets obtained in exchange for lease obligations (non-cash):
Operating leases	$	20,140		$	5,524
Lease Term and Discount Rate:
Weighted average remaining lease term (years)	6			3
Weighted average discount rate	1.81		%	3.28		%

As of December 31, 2021, maturities of lease liabilities were as follows (in thousands):

Year ending December 31,	Amount
2022	$	12,070
2023	9,059
2024	7,687
2025	5,592
2026	3,809
Thereafter	11,431
Total lease payments	49,648
Less: Interest	(2,752)
Present value of operating lease liabilities	$	46,896

Rental income from third parties

We own office buildings in Bangor, Falmouth and Yarmouth, Maine; Lubbock and Plano, Texas; Troy, Michigan; Latham, New York; and Moraine, Ohio. We lease space in some of these buildings to third-party tenants. The property we lease to others under operating leases consists primarily of specific facilities where one tenant obtains substantially all of the economic benefit from the asset and has the right to direct the use of the asset. These non-cancelable leases expire between 2022 and 2027, and some have options to extend the lease for up to 10 years. We determine if an arrangement is a lease at inception. None of our leases allow the lessee to purchase the leased asset.

Rental income from third-party tenants was $1.2 million in 2021, $1.1 million in 2020, and $1.1 million in 2019. Rental income is included in hardware and other revenue on the consolidated statements of comprehensive income. Future minimum operating rental income based on contractual agreements is as follows (in thousands):

Year ending December 31,	Amount
2022	$	1,519
2023	1,557
2024	1,589
2025	1,047
2026	84
Thereafter	7
Total	$	5,803

As of December 31, 2021, we had no additional significant operating or finance leases that had not yet commenced.