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Leases:

6 Months Ended

Jun. 30, 2021

8. Leases:

The Company leases its offices and warehouses, vehicles, and certain office equipment, substantially all of which are classified as operating leases. The Company currently has no material financing leases. The Company determines if an arrangement is a lease at inception. Operating lease assets and obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term.

In determining lease asset value, the Company considers fixed or variable payment terms, prepayments, incentives, and options to extend or terminate, depending on the lease. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. The Company generally uses its incremental borrowing rate based on information available at the lease commencement date for the location in which the lease is held in determining the present value of lease payments.

As of June 30, 2021, the weighted average remaining lease term was 5.5 years and the weighted average discount rate used to determine the operating lease liability was 2.1%. Rental expense related to operating leases was $3.1 million and $4.9 million for the three and six months ended June 30, 2021, respectively, as compared to $1.5 million and $3.3 million for the corresponding periods of the prior year. Operating lease payments included in operating cash flows totaled $4.6 million and $3.0 million for the six months ended June 30, 2021 and 2020, respectively, and noncash additions to operating lease assets totaled $13.8 million and $1.0 million for the six months ended June 30, 2021 and 2020, respectively.

In connection with the preparation of our consolidated financial statements for the three months ended June 30, 2021, we identified an error relating to the recognition of certain leases under ASC 842. The error impacted the lease right-of-use assets and lease liabilities, both of which were understated by approximately €14.0 million ($16.6 million) as of June 30, 2020. There was no income statement impact resulting from this correction. We concluded the impact on the interim financial statements was immaterial and corrected the balances as of June 30, 2021.

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

(In thousands)

2021 $ 3,665

2022 6,129

2023 5,434

2024 5,322

2025 4,219

Thereafter 13,367

38,136

Less imputed interest (based on 2.1% weighted-average discount rate) (2,221 )

$ 35,915