11. Leases

The Company’s leases pertain primarily to engineering, manufacturing, sales and administrative facilities, with an initial term of one year or more. The Company has three leased facilities in Minnesota, two that expire in 2022 and one that expires in 2023, one leased facility in Illinois that expires in 2022, one leased facility in Singapore that expires in 2020, one leased facility in Indonesia that expires in 2024, and one leased facility in Germany that expires in 2022.

Certain foreign leases allow for variable lease payments that depend on an index or a market rate adjustment for the respective country and are adjusted on an annual basis. The adjustment is recognized as incurred in profit and loss. The facility leases include options to extend for terms ranging from one to five years. Lease options that the Company is reasonably certain to execute, are included in the determination of the ROU asset and lease liability. Our Indonesia lease includes embedded forward starting leases that will begin in 2022 and 2024 for additional square footage, which will result in the recognition of an additional ROU asset and lease liability in those periods of approximately $103 and $72, respectively. The Company also leases equipment that include bargain purchase options at termination. These leases have been classified as finance leases.

As of March 31, 2020, the Company has a weighted-average lease term of 1.2 years for its finance leases, and 2.9 years for its operating leases. As of March 31, 2020, the Company has a weighted-average discount rate of 5.56% for its finance leases, and 5.26% for its operating leases. Discount rates are determined based on 5 year term incremental borrowing rates at inception of the lease. Operating cash flows for the three months ended March 31, 2020 from operating leases were $507. Financing lease assets are classified as machinery and equipment within the consolidated balance sheet.

The following tables summarizes lease costs by type:


Three Months Ended	March 31, 2020	March 31, 2019
Lease cost
Finance lease cost:
Amortization of right-of-use assets	$ 26	$ 25
Interest on lease liabilities	2	3

Operating lease cost	481	460
Variable lease cost*	151	138
Total lease cost	$ 660	$ 626

*Variable lease costs consist primarily of taxes, insurance, and common area or other maintenance costs for our domestic and foreign building leases.

Maturities of lease liabilities are as follows as of March 31, 2020:


		Operating Leases		Financing Leases		Total
2020	$	1,375	$	73	$	1,448
2021		1,567		31		1,598
2022		1,003		3		1,006
2023		396		-		396
2024		80		-		80
2025 and thereafter		-		-		-
Total lease payments		4,421		107		4,528
Less: Interest		(313)		(4)		(317)
Present value of lease liabilities	$	4,108	$	103	$	4,211