LEASES

9 Months Ended

Sep. 30, 2020

LEASESThe Company leases real properties for use in manufacturing and as administrative and sales offices, and leases automobiles and office equipment. The Company determines if a contract contains a lease arrangement at the inception of the contract. For leases in which the Company is the lessee, leases are classified as either finance or operating. Right of use (ROU)

assets are initially measured at the present value of lease payments over the lease term plus initial direct costs, if any, with the classification affecting the pattern of expense recognition. If a lease does not provide a discount rate and the rate cannot be readily determined, an incremental borrowing rate is used to determine the future lease payments. Lease and non-lease components within the Company’s lease agreements are accounted for together.

Nearly all of the Company’s leasing arrangements are classified as operating leases. ROU asset and lease liability balances were as follows for the periods presented:


	September 30, 2020		December 31, 2019
ROU asset	10,751		10,423

Current lease liability	1,804		1,716
Long-term lease liability	10,155		9,777
Total lease liability	$	11,959	$	11,493

The ROU asset was included in “Other assets” while the current lease liability was reported in “Other current liabilities” and the long-term lease liability was reported in “Other long-term liabilities” on the Company’s Condensed Consolidated Balance Sheet. Cash paid for operating lease liabilities are recorded as cash flows from operating activities in the Company’s Condensed Consolidated Statements of Cash Flows. For the three months ended September 30, 2020 and 2019, operating lease costs were $1,055 and $784, respectively. For the nine months ended September 30, 2020 and 2019, operating lease costs were $3,051 and $2,220, respectively. Operating lease costs were included in the Company’s Condensed Consolidated Statements of Operations. Short term and variable lease costs were not material for the three and nine months ended September 30, 2020 and 2019.

Certain of the Company’s leases contain renewal options and options to extend the leases for up to five years, and a majority of these options are reflected in the calculation of the ROU asset and lease liability due to the likelihood of renewal.

The following table summarizes the weighted average lease terms and discount rates for operating lease liabilities:


	September 30, 2020
Weighted average remaining lease term (in years)	8.50
Weighted average discount rate	5.5	%

The following table represents maturities of operating lease liabilities as of September 30, 2020:


Due within 1 year	$	1,804
Due after 1 year through 2 years	1,885
Due after 2 years through 3 years	1,769
Due after 3 years through 4 years	1,615
Due after 4 years through 5 years	1,547
Due after 5 years	5,706
Total future minimum lease payments	14,326
Less imputed interest	(2,367)
Total	$	11,959