Leases

6 Months Ended

Jun. 30, 2020

Orion has entered into lease contracts as a lessee and is not acting as a lessor. The vast majority of Orion’s lease contracts are concerning operational items such as rail cars, company cars, offices and office equipment.

The recorded right-of-use assets as of June 30, 2020 amounted to $28.9 million, and the corresponding lease liabilities amounted to $30.3 million, of which $7.2 million were recorded within other current liabilities and $23.2 million as other liabilities.

The weighted remaining average minimum lease period is 2.5 years.

The undiscounted minimum lease payments are due in and reconcile to the discounted lease liabilities as follows:


	June 30, 2020
	(In thousands)
Next 12 months	$	7,152
1 to 2 years	6,883
2 to 3 years	6,328
3 to 4 years	5,668
4 to 5 years	4,984
More than 5 years	3,849
Total undiscounted minimum lease payments	34,865
Discount	(4,562)
Lease liability (current and non-current)	$	30,303

The weighted average discount rate applied to the lease liabilities is 5.97%.

Finance lease costs were immaterial for the three and six months ended June 30, 2020 and June 30, 2019, respectively. Operating lease costs for the three and six months ended June 30, 2020 amounted in total to $2.4 million and to $5.5 million, respectively, and were recorded as operating expenses under cost of sales, selling, general and administrative expenses and under research and development cost. The operating lease costs for the three and six months ended June 30, 2019 recorded as operating expenses amounted in total to $2.7 million and $5.3 million, respectively, and were recorded under cost of sales, selling, general and administrative expenses and under research and development cost. Cash paid for amounts included in the measurement of lease liabilities from operating leases was $2.1 million and $2.6 million for the three months June 30, 2020 and 2019, respectively, and $4.4 million and $5.2 million for the six months ended June 30, 2020 and 2019, respectively. Cash paid for finance leases was immaterial during the same periods.

In addition to the above, we entered into a forward-starting lease agreement in October 2016, for a district heating facility in Cologne, Germany, where we plan to operate the equipment to generate the required heat energy. The lessor, the public utility of our neighbor city and its agents, is currently constructing the facilities at our location, with the lease scheduled to commence by the end of 2020 after construction is completed. The lease agreement will have a total of approximately $35 million in undiscounted future lease payments over a 20-year term. In May 2020, after a building permit was obtained by the lessor, we entered into a forward-starting lease agreement for a new warehouse at our facility in Cologne, Germany. The lessor, a logistics and distribution service provider, is currently constructing the warehouse at our location, with the lease scheduled to commence by the end of 2020 after construction is completed. The lease agreement will have a total of approximately $6 million in undiscounted future lease payments over the 10-year term of the lease.