Leases

3 Months Ended

Mar. 31, 2021

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 on June 30, 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. We expect to exercise this purchase option. Our finance lease obligation related to this facility was $4.2 million and $4.5 million as of March 31, 2021 and December 31, 2020, respectively. The finance lease right-of-use asset balance for this facility was $6.2 million and $6.5 million as of March 31, 2021 and December 31, 2020, respectively. Accumulated amortization related to this finance lease right-of-use asset was $4.3 million and $4.5 million as of March 31, 2021 and December 31, 2020, respectively. The aggregate of all other finance lease obligations, finance lease right-of-use assets and related accumulated amortization, were immaterial as of March 31, 2021 and December 31, 2020.

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 months ended March 31, 2021 and 2020. 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-month periods ended March 31, 2021 and 2020. Payments made on the principal portion of our finance lease obligations were immaterial for each of the three-month periods ended March 31, 2021 and 2020.

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
(Dollars in thousands)	March 31, 2021		March 31, 2020
Operating leases expense	$	681	$	728
Short-term leases expense	$	74	$	123
Payments on operating lease obligations	$	670	$	746

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	March 31, 2021		December 31, 2020
Finance lease right-of-use assets	Property, plant and equipment, net	$	6,618	$	7,017
Operating lease right-of-use assets	Other long-term assets	$	4,802	$	4,216
Finance lease obligations, current portion	Other accrued liabilities	$	4,453	$	4,755
Finance lease obligations, non-current portion	Other long-term liabilities	$	184	$	322
Total finance lease obligations		$	4,637	$	5,077
Operating lease obligations, current portion	Other accrued liabilities	$	2,187	$	2,275
Operating lease obligations, non-current portion	Other long-term liabilities	$	2,644	$	2,219
Total operating lease obligations		$	4,831	$	4,494

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 March 31, 2021:

	Finance	Operating
(Dollars in thousands)	Leases in Effect	Leases Signed	Less: Leases Not Yet Commenced	Leases in Effect
2021	4,308	1,818	(52)	1,766
2022	194	1,930	(85)	1,845
2023	188	1,166	(49)	1,117
2024	—	306	(20)	286
2025	—	38	—	38
Thereafter	—	3	—	3
Total lease payments	4,690	5,261	(206)	5,055
Less: Interest	(53)	(228)	4	(224)
Present Value of Net Future Minimum Lease Payments	4,637	5,033	(202)	4,831

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	0.5 years	2.5 years
Weighted Average Discount Rate	3.06%	3.61%

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 on June 30, 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. We expect to exercise this purchase option. Our finance lease obligation related to this facility was $4.2 million and $4.5 million as of March 31, 2021 and December 31, 2020, respectively. The finance lease right-of-use asset balance for this facility was $6.2 million and $6.5 million as of March 31, 2021 and December 31, 2020, respectively. Accumulated amortization related to this finance lease right-of-use asset was $4.3 million and $4.5 million as of March 31, 2021 and December 31, 2020, respectively. The aggregate of all other finance lease obligations, finance lease right-of-use assets and related accumulated amortization, were immaterial as of March 31, 2021 and December 31, 2020.

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 months ended March 31, 2021 and 2020. 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-month periods ended March 31, 2021 and 2020. Payments made on the principal portion of our finance lease obligations were immaterial for each of the three-month periods ended March 31, 2021 and 2020.

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
(Dollars in thousands)	March 31, 2021		March 31, 2020
Operating leases expense	$	681	$	728
Short-term leases expense	$	74	$	123
Payments on operating lease obligations	$	670	$	746

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	March 31, 2021		December 31, 2020
Finance lease right-of-use assets	Property, plant and equipment, net	$	6,618	$	7,017
Operating lease right-of-use assets	Other long-term assets	$	4,802	$	4,216
Finance lease obligations, current portion	Other accrued liabilities	$	4,453	$	4,755
Finance lease obligations, non-current portion	Other long-term liabilities	$	184	$	322
Total finance lease obligations		$	4,637	$	5,077
Operating lease obligations, current portion	Other accrued liabilities	$	2,187	$	2,275
Operating lease obligations, non-current portion	Other long-term liabilities	$	2,644	$	2,219
Total operating lease obligations		$	4,831	$	4,494

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 March 31, 2021:

	Finance	Operating
(Dollars in thousands)	Leases in Effect	Leases Signed	Less: Leases Not Yet Commenced	Leases in Effect
2021	4,308	1,818	(52)	1,766
2022	194	1,930	(85)	1,845
2023	188	1,166	(49)	1,117
2024	—	306	(20)	286
2025	—	38	—	38
Thereafter	—	3	—	3
Total lease payments	4,690	5,261	(206)	5,055
Less: Interest	(53)	(228)	4	(224)
Present Value of Net Future Minimum Lease Payments	4,637	5,033	(202)	4,831

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	0.5 years	2.5 years
Weighted Average Discount Rate	3.06%	3.61%