NOTE 8 — LEASES

The Company leases certain facilities and equipment. On January 1, 2019, the Company adopted ASU 2016-02, Leases (“Topic 842”) and ASU 2018-11 using the cumulative effect method and has elected to apply each available practical expedient. The adoption of Topic 842 resulted in the Company recognizing operating lease liabilities totaling $19,508 with a corresponding right-of-use (“ROU”) asset of $17,613 based on the present value of the minimum rental payments of such leases. The variance between the ROU asset balance and the lease liability is a deferred rent liability that existed prior to the adoption of Topic 842 and was offset against the ROU asset balance during the adoption. The discount rates used for leases accounted for under ASC 842 are based on an interest rate yield curve developed for the leases in the Company’s lease portfolio.

The Company has elected to apply the short-term lease exception to all leases of one year or less. During the six months ended June 30, 2020, the Company had an additional operating lease that resulted in right-of-use assets obtained in exchange for lease obligations of $4,380. Additionally, during the six months ended June 30, 2020, the Company had additional finance leases that resulted in property, plant, and equipment obtained in exchange for lease obligations of $1,918.

Some of the Company’s facility leases include options to renew. The exercise of the renewal options is typically at the Company’s discretion. The Company regularly evaluates the renewal options and includes them in the lease term when the Company is reasonably certain to exercise them.

Quantitative information regarding the Company’s leases is as follows:


	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Components of lease cost
Finance lease cost components:
Amortization of finance lease assets	$ 156	$ 136	$ 285	$ 272
Interest on finance lease liabilities	48	25	74	54
Total finance lease costs	204	161	359	326
Operating lease cost components:
Operating lease cost	811	755	1,576	1,541
Short-term lease cost	155	158	287	304
Variable lease cost (1)	193	207	388	385
Sublease income	(45)	(44)	(90)	(88)
Total operating lease costs	1,114	1,076	2,161	2,142

Total lease cost	$ 1,318	$ 1,237	$ 2,520	$ 2,468

Supplemental cash flow information related to our operating leases is
as follows for the six months ended June 30, 2020 and 2019:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases
Operating cash outflow from operating leases			$ 1,764	$ 1,750

Weighted-average remaining lease term-finance leases at end of period (in years)			1.8	1.4
Weighted-average remaining lease term-operating leases at end of period (in years)			10.4	10.8
Weighted-average discount rate-finance leases at end of period			9.0%	8.6%
Weighted-average discount rate-operating leases at end of period			8.8%	9.0%

⁽¹⁾

Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company’s leased facilities and equipment.

As of June 30, 2020, future minimum lease payments under finance leases and operating leases were as follows:


	Finance		Operating
	Leases		Leases		Total
2020	$	619	$	1,751	$	2,370
2021		1,250		3,387		4,637
2022		926		2,902		3,828
2023		309		2,884		3,193
2024		31		2,906		2,937
2025 and thereafter		4		20,118		20,122
Total lease payments		3,139		33,948		37,087
Less—portion representing interest		(338)		(12,435)		(12,773)
Present value of lease obligations		2,801		21,513		24,314
Less—current portion of lease obligations		(1,032)		(1,582)		(2,614)
Long-term portion of lease obligations	$	1,769	$	19,931	$	21,700