LEASES AND RELATED PARTY LEASES

9 Months Ended

Sep. 30, 2019

The Company leases administrative, manufacturing, research and distribution facilities and vehicles through operating lease agreements. The Company has no finance leases as of September 30, 2019. Many of the Company's leases include both lease (e.g., fixed payments including rent) and non-lease components (e.g., common-area or other maintenance costs). For vehicles, the Company has elected the practical expedient to group lease and non-lease components.

Most facility leases include one or more options to renew. The exercise of lease renewal options is typically at the Company's sole discretion, therefore, the majority of renewals to extend the lease terms are not included in the ROU assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates renewal options and when they are reasonably certain of exercise, the renewal period is included in the lease term.

As most of the Company's leases do not provide an implicit rate, the Company uses a collateralized incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

Total operating lease expense for the nine months ended September 30, 2019 and September 30, 2018, was $14.2 million and $11.8 million respectively, which includes $0.2 million, in related party operating lease expense.

Supplemental balance sheet information related to operating leases at September 30, 2019 were as follows:



	September 30, 2019
	(In thousands, except lease term and discount rate)
ROU assets	$	97,738

Current lease liabilities	$	11,835
Non-current lease liabilities	96,820
Total lease liabilities	$	108,655

Weighted average remaining lease term (in years):
Leased facilities	12.9
Leased vehicles	2.8

Weighted average discount rate:
Leased facilities	5.4		%
Leased vehicles	3.2		%

Supplemental cash flow information related to leases was as follows for the nine months ended September 30, 2019 (in thousands):



	September 30, 2019
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	10,680

ROU assets obtained in exchange for lease liabilities:
Operating leases	41,860

Future minimum lease payments under operating leases at September 30, 2019 were as follows:



	Related Parties		Third Parties		Total
	(In thousands)
2019	$	74	$	4,489	$	4,563
2020	296		13,289		13,585
2021	296		12,691		12,987
2022	296		13,641		13,937
2023	296		11,414		11,710
Thereafter	1,724		102,743		104,467
Total minimum lease payments	$	2,982	$	158,267	$	161,249
Less: Imputed interest					52,594
Total lease liabilities					108,655
Less: Current lease liabilities					11,835
Long-term lease liabilities					96,820

During 2018, the Company entered into an operating lease with a term of 18 years for a new corporate headquarters in Princeton, NJ. The lease commenced during the second quarter of 2019 and the Company recorded a ROU asset and lease liability of $35.6 million.

Future minimum lease payments under operating leases at December 31, 2018 were as follows:



	Related Parties		Third Parties		Total
	(In thousands)
2019	$	296	$	16,472	$	16,768
2020	296		13,510		13,806
2021	296		12,197		12,493
2022	296		12,937		13,233
2023	296		10,707		11,003
Thereafter	1,724		100,675		102,399
Total minimum lease payments	$	3,204	$	166,498	$	169,702

Total operating lease expense for the year ended December 31, 2018 was $16.3 million and included $0.3 million, in related party lease expense.

There were no future minimum lease payments under capital leases at December 31, 2018.

Related Party Leases

The Company leases its manufacturing facility in Plainsboro, New Jersey, from a general partnership that is 50% owned by a corporation whose shareholders are trusts, whose beneficiaries include family members of the Company’s principal stockholder and former director. The term of the current lease agreement is through October 31, 2032 at an annual rate of approximately $0.3 million per year. The current lease agreement also provides (i) a 5-year renewal option for the Company to extend the lease from November 1, 2032 through October 31, 2037 at the fair market rental rate of the premises, and (ii) another 5-year renewal option to extend the lease from November 1, 2037 through October 31, 2042 at the fair market rental rate of the premises.