Onterris, Inc. Leases Disclosure
7. LEASES
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.
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 does 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 (ROU) 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.
The Company does 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 combines lease and non-lease components on all new or modified operating leases into a single lease component for all classes of assets.
When a lease is terminated before the expiration of the lease term, irrespective of whether the lease is classified as a finance lease or an operating lease, the lessee would derecognize the ROU asset and corresponding lease liability. Any difference would be recognized as a gain or loss related to the termination of the lease. Similarly, if a lessee is required to make any payments or receives any consideration when terminating the lease, it would include such amounts in the determination of the gain or loss upon termination.
The components of lease expense were as follows:
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For the Twelve Months Ended December 31, |
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Statement of Operations Location |
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2024 |
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2023 |
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Operating lease cost |
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Lease cost |
|
Selling, general and administrative expense |
|
$ |
13,667 |
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|
$ |
11,663 |
|
Variable lease cost |
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Selling, general and administrative expense |
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|
2,217 |
|
|
|
1,313 |
|
Lease termination gain-net(1) |
|
Selling, general and administrative expense |
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|
— |
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|
|
(737 |
) |
Total operating lease cost |
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|
$ |
15,884 |
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|
$ |
12,239 |
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Finance lease cost |
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Amortization of ROU assets |
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Depreciation and amortization |
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$ |
5,814 |
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$ |
5,351 |
|
Interest on lease liabilities |
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Interest expense, net |
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|
611 |
|
|
|
655 |
|
Total finance lease cost |
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|
$ |
6,425 |
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|
$ |
6,006 |
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Total lease cost |
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|
|
$ |
22,309 |
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|
$ |
18,245 |
|
Supplemental cash flows information related to leases was as follows:
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For the Twelve Months Ended December 31, |
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2024 |
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2023 |
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Cash paid for amounts included in the measurement of lease liabilities: |
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Operating cash flows used in operating leases |
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$ |
13,202 |
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$ |
11,931 |
|
Operating cash flows used for interest related to finance leases |
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|
661 |
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|
|
655 |
|
Financing cash flows used in finance leases |
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|
5,489 |
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|
|
5,797 |
|
Lease liabilities arising from new ROU assets: |
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Operating leases |
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20,951 |
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|
31,459 |
|
Finance leases |
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|
8,841 |
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|
7,636 |
|
Weighted average remaining lease terms and weighted average discount rates were:
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December 31, 2024 |
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Operating Leases |
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Finance Leases |
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Weighted average remaining lease term (years) |
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4.6 |
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3.7 |
|
Weighted average discount rate |
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4.8 |
% |
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|
6.7 |
% |
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December 31, 2023 |
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Operating Leases |
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Finance Leases |
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Weighted average remaining lease term (years) |
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|
4.4 |
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|
3.5 |
|
Weighted average discount rate |
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|
4.2 |
% |
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|
6.3 |
% |
The following is a schedule by year of the maturities of lease liabilities with original terms in excess of one year:
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Operating Leases |
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Finance Leases |
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2025 |
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$ |
13,067 |
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$ |
5,736 |
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2026 |
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|
10,827 |
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|
|
4,823 |
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2027 |
|
|
7,843 |
|
|
|
3,801 |
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2028 |
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|
6,239 |
|
|
|
2,525 |
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2029 |
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|
4,889 |
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|
|
1,265 |
|
2030 and thereafter |
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|
4,397 |
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|
— |
|
Total undiscounted future minimum lease payments |
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$ |
47,262 |
|
|
$ |
18,150 |
|
Less imputed interest |
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|
(5,037 |
) |
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|
(2,063 |
) |
Total discounted future minimum lease payments |
|
$ |
42,225 |
|
|
$ |
16,087 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 3, 2025 | Showing above |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.