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Leases | 3 Months Ended
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Mar. 31, 2020
Leases [Abstract] |
Leases | 11. LEASES Operating Leases Operating leases consist of office space, automobiles and various other equipment in the U.S. and in certain international locations in which we do business. Other contracts, such as manufacturing agreements and service agreements, are reviewed to determine if they contain any embedded leases. As of March 31, 2020, the operating leases had remaining lease terms of one month to five years, some of which include options to extend the leases for up to nine years, and some of which include options to terminate the leases within three months. As of March 31, 2020 and December 31, 2019, the Company’s operating lease assets and operating lease liabilities were as follows:
(In thousands) |  | Classification |  | March 31, 2020 |  |  | December 31, 2019 |
Assets |  |  |  |  |  |  |  |  |  |
Operating lease asset |  | Other assets |  | $ | 7,474 |  |  | $ | 8,452 |
Total lease asset |  |  |  | $ | 7,474 |  |  | $ | 8,452 |
Liabilities |  |  |  |  |  |  |  |  |  |
Current operating lease liability |  | Accrued expenses |  | $ | 2,506 |  |  | $ | 2,676 |
Non-current operating lease liability |  | Other non-current liabilities |  |  | 5,012 |  |  |  | 5,818 |
Total lease liability |  |  |  | $ | 7,518 |  |  | $ | 8,494 |
Lease expense related to short-term leases (initial term of less than 12 months) was $9 thousand and $0.2 million for the three months ended March 31, 2020 and 2019, respectively, and was included in cost of sales, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Income (Loss). Lease expense related to variable lease payments that do not depend on an index or rate, such as real estate taxes and insurance reimbursements, was $0.2 million and $0.1 million for the three months ended March 31, 2020 and 2019, respectively. Components of lease expense included in the Condensed Consolidated Statements of Income (Loss) for the three months ended March 31, 2020 and 2019 were as follows:
|  | Three Months Ended |
|  | March 31, |
(In thousands) |  | 2020 |  |  | 2019 |
Selling, general and administrative expenses |  | $ | 327 |  |  | $ | 349 |
Research and development expenses |  |  | 425 |  |  |  | 454 |
Cost of sales |  |  | 21 |  |  |  | 16 |
Total operating lease expense |  | $ | 773 |  |  | $ | 819 |
As of March 31, 2020 and December 31, 2019, operating lease liabilities included on the Condensed Consolidated Balance Sheets by future maturity were as follows:
(In thousands) |  | March 31, 2020 |  |  | December 31, 2019 |
2020 |  | $ | 2,066 |  |  | $ | 2,856 |
2021 |  |  | 2,326 |  |  |  | 2,412 |
2022 |  |  | 1,630 |  |  |  | 1,705 |
2023 |  |  | 1,076 |  |  |  | 1,160 |
2024 |  |  | 468 |  |  |  | 482 |
Thereafter |  |  | 259 |  |  |  | 264 |
Total lease payments |  |  | 7,825 |  |  |  | 8,879 |
Less: Interest |  |  | (307 | ) |  |  | (385 | )
Present value of lease liabilities |  | $ | 7,518 |  |  | $ | 8,494 |
Future operating lease payments include $0.6 million related to options to extend lease terms that are reasonably certain of being exercised. There are no legally binding leases that have not yet commenced. An incremental borrowing rate is used based on information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate was determined on a portfolio basis by grouping leases with similar terms as well as grouping leases based on a U.S. dollar or Euro functional currency. The actual rate is then determined based on a credit spread over LIBOR as well as the Bloomberg Curve Matrix for the U.S. Communications section. The following table provides information about the weighted average lease terms and weighted average discount rates as of March 31, 2020:
|  | As of March 31, 2020 |
Weighted average remaining lease term (in years) |  |  |  |
Operating leases with USD functional currency |  |  | 2.2 |
Operating leases with Euro functional currency |  |  | 4.2 |
Weighted average discount rate |  |  |  |
Operating leases with USD functional currency |  |  | 3.87 | %
Operating leases with Euro functional currency |  |  | 1.83 | %
Supplemental cash flow information related to operating leases is as follows:
|  | Three Months Ended |
|  | March 31, |
(In thousands) |  | 2020 |  |  | 2019 |
Cash paid for amounts included in the measurement of operating lease assets / liabilities |  |  |  |  |  |  |  |
Cash used in operating activities related to operating leases |  | $ | 707 |  |  | $ | 811 |
Right-of-use assets obtained in exchange for lease obligations |  | $ | 85 |  |  | $ | 10,387 |
Net Investment in Sales-Type Leases We are the lessor in sales-type lease arrangements for network equipment, which have initial terms of up to five years, and consisted of the following as of March 31, 2020 and December 31, 2019
(In thousands) |  | March 31, 2020 |  |  | December 31, 2019 |
Current minimum lease payments receivable(1) |  | $ | 1,049 |  |  | $ | 1,201 |
Non-current minimum lease payments receivable(2) |  |  | 715 |  |  |  | 889 |
Total minimum lease payments receivable |  |  | 1,764 |  |  |  | 2,090 |
Less: Current unearned revenue |  |  | 298 |  |  |  | 365 |
Less: Non-current unearned revenue |  |  | 124 |  |  |  | 163 |
Net investment in sales-type leases |  | $ | 1,342 |  |  | $ | 1,562 |
| (1) | Included in other receivables on the Condensed Consolidated Balance Sheets.
| (2) | Included in other assets on the Condensed Consolidated Balance Sheets.
Components of gross profit related to sales-type leases recognized at the lease commencement date and interest and dividend income included in the Condensed Consolidated Statements of Income (Loss) for the three months ended March 31, 2020 and 2019 were as follows:
|  | Three Months Ended |
|  | March 31, |
(In thousands) |  | 2020 |  |  | 2019 |
Sales - Network Solutions |  | $ | 38 |  |  | $ | 1,512 |
Less: Cost of sales - Network Solutions |  |  | 16 |  |  |  | 591 |
Gross profit |  | $ | 22 |  |  | $ | 921 |
Interest and dividend income |  | $ | 13 |  |  | $ | 87 |

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