Leases

6 Months Ended

Jun. 30, 2019

Adoption of ASC Topic 842, “Leases”

The Company adopted ASC 842 on January 1, 2019, using the prospective approach which provides a method for recording existing leases at adoption using the effective date of the standard as its initial application date. ASC 842 generally requires all leases to be recognized on the balance sheet. In addition, the Company elected the relief package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed the Company not to reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases and initial direct costs for any existing leases. The reported results for 2019 reflect the application of ASC 842 guidance while the reported results for 2018 were prepared under the guidance of ASC 840, Leases. The adoption of ASC 842 resulted in the recording of an additional lease asset and lease liability of approximately $1.1 million as of January 1, 2019. ASC 842 did not materially impact the Company’s condensed consolidated results of operations, equity or cash flows as of the adoption date or for the periods presented.

Leases

The Company determines if an arrangement is a lease at inception. The Company has operating and finance leases for vehicles, corporate offices and certain equipment.

Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Lease agreements with lease and non-lease components are accounted for separately. As the Company’s leases do not provide an implicit rate, the Company used the incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Leases with an initial term of 12 months or less are not recorded on the balance sheet as the Company has elected to apply the short-term lease exemption. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Operating and finance lease assets and liabilities are as follows:



(in thousands)	Classification	June 30, 2019
Assets
Operating	Other long-term assets	$	1,021
Finance	Property, plant and equipment, net	237
Total leased assets		$	1,258
Liabilities
Current
Operating	Accrued expenses and other liabilities	$	185
Finance	Current portion of long-term debt and other borrowings	136
Noncurrent
Operating	Other long-term liabilities	910
Finance	Long-term debt, net and other borrowings	104
Total leased liabilities		$	1,335

The components of lease expense were as follows:



(in thousands)	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease expense	$	56	$	112
Finance lease expense
Amortization of ROU assets	30		59
Interest on lease liabilities	1		3
Short-term lease expense	22		45
Total lease expense	$	109	$	219

Other information related to leases were as follows:



	June 30, 2019
Weighted average remaining lease term (Years):
Operating leases	5.3
Finance leases	2.2
Weighted average discount rate:
Operating leases	5.1%
Finance leases	6.2%

(in thousands)	Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	114
Operating cash flows from finance leases	3
Financing cash flows from finance leases	60
ROU assets obtained in exchange for lease obligations:
Operating leases	—
Finance leases	160

Future minimum lease payments under non-cancellable leases as of June 30, 2019 were as follows:



(in thousands)	Operating Leases		Finance Leases
Remainder of 2019	$	116	$	91
2020	238		79
2021	238		58
2022	238		29
2023	238		—
Thereafter	178		—
Total future minimum lease payments	1,246		257
Less: interest	151		17
Total	$	1,095	$	240

Leases

Adoption of ASC Topic 842, “Leases”

Leases

The Company determines if an arrangement is a lease at inception. The Company has operating and finance leases for vehicles, corporate offices and certain equipment.

Operating and finance lease assets and liabilities are as follows:



(in thousands)	Classification	June 30, 2019
Assets
Operating	Other long-term assets	$	1,021
Finance	Property, plant and equipment, net	237
Total leased assets		$	1,258
Liabilities
Current
Operating	Accrued expenses and other liabilities	$	185
Finance	Current portion of long-term debt and other borrowings	136
Noncurrent
Operating	Other long-term liabilities	910
Finance	Long-term debt, net and other borrowings	104
Total leased liabilities		$	1,335

The components of lease expense were as follows:



(in thousands)	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease expense	$	56	$	112
Finance lease expense
Amortization of ROU assets	30		59
Interest on lease liabilities	1		3
Short-term lease expense	22		45
Total lease expense	$	109	$	219

Other information related to leases were as follows:



	June 30, 2019
Weighted average remaining lease term (Years):
Operating leases	5.3
Finance leases	2.2
Weighted average discount rate:
Operating leases	5.1%
Finance leases	6.2%

(in thousands)	Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	114
Operating cash flows from finance leases	3
Financing cash flows from finance leases	60
ROU assets obtained in exchange for lease obligations:
Operating leases	—
Finance leases	160

Future minimum lease payments under non-cancellable leases as of June 30, 2019 were as follows:



(in thousands)	Operating Leases		Finance Leases
Remainder of 2019	$	116	$	91
2020	238		79
2021	238		58
2022	238		29
2023	238		—
Thereafter	178		—
Total future minimum lease payments	1,246		257
Less: interest	151		17
Total	$	1,095	$	240