LEASES

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

LEASES

LEASES

The Company records a right-of-use ("ROU") asset and lease liability for substantially all leases for which it is a lessee, in accordance with ASC 842. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company has no significant lease agreements in place for which the Company is a lessor. At inception of a contract, the Company considers all relevant facts and circumstances to assess whether or not the contract represents a lease by determining whether or not the contract conveys the right to control the use of an identified asset, either explicit or implicit, for a period of time in exchange for consideration.

The Company leases certain industrial spaces, office spaces, land, and equipment. Some leases include one or more options to renew, with renewal terms that can extend the lease term from generally one to 5 years. The exercise of lease renewal options is at the Company’s sole discretion, and are included in the lease term only to the extent such renewal options are reasonably certain of being exercised at lease commencement. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. During the three months ended September 30, 2020, leased assets obtained in exchange for new operating lease liabilities totaled approximately $0.3 million. As of September 30, 2020, leases that the Company has signed but have not yet commenced are immaterial.

Leased assets and liabilities included within the Condensed Consolidated Balance Sheets consist of the following (in thousands):

	Classification	September 30, 2020		December 31, 2019
Right-of-Use Assets
Operating	Other assets	$	11,987	$	14,246
Finance	Property, plant and equipment, net of depreciation	2,837		2,945
Total leased ROU assets		$	14,824	$	17,191
Liabilities
Current
Operating	Other accrued liabilities	$	4,346	$	4,369
Finance	Current portion of finance lease obligations	342		327
Noncurrent
Operating	Non-current liabilities	7,883		10,041
Finance	Finance lease obligations	119		378
Total lease liabilities		$	12,690	$	15,115

Lease costs included in the Condensed Consolidated Statements of Operations consist of the following (in thousands):

	Classification	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Operating lease cost	Cost of sales, selling expenses and general and administrative expense	$	1,217	$	1,200
Finance lease cost
Amortization of ROU leased assets	Depreciation and amortization within Cost of sales	36		36
Interest on lease liabilities	Interest expense	11		16
Net lease cost		$	1,264	$	1,252

	Classification	Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Operating lease cost	Cost of sales, selling expenses and general and administrative expense	$	3,844	$	3,398
Finance lease cost
Amortization of ROU leased assets	Depreciation and amortization	108		108
Interest on lease liabilities	Interest expense	44		51
Net lease cost		$	3,996	$	3,557

Maturity of the Company’s lease liabilities as of September 30, 2020 is as follows (in thousands):

	Operating Leases		Finance Leases		Total
2020 (remainder)	$	1,290	$	90	$	1,380
2021	4,580		361		4,941
2022	3,032		30		3,062
2023	2,183		—		2,183
2024	1,085		—		1,085
Thereafter	1,258		—		1,258
Total lease payments	$	13,428	$	481	$	13,909
Less: interest	1,199		20
Present value of lease payments	$	12,229	$	461

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Remaining lease term and discount rates are as follows:

	September 30, 2020		December 31, 2019
Weighted average remaining lease term (years)
Operating leases	3.7		4.0
Finance leases	1.3		2.1
Weighted average discount rate
Operating leases	5.06	%	5.17	%
Finance leases	6.16	%	6.16	%

Lease costs included in the Condensed Consolidated Statements of Cash Flows are as follows (in thousands):

	Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	3,820	$	3,271
Operating cash flows from finance leases	$	27	$	42
Financing cash flows from finance leases	$	244	$	230

LEASES

LEASES

The Company records a right-of-use ("ROU") asset and lease liability for substantially all leases for which it is a lessee, in accordance with ASC 842. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company has no significant lease agreements in place for which the Company is a lessor. At inception of a contract, the Company considers all relevant facts and circumstances to assess whether or not the contract represents a lease by determining whether or not the contract conveys the right to control the use of an identified asset, either explicit or implicit, for a period of time in exchange for consideration.

The Company leases certain industrial spaces, office spaces, land, and equipment. Some leases include one or more options to renew, with renewal terms that can extend the lease term from generally one to 5 years. The exercise of lease renewal options is at the Company’s sole discretion, and are included in the lease term only to the extent such renewal options are reasonably certain of being exercised at lease commencement. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. During the three months ended September 30, 2020, leased assets obtained in exchange for new operating lease liabilities totaled approximately $0.3 million. As of September 30, 2020, leases that the Company has signed but have not yet commenced are immaterial.

Leased assets and liabilities included within the Condensed Consolidated Balance Sheets consist of the following (in thousands):

	Classification	September 30, 2020		December 31, 2019
Right-of-Use Assets
Operating	Other assets	$	11,987	$	14,246
Finance	Property, plant and equipment, net of depreciation	2,837		2,945
Total leased ROU assets		$	14,824	$	17,191
Liabilities
Current
Operating	Other accrued liabilities	$	4,346	$	4,369
Finance	Current portion of finance lease obligations	342		327
Noncurrent
Operating	Non-current liabilities	7,883		10,041
Finance	Finance lease obligations	119		378
Total lease liabilities		$	12,690	$	15,115

Lease costs included in the Condensed Consolidated Statements of Operations consist of the following (in thousands):

	Classification	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Operating lease cost	Cost of sales, selling expenses and general and administrative expense	$	1,217	$	1,200
Finance lease cost
Amortization of ROU leased assets	Depreciation and amortization within Cost of sales	36		36
Interest on lease liabilities	Interest expense	11		16
Net lease cost		$	1,264	$	1,252

	Classification	Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Operating lease cost	Cost of sales, selling expenses and general and administrative expense	$	3,844	$	3,398
Finance lease cost
Amortization of ROU leased assets	Depreciation and amortization	108		108
Interest on lease liabilities	Interest expense	44		51
Net lease cost		$	3,996	$	3,557

Maturity of the Company’s lease liabilities as of September 30, 2020 is as follows (in thousands):

	Operating Leases		Finance Leases		Total
2020 (remainder)	$	1,290	$	90	$	1,380
2021	4,580		361		4,941
2022	3,032		30		3,062
2023	2,183		—		2,183
2024	1,085		—		1,085
Thereafter	1,258		—		1,258
Total lease payments	$	13,428	$	481	$	13,909
Less: interest	1,199		20
Present value of lease payments	$	12,229	$	461

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Remaining lease term and discount rates are as follows:

	September 30, 2020		December 31, 2019
Weighted average remaining lease term (years)
Operating leases	3.7		4.0
Finance leases	1.3		2.1
Weighted average discount rate
Operating leases	5.06	%	5.17	%
Finance leases	6.16	%	6.16	%

Lease costs included in the Condensed Consolidated Statements of Cash Flows are as follows (in thousands):

	Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	3,820	$	3,271
Operating cash flows from finance leases	$	27	$	42
Financing cash flows from finance leases	$	244	$	230