Leases

3 Months Ended

Mar. 31, 2020

5. Leases

A summary of the Company’s lease portfolio as of March 31, 2020 and December 31, 2019 is presented in the table below:

(U.S. Dollars, in thousands, except lease term and discount rate)	Classification	March 31, 2020		December 31, 2019
Right-of-use assets ("ROU assets")
Operating leases	Other long-term assets	$	5,530	$	5,798
Finance leases	Property, plant and equipment, net		21,911		20,207
Total ROU assets			27,441		26,005
Lease Liabilities
Current
Operating leases	Other current liabilities		1,902		1,875
Finance leases	Current portion of finance lease liability		357		323
Long-term
Operating leases	Other long-term liabilities		3,786		4,084
Finance leases	Long-term portion of finance lease liability		22,471		20,648
Total lease liabilities		$	28,516	$	26,930

Supplemental cash flow information related to leases was as follows:

(U.S. Dollars, in thousands)	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,059	$	950
Operating cash flows from finance leases		229		222
Financing cash flows from finance leases		92		99
ROU assets obtained in exchange for lease obligations
Operating leases		275		200
Finance leases		1,949		21,179

Wittenstein Contract Manufacturing and Supply Agreement

In March 2020, the Company entered into a CMSA with Wittenstein for an initial term of two years to manufacture the FITBONE product line. As consideration for the CMSA, the Company will pay $2.0 million to Wittenstein if certain conditions are met in

relation to the prompt delivery of manufactured products. The Company is accounting for the CMSA as a finance lease as the Company has the right to direct the use of and to obtain substantially all of the economic benefits of the dedicated equipment used to manufacture the products and has the option to obtain title and possession of the equipment at the conclusion of the CMSA. As a result, the Company recognized both a lease finance liability and a related ROU asset of $1.9 million as of the commencement date of the CMSA.