Leases

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

Leases

Leases

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-month periods ended March 31, 2022 and 2021. 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, 2022 and 2021. Payments made on the principal portion of our finance lease obligations were immaterial for each of the three- and nine-month periods ended March 31, 2022 and 2021, excluding the $5.0 million net cash payment to exercise the Eschenbach, Germany manufacturing facility purchase option.

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, 2022		March 31, 2021
Operating leases expense	$	692	$	681
Short-term leases expense	$	122	$	74
Payments on operating lease obligations	$	869	$	670

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, 2022		December 31, 2021
Finance lease right-of-use assets	Property, plant and equipment, net	$	320	$	389
Operating lease right-of-use assets	Other long-term assets	$	17,007	$	17,161
Finance lease obligations, current portion	Other accrued liabilities	$	192	$	198
Finance lease obligations, non-current portion	Other long-term liabilities	$	68	$	209
Total finance lease obligations		$	260	$	407
Operating lease obligations, current portion	Other accrued liabilities	$	2,723	$	2,810
Operating lease obligations, non-current portion	Other long-term liabilities	$	14,155	$	14,965
Total operating lease obligations		$	16,878	$	17,775

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, 2022:

	Finance			Operating
(Dollars in thousands)	Leases Signed	Less: Leases Not Yet Commenced	Leases in Effect	Leases Signed	Less: Leases Not Yet Commenced	Leases in Effect
2022	314	(259)	55	2,562	(53)	2,509
2023	594	(395)	199	2,691	(76)	2,615
2024	404	(395)	9	1,659	(71)	1,588
2025	404	(395)	9	1,351	(41)	1,310
2026	402	(395)	7	1,336	(9)	1,327
Thereafter	293	(293)	—	11,263	(4)	11,259
Total lease payments	2,411	(2,132)	279	20,862	(254)	20,608
Less: Interest	(146)	127	(19)	(3,742)	12	(3,730)
Present Value of Net Future Minimum Lease Payments	2,265	(2,005)	260	17,120	(242)	16,878

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	1.9 years	11.0 years
Weighted Average Discount Rate	3.78%	3.61%

Subsequent Event - Lease Termination

In April 2022, we successfully negotiated the termination of lease signed for the facility in South Korea, which went into effect in October 2021, in exchange for an approximately $0.4 million settlement fee. The termination of this lease reduces our operating lease right-of-use assets and lease liabilities by approximately $9.2 million each.

Leases

Leases

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-month periods ended March 31, 2022 and 2021. 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, 2022 and 2021. Payments made on the principal portion of our finance lease obligations were immaterial for each of the three- and nine-month periods ended March 31, 2022 and 2021, excluding the $5.0 million net cash payment to exercise the Eschenbach, Germany manufacturing facility purchase option.

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, 2022		March 31, 2021
Operating leases expense	$	692	$	681
Short-term leases expense	$	122	$	74
Payments on operating lease obligations	$	869	$	670

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, 2022		December 31, 2021
Finance lease right-of-use assets	Property, plant and equipment, net	$	320	$	389
Operating lease right-of-use assets	Other long-term assets	$	17,007	$	17,161
Finance lease obligations, current portion	Other accrued liabilities	$	192	$	198
Finance lease obligations, non-current portion	Other long-term liabilities	$	68	$	209
Total finance lease obligations		$	260	$	407
Operating lease obligations, current portion	Other accrued liabilities	$	2,723	$	2,810
Operating lease obligations, non-current portion	Other long-term liabilities	$	14,155	$	14,965
Total operating lease obligations		$	16,878	$	17,775

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, 2022:

	Finance			Operating
(Dollars in thousands)	Leases Signed	Less: Leases Not Yet Commenced	Leases in Effect	Leases Signed	Less: Leases Not Yet Commenced	Leases in Effect
2022	314	(259)	55	2,562	(53)	2,509
2023	594	(395)	199	2,691	(76)	2,615
2024	404	(395)	9	1,659	(71)	1,588
2025	404	(395)	9	1,351	(41)	1,310
2026	402	(395)	7	1,336	(9)	1,327
Thereafter	293	(293)	—	11,263	(4)	11,259
Total lease payments	2,411	(2,132)	279	20,862	(254)	20,608
Less: Interest	(146)	127	(19)	(3,742)	12	(3,730)
Present Value of Net Future Minimum Lease Payments	2,265	(2,005)	260	17,120	(242)	16,878

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	1.9 years	11.0 years
Weighted Average Discount Rate	3.78%	3.61%

Subsequent Event - Lease Termination

In April 2022, we successfully negotiated the termination of lease signed for the facility in South Korea, which went into effect in October 2021, in exchange for an approximately $0.4 million settlement fee. The termination of this lease reduces our operating lease right-of-use assets and lease liabilities by approximately $9.2 million each.