Commitments and Contingencies Operating Lease Obligations The Company leases office facilities and equipment under operating leases that expire on various dates through 2028. In April 2018, the Company renegotiated the lease of approximately of 170,000 square feet of space in San Leandro, California, with the lessor (New Doolittle Lease). The New Doolittle Lease is effective from April 2018 through December 2028 and has a renewal term of one additional period of five years. The initial monthly rent is approximately $135 thousand with an annual increase of 3% and a total of nine months of rent abatement. Under the new lease standard, ASC 842, which was early-adopted by the company in 2018, the New Doolittle Lease was accounted for as a modification with changes in lease term and consideration. As a result, the Company re-measured the lease liability using the updated discount rate using secured borrowing discount rate and revised lease payments and recognized the amount of $10.4 million as an increase to the lease liability, with a corresponding adjustment to the right-of-use asset. In October 2017 , the Company entered into a sublease agreement for office space in Houston, Texas. The sublease agreement is for a term of 3 years commencing in November 2017 . Rent and lease expense related to all of the Companys leased property is presented in the following table. Twelve Months Ended December 31, 2018 Twelve Months Ended December 31, 2017 Twelve Months Ended December 31, 2016 Operating lease cost $ 1,888 $ 1,699 $ 1,422 Other information related to the operating leases are presented in the following table. Twelve Months Ended December 31, 2018 Twelve Months Ended December 31, 2017 Twelve Months Ended December 31, 2016 Cash payments $ 964 $ 1,395 $ 1,337 The weighted average remaining lease term and discount rate as of December 31, 2018 related to the operating leases are presented in the following table. Weighted average remaining lease term 9.8 years Weighted average discount rate 6.95 % The Company leases facilities under fixed non-cancellable operating leases that expire on various dates through December 2028 . Maturities of lease liabilities as of December 31, 2018 are presented in the following table: Lease Amounts (In thousands) Year: 2019 $ 1,855 2020 1,653 2021 1,811 2022 1,714 2023 1,922 Thereafter 8,122 Imputed interest (3,595 ) Total $ 13,482 On January 10, 2019, the Company entered into an industrial lease agreement pursuant to which the Company has leased approximately 25,200 square feet to be constructed office and warehouse space and approximately 4.5 acres of yard space in Katy, Texas, for a new commercial development center for oil &amp; gas field testing and training. The Companys monthly base rent obligation is approximately $26,000 for the first year of the Lease and increases three percent annually thereafter. In addition, the Company will pay its share of operating expenses, which is currently estimated to be approximately $12,000 per month. The initial term of the Lease is one hundred twenty ( 120 ) months after the commencement date, and the Company has two options to extend the Lease by an additional five -year term, which must be exercised by written notice at least six months prior to the end of the relevant term. Warranty Changes in the Companys accrued product warranty reserve are presented in the following table. Years Ended December 31, 2018 2017 2016 (In thousands) Balance, beginning of year $ 366 $ 406 $ 461 Warranty costs charged to cost of revenue 340 246 208 Utilization charges against reserve (48 ) (86 ) (27 ) Release of accrual related to expired warranties (180 ) (200 ) (236 ) Balance, end of year $ 478 $ 366 $ 406 Purchase Obligations The Company has purchase order arrangements with its vendors for which the Company has not received the related goods or services as of December 31, 2018 . These arrangements are subject to change based on the Companys sales demand forecasts, and the Company has the right to cancel the arrangements prior to the date of delivery. The majority of these purchase order arrangements were related to various raw materials and components parts. As of December 31, 2018 , the Company had approximately $8.0 million of open cancellable purchase order arrangements related primarily to materials and parts. Guarantees The Company enters into indemnification provisions under its agreements with other companies in the ordinary course of business, typically with customers. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Companys activities, generally limited to personal injury and property damage caused by the Companys employees at a customers desalination plant in proportion to the employees percentage of fault for the accident. Damages incurred for these indemnifications would be covered by the Companys general liability insurance to the extent provided by the policy limitations. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the estimated fair value of these agreements is not material. Accordingly, the Company had no liabilities recorded for these agreements as of December 31, 2018 and 2017 . In certain cases, the Company issues warranty and product performance guarantees to its customers for amounts generally equal to 10% or less of the total sales agreement to endorse the execution of product delivery and the warranty of design work, fabrication, and operating performance of our devices. These guarantees are generally stand-by letters of credit that typically remain in place for periods ranging up to 36 months. All stand-by letters of credit at December 31, 2018 and 2017 , were $8.8 million and $10.4 million , respectively. See Note 8 ,  Long-term Debt and Lines of Credit , of the Notes to Consolidated Financial Statements in Part II, Item 8, Financial Statements and Supplemental Data, of this Annual Report on Form 10-K for additional information about the Companys stand-by letters of credit arrangements.