Leases

6 Months Ended

Jun. 30, 2019

The Company determines if an arrangement is or contains a lease at contract inception. Right-of-use (ROU) assets related to leases are recorded in Lease assets and lease liabilities are recorded in Accrued liabilities and Lease liabilities on the consolidated balance sheet.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement date based on the present value of future lease payments over the lease term. The ROU asset also includes prepaid lease payments and initial direct costs and is reduced for lease incentives paid by the lessor. The discount rate used to determine the present value is generally the Company's incremental borrowing rate because the implicit rate in the lease is not readily determinable. The lease term used to calculate the ROU asset and lease liability includes periods covered by options to extend or terminate when the Company is reasonably certain the lease term will include these optional periods.

The Company has lease arrangements for sales and administrative offices, manufacturing and distribution facilities, product testing facilities, equipment and vehicles. All of the Company’s lease arrangements are accounted for as operating leases. The Company’s leases have remaining lease terms ranging from 1 to 13 years, some of which include options to extend the leases for periods generally not greater than 5 years and some of which include options to terminate the leases within 1 year. Certain leases also include options to purchase the leased asset. Leases do not contain any material residual value guarantees or material restrictive covenants.

Operating lease expense for the three and six months ended June 30, 2019 was $6.4 million and $12.7 million, respectively. This includes variable lease costs related to leases involving assets operated by a third-party of approximately $2.0 million and $3.2 million for the three and six months ended June 30, 2019, respectively. Other variable and short-term lease costs were not material.

Balance sheet information related to leases was as follows (in thousands):



	June 30, 2019
Lease assets	$	54,913

Accrued liabilities	$	18,133
Lease liabilities	38,365
	$	56,498

Future maturities of lease liabilities were as follows as of June 30, 2019 (in thousands):



	Operating Leases
2019	$	10,474
2020	16,509
2021	13,167
2022	9,326
2023	3,770
Thereafter	6,899
Total present value of lease payments	60,145
Less present value discount	3,647
Total lease liability	$	56,498

Other lease information is as follows (dollars in thousands):



	Three months ended		Six months ended
	June 30, 2019		June 30, 2019
Operating cash outflows for amounts included in the measurement of lease liabilities	$	4,510	$	9,871
Right-of-use assets obtained in exchange for lease obligations	$	3,964	$	4,262



	June 30, 2019
Weighted average remaining lease term (in years)	4.44
Weighted average discount rate	3.2	%