LEASES

The Company leases real properties for use in manufacturing and as administrative and sales offices, in addition to automobiles and office equipment. Until the end of 2018, leases of property, plant and equipment were classified as operating leases. Payments made under operating leases were charged to the Condensed Consolidated Statement of Operations on a straight line basis. Upon adoption of the new lease standard, the Company recognized ROU assets and lease liabilities in relation to leases which had previously been classified as operating leases.

The Company determines if a contract contains a lease arrangement at the inception of the contract. For leases in which the Company is the lessee, leases are classified as either finance or operating. ROU assets are initially measured at the present value of lease payments over the lease term plus initial direct costs, if any, with the classification affecting the pattern of expense recognition. If a lease does not provide a discount rate and the rate cannot be readily determined, an incremental borrowing rate is used to determine the future lease payments. Lease and non-lease components within the Company’s lease agreements are accounted for together. The Company has no material leases in which the Company is the lessor.

The significant majority of the Company’s leasing arrangements are classified as operating leases. As of March 31, 2019, the total ROU asset and lease liability for operating leases were $8,165 and $8,279, respectively. The ROU asset was included in “Other assets” while $2,122 of the lease liability was reported in “Other current liabilities” and $6,157 was reported in “Other long-term liabilities” on the Company’s Condensed Consolidated Balance Sheet. The Company’s financing leases were not material as of March 31, 2019. Cash paid for operating lease liabilities are recorded as cash flows from operating activities in the Company’s Condensed Consolidated Statements of Cash Flows. For the three months ended March 31, 2019, operating lease costs were $685 which were included in the Company’s Condensed Consolidated Statements of Income. Short term and variable lease costs were not material for the three months ended March 31, 2019.

Certain of the Company’s leases contain renewal options and options to extend the leases for up to five years, and a majority of these options are reflected in the calculation of the ROU asset and lease liability due to the likelihood of renewal.

The following table summarizes the weighted average lease terms and discount rates for operating lease liabilities:




	March 31, 2019
Weighted average remaining lease term (in years)	6.48
Weighted average discount rate	5.3	%

The following table represents maturities of operating lease liabilities as of March 31, 2019:




Due within 1 year	2,485
Due after 1 year through 2 years	1,744
Due after 2 years through 3 years	1,278
Due after 3 years through 4 years	1,039
Due after 4 years through 5 years	753
Due after 5 years	2,379
Total future minimum lease payments	9,678
Less imputed interest	(1,399	)
Total	8,279