Leases

9 Months Ended

Sep. 30, 2020

LEASES

We have operating and finance leases for manufacturing facilities, corporate offices, research and development facilities, sales and training facilities, vehicles, and certain equipment under which we assume the role of lessee. We do not lease assets as a lessor. Our leases have remaining lease terms of less than one year to approximately six years, some of which include options to extend the leases for up to eight years, and some of which include options to terminate the leases within three months. We do not participate in any material subleasing activity.

We determine if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use (“ROU”) asset, Lease liability, and Lease liability - less current portion in our condensed consolidated balance sheets. Finance leases are included in Property and equipment, net, Lease liability, and Lease liability - less current portion in our condensed consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized on the commencement date of the lease based on the present value of lease payments over the lease term. Variable lease payments that depend on an index or rate include the variable portion when calculating ROU assets and lease liabilities. Variable lease payments that do not depend on an index or rate are expensed as incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available on the commencement date of the lease to determine the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU assets also include any lease payments made and lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option at the time the lease is commenced. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

While we have lease agreements with lease and non-lease components, we account for the lease and non-lease components as a single lease component.

The components of lease expense were as follows:


	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Operating lease cost	$	2,245	$	2,039	$	6,306	$	6,036

Finance lease cost:
Amortization of ROU assets	$	77	$	88	$	237	$	278
Interest on lease liabilities	6		11		23		35
Total finance lease cost	$	83	$	99	$	260	$	313

We recognize lease payments made for short-term leases where terms are 12 months or less as the payments are incurred. Our short-term lease cost for the three months ended September 30, 2020 and September 30, 2019 were both less than $0.1 million. Our short-term lease cost for the nine months ended September 30, 2020 and September 30, 2019 were $0.1 million and $0.2 million, respectively.

Supplemental balance sheet information related to leases was as follows:


	As of			As of
	September 30, 2020			December 31, 2019
Operating leases:
Operating lease right-of-use asset	$	15,060		$	18,418

Current operating lease liability	$	4,792		$	6,349
Operating lease liability - less current portion	11,586			13,272
Total operating lease liability	$	16,378		$	19,621

Finance leases:
Property and equipment, at cost	$	1,806		$	1,870
Accumulated depreciation	(1,338)			(1,150)
Property and equipment, net	$	468		$	720

Current finance lease liability	$	297		$	325
Finance lease liability - less current portion	195			426
Total finance lease liability	$	492		$	751

Weighted Average Remaining Lease Term (in years):
Operating leases	4.21			4.48
Finance leases	2.06			2.48

Weighted Average Discount Rate:
Operating leases	5.30		%	5.10		%
Finance leases	5.07		%	5.09		%

Supplemental cash flow information related to leases was as follows:


	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	$	6,451	$	6,134
Operating cash flows from finance leases	23		35
Financing cash flows from finance leases	237		273

ROU assets obtained in exchange for lease obligations:
Operating leases	$	1,758	$	8,170

Maturities of lease liabilities are as follows:


Year Ending December 31,	Operating leases		Finance leases
2020 (excluding the first 9 months)	$	5,551	$	315
2021	3,854		129
2022	3,203		50
2023	2,761		22
2024	1,981		4
Thereafter	1,033		—
Total lease payments	$	18,383	$	520
Less imputed interest	(2,005)		(28)
Total	$	16,378	$	492

Leases