Note 15 - Leases

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Lessee, Operating and Finance Leases [Text Block]

15. LEASES

The Company’s leases pertain primarily to engineering, manufacturing, sales and administrative facilities, with an initial term of one year or more. The Company has three leased facilities in Minnesota, two that expire in 2022 and one that expires in 2023, one leased facility in Illinois that expires in 2022, two leased facilities in California that expire in 2022 and 2024, one leased facility in Singapore that expires in 2025, one leased facility in Indonesia that expires in 2027, and one leased facility in Germany that expires in 2022. Effective January 2022, the Company renewed the lease of its headquarters in Arden Hills, Minnesota, which was set to expire. The renewed lease terms were extended to January 2027.

Certain foreign leases allow for variable lease payments that depend on an index or a market rate adjustment for the respective country and are adjusted on an annual basis. The adjustment is recognized as incurred in the Consolidated Statement of Operations. The facility leases include options to extend for terms ranging from one year to five years. Lease options that the Company is reasonably certain to execute are included in the determination of the ROU asset and lease liability. The Company also leases equipment that include bargain purchase options at termination. These leases have been classified as finance leases.

As of December 31, 2021, the Company has a weighted-average lease term of 0.4 years for its finance leases, and 3.3 years for its operating leases. As of December 31, 2021, the Company has a weighted-average discount rate of 5.56% for its finance leases, and 4.98% for its operating leases. As of December 31, 2020, the Company has a weighted-average lease term of 0.8 years for its finance leases, and 3.8 years for its operating leases. As of December 31, 2020, the Company has a weighted-average discount rate of 5.56% for its finance leases, and 5.06% for its operating leases. Discount rates are determined based on 5-year term incremental borrowing rates at inception of the lease. Operating cash flows for the year ended December 31, 2021, and 2020 from operating leases were $2,395 and $1,950, respectively. Financing lease assets are classified as property, plant and equipment within the Consolidated Balance Sheet.

The following table summarizes lease costs by type:

Year Ended December 31,	2021		2020
Lease cost
Finance lease cost:
Amortization of right-of-use assets	$	21	$	88
Interest on lease liabilities		1		3
Operating lease cost		2,369		1,926
Variable lease cost*		397		611
Total lease cost	$	2,788	$	2,628

*Variable lease costs consist primarily of taxes, insurance, and common area or other maintenance costs for our domestic and foreign building leases.

Maturities of lease liabilities are as follows:

	Operating Leases			Financing Leases		Total
2022	$	2,051		$	4	$	2,055
2023		1,492			-		1,492
2024		1,146			-		1,146
2025		882			-		882
2026 and thereafter		128			-		128
Total lease payments		5,699			4		5,703
Less: Interest		(461	)		-		(461	)
Present value of lease liabilities	$	5,238		$	4	$	5,242