Leases

6 Months Ended

Jun. 30, 2022

Leases

Leases

6. Leases

We lease certain land, buildings and equipment for use in our operations. We recognize lease expense for these leases on a straight-line basis over the lease term and combine lease and non-lease components for all leases. Right-of-use (“ROU”) assets and lease liabilities are recorded on the balance sheet for all leases with an expected term of at least one year. Some leases include one or more options to renew. The exercise of lease renewal options is generally at our discretion. The depreciable lives of ROU assets are limited to the expected lease term. Our lease agreements do not contain any residual value guarantees or material restrictive covenants. As of June 30, 2022, we do not have any non-cancellable operating lease commitments that have not yet commenced.

ROU assets are classified within other intangibles, deferred costs and investments, net on the condensed consolidated balance sheet while current lease liabilities are classified within other accrued expenses and long-term lease liabilities are classified within other liabilities. Leases with an initial term of 12 months or less are not recorded on the balance sheet. ROU assets were $5.5 million and $6.1 million at June 30, 2022 and December 31, 2021 respectively. Lease liabilities were $5.8 million and $6.4 million at June 30, 2022 and December 31, 2021, respectively. During the six months ended June 30, 2022, we recorded additional ROU assets under operating leases of $219,000. Payments on lease liabilities during the three and six months ended June 30, 2022 and 2021 totaled $428,000, $906,000, $415,000, and $884,000, respectively.

Lease expense includes cost for leases with terms in excess of one year. For the three and six months ended June 30, 2022 and 2021, our total lease expense was $449,000, $893,000, $442,000 and $882,000, respectively. Short-term lease costs are de minimus.

We have no financing leases and minimum annual rental commitments under non-cancellable operating leases consisted of the following at June 30, 2022 (in thousands):

Years Ending December 31,
2022 (a)	$	885
2023		1,608
2024		1,293
2025		906
2026		700
Thereafter		1,321
Total lease payments (b)		6,713
Less: Interest (c)		895
Present value of lease liabilities (d)	$	5,818

(a) Remaining payments are for the nine-months ending December 31, 2022

(b) Lease payments include options to extend lease terms that are reasonably certain of being exercised. There were no legally binding minimum lease payments for leases signed but not yet commenced at June 30, 2022.

(c) Our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our discount rate for such leases to determine the present value of lease payments at the lease commencement date.

(d) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 6.1 years and 4.2%, respectively, at June 30, 2022.