Note 9 - Leases

6 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Leases of Lessee Disclosure [Text Block]

9. 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, two leased facilities in California, one that expires in 2022 and one that expires in 2024, one leased facility in Singapore that expires in 2025, 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 the condensed consolidated statement of operations. The facility leases include options to extend for terms ranging from one year 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.

Operating cash flows for the period ended June 30, 2021, and 2020 from operating leases were $1,211 and $924, respectively. Financing lease assets are classified as property, plant and equipment within the condensed consolidated balance sheet.

Discount rates are determined based on 5-year term incremental borrowing rates at inception of the lease. The following table summarizes the weighted-average lease term and discount rates:

Weighted-Average Lease Term (Years)	June 30, 2021		December 31, 2020
Finance leases		0.7		0.8
Operating leases		3.4		3.8

Weighted-Average Discount Rate	June 30, 2021			December 31, 2020
Finance leases		5.56	%		5.56	%
Operating leases		5.02	%		5.06	%

The following tables summarizes lease costs by type:

	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Lease cost
Finance lease cost:
Amortization of right-of-use assets	$	7	$	26	$	17	$	52
Interest on lease liabilities		-		1		1		3
Operating lease cost		587		393		1,169		874
Variable lease cost		119		148		239		299
Total lease cost	$	713	$	568	$	1,426	$	1,228

Maturities of lease liabilities are as follows as of June 30, 2021:

	Operating Leases			Financing Leases			Total
2021	$	1,247		$	7		$	1,254
2022		1,993			3			1,996
2023		1,394			-			1,394
2024		1,049			-			1,049
2025 and thereafter		776			-			776
Total lease payments		6,459			10			6,469
Less: Interest		(536	)		(3	)		(539	)
Present value of lease liabilities	$	5,923		$	7		$	5,930