Leases

6 Months Ended

Jun. 30, 2020

Leases

Leases

Note 6 – Leases

The Company leases certain real estate for commercial, production, and retail purposes, as well as equipment from third parties. Lease expiration dates are between 2020 and 2026. A portion of leases are denominated in foreign currencies.

For both operating and finance leases, the Company recognizes a right-of-use asset, which represents the right to use the underlying asset for the lease term, and a lease liability, which represents the present value of our obligation to make payments arising over the lease term.

We elected the short-term lease exemption for all leases that qualify. This means leases having an initial term of twelve months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the term of the lease.

The Company's leases may include options to extend or terminate the lease. Renewal options generally range from one to ten years and the options to extend are included in the lease term when it is reasonably certain that we will exercise that option. Some leases have variable payments, however, because they are not based on an index or rate, they are not included in the ROU assets and liabilities. Variable payments for real estate leases primarily relate to common area maintenance, insurance, taxes and utilities. Variable payments for equipment, vehicles, and leases within supply agreements primarily relate to usage, repairs, and maintenance. As the implicit rate is not readily determinable for most of the Company's leases, the Company applies a portfolio approach using an estimated incremental borrowing rate, giving consideration to company specific information and publicly available interest rates for instruments with similar characteristics, to determine the initial present value of lease payments over the lease terms.

	For the Three Months Ended				For the Six Months Ended
$'s in 000's	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Finance lease cost
Amortization of right-of-use assets	$	391	$	411	$	782	$	701
Interest on lease liabilities		77		59		159		109
Operating lease cost		1,279		961		3,110		1,871
Variable lease cost(1)		78		115		253		187
Short-term lease cost		14		5		19		19
Sublease income		(226)		—		(452)		—
Total lease cost	$	1,613	$	1,551	$	3,871	$	2,887

(1) Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate.

Other information related to leases was as follows as of:

	June 30, 2020	December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	4.65	5.15
Finance leases	2.59	2.73
Weighted-average discount rate
Operating leases	5.3%	5.3%
Finance leases	5.8%	5.7%

Annual future commitments under non-cancelable leases as of June 30, 2020, consist of the following:

	Lease Obligations
$'s in 000's	Operating Leases		Finance Leases
Remainder of 2020	$	2,983	$	815
2021		5,232		1,412
2022		4,926		1,222
2023		4,134		1,196
2024		2,609		150
Thereafter		2,998		21
Total minimum future obligations	$	22,882	$	4,816
Less interest		(2,613)		(370)
Present value of net future minimum obligations		20,269		4,446
Less current lease obligations		(4,717)		(1,606)
Long-term lease obligations	$	15,552	$	2,840

Supplemental cash flow information:

	Six Months Ended		Six Months Ended
$'s in 000's	June 30, 2020		June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	159	$	109
Operating cash flows from operating leases		3,058		1,800
Financing cash flows from finance leases		761		737
(Noncash) right-of-use assets obtained in exchange for lease obligations
Operating leases		2,106		1,566
Finance leases		381		315