Salem Media Group, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Operating and Finance Lease Right-of-Use Assets

Operating and Finance Lease Right-of-Use Assets

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Operating and Finance Lease Right-of-Use Assets

NOTE 6. OPERATING AND FINANCE LEASE

RIGHT-OF-USE

ASSETS

Leasing Transactions

Refer to Footnote 7 – Operating and Finance Lease

Right-Of-Use

Assets of our annual report on Form

10-K

for the year ended December 31, 2022 for a description of our leasing transactions under ASC 842.

Due to the adverse economic impact of the

COVID-19

pandemic, we negotiated with our landlords in early 2020 to obtain rent concessions to improve our short-term liquidity. In accordance with the FASB’s recent Staff Q&A regarding rent concessions related to the effects of the

COVID-19

pandemic, we did not apply the lease modification guidance under FASB ASC Topic 842 to rent concessions that resulted in total payments required under the modified contract were substantially the same as or less than total payments required by the original contract. For qualifying rent abatement concessions, we recorded negative lease expense for abatement during the period of relief. At December 31, 2022, $0.2 million of the deferred cash payments remained with $26,000 payable in 2023 and the remainder payable in 2024.

Balance Sheet

Supplemental balance sheet information related to leases is as follows:


	September 30, 2023
	(Dollars in thousands)
Operating Leases		Related Party		Other		Total
Operating leases ROU assets	$	8,167	$	36,939	$	45,106
Operating lease liabilities (current)	$	1,220	$	7,680	$	8,900
Operating lease liabilities (non-current)		7,214		35,594		42,808

Total operating lease liabilities	$	8,434	$	43,274	$	51,708


Weighted Average Remaining Lease Term
Operating leases	7.3 years
Finance leases	2.5 years
Weighted Average Discount Rate
Operating leases	8.62	%
Finance leases	8.29	%

Lease Expense

The components of lease expense were as follows:


	Nine Months Ended September 30, 2023
	(Dollars in thousands)
Amortization of finance lease ROU Assets	$	32
Interest on finance lease liabilities		4

Finance lease expense		36
Operating lease expense		10,123
Variable lease expense		1,164
Short-term lease expense		350

Total lease expense	$	11,673

Supplemental Cash Flow

Supplemental cash flow information related to leases was as follows:


	Nine Months Ended September 30, 2023
	(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	10,711
Operating cash flows from finance leases		3
Financing cash flows from finance leases		43
Leased assets obtained in exchange for new operating lease liabilities	$	8,965
Leased assets obtained in exchange for new finance lease liabilities		41

Maturities

Future minimum lease payments under leases that had initial or remaining

non-cancelable

lease terms in excess of one year as of September 30, 2023, are as follows:


Future minimum lease	Operating Leases
	Related Party			Other			Total			Finance Leases			Total

	(Dollars in thousands)
2024	$	1,453		$	9,546		$	10,999		$	38		$	11,037
2025		1,954			9,892			11,846			20			11,866
2026		1,959			8,651			10,610			19			10,629
2027		1,624			6,966			8,590			4			8,594
2028		1,201			5,184			6,385			1			6,386
Thereafter		3,584			21,919			25,503			—			25,503

Undiscounted Cash Flows	$	11,775		$	62,158		$	73,933		$	82		$	74,015

Less: imputed interest		(3,341	)		(18,884	)		(22,225	)		(8	)		(22,233	)

Total	$	8,434		$	43,274		$	51,708		$	74		$	51,782

Reconciliation to lease liabilities:
Lease liabilities – current	$	1,220		$	7,680		$	8,900		$	36		$	8,936
Lease liabilities – long-term		7,214			35,594			42,808			38			42,846

Total Lease Liabilities	$	8,434		$	43,274		$	51,708		$	74		$	51,782