The Company determines if an arrangement is a lease at inception. The Company has leases for manufacturing facilities, distribution centers, warehouses, office space and equipment, with remaining lease terms of one to eight years. Certain of these leases include options to extend the lease for up to five years, and some include options to terminate the lease early. Leases with an initial term of 12 months or less are not recorded on the statement of financial position; the Company recognizes lease expense for these short-term leases on a straight-line basis over the lease term. Operating leases with an initial term greater than 12 months are included in right of use asset – operating leases (“ROU assets”), operating lease liability – short term, and operating lease liability – long term in the Condensed Consolidated Statement of Financial Position (Unaudited).

The ROU assets represent the right to use an underlying asset for the lease term and the lease liabilities represent the obligation to make lease payments. ROU assets and lease liabilities are recognized at commencement date based on the present value of the lease payments over the lease term. When leases do not provide an implicit rate, the Company’s incremental borrowing rate is used, which is then applied at the portfolio level, based on the information available at commencement date in determining the present value of lease payments. The Company has also elected not to separate lease and non-lease components. The lease terms include options to extend or terminate the lease when it is reasonably certain the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.

Amounts included in the Condensed Consolidated Statement of Financial Position (Unaudited) related to leases include:

	March 31,		December 31,
	2020		2019
Right of use asset - operating leases	$	5,355	$	5,901

Operating lease liability - short-term	$	1,803	$	2,057
Operating lease liability - long-term		3,778		4,074
Total operating lease liabilities	$	5,581	$	6,131

		For the Quarter Ended March 31,
Lease Cost	Classification	2020		2019
Operating lease cost ⁽¹⁾	Cost of sales	$	399	$	415
Operating lease cost ⁽¹⁾	Selling, general and administrative expenses		441		471
Total lease cost		$	840	$	886

(1)

Includes short-term leases and variable lease costs, which are immaterial

	For the Quarter Ended March 31,
Supplemental Cash Flow Information	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	622	$	561
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases	$	—	$	70

Lease Term and Discount Rate	March 31, 2020			December 31, 2019
Weighted-average remaining lease term (years)
Operating leases		4.16			4.23
Weighted-average discount rate
Operating leases		5.0	%		5.0	%

Maturity of Lease Liabilities - As of March 31, 2020	Operating Leases
2020 ⁽¹⁾	$	1,682
2021		1,339
2022		1,189
2023		1,016
2024		339
After 2024		621
Total lease payments		6,186
Less: Interest		(605	)
Present value of lease liabilities	$	5,581

(1)

Represents amounts due in 2020 after March 31, 2020

In December 2019, the Company entered into an agreement where a new manufacturing and distribution facility in Bristol, Indiana will be constructed, and when it is substantially complete, the Company will lease that new facility and sell its existing facility in Bristol, Indiana. As described in Note 6, this agreement was in connection with the Ameri-Kart Plan, which includes facility consolidation for this business within the Material Handling Segment. This lease is not included in the tables disclosed above because it has not yet commenced; it commences when the facility is substantially complete, which is expected to be in the second half of 2020. Upon commencement, the lease has an initial term of fifteen years with base annual rent of approximately $0.8 million during the first year. Inclusive of scheduled increases the total expected future minimum lease payments during the initial term of the lease is approximately $13.5 million, but may vary depending on the actual cost of certain construction activities. At commencement of this lease, the Company expects assets and liabilities within the Consolidated Statement of Financial Position to each increase by approximately $9 million.