Leases

3 Months Ended

Mar. 31, 2019

The Company adopted the new lease standard on January 1, 2019 using the modified retrospective transition method. Prior periods were not retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under the transition guidance within the new lease standard, which among other things, allowed the company to continue to account for existing leases based on the historical lease classification. The Company also elected the practical expedients to exclude right-of-use ("ROU") assets and lease liabilities for leases with an initial term of 12 months or less from the balance sheet, and to combine lease and non-lease components for property leases, which primarily relate to ancillary expenses such as common area maintenance charges and management fees.

The Company determines if an arrangement is a lease at inception by assessing whether it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company’s leases are primarily related to property leases for its field offices. The Company's leases have remaining lease terms of one to 10 years. Renewal and termination options are included in the lease term when it is reasonably certain that the Company will exercise the option.

The Company's lease agreements do not contain any contingent rental payments, material residual guarantees or material restrictive covenants.

ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As substantially all of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate to determine the present value of lease payments. Based on the present value of lease payments for the Company's existing leases, the Company recorded net lease assets and lease liabilities of approximately $451,000, respectively, upon adoption. The Company had no finance leases. The new lease standard did not materially impact the Company's consolidated statements of operations and had no impact on the Company's consolidated statements of cash flows.

The impact of the new lease standard on the March 31, 2019 consolidated balance sheet was as follows:


	Classification on the Condensed Consolidated Balance Sheet	March 31, 2019
		(in thousands, except years)
Operating lease assets	Right of use assets-operating leases	$	541

Current lease liabilities	Current operating leases	148
Noncurrent lease liabilities	Long-term operating leases	393
Total lease liabilities, net		541

Weighted average remaining lease term in years		3.1
Implicit Rate		3.8		%

Operating lease costs are recognized on a straight-line basis over the lease term. Total operating lease costs for the three months ended March 31, 2019 was approximately $193,000, which included approximately $146,000 related to short-term lease costs.


	March 31, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating lease cost⁽¹⁾	$	48

(1) Lease costs are classified on the condensed consolidated statements of income in cost of sales, cost of compressors and selling, general and administrative expenses.

The following table shows the future maturities of lease liabilities:


Years Ending December 31,	Lease Liabilities
	(in thousands)
2019 (excluding the three months ended March 31, 2019)	$	134
2020	$	116
2021	$	95
2022	$	43
2023	$	35
Thereafter	$	190
Total lease payments	$	613
Less: Imputed interest	$	72
Total	$	541

As previously disclosed on Form 10-K and under the previous lease standard (Topic 840), future minimum obligations under lease commitments in effect at December 31, 2018 as follows:


			Operating Leases
			(in thousands)
2019			298
2020			118
2021			97
2022			44
2023			35
Thereafter			15
Total			607