Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

Leases

We have a finance lease obligation related to our manufacturing facility in Eschenbach, Germany. Under the terms of the lease agreement, we have an option to purchase the property upon the expiration of the lease in 2021 at a price which is the greater of (i) the then-current market value or (ii) the residual book value of the land including the buildings and installations thereon. Our finance lease obligation related to this facility was $4.4 million and $4.5 million as of June 30, 2020 and December 31, 2019, respectively. The finance lease right-of-use asset balance for this facility was $6.1 million and $6.3 million as of June 30, 2020 and December 31, 2019, respectively. Accumulated amortization related to this finance lease right-of-use asset was $3.9 million and $3.8 million as of June 30, 2020 and December 31, 2019, respectively. The aggregate of all other finance lease obligations, finance lease right-of-use assets and related accumulated amortization, were immaterial as of June 30, 2020 and December 31, 2019.

Amortization expense related to our finance lease right-of-use assets, which is primarily included in the “Cost of sales” line item of the condensed consolidated statements of operations, was immaterial for each of the three- and six-month periods ended June 30, 2020 and 2019. Interest expense related to our finance lease obligations, which is included in the “Interest expense, net” line item of the condensed consolidated statements of operations, was immaterial for each of the three- and six-month periods ended June 30, 2020 and 2019. Payments made on the principal portion of our finance lease obligations were immaterial for each of the three- and six-month periods ended June 30, 2020 and 2019.

We have operating leases primarily related to building space and vehicles. Renewal options are included in the lease term to the extent we are reasonably certain to exercise the option. The exercise of lease renewal options is at our sole discretion. We account for lease components separately from non-lease components. The incremental borrowing rate represents our ability to borrow on a collateralized basis over a similar lease term.

Our expenses and payments for operating leases were as follows:

	Three Months Ended				Six Months Ended
(Dollars in thousands)	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Operating leases expense	$	694	$	775	$	1,422	$	1,493
Short-term leases expense	$	107	$	43	$	230	$	82
Payments on operating lease obligations	$	722	$	760	$	1,468	$	1,524

Our assets and liabilities balances related to finance and operating leases reflected in the condensed consolidated statements of financial position were as follows:

(Dollars in thousands)	Location in Statements of Financial Position	June 30, 2020		December 31, 2019
Finance lease right-of-use assets	Property, plant and equipment, net	$	6,125	$	6,280
Operating lease right-of-use assets	Other long-term assets	$	4,643	$	4,656
Finance lease obligations, current portion	Other accrued liabilities	$	4,350	$	400
Finance lease obligations, non-current portion	Other long-term liabilities	$	—	$	4,140
Total finance lease obligations		$	4,350	$	4,540
Operating lease obligations, current portion	Other accrued liabilities	$	2,326	$	2,343
Operating lease obligations, non-current portion	Other long-term liabilities	$	2,339	$	2,334
Total operating lease obligations		$	4,665	$	4,677

Net Future Minimum Lease Payments

The following table includes future minimum lease payments under finance and operating leases together with the present value of the net future minimum lease payments as of June 30, 2020:

	Finance						Operating
(Dollars in thousands)	Leases Signed		Less: Leases Not Yet Commenced		Total Leases		Leases Signed		Less: Leases Not Yet Commenced		Total Leases
2020	$	266	$	—	$	266	$	1,362	$	(11)	$	1,351
2021	4,445		(235)		4,210		1,970		(29)		1,941
2022	235		(235)		—		1,063		(29)		1,034
2023	211		(211)		—		433		(18)		415
2024	—		—		—		199		—		199
Thereafter	—		—		—		5		—		5
Total lease payments	5,157		(681)		4,476		5,032		(87)		4,945
Less: Interest	(212)		86		(126)		(285)		5		(280)
Present Value of Net Future Minimum Lease Payments	$	4,945	$	(595)	$	4,350	$	4,747	$	(82)	$	4,665

The following table includes information regarding the lease term and discount rates utilized in the calculation of the present value of net future minimum lease payments:

	Finance Leases	Operating Leases
Weighted Average Remaining Lease Term	1.0 year	2.5 years
Weighted Average Discount Rate	3.00%	4.97%

