Leases

12 Months Ended

Dec. 31, 2019

13. LEASES

Substantially

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 December 31, 2019, the balance of ROU assets was approximately $4,261,000, and the balances of short-term and long-term lease liabilities were approximately $1,520,000 and $2,855,000, respectively. For the year ended December 31, 2019, the Company recorded operating lease cost, including short-term lease cost, of approximately $1,870,000. The ROU assets are included in “Property, plant and equipment, net” in the accompanying Consolidated Balance Sheets.

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


2020	$	1,657
2021		995
2022		695
2023		606
2024		587
Thereafter		171

Total lease payments	$	4,711
Less: Imputed interest		336

Present value of lease liabilities	$	4,375

As of December 31, 2019, the weighted-average remaining lease term was 3.9 years and the weighted-average discount rate was 3.78% 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 year ended December 31, 2019, the Company paid approximately $247,000 for amounts included in the measurement of lease liabilities through operating cash flows, and obtained approximately $1,761,000 in ROU assets for the year ended December 31, 2019, in exchange for new operating lease liabilities.

As of December 31, 2018, prior to the adoption of Topic 842,

Leases

, future minimum rental commitments under

non-cancelable

operating leases with remaining terms in excess of one year were as follows (in thousands):


Year
2019	$	1,962
2020		1,502
2021		688
2022		447
2023 and thereafter		830

	$5,429

The maturities of the lease payments to be received by the Company under

the lease agreement

for

its

leased facility in California are as follows (in thousands):


2020	$	874
2021		901
2022		928
2023		955
2024		402

Total lease payments to be received	$	4,060

For the year ended December 31, 2019, the Company recorded lease income under this lease of approximately $856,000.