iMedia Brands, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Leases

Leases

12 Months Ended

Jan. 29, 2022

(12) Leases

The Company leases certain property and equipment, such as transmission and production equipment, satellite transponder and office equipment. The Company also leases office space used by the media commerce services segment's Float Left and iMDS, as well as our entertainment segment 1-2-3.tv. Additionally, the Company leases retail space used by our consumer brands segment’s Christopher & Banks, J.W. Hulme Company and OurGalleria.com. The Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on accompanying consolidated balance sheets.

Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease liabilities and right-of-use assets are recognized at commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Some of the Company's leases include options to extend the term, which is only included in the lease liability and right-of-use assets calculation when it is reasonably certain the Company will exercise that option. As of January 29, 2022, the lease liability and right-of-use assets did not include any lease extension options.

The Company has lease agreements with lease and non-lease components, and has elected to account for these as a single lease component. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The components of lease expense were as follows:


	For the Years Ended
	January 29, 2022		January 30, 2021
Operating leases:
Long-term operating lease cost	$	1,523	$	972
Short-term lease cost		172		63
Variable cost		56		33
Finance leases:
Amortization of right-of-use assets		83		104
Interest expense		3		7
Variable cost		96		57

Variable lease costs includes incremental costs for printers and common area maintenance charges.

Supplemental cash flow information related to leases was as follows:


	For the Years Ended
	January 29, 2022		January 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	1,456	$	1,095
Operating cash flows used for finance leases		2		7
Financing cash flows used for finance leases		86		103

Right-of-use assets obtained in exchange for lease liabilities:
Operating leases		7,741		1,299
Finance leases		—		62

The weighted average remaining lease term and weighted average discount rates related to leases were as follows:


	January 29, 2022	January 30, 2021
Weighted average remaining lease term:
Operating leases	2.7 years	2.8 years
Finance leases	0.4 years	1.1 years


Weighted average discount rate:
Operating leases	4.5%	6.8%
Finance leases	6.0%	5.7%

Supplemental balance sheet information related to leases is as follows:


Leases	Classification	January 29, 2022		January 30, 2021
Assets:
Operating lease right-of-use assets	Other assets	$	7,474	$	1,116
Finance lease right-of-use assets	Property and equipment, net		17		101
Total lease right-of-use assets		$	7,491	$	1,217

Operating lease liabilities:
Current portion of operating lease liabilities	Current portion of operating lease liabilities	$	2,331	$	462
Operating lease liabilities, excluding current portion	Long term operating lease liabilities		5,169		646
Total operating lease liabilities			7,500		1,108

Finance lease liabilities:
Current portion of finance lease liabilities	Current liabilities: Accrued liabilities		19		86
Finance lease liabilities, excluding current portion	Other long term liabilities		—		19
Total finance lease liabilities			19		105
Total lease liabilities		$	7,519	$	1,213

Future maturities of lease liabilities as of January 29, 2022 are as follows:


Fiscal year	Operating Leases		Finance Leases
2022	$	2,698	$	19
2023		2,519		—
2024		1,852		—
2025		935		—
2026		330		—
Thereafter		—		—
Total lease payments		8,334		19
Less: imputed interest		(834)		—
Total lease liabilities	$	7,500	$	19

As of January 29, 2022, the Company had no operating or finance leases that had not yet commenced.