(

)

Leases

The Company adopted ASC

842

- Leases (“ASC

842”

) as of

January 1, 2019,

using the transition method wherein entities could initially apply the new leases standard at adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Accordingly, all periods prior to

January 1, 2019

were presented in accordance with the previous ASC Topic

840,

Leases, and

retrospective adjustments were made to the comparative periods presented. The adoption of ASC

842

resulted in an increase to total assets due to the recording of operating lease right-of-use ("ROU") assets and operating lease liabilities of approximately

$4.0

million and

$4.1

million, respectively, as of

January 1, 2019.

The Company did

not

have any finance leases at the adoption date. The adoption did

not

materially impact the Company’s condensed consolidated statements of income or cash flows.

The Company has operating leases for offices, manufacturing plants, vehicles and certain office and manufacturing equipment. Leases with an initial term of

months or less are

not

recorded on the balance sheet. The Company has elected the practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized. The Company also elected the package of practical expedients permitted within the new standard, which among other things, allows the Company to carry forward historical lease classification. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, are

not

included in the ROU assets or operating lease liabilities. These are expensed as incurred and recorded as variable lease expense. The Company determines if an arrangement is a lease at the inception of a contract. Operating lease ROU assets and operating lease liabilities are stated separately in the condensed consolidated balance sheet.

ROU assets represent the Company's right to use an underlying asset during the lease term and operating lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at commencement date based on the net present value of fixed lease payments over the lease term. The Company's lease term includes options to extend or terminate the lease when it is reasonably certain that we will exercise that option. ROU assets will also be adjusted for any deferred or accrued rent. As the Company's operating leases do

not

typically provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s incremental borrowing rate is based on its borrowing rate under the Amended and Restated Credit Agreement, adjusted to reflect an estimated fixed rate for the term of the underlying lease. Operating fixed lease expense is recognized on a straight-line basis over the lease term.

	Year Ended
	December 31, 2019
	($ in thousands)
Lease cost:
Operating	$	1,222
Variable		219
Short-term		27
Total lease cost	$	1,468

Cash paid for amounts included in measurement of lease liabilities:
Operating	$	1,208

Weighted-average remaining lease term (years):
Operating		2.69
Weighted-average discount rate:
Operating		4.45	%

The aggregate future lease payments for operating leases as of

December 31, 2019

were as follows (in thousands):

2020		1,173
2021		1,118
2022		957
2023		36
2024		-
Thereafter		-
Total lease payments		3,284
Less: Interest		(194	)
Present value of lease liabilities	$	3,090

The aggregate future lease payments for operating leases as of

December 31, 2018

were as follows (in thousands):

2019	$	1,051
2020		1,070
2021		1,063
2022		975
2023		36
Total	$	4,195

Rent expense amounted to approximately

$1.2

million,

$1.2

million, and

$0.9

million, in

2019,

2018

and

2017,

respectively.