Annual report pursuant to Section 13 and 15(d)

Leases

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Leases
12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Leases LEASESThe Company has operating and finance leases for leased office and manufacturing facilities and equipment leases. We have concluded that when an agreement grants us the right to substantially all of the economic benefits associated with an identified asset, and we are able to direct the use of that asset throughout the term of the agreement, we have a lease. We lease certain facilities and office equipment, finance leases, and we lease certain production facilities, office equipment and vehicles under
operating leases. Some of our leases include options to extend or terminate the leases and these options have been included in the relevant lease term to the extent that they are reasonably certain to be exercised.
If the lease arrangement also contains non-lease components, the Company elected the practical expedient not to separate any combined lease and non-lease components for all lease contracts. For our real estate leases, the remaining fixed minimum rental payments used in the calculation of the new lease liability, include fixed payments and variable payments (if the variable payments are based on an index), over the remaining lease term. Variable lease payments based on indices have been included in the related right-of-use assets and lease liabilities on our Consolidated Balance Sheet, while variable lease payments based on usage of the underlying asset have been excluded, as they do not represent present rights or obligations. Variable lease components for leases relate primarily to common area maintenance charges and other separately billed lessor services, sales and real estate taxes. Variable lease costs are expensed in the period they are incurred. We have also elected to adopt the practical expedient under ASC 842 to not separate lease and non-lease components in contracts where the base lease payment contains both. In this situation, these lease agreements are accounted for as a single lease component for all classes of underlying assets. While we do have real estate leases with options to purchase the facility at a market value at the date of exercise, these are not included in the calculation of the lease liability, as these options are not expected to be exercised.
Any new additional operating lease liabilities and corresponding ROU assets are based on the present value of the remaining minimum rental payments. The present value of the Company’s lease liability at transition was calculated using a weighted-average incremental borrowing rate of 3.7%. In determining the incremental borrowing rate, we have considered borrowing data for secured debt obtained from our lending institution. As of December 31, 2019, the Company recognized an operating ROU asset and lease liability of $23.6 million and $25.6 million, respectively. The Company obtained ROU assets of $10.4 million in exchange for operating lease liabilities from new leases entered into or acquired, net of modifications, during the year ended December 31, 2019.
As of December 31, 2019, the Company recognized a financing ROU asset of $2.5 million included in Other Assets. As of December 31, 2019, the Company recognized a financing lease liability of $4.7 million, of which $1.9 million and $2.8 million are within Other Accrued Expenses and Other Liabilities, respectively. No new financing lease liabilities were entered into during the year ended December 31, 2019.
As permitted by ASC 842, leases with expected durations of less than 12 months from inception (i.e. short-term leases) were excluded from the Company’s calculation of its lease liability and right-of-use asset. Furthermore, as permitted by ASC 842, the Company elected to apply the package of practical expedients, which allows companies not to reassess: (a) whether its expired or existing contracts are or contain leases, (b) the lease classification for any expired or existing leases, and (c) initial direct costs for any existing leases.
The following is a summary of the Company's total lease costs as of December 31:
(In thousands) 2019
Finance Lease Cost:
Amortization of ROU Assets $ 1,020   
Interest on Lease Liabilities 314
Total Finance Lease Cost 1,334   
Operating Lease Cost 5,050
Impairment Charge of Operating Lease ROU Asset 1,018
Variable Lease Cost 1,236
Short-term Lease Cost (excluding month-to-month) 223
Less Sublease and Rental (Income) Expense (629)  
Total Operating Lease Cost 6,898   
Total Net Lease Cost $ 8,232   
The following is a summary of cash paid for amounts included in the measurement of lease liabilities as of December 31:
(In thousands) 2019
Operating Cash Flows Used for Finance Leases $ 314   
Operating Cash Flows Used for Operating Leases $ 4,718   
Financing Cash Flows Used for Finance Leases $ 1,746   
The weighted-average remaining term for the Company's operating and financing leases are approximately 6 years and 2 years, respectively. The weighted-average discount rates for the Company's operating and financing leases are approximately 3.4% and 5.0%, respectively.
