Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.19.3
Leases
9 Months Ended
Sep. 30, 2019
Leases [Abstract]  
Leases
Leases

The Company primarily leases buildings and equipment. The Company determines if a contract is a lease at the inception of the arrangement. The Company reviews all options to extend, terminate, or purchase its right of use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised. Certain real estate leases contain lease and non-lease components, which are accounted for separately.

Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheet. Lease expense for these leases is recognized on a straight-line basis over the lease term.

All of the Company's leases are currently determined to be operating leases.

Components of Lease Expense

The components of lease expense were as follows (in thousands):
 
Successor Company
 
 
Predecessor Company
 
Period from September 1, 2019 through September 30,
 
 
Period from July 1, 2019 through August 31,
Operating lease cost (a)
$
34

 
 
$
70

Operating lease cost (b)
320

 
 
624

Total operating lease cost
$
354

 
 
$
694

 
(a)        Amount is included in Cost of services in the unaudited condensed consolidated statements of operations.
(b)        Amount is included in Selling, general and administrative, including stock-based and long-term incentive compensation in the unaudited condensed consolidated statements of operations.

 
Successor Company
 
 
Predecessor Company
 
Period from September 1, 2019 through September 30,
 
 
Period from January 1, 2019 through August 31,
Operating lease cost (a)
$
34

 
 
$
321

Operating lease cost (b)
320

 
 
2,595

Total operating lease cost
$
354

 
 
$
2,916

 
(a)        Amount is included in Cost of services in the unaudited condensed consolidated statements of operations.
(b)        Amount is included in Selling, general and administrative, including stock-based and long-term incentive compensation in the unaudited condensed consolidated statements of operations.

Remaining Lease Term and Discount Rate

The following table presents the weighted-average remaining lease term and the weighted-average discount rate:
 
As of September 30, 2019
Weighted-average remaining lease term for operating leases (in years)
9.9

Weighted-average discount rate for operating leases
11.8
%

All of the Company's lease contracts do not provide a readily determinable implicit rate. For these contracts, the Company's estimated incremental borrowing rate is based on information available either upon adoption of ASU 2016-02 or at the inception of the lease.

Supplemental Cash Flow Information

The following is the supplemental cash flow information associated with the Company's leases (in thousands):
 
Successor Company
 
 
Predecessor Company
 
Period from September 1, 2019 through September 30,
 
 
Period from January 1, 2019 through August 31,
 
2019
 
 
2019
Cash paid for amounts included in the measurement of lease liabilities
 
 
 
 
Operating cash flows from operating leases
$
345

 
 
$
2,804


Maturities of Lease Liabilities

As of September 30, 2019, maturities of lease liabilities were as follows:
Remainder of 2019
$
758

2020
3,980

2021
3,195

2022
3,069

2023
3,087

Thereafter
20,329

Total lease payments
$
34,418

Less: Interest
(14,653
)
Total lease obligations
$
19,765



Disclosures Related to Periods Prior to Adoption of ASU 2016-02

The Company adopted ASU 2016-02 using a modified retrospective method at January 1, 2019 as described in note 4, Recent Accounting Pronouncements. As required, the following disclosure is provided for periods prior to adoption. Minimum lease commitments as of December 31, 2018 that have initial or remaining noncancelable lease terms in excess of one year are as follows (in thousands):
Year Ended December 31:
 
2019
$
4,628

2020
4,207

2021
3,093

2022
3,068

2023
3,087

Thereafter
20,329

Minimum lease commitments
$
38,412