Leases

Leases

We have a finance lease obligation related to our manufacturing facility in Eschenbach, Germany. Under the terms of the lease agreement, we have an option to purchase the property upon the expiration of the lease in 2021 at a price which is the greater of (i) the then-current market value or (ii) the residual book value of the land including the buildings and installations thereon. Our finance lease obligation related to this facility was $4.4 million and $4.5 million as of June 30, 2020 and December 31, 2019, respectively. The finance lease right-of-use asset balance for this facility was $6.1 million and $6.3 million as of June 30, 2020 and December 31, 2019, respectively. Accumulated amortization related to this finance lease right-of-use asset was $3.9 million and $3.8 million as of June 30, 2020 and December 31, 2019, respectively. The aggregate of all other finance lease obligations, finance lease right-of-use assets and related accumulated amortization, were immaterial as of June 30, 2020 and December 31, 2019.

Amortization expense related to our finance lease right-of-use assets, which is primarily included in the “Cost of sales” line item of the condensed consolidated statements of operations, was immaterial for each of the three- and six-month periods ended June 30, 2020 and 2019. Interest expense related to our finance lease obligations, which is included in the “Interest expense, net” line item of the condensed consolidated statements of operations, was immaterial for each of the three- and six-month periods ended June 30, 2020 and 2019. Payments made on the principal portion of our finance lease obligations were immaterial for each of the three- and six-month periods ended June 30, 2020 and 2019.

We have operating leases primarily related to building space and vehicles. Renewal options are included in the lease term to the extent we are reasonably certain to exercise the option. The exercise of lease renewal options is at our sole discretion. We account for lease components separately from non-lease components. The incremental borrowing rate represents our ability to borrow on a collateralized basis over a similar lease term.

Our expenses and payments for operating leases were as follows:

	Three Months Ended				Six Months Ended
(Dollars in thousands)	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Operating leases expense	$	694	$	775	$	1,422	$	1,493
Short-term leases expense	$	107	$	43	$	230	$	82
Payments on operating lease obligations	$	722	$	760	$	1,468	$	1,524

Our assets and liabilities balances related to finance and operating leases reflected in the condensed consolidated statements of financial position were as follows:

(Dollars in thousands)	Location in Statements of Financial Position	June 30, 2020		December 31, 2019
Finance lease right-of-use assets	Property, plant and equipment, net	$	6,125	$	6,280
Operating lease right-of-use assets	Other long-term assets	$	4,643	$	4,656
Finance lease obligations, current portion	Other accrued liabilities	$	4,350	$	400
Finance lease obligations, non-current portion	Other long-term liabilities	$	—	$	4,140
Total finance lease obligations		$	4,350	$	4,540
Operating lease obligations, current portion	Other accrued liabilities	$	2,326	$	2,343
Operating lease obligations, non-current portion	Other long-term liabilities	$	2,339	$	2,334
Total operating lease obligations		$	4,665	$	4,677

Net Future Minimum Lease Payments

The following table includes future minimum lease payments under finance and operating leases together with the present value of the net future minimum lease payments as of June 30, 2020:

	Finance						Operating
(Dollars in thousands)	Leases Signed		Less: Leases Not Yet Commenced		Total Leases		Leases Signed		Less: Leases Not Yet Commenced		Total Leases
2020	$	266	$	—	$	266	$	1,362	$	(11)	$	1,351
2021	4,445		(235)		4,210		1,970		(29)		1,941
2022	235		(235)		—		1,063		(29)		1,034
2023	211		(211)		—		433		(18)		415
2024	—		—		—		199		—		199
Thereafter	—		—		—		5		—		5
Total lease payments	5,157		(681)		4,476		5,032		(87)		4,945
Less: Interest	(212)		86		(126)		(285)		5		(280)
Present Value of Net Future Minimum Lease Payments	$	4,945	$	(595)	$	4,350	$	4,747	$	(82)	$	4,665

The following table includes information regarding the lease term and discount rates utilized in the calculation of the present value of net future minimum lease payments:

	Finance Leases	Operating Leases
Weighted Average Remaining Lease Term	1.0 year	2.5 years
Weighted Average Discount Rate	3.00%	4.97%