Leases

12 Months Ended

Dec. 31, 2019

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, which is based on a fully collateralized loan over the lease term, 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 income and had no impact on the Company's consolidated statements of cash flows.

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


	Classification on Consolidated Balance Sheet	December 31, 2019
		($ in thousands)
Operating lease assets	Right of use assets-operating leases	$	604

Current lease liabilities	Current operating leases	$	189
Noncurrent lease liabilities	Long-term operating leases	415
Total lease liabilities		$	604

Weighted average remaining lease term in years		2.6
Implicit Rate		3.1		%

Operating lease costs are recognized on a straight-line basis over the lease term. Total operating lease costs for the year ended December 31, 2019 was approximately $548,000.


	December 31, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating lease cost ^{(1) (2)}	$	548

(1) Lease costs are classified on the Consolidated Statements of Operations in cost of sales, cost of compressors and selling, general and administrative expenses.

(2) Includes costs of $350,000 for leases with terms of 12 months or less and $198,000 for leases with terms greater than 12 months.

The following table shows the future maturities of lease liabilities:


Years Ending December 31,	Lease Liabilities
	(in thousands)
2020	$	208
2021	172
2022	46
2023	38
2024	38
Thereafter	168
Total lease payments	670
Less: Imputed interest	(66)
Total	$	604

Under the previous lease standard (Topic 840), future minimum obligations under lease commitments in effect at December 31, 2018 were as follows:


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

Rent expense under such leases was $198,000, $433,000, and $310,000 for the years ended December 31, 2019, 2018 and 2017, respectively.