Leases

9 Months Ended

Sep. 30, 2019

The Company leases office, warehouse and manufacturing space and certain equipment under non-cancelable operating lease agreements that generally require us to pay maintenance, insurance, taxes and other expenses in addition to annual rental fees. Our leases have remaining lease terms of one year to eight years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year.

The components of lease expense are as follows:



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019

Operating lease cost	$	1,858	$	5,305
Finance lease cost:
Amortization of right-of-use assets	92		252
Interest on lease liabilities	16		46
Total finance lease cost	$	108	$	298
Short-term lease cost¹	1,793		5,557
Total lease expense	$	3,759	$	11,160

¹Includes variable lease costs, which are not significant

Supplemental cash flow information related to leases is as follows:



	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,200
Financing cash flows from finance leases	$	331

Supplemental balance sheet information related to leases is as follows:



	Balance Sheet Location	September 30, 2019
Operating Leases
Right-of-use assets, net	Operating lease right-of-use assets, net ¹	$	23,333

Current liabilities	Current operating lease liabilities	$	5,485
Non-current liabilities	Operating lease liabilities	19,192
Total operating lease liabilities		$	24,677

Finance Leases
Right-of-use assets		$	1,118
Accumulated depreciation		(250		)
Right-of-use assets, net	Other assets, net	$	868

Current liabilities	Accrued liabilities and other	$	374
Non-current liabilities	Other long-term liabilities	465
Total finance lease liabilities		$	839

Weighted Average Remaining Lease Term
Operating leases		4.7 years
Finance leases		3.0 years
Weighted Average Discount Rate
Operating leases		11.0		%
Finance leases		7.2		%


¹	Includes $20.2 million for operating leases existing on January 1, 2019 and $6.4 million for operating leases that commenced in the nine months ended September 30, 2019, net of amortization of $3.3 million.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. We utilize an incremental borrowing rate, which is reflective of the specific term of the leases and economic environment of each geographic region, and apply a portfolio approach for certain machinery and equipment that have consistent terms in a specific geographic region.

Anticipated future lease costs, which are based in part on certain assumptions to approximate minimum annual rental commitments under non-cancelable leases, are as follows:



Year Ending December 31,	Operating			Financing			Total
2019¹	$	1,920		$	114		$	2,034
2020	7,671			387			8,058
2021	7,285			236			7,521
2022	6,597			115			6,712
2023	2,597			53			2,650
Thereafter	5,751			14			5,765
Total lease payments	$	31,821		$	919		$	32,740
Less: Imputed interest	(7,144		)	(80		)	(7,224		)
Present value of lease liabilities	$	24,677		$	839		$	25,516

1Excluding lease costs for the nine months ended September 30, 2019.

The Company has additional operating leases for real estate of $10.6 million which have not commenced as of September 30, 2019, and as such, have not been recognized on the Company's Condensed Consolidated Balance Sheet. These operating leases are expected to commence during 2019 with leases terms between 5 years and 7 years.

The Company elected to apply the modified retrospective approach. As such, we did not restate the prior year Condensed Consolidated Balance Sheet. The following are the future minimum annual rental commitments under Topic 840 as disclosed in our December 31, 2018 Form 10-K:



Year Ending December 31,
2019	$	7,558
2020	$	6,492
2021	$	5,960
2022	$	5,286
2023	$	1,676
Thereafter	$	2,501

Leases