Leases

3 Months Ended

Mar. 31, 2020

Effective January 1, 2019, the Company adopted ASC 842 using the prospective method applied to those leases which were not completed as of December 31, 2018. The Company has leases for corporate offices, research and development facilities, warehouses, sales offices and equipment. The leases have remaining lease terms of 1 year to 10 years, some of which include options to extend the leases for up to 10 years.

Upon adoption, the Company recorded operating lease right of use (“ROU”) assets and corresponding operating lease liabilities, net of deferred rent, of approximately $18.4 million, representing the present value of future lease payments under operating leases with terms of greater than twelve months. Leases with an initial expected term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the expected lease term.

During the first quarter 2020, the Company made the decision to cease use of the corporate headquarter leased offices and move corporate employees to the Houston Global Research and Innovation Center (“GRIC”) during second quarter of 2020. In addition, the lease term liability for the corporate headquarters and GRIC locations and corresponding ROU assets were remeasured to remove extensions that would no longer be utilized and it was determined the Company was no longer reasonably certain to utilize the extension at the GRIC location . The remeasurement resulted in adjustments to lease liabilities and ROU assets totaling of $6.2 million each as of March 31, 2020. In addition, during the three months ended March 31, 2020, the Company recorded an impairment of the ROU assets totaling $7.4 million. See Note 9 - Impairment of Fixed and Long-lived Assets for further discussion of the impairment charge booked in the first quarter 2020.

The components of lease expense and supplemental cash flow information are as follows (in thousands):



	Three months ended March 31,
	2020			2019
Operating lease expense	$	570		$	653
Short-term lease expense	32			43
Interest on lease liabilities	4			—
Total lease expense	$	606		$	696

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	584		$	582
Operating cash flows from finance leases	3			—
Financing cash flows from finance leases	(51		)	—

Maturities of lease liabilities are as follows (in thousands):



Years ending December 31,	Operating Leases			Finance Leases
2020 (excluding the three months ended March 31, 2020)	$	1,393		$	54
2021	1,957			71
2022	1,912			47
2023	1,488			38
2024	1,338			23
Thereafter	8,153			—
Total lease payments	$	16,241		$	233
Less: Interest	(5,320		)	(33		)
Present value of lease liabilities	$	10,921		$	200

Supplemental balance sheet information related to leases is as follows (in thousands):



	March 31, 2020			December 31, 2019
Operating Leases
Operating lease right-of-use assets	$	2,473		$	16,388

Current portion of operating lease liabilities	$	1,167		$	486
Long-term operating lease liabilities	9,754			16,973
Total operating lease liabilities	$	10,921		$	17,459

Finance Leases
Property and equipment	$	293		$	293
Accumulated depreciation	(38		)	(28		)
Property and equipment, net	$	255		$	265

Current portion of finance lease liabilities	$	56		$	55
Long-term finance lease liabilities	144			158
Total finance lease liabilities	$	200		$	213

Weighted Average Remaining Lease Term
Operating leases	9.2 years			16.6 years
Finance leases	4.3 years			4.6 years

Weighted Average Discount Rate
Operating leases	8.9		%	8.9		%
Finance leases	8.5		%	9.0		%

Leases

The components of lease expense and supplemental cash flow information are as follows (in thousands):



	Three months ended March 31,
	2020			2019
Operating lease expense	$	570		$	653
Short-term lease expense	32			43
Interest on lease liabilities	4			—
Total lease expense	$	606		$	696

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	584		$	582
Operating cash flows from finance leases	3			—
Financing cash flows from finance leases	(51		)	—

Maturities of lease liabilities are as follows (in thousands):



Years ending December 31,	Operating Leases			Finance Leases
2020 (excluding the three months ended March 31, 2020)	$	1,393		$	54
2021	1,957			71
2022	1,912			47
2023	1,488			38
2024	1,338			23
Thereafter	8,153			—
Total lease payments	$	16,241		$	233
Less: Interest	(5,320		)	(33		)
Present value of lease liabilities	$	10,921		$	200

Supplemental balance sheet information related to leases is as follows (in thousands):



	March 31, 2020			December 31, 2019
Operating Leases
Operating lease right-of-use assets	$	2,473		$	16,388

Current portion of operating lease liabilities	$	1,167		$	486
Long-term operating lease liabilities	9,754			16,973
Total operating lease liabilities	$	10,921		$	17,459

Finance Leases
Property and equipment	$	293		$	293
Accumulated depreciation	(38		)	(28		)
Property and equipment, net	$	255		$	265

Current portion of finance lease liabilities	$	56		$	55
Long-term finance lease liabilities	144			158
Total finance lease liabilities	$	200		$	213

Weighted Average Remaining Lease Term
Operating leases	9.2 years			16.6 years
Finance leases	4.3 years			4.6 years

Weighted Average Discount Rate
Operating leases	8.9		%	8.9		%
Finance leases	8.5		%	9.0		%