Note

– Leases

The Company’s significant accounting policies are disclosed in Note

to the Consolidated Financial Statements included in its Annual Report on Form

-K for the year ended

December 31, 2018.

Significant changes to the Company’s accounting policies as a result of adopting ASC

842

are discussed below.

The Company accounts for leases in accordance with ASC

842.

The Company adopted the standard as of

January 1, 2019,

using the alternative transition method provided under ASC

842,

which allowed the Company to initially apply the new lease standard at the adoption date (the "effective date method"). Under the effective date method, comparative periods are presented in accordance with ASC

840

and do

not

include any retrospective adjustments to reflect the adoption of ASC

842.

The Company elected the package of practical expedients permitted under the transition guidance within the new standard. The Company did

not

elect the hindsight practical expedient. The Company recorded a net increase of

$13.1

million to its operating lease assets and liabilities on

January 1, 2019.

The adoption did

not

result in a cumulative-effect adjustment to the opening balance of retained earnings. The adoption of ASC

842

did

not

have a material impact on the Company's consolidated statements of comprehensive income, shareholders' equity or cash flows as of the adoption date.

The Company has operating leases for office space, manufacturing facilities and certain company vehicles and equipment. The leases have remaining lease terms of

one

year to

years. Leases with an initial term of

months or less are

not

recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For purposes of calculating operating lease liabilities, lease terms

may

be deemed to include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. As of

March 31, 2019,

the operating lease liability does

not

include any options to extend or terminate leases. The Company currently has

finance leases.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease assets, current operating lease liabilities and long-term operating lease liabilities in the Consolidated Balance Sheets and are recognized based on the present value of lease payments over the lease term at commencement date. The majority of the Company’s leases do

not

provide an implicit rate of return, therefore, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Lease agreements that contain non-lease components, with the exception of certain real estate leases, are accounted for as a single lease component.

Supplemental balance sheet information related to leases was as follows:


(in thousands)	March 31, 2019
Operating lease assets	$	11,965

Current operating lease liabilities	$	3,021
Long-term operating lease liabilities		9,107
Total operating lease liabilities	$	12,128

Lease expense is recognized on a straight line basis over the lease term, with variable payments recognized in the period those payments are incurred. The components of lease expense for the periods reported were as follows:


(in thousands)	Three Months Ended March 31, 2019
Operating lease cost	$	1,070
Variable lease cost		239
Total lease cost	$	1,309

Maturities of operating lease liabilities as of

March 31, 2019 (

in accordance with ASC

842

) were as follows:


(in thousands)	Operating Leases
Year Ending December 31,
2019 (excluding three months ended March 31, 2019)	$	2,706
2020		2,627
2021		2,307
2022		2,256
2023		1,028
After 2023		2,098
Total future minimum lease payments		13,022
Less interest		(894	)
Present value of lease liabilities	$	12,128

As of

March 31, 2019,

we have

operating leases that have

not

yet commenced.

Weighted average remaining lease term and discount rate was as follows:


	March 31, 2019
Weighted Average Remaining Lease Term (Years)		5.38
Weighted Average Discount Rate		2.6	%

Supplemental cash flow information related to leases was as follows:


(in thousands)	Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows for operating leases	$	1,197
Lease assets obtained in exchange for new operating lease liabilities		13,049