Leases

3 Months Ended

Mar. 31, 2019

From time to time, the Company enters into arrangements with vendors to provide certain tangible assets used in the Company's operations which qualify as a lease pursuant to ASC Topic 842, Leases. The tangible assets leased include Buildings, Office Equipment, Machinery and Vehicles. The Company's leases have remaining terms of a few months to 14 years, some of which have options to extend for a period of up to 7 years and some of which have options to terminate within 1 year.

At inception of the arrangement, the Company determines if an arrangement is a lease based on assessment of the terms and conditions of the contract. Operating leases are included in Operating lease right-of-use (“ROU”) assets, other accrued liabilities, and Long-term operating lease liabilities in the Company's condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, Current portion of long-term debt, and long-term debt in the Company's condensed consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

While the overwhelming majority of leases have fixed payments schedules, some leases have variable lease schedules based on market indices such as LIBOR or include additional payments based on excess consumption of services. For leases on a variable schedule based on a market index, the current lease payment amount is used in the calculation of the lease liability and corresponding asset included on the balance sheet. For leases with additional payments based on excess consumption of services, no amount is included in the calculation of the lease liability or corresponding asset as it is not probable excess consumption will continue in the future.

As most 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 lease payments. At March 31, 2019, the weighted average discount rate used for operating and finance leases is 4.39% and 1.89%, respectively. The implicit rate is used when readily determinable from a lease.

The operating lease ROU asset also includes any lease payments made in advance of the assets use and excludes lease incentives received. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are generally accounted for as one component as permitted by ASC 842.

After consideration of any options to terminate early which are reasonably certain to be executed or any options to extend which are not reasonably certain to be executed, any lease with a term of 12 months or less is considered short-term. As permitted by ASC 842, short-term leases are excluded from the ROU Asset and Lease Liability accounts on the condensed consolidated balance sheets. Consistent with all other operating leases, short-term lease expense is recorded on a straight-line basis over the lease term.

The components of lease expense are as follows:



In thousands	Three Months Ended March 31, 2019
Finance lease expense:
Amortization of right-of-use assets	$	33
Interest on lease liabilities	1
Operating lease expense	1,644
Short-term lease expense	224
Variable lease expense	36
Total lease expense	$	1,938

Supplemental balance sheet information related to leases are as follows:



In thousands, except lease term	March 31, 2019
Operating leases:
Operating lease right-of-use assets	$	27,254

Short-term lease liabilities, included in "Other accrued liabilities"	$	5,039
Long-term lease liabilities	22,138
Total operating lease liabilities	$	27,177

Finance leases:
Property, plant and equipment	$	1,455
Accumulated depreciation	(443		)
Property, plant and equipment, net	$	1,012

Short-term lease liabilities, included in debt	$	219
Long-term lease liabilities, included in debt	24
Total finance lease liabilities	$	243

Weighted average remaining lease term:
Operating leases	7.6 years
Finance leases	0.7 years

Supplemental cash flow information related to leases are as follows:



In thousands	Three Months Ended March 31, 2019

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,673
Operating cash flows from finance leases	1
Financing cash flows from finance leases	67

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	1,131
Finance leases	—

As of March 31, 2019, future lease payments maturities were as follows:



In thousands
Years Ending December 31,	Operating Leases			Finance Leases
2019 (excluding the 3 months ended March 31, 2019)	$	4,584		$	209
2020	5,522			36
2021	4,222			—
2022	3,483			—
2023	2,598			—
Thereafter	12,160			—
Total lease payments	32,569			245
Less imputed interest	(5,392		)	(2		)
Total discounted future lease payments	$	27,177		$	243

As of December 31, 2018, future lease payment maturities were as follows:



In thousands
Years Ending December 31,	Operating Leases		Finance Leases
2019	$	6,004	$	279
2020	4,871		35
2021	3,877		—
2022	3,226		—
2023	2,617		—
Thereafter	11,111		—
Total lease payments	$	31,706	$	314

Leases

The components of lease expense are as follows:



In thousands	Three Months Ended March 31, 2019
Finance lease expense:
Amortization of right-of-use assets	$	33
Interest on lease liabilities	1
Operating lease expense	1,644
Short-term lease expense	224
Variable lease expense	36
Total lease expense	$	1,938

Supplemental balance sheet information related to leases are as follows:



In thousands, except lease term	March 31, 2019
Operating leases:
Operating lease right-of-use assets	$	27,254

Short-term lease liabilities, included in "Other accrued liabilities"	$	5,039
Long-term lease liabilities	22,138
Total operating lease liabilities	$	27,177

Finance leases:
Property, plant and equipment	$	1,455
Accumulated depreciation	(443		)
Property, plant and equipment, net	$	1,012

Short-term lease liabilities, included in debt	$	219
Long-term lease liabilities, included in debt	24
Total finance lease liabilities	$	243

Weighted average remaining lease term:
Operating leases	7.6 years
Finance leases	0.7 years

Supplemental cash flow information related to leases are as follows:



In thousands	Three Months Ended March 31, 2019

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,673
Operating cash flows from finance leases	1
Financing cash flows from finance leases	67

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	1,131
Finance leases	—

As of March 31, 2019, future lease payments maturities were as follows:



In thousands
Years Ending December 31,	Operating Leases			Finance Leases
2019 (excluding the 3 months ended March 31, 2019)	$	4,584		$	209
2020	5,522			36
2021	4,222			—
2022	3,483			—
2023	2,598			—
Thereafter	12,160			—
Total lease payments	32,569			245
Less imputed interest	(5,392		)	(2		)
Total discounted future lease payments	$	27,177		$	243

As of December 31, 2018, future lease payment maturities were as follows:



In thousands
Years Ending December 31,	Operating Leases		Finance Leases
2019	$	6,004	$	279
2020	4,871		35
2021	3,877		—
2022	3,226		—
2023	2,617		—
Thereafter	11,111		—
Total lease payments	$	31,706	$	314