Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

Leases

The Company leases office, warehouse and manufacturing space and certain equipment under non-cancelable operating lease agreements that generally require us to pay maintenance, insurance, taxes and other expenses in addition to annual rental fees. Our leases have remaining lease terms of one year to eight years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year.

On January 1, 2019, the Company adopted ASU No. 2016-02, "Leases (Topic 842)" which requires the recognition of the right-of-use assets and related operating and finance lease liabilities in the Condensed Consolidated Balance Sheet. We adopted Topic 842 using a modified retrospective approach for all leases existing at January 1, 2019. As discussed in footnote 2, we elected to exclude leases for periods of 12 months or less and elected to apply the package of practical expedients.

The components of lease expense are as follows:

	Three Months Ended March 31, 2019
Operating lease cost	$	1,570
Finance lease cost
Amortization of right-of-use assets	$	80
Interest on lease liabilities	15
Total finance lease cost	$	95
Short-term lease cost  1	1,991
Total lease expense	$	3,656

¹ Includes variable lease costs, which are not significant

Supplemental cash flow information related to leases is as follows:

	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,480
Financing cash flows from finance leases	$	105

Supplemental balance sheet information related to leases is as follows:

	Balance Sheet Location	March 31, 2019
Operating Leases
Right-of-use assets, net	Operating lease right-of-use assets, net  1	$	19,793
Current liabilities	Current operating lease liabilities	$	4,456
Non-current liabilities	Operating lease liabilities	16,538
Total operating lease liabilities		$	20,994
Finance Leases
Right-of-use assets		$	991
Accumulated depreciation		(92		)
Right-of-use assets, net	Other assets, net	$	899
Current liabilities	Accrued liabilities and other	$	369
Non-current liabilities	Other long-term liabilities	520
Total finance lease liabilities		$	889
Weighted Average Remaining Lease Term
Operating leases		4.5 years
Finance leases		3.1 years
Weighted Average Discount Rate
Operating leases		10.4		%
Finance leases		7.4		%

¹   Includes $20.4 million for operating leases existing on January 1, 2019 and $0.4 million for operating leases that commenced in the first quarter of 2019, net of amortization of $1.0 million.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. We utilize an incremental borrowing rate, which is reflective of the specific term of the leases and economic environment of each geographic region, and apply a portfolio approach for certain machinery and equipment that have consistent terms in a specific geographic region.

Anticipated future lease costs, which are based in part on certain assumptions to approximate minimum annual rental commitments under non-cancelable leases, are as follows:

Year Ending December 31,	Operating			Financing			Total
2019 1	$	4,677		$	316		$	4,993
2020	6,233			351			6,584
2021	5,827			199			6,026
2022	5,261			84			5,345
2023	1,721			25			1,746
Thereafter	2,512			—			2,512
Total lease payments	26,231			975			27,206
Less: Imputed interest	(5,237		)	(86		)	(5,323		)
Present value of lease liabilities	$	20,994		$	889		$	21,883

¹  Excluding the three months ended March 31, 2019.

The Company elected to apply the modified retrospective approach. As such, we did not restate the prior year Condensed Consolidated Balance Sheet. The following are the future minimum annual rental commitments under Topic 840 as disclosed in our December 31, 2018 Form 10-K:

Year Ending December 31,
2019	$	7,558
2020	$	6,492
2021	$	5,960
2022	$	5,286
2023	$	1,676
Thereafter	$	2,501

Leases

Leases

The Company leases office, warehouse and manufacturing space and certain equipment under non-cancelable operating lease agreements that generally require us to pay maintenance, insurance, taxes and other expenses in addition to annual rental fees. Our leases have remaining lease terms of one year to eight years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year.

On January 1, 2019, the Company adopted ASU No. 2016-02, "Leases (Topic 842)" which requires the recognition of the right-of-use assets and related operating and finance lease liabilities in the Condensed Consolidated Balance Sheet. We adopted Topic 842 using a modified retrospective approach for all leases existing at January 1, 2019. As discussed in footnote 2, we elected to exclude leases for periods of 12 months or less and elected to apply the package of practical expedients.

The components of lease expense are as follows:

	Three Months Ended March 31, 2019
Operating lease cost	$	1,570
Finance lease cost
Amortization of right-of-use assets	$	80
Interest on lease liabilities	15
Total finance lease cost	$	95
Short-term lease cost  1	1,991
Total lease expense	$	3,656

¹ Includes variable lease costs, which are not significant

Supplemental cash flow information related to leases is as follows:

	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,480
Financing cash flows from finance leases	$	105

Supplemental balance sheet information related to leases is as follows:

	Balance Sheet Location	March 31, 2019
Operating Leases
Right-of-use assets, net	Operating lease right-of-use assets, net  1	$	19,793
Current liabilities	Current operating lease liabilities	$	4,456
Non-current liabilities	Operating lease liabilities	16,538
Total operating lease liabilities		$	20,994
Finance Leases
Right-of-use assets		$	991
Accumulated depreciation		(92		)
Right-of-use assets, net	Other assets, net	$	899
Current liabilities	Accrued liabilities and other	$	369
Non-current liabilities	Other long-term liabilities	520
Total finance lease liabilities		$	889
Weighted Average Remaining Lease Term
Operating leases		4.5 years
Finance leases		3.1 years
Weighted Average Discount Rate
Operating leases		10.4		%
Finance leases		7.4		%

¹   Includes $20.4 million for operating leases existing on January 1, 2019 and $0.4 million for operating leases that commenced in the first quarter of 2019, net of amortization of $1.0 million.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. We utilize an incremental borrowing rate, which is reflective of the specific term of the leases and economic environment of each geographic region, and apply a portfolio approach for certain machinery and equipment that have consistent terms in a specific geographic region.

Anticipated future lease costs, which are based in part on certain assumptions to approximate minimum annual rental commitments under non-cancelable leases, are as follows:

Year Ending December 31,	Operating			Financing			Total
2019 1	$	4,677		$	316		$	4,993
2020	6,233			351			6,584
2021	5,827			199			6,026
2022	5,261			84			5,345
2023	1,721			25			1,746
Thereafter	2,512			—			2,512
Total lease payments	26,231			975			27,206
Less: Imputed interest	(5,237		)	(86		)	(5,323		)
Present value of lease liabilities	$	20,994		$	889		$	21,883

¹  Excluding the three months ended March 31, 2019.

The Company elected to apply the modified retrospective approach. As such, we did not restate the prior year Condensed Consolidated Balance Sheet. The following are the future minimum annual rental commitments under Topic 840 as disclosed in our December 31, 2018 Form 10-K:

Year Ending December 31,
2019	$	7,558
2020	$	6,492
2021	$	5,960
2022	$	5,286
2023	$	1,676
Thereafter	$	2,501