Leases

During the

first

quarter of

2019,

the Company adopted ASU

No.

2016

02,

Leases. This ASU requires lessees to recognize a right of use (ROU) asset and a lease liability on the balance sheet, with the exception of short-term leases. The Company leases warehouses and office space, industrial equipment, office equipment, vehicles, industrial gas tanks and forklifts from other parties and leases land and warehouse space to

third

parties. The Company determines if a contract contains a lease when the contract conveys the right to control the use of identified assets for a period in exchange for consideration. Upon identification and commencement of a lease, the Company establishes a ROU asset and a lease liability. Operating and finance leases are included in ROU assets, current portion of lease liabilities, and lease liabilities on the accompanying Consolidated Balance Sheets.

The Company has remaining lease terms ranging from

one

year to

years, some of these include options to renew the lease for up to

five

years. The total lease term is determined by considering the initial term per the lease agreement which is adjusted to include any renewal options that the Company is reasonably certain to exercise as well as any period that the Company has control over the space before the stated initial term of the agreement. If the Company determines a reasonable certainty of exercising termination or early buyout options, then the lease terms are adjusted to account for these facts.

Under the transition method selected by the Company, leases existing at, or entered into after,

January 1, 2019

were required to be recognized and measured. Prior period amounts have

not

been adjusted and continue to be reflected in accordance with the Company’s historical reporting. The adoption of this standard resulted in the recording of ROU assets and operating lease liabilities of approximately

$30.1

million as of

January 1, 2019,

with

related impact on the Company’s Consolidated Statements of Comprehensive Income or Consolidated Statements of Cash Flows. Short-term leases have

not

been recorded on the consolidated balance sheets.

The Company leases

one

warehouse from a related party. The Company’s Executive Chairman of the Board owns

50%

of an entity that owns

one

of the Cleveland warehouses and leases it to the Company at a fair market value annual rental of

$0.2

million. The lease expires on

December 31, 2023

with

three

five

-year renewal options.

The Company elected the package of practical expedients permitted under the transition guidance within the new standard which, among other things, allows the Company to carry forward its historical lease classification.

The Company made an accounting policy election to

not

separate non-lease components from lease components for the vehicle ROU asset class. This election has been made to significantly reduce the administrative burden which would be imposed on the Company.

accounting policy elections were made for the remaining ROU asset classes.

ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the leases do

not

provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Lease expense is recognized on a straight-line basis over the lease term.

The components of lease expense were as follows for the year ended

December 31, 2019:

(in thousands)	2019

Operating lease cost	$	7,013

Finance lease cost
Amortization of right to use asset		67
Interest on lease liabilities		15
	$	82

Supplemental cash flow information related to leases was as follows for the year ended

December 31, 2019:

(in thousands)	2019

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,913
Operating cash flows from finance leases		15
Financing cash flows from finance leases		63
Total cash paid for amounts included in the measurement of lease liabilities	$	6,991

Supplemental balance sheet information related to leases was as follows:

(in thousands)	2019

Operating leases
Operating lease right of use asset	$	31,624
Operating lease accumulated depreciation		(5,825	)
Operating lease right of use asset, net	$	25,799

Operating lease current liabilities		5,481
Operating lease liabilities		20,418
	$	25,899

(in thousands)	2019

Finance leases
Finance lease right of use asset	$	613
Finance lease accumulated depreciation		(67	)
Finance lease right of use asset, net	$	546

Finance lease current liabilities		108
Finance lease liabilities		443
	$	551

Weighted average remaining lease term (in years)
Operating leases	7
Finance leases	6

Weighted average discount rate
Operating leases	3.72	%
Finance leases	4.01	%

Maturities of lease liabilities were as follows:

(in thousands)	Operating Lease			Finance Lease
Year Ending December 31,
2020	$	6,329		$	127
2021		5,451			125
2022		4,424			116
2023		3,516			77
2024		2,897			58
Thereafter		6,876			111
Total future minimum lease payments	$	29,493		$	614
Less remaining imputed interest		(3,594	)		(63	)
Total	$	25,899		$	551

The Company entered into a facility lease in

December 2019

which commences in the

first

quarter of

2020.

The ROU asset and lease liability for this lease is

$3.8

million.