Leases

Effective January 1, 2019 the Company adopted the new lease accounting standard using the modified retrospective method of applying the new standard at the adoption date. The Company determines if an arrangement is or contains a lease at inception or modification of such agreement. The arrangement is or contains a lease if the contract conveys the right to control the use of the identified asset for a period in exchange for consideration.

Lease right of use assets and liabilities are recognized based on the present value of future minimum lease payments over the expected term at commencement date. As the implicit rate is not determinable in most of the Company's leases, the Company's incremental borrowing rate is used as the basis to determine the present value of future lease payments. Refer to Note 7 for discussion of the Company's borrowing rate. The expected lease terms include options to extend or terminate. The period which is subject to an option to extend the lease is included in the lease term if it is reasonably certain that the option will be exercised. Some of these leases contain variable payment provisions that depend on an index or rate, initially measured using the index or rate at the lease commencement date and are therefore not included in our future minimum lease payments. Variable payments are expensed in the periods incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease term. Additionally, the Company elected the package of practical expedients permitted under the transition guidance, which allows the carryforward the historical lease classification. The Company also made an election to exclude from balance sheet reporting leases with initial terms of 12 months or less and to exclude non-lease components from lease right of use assets and corresponding liabilities.

The Company primarily leases office and manufacturing facilities in addition to vehicles, which have remaining terms of less than one year to seven years. The Company has no finance leases. The Company recorded a $0.5 million adjustment to opening retained earnings related to the remaining deferred gain recorded as part of the Karmiel, Israel sale leaseback.

Leases recorded on the balance sheet consist of the following (in thousands):



Leases	Classification on Balance Sheet	December 31, 2019
Assets
Operating lease right of use asset	Other Assets	$	8,691

Liabilities
Operating lease - current	Other Accrued Expenses	$	2,827
Operating lease - non-current	Other Liabilities	$	5,811

Other information related to lease term and discount rate is as follows:



	December 31, 2019
Operating leases weighted average remaining lease term (in years)	4.0 years
Operating leases weighted average discount rate	5.05	%

The components of lease expense are as follows (in thousands):



	Year Ended
	December 31, 2019
Operating lease cost	$	3,376
Variable lease cost	44
Short-term lease cost	87
Total lease cost	$	3,507

Right of use assets obtained in exchange for new operating lease liability during 2019 were $0.3 million. The cash paid for amounts included in the measurement of lease liabilities approximates our operating lease cost for the year ended December 31, 2019.

Undiscounted maturities of operating lease payments as of December 31, 2019 are summarized as follows (in thousands):



2020	$	3,349
2021	2,563
2022	1,580
2023	1,201
2024	769
Thereafter	576
Total future minimum lease payments	$	10,038
Less: amount representing interest	(1,400		)
Present value of future minimum lease payments	$	8,638

One of the Company's indirect wholly-owned subsidiaries enter into a lease agreement as tenant related to a property in Israel. Such lease agreement provides that we will lease a new building of approximately 121,400 square feet. The Company expects to commence occupancy in the second half of 2020.

Rent expense on operating leases prior to adoption of ASC 842 was $3.6 million and $3.6 million for the years ended December 31, 2018 and 2017, respectively.

The following are the future minimum lease payments (excluding related party leases as described in Note 17) with initial or remaining noncancellable lease terms in excess of one year as of December 31, 2018 ( in thousands):



2019	$	3,580
2020	2,126
2021	997
2022	725
2023	503
Thereafter	336
Total lease payments	$	8,267