Leases

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

LEASES

LEASES

We have operating and finance leases for manufacturing facilities, corporate offices, research and development facilities, sales and training facilities, vehicles, and certain equipment under which we assume the role of lessee. We do not lease assets as a lessor. Our leases have remaining lease terms of less than one year to approximately ten years, some of which include options to extend the leases for up to fifteen years, and some of which include options to terminate the leases within three months. We do not participate in any material subleasing.

We determine if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use (“ROU”) asset, Lease liability, and Lease liability - less current portion in our condensed consolidated balance sheets. Finance leases are included in Property and equipment, net, Lease liability, and Lease liability - less current portion in our condensed consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized on the commencement date of the lease based on the present value of lease payments over the lease term. Variable lease payments that depend on an index or rate include the variable portion when calculating ROU assets and lease liabilities. Variable lease payments that do not depend on an index or rate are expensed as incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available on the commencement date of the lease to determine the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU assets also include any lease payments made and lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option at the time the lease is commenced. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

While we have lease agreements with lease and non-lease components, we account for the lease and non-lease components as a single lease component.

The components of lease expense were as follows:

	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Operating lease cost	$	1,805	$	2,010	$	5,453	$	5,901
Finance lease cost:
Amortization of ROU assets	18		60		$	96	$	221
Interest on lease liabilities	4		5		$	15	$	14
Total finance lease cost	$	22	$	65	$	111	$	235

We recognize lease payments made for short-term leases where terms are 12 months or less as the payments are incurred. Our short-term lease costs for the three months ended September 30, 2022 and September 30, 2021 were both less than $0.1 million. Our short-term lease costs for the nine months ended September 30, 2022 and September 30, 2021 were both $0.1 million.

Supplemental balance sheet information related to leases was as follows:

	As of			As of
	September 30, 2022			December 31, 2021
Operating leases:
Operating lease right-of-use assets	$	18,404		$	22,543
Current operating lease liabilities	$	5,363		$	5,601
Operating lease liabilities - less current portion	14,225			18,538
Total operating lease liabilities	$	19,588		$	24,139
Finance leases:
Property and equipment, at cost	$	1,415		$	1,380
Accumulated depreciation	(1,312)			(1,222)
Property and equipment, net	$	103		$	158
Current finance lease liabilities	$	169		$	137
Finance lease liabilities - less current portion	119			110
Total finance lease liabilities	$	288		$	247
Weighted Average Remaining Lease Term (in years):
Operating leases	5.01			5.69
Finance leases	1.97			2.12
Weighted Average Discount Rate:
Operating leases	5.67		%	5.67		%
Finance leases	5.35		%	5.02		%

Supplemental cash flow information related to leases was as follows:

	Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,686	$	5,874
Operating cash flows from finance leases	$	15	$	14
Financing cash flows from finance leases	$	172	$	229
ROU assets obtained in exchange for lease obligations:
Operating leases	$	808	$	1,209

Maturities of lease liabilities are as follows:

Year Ending December 31,	Operating leases		Finance leases
2022 (excluding the first 6 months)	$	1,673	$	49
2023	6,105		170
2024	4,826		61
2025	3,074		12
2026	2,075		8
Thereafter	4,984		2
Total lease payments	$	22,737	$	302
Less imputed interest	(3,149)		(14)
Total	$	19,588	$	288

LEASES

LEASES

We have operating and finance leases for manufacturing facilities, corporate offices, research and development facilities, sales and training facilities, vehicles, and certain equipment under which we assume the role of lessee. We do not lease assets as a lessor. Our leases have remaining lease terms of less than one year to approximately ten years, some of which include options to extend the leases for up to fifteen years, and some of which include options to terminate the leases within three months. We do not participate in any material subleasing.

We determine if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use (“ROU”) asset, Lease liability, and Lease liability - less current portion in our condensed consolidated balance sheets. Finance leases are included in Property and equipment, net, Lease liability, and Lease liability - less current portion in our condensed consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized on the commencement date of the lease based on the present value of lease payments over the lease term. Variable lease payments that depend on an index or rate include the variable portion when calculating ROU assets and lease liabilities. Variable lease payments that do not depend on an index or rate are expensed as incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available on the commencement date of the lease to determine the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU assets also include any lease payments made and lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option at the time the lease is commenced. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

While we have lease agreements with lease and non-lease components, we account for the lease and non-lease components as a single lease component.

The components of lease expense were as follows:

	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Operating lease cost	$	1,805	$	2,010	$	5,453	$	5,901
Finance lease cost:
Amortization of ROU assets	18		60		$	96	$	221
Interest on lease liabilities	4		5		$	15	$	14
Total finance lease cost	$	22	$	65	$	111	$	235

We recognize lease payments made for short-term leases where terms are 12 months or less as the payments are incurred. Our short-term lease costs for the three months ended September 30, 2022 and September 30, 2021 were both less than $0.1 million. Our short-term lease costs for the nine months ended September 30, 2022 and September 30, 2021 were both $0.1 million.

Supplemental balance sheet information related to leases was as follows:

	As of			As of
	September 30, 2022			December 31, 2021
Operating leases:
Operating lease right-of-use assets	$	18,404		$	22,543
Current operating lease liabilities	$	5,363		$	5,601
Operating lease liabilities - less current portion	14,225			18,538
Total operating lease liabilities	$	19,588		$	24,139
Finance leases:
Property and equipment, at cost	$	1,415		$	1,380
Accumulated depreciation	(1,312)			(1,222)
Property and equipment, net	$	103		$	158
Current finance lease liabilities	$	169		$	137
Finance lease liabilities - less current portion	119			110
Total finance lease liabilities	$	288		$	247
Weighted Average Remaining Lease Term (in years):
Operating leases	5.01			5.69
Finance leases	1.97			2.12
Weighted Average Discount Rate:
Operating leases	5.67		%	5.67		%
Finance leases	5.35		%	5.02		%

Supplemental cash flow information related to leases was as follows:

	Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,686	$	5,874
Operating cash flows from finance leases	$	15	$	14
Financing cash flows from finance leases	$	172	$	229
ROU assets obtained in exchange for lease obligations:
Operating leases	$	808	$	1,209

Maturities of lease liabilities are as follows:

Year Ending December 31,	Operating leases		Finance leases
2022 (excluding the first 6 months)	$	1,673	$	49
2023	6,105		170
2024	4,826		61
2025	3,074		12
2026	2,075		8
Thereafter	4,984		2
Total lease payments	$	22,737	$	302
Less imputed interest	(3,149)		(14)
Total	$	19,588	$	288