Leases

3 Months Ended

Mar. 31, 2019

All of the Company’s leases are classified as operating leases. The majority of the Company’s leases are for office and manufacturing space, along with several automobiles and certain equipment. Leases with initial terms of less than twelve months are not recorded on the balance sheet. Expense for these leases is recognized on a straight-line basis over the lease term. The Company’s leases have remaining terms of less than one year to just over six years. The majority of the Company’s leases do not have options to renew, although several have renewal terms to extend the lease for one five-year term, and one lease contains two five-year renewal options. None of the renewal options are included in determining the term of the lease, used for calculating the associated lease liabilities. None of the Company’s leases include variable payments, residual value guarantees or restrictive covenants. A number of the Company’s leases for office and manufacturing space include provision for common area maintenance (“CAM”). The Company accounts for CAM separately from lease payments, and therefore costs for CAM are not included in the determination of lease liabilities. The Company is a party to one arrangement as the lessor, for its former Westcor facility located in Sunnyvale, California, with a third party. The lessee under this lease has one option to renew the lease for a term of five years.

As of March 31, 2019, the balance of ROU assets was approximately

$4,306,000, and the balances of current and long-term lease liabilities were approximately $1,678,000 and $2,747,000, respectively. For the three months ended March 31, 2019, the Company recorded operating lease cost, including short-term lease cost, of approximately $457,000. The ROU assets are included in “Property, plant and equipment, net” in the accompanying Condensed Consolidated Balance Sheets.

The maturities of the Company’s lease liabilities are as follows (in thousands):

2019	$	1,370
2020		1,448
2021		744
2022		439
2023		349
Thereafter		411
Total lease payments	$	4,761
Less: Imputed interest		336
Present value of lease liabilities	$	4,425

As of March 31, 2019, the weighted-average remaining lease term was 3.6 years and the weighted-average discount rate was 3.82% for the

Company’s

operating leases. The Company developed the discount rates used based on a London Interbank Offered Rate (“LIBOR”) over a term approximating the term of the related lease, plus an additional interest factor, which was generally 1.375%.

For the three months ended March 31, 2019, the Company paid approximately $21,000 for amounts included in the measurement of lease liabilities through operating cash flows, and obtained approximately $406,000 in ROU assets in exchange for new operating lease liabilities.

The maturities of the lease payments to be received by the Company under its leased facility in California are as follows (in thousands):

2019	$	639
2020		874
2021		901
2022		928
2023		955
Thereafter		402
Total lease payments to be received	$	4,699

For the three months ended March 31, 2019, the Company recorded lease income under this lease of approximately $214,000.