Quarterly report pursuant to Section 13 or 15(d)

OPERATING LEASES

v3.19.2
OPERATING LEASES
6 Months Ended
Jun. 30, 2019
OPERATING LEASES  
OPERATING LEASES

NOTE 8 – OPERATING LEASES

We lease space under non-cancelable operating leases for manufacturing and laboratory facilities and administrative offices in Cleveland as well as administrative offices in New York. The leases do not have significant rent escalation, holidays, concessions, material residual value guarantees, material restrictive covenants or contingent rent provisions. Our leases include both lease (e.g., fixed payments including rent, taxes, and insurance costs) and non-lease components (e.g., common-area or other maintenance costs) which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases. We also lease office space in Dallas and Madrid, Spain as well as certain office equipment under operating leases, which have a non-cancelable lease term of less than one year and therefore, we have elected the practical expedient to exclude these short-term leases from our right-of-use assets and lease liabilities.

Most leases include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion; therefore, the majority of renewals to extend the lease terms are not included in our right-of-use assets and lease liabilities as they are not reasonably certain of exercise. We regularly evaluate the renewal options and when they are reasonably certain of exercise, we include the renewal period in our lease term.

As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

Components of lease cost are as follows:

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

    

June 30, 2019

    

June 30, 2019

Operating lease cost

 

$

434,000

 

$

723,000

Variable lease cost

 

$

86,000

 

$

159,000

Short-term lease cost

 

$

34,000

 

$

81,000

 

The following table presents information about the amount and timing of cash flows arising from operating leases as of June 30, 2019:

 

 

 

 

 

 

Maturity of lease liabilities:

    

 

  

 

2019, remainder

 

$

845,000

 

2020

 

 

1,699,000

 

2021

 

 

1,713,000

 

2022

 

 

1,727,000

 

2023

 

 

1,741,000

 

Thereafter

 

 

3,667,000

 

Total undiscounted operating lease payments

 

 

11,392,000

 

Less: imputed interest

 

 

2,991,000

 

Present value of operating lease liabilities

 

$

8,401,000

 

 

 

 

 

 

Balance sheet classification:

 

 

 

 

Current portion of lease liability

 

$

1,693,000

 

Long-term lease liability

 

 

6,708,000

 

Total operating lease liabilities

 

$

8,401,000

 

 

 

 

 

 

Other information:

 

 

 

 

Weighted-average remaining lease term for operating leases

 

 

79 months

 

Weighted-average discount rate for operating leases

 

 

9.6

%