The following is a summary of the Company's maturity of lease liabilities:
(In thousands) Operating Leases Financing Leases
2020 $ 4,898    $ 2,128   
2021 5,370    2,181   
2022 5,152    743   
2023 3,911    —   
2024 2,837    —   
Thereafter 5,977    —   
Total Lease Payments $ 28,145    $ 5,052   
Less: Interest 2,589    314   
Total Lease Liability $ 25,556    $ 4,738   
Leases LEASESThe Company has operating and finance leases for leased office and manufacturing facilities and equipment leases. We have concluded that when an agreement grants us the right to substantially all of the economic benefits associated with an identified asset, and we are able to direct the use of that asset throughout the term of the agreement, we have a lease. We lease certain facilities and office equipment, finance leases, and we lease certain production facilities, office equipment and vehicles under
operating leases. Some of our leases include options to extend or terminate the leases and these options have been included in the relevant lease term to the extent that they are reasonably certain to be exercised.
If the lease arrangement also contains non-lease components, the Company elected the practical expedient not to separate any combined lease and non-lease components for all lease contracts. For our real estate leases, the remaining fixed minimum rental payments used in the calculation of the new lease liability, include fixed payments and variable payments (if the variable payments are based on an index), over the remaining lease term. Variable lease payments based on indices have been included in the related right-of-use assets and lease liabilities on our Consolidated Balance Sheet, while variable lease payments based on usage of the underlying asset have been excluded, as they do not represent present rights or obligations. Variable lease components for leases relate primarily to common area maintenance charges and other separately billed lessor services, sales and real estate taxes. Variable lease costs are expensed in the period they are incurred. We have also elected to adopt the practical expedient under ASC 842 to not separate lease and non-lease components in contracts where the base lease payment contains both. In this situation, these lease agreements are accounted for as a single lease component for all classes of underlying assets. While we do have real estate leases with options to purchase the facility at a market value at the date of exercise, these are not included in the calculation of the lease liability, as these options are not expected to be exercised.
Any new additional operating lease liabilities and corresponding ROU assets are based on the present value of the remaining minimum rental payments. The present value of the Company’s lease liability at transition was calculated using a weighted-average incremental borrowing rate of 3.7%. In determining the incremental borrowing rate, we have considered borrowing data for secured debt obtained from our lending institution. As of December 31, 2019, the Company recognized an operating ROU asset and lease liability of $23.6 million and $25.6 million, respectively. The Company obtained ROU assets of $10.4 million in exchange for operating lease liabilities from new leases entered into or acquired, net of modifications, during the year ended December 31, 2019.
As of December 31, 2019, the Company recognized a financing ROU asset of $2.5 million included in Other Assets. As of December 31, 2019, the Company recognized a financing lease liability of $4.7 million, of which $1.9 million and $2.8 million are within Other Accrued Expenses and Other Liabilities, respectively. No new financing lease liabilities were entered into during the year ended December 31, 2019.
As permitted by ASC 842, leases with expected durations of less than 12 months from inception (i.e. short-term leases) were excluded from the Company’s calculation of its lease liability and right-of-use asset. Furthermore, as permitted by ASC 842, the Company elected to apply the package of practical expedients, which allows companies not to reassess: (a) whether its expired or existing contracts are or contain leases, (b) the lease classification for any expired or existing leases, and (c) initial direct costs for any existing leases.
The following is a summary of the Company's total lease costs as of December 31:
(In thousands) 2019
Finance Lease Cost:
Amortization of ROU Assets $ 1,020   
Interest on Lease Liabilities 314
Total Finance Lease Cost 1,334   
Operating Lease Cost 5,050
Impairment Charge of Operating Lease ROU Asset 1,018
Variable Lease Cost 1,236
Short-term Lease Cost (excluding month-to-month) 223
Less Sublease and Rental (Income) Expense (629)  
Total Operating Lease Cost 6,898   
Total Net Lease Cost $ 8,232   
The following is a summary of cash paid for amounts included in the measurement of lease liabilities as of December 31:
(In thousands) 2019
Operating Cash Flows Used for Finance Leases $ 314   
Operating Cash Flows Used for Operating Leases $ 4,718   
Financing Cash Flows Used for Finance Leases $ 1,746   
The weighted-average remaining term for the Company's operating and financing leases are approximately 6 years and 2 years, respectively. The weighted-average discount rates for the Company's operating and financing leases are approximately 3.4% and 5.0%, respectively.
The following is a summary of the Company's maturity of lease liabilities:
(In thousands) Operating Leases Financing Leases
2020 $ 4,898    $ 2,128   
2021 5,370    2,181   
2022 5,152    743   
2023 3,911    —   
2024 2,837    —   
Thereafter 5,977    —   
Total Lease Payments $ 28,145    $ 5,052   
Less: Interest 2,589    314   
Total Lease Liability $ 25,556    $ 4,738