Annual report pursuant to Section 13 and 15(d)

Leases, Other Commitments, and Contingencies

v3.19.3.a.u2
Leases, Other Commitments, and Contingencies
12 Months Ended
Dec. 31, 2019
Commitments And Contingencies Disclosure [Abstract]  
Leases, Other Commitments, and Contingencies

8. LEASES, OTHER COMMITMENTS, AND CONTINGENCIES

Litigation and Claims

We are not currently a party to any material pending legal proceeding.

Leases

We lease our headquarters facility, office equipment, and other items. Our headquarters lease involved the sale of land and improvements to a third party who then constructed the facility. This lease is considered a financing lease.     

 

Sale-Leaseback of Headquarters and Lab Facility

Our headquarters facility is composed of a 40,000 square-foot office and lab building, with greenhouses and outdoor research plots. We are deemed the owner for accounting purposes. The lease has a term of twenty years, with four options to extend its term for five years each, subject to there being no default under the lease terms beyond any cure period and us occupying the property at the time of extension. In 2017, we received $7.0 million in connection with the sale of the land and uncompleted facility.

The lease commenced in May 2018. Under the lease, we pay an annual base rent of eight percent of the total project cost with scheduled increases in rent of 7.5 percent on the sixth, eleventh and sixteenth anniversaries of the start of the lease commencement as well as on the first day of each renewal term. Currently, we pay an annual base rent of $1.4 million.

We are also responsible for all operating costs and expenses associated with the property. Beginning on the eighteenth month anniversary of the start of the lease, if the landlord decides to sell the property we have a right of first refusal to purchase the property on the same terms offered to any third party.

Concurrent with entering the lease, Cellectis guaranteed all our obligations under the lease agreement. Cellectis’ guarantee of our obligations will terminate at the end of the second consecutive calendar year in which our tangible net worth exceeds $300 million, as determined in accordance with generally accepted accounting principles. At a point when Cellectis owns 50% or less of our outstanding common stock, we have agreed to indemnify Cellectis for any obligations incurred by Cellectis under its guaranty of our obligations under the lease.

Sale-Leaseback of Equipment

We also have an equipment financing arrangement that is considered a financing lease. This arrangement has a term of four years for each draw. We were required to deposit cash into a restricted account in an amount equal to the future rent payments required by the lease. As of December 31, 2019, this restricted cash totaled $1.4 million. We have the option to request the return of excess collateral annually in December. The equipment financing arrangement allows for a six-month renewal option or a repurchase option at the end of the lease term.

Operating Leases

As a lessee, we lease office equipment, storage facilities and vehicles under various operating leases.

Rent expense from all operating leases was as follows:

 

 

Year ended December 31,

 

In Thousands

 

2019

 

 

2018

 

 

2017

 

Rent expense from operating leases

 

$

117

 

 

$

200

 

 

$

270

 

Noncancelable future lease commitments are as follows:

In Thousands

 

Operating

Leases

 

 

Capital

Leases

 

2020

 

$

419

 

 

$

1,817

 

2021

 

 

59

 

 

 

1,787

 

2022

 

 

13

 

 

 

1,898

 

2023

 

 

 

 

 

1,561

 

2024

 

 

 

 

 

1,479

 

After fiscal 2024

 

 

 

 

 

21,428

 

Total noncancelable future lease commitments

 

$

491

 

 

$

29,970

 

 

Other Commitments

As of December 31, 2019, we have committed to purchase grain from growers and seed from third party producers at dates throughout 2020 and 2021 aggregating $50.9 million based on current commodity futures market prices, other payments to growers and estimated yields per acre. This amount is not recorded in the consolidated financial statements because we have not taken delivery of the grain or seed as of December 31, 2019.