Leases

12 Months Ended

Dec. 31, 2019

8. Leases

The Company leases certain real estate, computer systems, material handling equipment, offices, automobiles and other equipment. The Company determines if a contract is a lease (or contains an embedded lease) at the inception of the agreement. The Company adopted ASU No. 2016-02, Leases, on January 1, 2019 using the effective date method. Upon adoption, right-of-use (“ROU”) assets totaling $4,993 were recorded on the Company’s balance sheet. Incremental borrowing rates used in the calculation of the ROU asset, when not apparent in the lease agreements, were estimated based upon secured borrowing rates quoted by the Company’s banks for loans of various lengths ranging from one to 20 years. Operating leases with original maturities less than one year in duration were excluded. The calculation of the ROU asset considered lease agreement provisions concerning termination, extensions, end of lease purchase and whether or not those provisions were reasonably certain of being exercised. Certain agreements contain lease and non-lease components, which are accounted for separately. The financial results for periods prior to January 1, 2019 are unchanged from results previously reported. No cumulative effect adjustment was necessary at the time of adoption. Based upon a contract review and related calculations, none of the Company’s leases were deemed to be financing leases. Lease expense recorded in the twelve-month period ended December 31, 2019 under ASC 842 was not materially different from lease expense that would have been recorded under the previous lease accounting standard. Other transitional practical expedients allowed under ASU No. 2016-02 were adopted.

Other information concerning the Company’s operating leases accounted for under ASC 842 guidelines and the related expense, assets and liabilities follows:

	Year Ended December 31, 2019
Operating lease expense	$	2,629
Cash paid for operating leases included in operating cash flows		2,727

	As of December 31, 2019
Operating lease right-of-use asset	$	3,853
Operating lease short-term liability included in other current liabilities		1,846
Operating lease long-term liability included in other long-term liabilities		2,020
Weighted average remaining lease term (in years)		4.66
Weighted average discount rate used in calculating right-of-use asset		3.56	%

Future annual minimum lease payments as of December 31, 2019 are as follows:

2020	$	1,960
2021		717
2022		418
2023		252
2024		146
2025 and thereafter		776
Total		4,269
Less interest		(403	)
Present value of lease liabilities	$	3,866

Operating lease expense under prior guidance for 2018 and 2017 was $3,618 and $3,211, respectively.

The Company adopted ASU No. 2016-02 on January 1, 2019 as noted above. As required by the ASU, the following table discloses the minimum rental commitments for all non-cancelable operating leases at December 31, 2018 as reported in the Company’s 2018 Form10-K under previous ASC 840 guidance:

2019	$	1,992
2020		1,100
2021		388
2022		144
2023		66
2024 and thereafter		12
Total	$	3,702