On March 1, 2019, ASU No. 2016-02, "Leases (Topic 842)," was adopted by the Company using the modified retrospective approach. The Company adopted the package of practical expedients that allows companies to not reassess historical conclusions related to contracts that contain leases, existing lease classification, and initial direct costs. It did not adopt the hindsight practical expedient. Adoption of the new standard resulted in the recording of additional lease assets and lease liabilities, which totaled $2,227 and $2,243, respectively, on March 1, 2019. The standard did not materially affect the Company's consolidated financial position, results of operations, or cash flows, and did not have an impact on the Company's debt-covenant compliance. The new guidance was applied to all operating and capital leases at the date of initial application. Leases historically referred to as capital leases are now referred to as finance leases under the new guidance.

We determine whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if we obtain the rights to direct the use of, and to obtain substantially all of the economic benefit from, the use of the underlying asset. Some of our leases include both lease and non-lease components which are accounted for as a single lease component, as we have elected the practical expedient in ASU 842-10-15-37. Some of our operating lease agreements include variable lease costs, including taxes, common area maintenance or increases in rental costs related to inflation. Such variable payments, other than those dependent upon a market index or rate, are expensed when the obligation for those payments is incurred. Lease expense is recorded in operating expenses in the Consolidated Statement of Operations and Comprehensive (Loss) Income. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leases with an initial term of 12 months or less which do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise are considered short term leases and are not recorded on the balance sheet. The Company had no short term leases during the three and nine months ended November 30, 2019.

Right-of-use assets and lease liabilities are recognized at each lease’s commencement date based on the present value of its lease payments over its respective lease term. When a borrowing rate is not explicitly available for a lease, our incremental borrowing rate is used based on information available at the lease’s commencement date to determine the present value of its lease payments. Operating lease payments are recognized on a straight-line basis over the lease term.

We have operating leases for office equipment, as well as offices, warehouses, and other facilities used for our operations. We also have finance leases comprised primarily of computer hardware and machinery and equipment. Our leases have remaining lease terms of less than 1 year to 7 years, some of which include renewal options. We consider these renewal options in determining the lease term used to establish our right-of-use assets and lease liabilities when it is determined that it is reasonably certain that the renewal option will be exercised.

On September 30, 2019, the Company, through its subsidiary Voxx German Holdings GmbH, executed a sale leaseback transaction, selling its real property in Pulheim, Germany to CLM S.A. RL (“the Purchaser”) for €10,920. Net proceeds received from the transaction were approximately $9,500 after transactional costs of $270 and repayment of the outstanding mortgage, which was $2,104 on September 30, 2019. The transaction qualified for sale leaseback accounting in accordance with ASC 842. Concurrently with the sale, the Company entered into an operating lease arrangement (“lease”) with the Purchaser for a small portion of the real property to continue to operate the combined Magnat/Klipsch sales office in Germany, with an initial lease term of five years. The Company recognized a gain related to the execution of the sale transaction of $4,057 for the three and nine months ended November 30, 2019, which is recorded in Other income (expense) on the Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss).

The components of lease cost for the three and nine months ended November 30, 2019 were as follows:

	Three months ended		Nine months ended
	November 30, 2019		November 30, 2019
Operating lease cost (a) (c)	$	209	$	668
Finance lease cost:
Amortization of right of use assets (a)		167		516
Interest on lease liabilities (b)		12		36
Total finance lease cost	$	179	$	552

	Nine months ended
	November 30, 2019
Non-cash investing and financing activities:
Right of use assets obtained in exchange for operating lease obligations	$	1,214
Right of use assets obtained in exchange for finance lease obligations		1,024
Upon the adoption of ASC 842:
Right of use assets recorded in exchange for operating lease obligations	$	2,227
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	628
Operating cash flows from finance leases	36
Finance cash flows from finance leases	477

	November 30, 2019
Operating Leases
Operating lease, right of use assets	$	2,773
Total operating lease right of use assets	$	2,773
Accrued expenses and other current liabilities	$	680
Operating lease liabilities, less current portion		2,127
Total operating lease liabilities	$	2,807
Finance Leases
Property, plant and equipment, gross	$	2,503
Accumulated depreciation		(1,041	)
Total finance lease right of use assets	$	1,462
Accrued expenses and other current liabilities	$	647
Finance lease liabilities, less current portion		855
Total finance lease liabilities	$	1,502
Weighted Average Remaining Lease Term
Operating leases	4.4 years
Finance leases	3.9 years
Weighted Average Discount Rate
Operating leases		6.08	%
Finance leases		3.87	%

At November 30, 2019, maturities of lease liabilities for each of the succeeding years were as follows:

	Operating Leases		Finance Leases
2020	$	829		681
2021		803		483
2022		616		274
2023		400		118
2024		333		—
Thereafter		224		—
Total lease payments		3,205		1,556
Less imputed interest		398		54
Total	$	2,807		1,502

As of November 30, 2019, the Company has not entered into any lease agreements that have not yet commenced.

At February 28, 2019, the Company was obligated under non-cancelable operating leases for equipment, as well as warehouse and office facilities for minimum annual rental payments, for each of the succeeding years, as follows:

	Operating Leases
2019	$	946
2020		604
2021		391
2022		154
2023		10
Thereafter		—
Total minimum lease payments	$	2,105

The Company owns and occupies buildings as part of its operations. Certain space within these buildings may, from time to time, be leased to third parties from which the Company earns rental income as lessor. This leased space is recorded within property, plant and equipment and was not material to the Company's Consolidated Balance Sheet at November 30, 2019. Rental income earned by the Company for the three and nine months ended November 30, 2019 was $176 and $460, respectively, which is recorded within Other income (expense).