10. Financing and Operating Leases

CPI adopted ASC 842 effective January 1, 2019. The Company elected the ‘package of practical expedients’, which permits the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification, and initial direct costs. Right-of-use (“ROU”) represents the right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. A lease is deemed to exist when the Company has the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration paid. The right to control is deemed to occur when the Company has the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets. As a result of the adoption of ASC 842, the Company recorded $8,025 of operating ROU assets, and corresponding operating lease liabilities of $8,813 on January 1, 2019, relating to existing real estate operating leases.

The components of operating and finance lease costs were as follows:



	Three Months Ended		Three Months Ended
	June 30, 2020		June 30, 2019
Total operating lease costs		671		665

Finance lease cost:
Right-of-use amortization expense	$	329	$	178
Interest on lease liabilities		117		40
Total financing lease costs	$	446	$	218

	Six Months Ended		Six Months Ended
	June 30, 2020		June 30, 2019
Total operating lease costs		1,342		1,308

Finance lease cost:
Right-of-use amortization expense	$	656	$	301
Interest on lease liabilities		246		62
Total financing lease costs	$	902	$	363

The following table reflects balances for operating and financing leases:



	June 30, 2020		December 31, 2019
Operating leases
Operating lease right-of-use assets, net of amortization	$	5,443	$	6,312

Operating lease liability (current)	$	2,470	$	2,283
Long-term operating liability		3,890		5,067
Total operating lease liabilities	$	6,360	$	7,350

Financing leases
Property, equipment and leasehold improvements	$	9,019	$	8,256
Accumulated depreciation		(1,740)		(1,094)
Total property, equipment and leasehold improvements, net	$	7,279	$	7,162

Financing lease liability (current)	$	2,122	$	2,211
Long-term financing liability		3,513		3,886
Total financing lease liabilities	$	5,635	$	6,097

Finance and operating lease ROU assets are recorded in “Plant, equipment, leasehold improvements, and operating lease right-of-use assets, net”. Financing and operating lease liabilities are recorded in “Accrued expenses” and “Other long-term liabilities.”

Future cash payment with respect to lease obligations as of June 30, 2020 were as follows:


		Operating		Financing
		Lease		Leases
2020 (excluding six months ended June 30, 2020)		1,473	$	1,395
2021		2,700		2,256
2022		1,428		1,745
2023		1,106		821
2024		583		68
Thereafter		-		2
Total lease payments		7,290		6,287
Less imputed interest		(930)		(652)
Total	$	6,360	$	5,635