Leases

9 Months Ended

Sep. 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 September 30, 2020 amounted to $82.7 million, and the corresponding lease liabilities amounted to $84.2 million, of which $11.5 million was recorded within other current liabilities and $72.7 million as other liabilities.

The weighted remaining average minimum lease period is 17.0 years.

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


	September 30, 2020
	(In thousands)
Next 12 months	$	11,550
1 to 2 years	10,804
2 to 3 years	10,519
3 to 4 years	9,529
4 to 5 years	8,989
More than 5 years	40,940
Total undiscounted minimum lease payments	92,330
Discount	(8,130)
Lease liability (current and non-current)	$	84,200

The weighted average discount rate applied to the lease liabilities is 5.7%.

In September 2020, Orion commenced a district heating project with the utilities provider of its Cologne, Germany neighbor city of Hürth. The power plant is operated by Orion on a finance lease basis over a period of 25 years. During the third quarter of 2020 Orion recorded a right-of-use asset and a respective lease liability in an amount of $54.8 million. Finance lease costs for the three and nine months ended September 30, 2020 amounted to $0.6 million and $0.9 million and were immaterial for the three and nine months ended September 30, 2019, respectively. Operating lease costs for the three and nine months ended September 30, 2020 amounted in total to $2.9 million and $8.4 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 nine months ended September 30, 2019 recorded as operating expenses amounted in total to $2.7 million and $8.0 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 $2.6 million and $2.3 million for the three months September 30, 2020 and 2019, respectively, and $7.0 million and $7.6 million for the nine months ended September 30, 2020 and 2019, respectively. Cash paid for finance leases was immaterial during the same periods.

In addition to the above, Orion entered into a forward-starting lease agreement in May 2020 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.