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LEASES | 6 Months Ended
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Jun. 30, 2019
LEASES [ABSTRACT] |
Leases | (11)LEASES The Company adopted ASU 842, Leases, as of January 1, 2019 using the effective date as the date of initial application. As a result, prior year financials were not recast under the new standard and therefore, those amounts are not presented below. Operating leases are included in our Consolidated Balance Sheet as Operating lease assets, Current operating lease liabilities and Non-current operating lease liabilities. Finance leases are included in Property, plant and equipment, Other current liabilities and Other long-term liabilities in our Consolidated Balance Sheet. The Company primarily leases real estate and equipment under various arrangements that provide the Company the right of use for the underlying asset that require lease payments over the lease term. The Company determines the value of each lease by computing the present value of each lease payment using the interest rate implicit in the lease, if available; otherwise the Company estimates its incremental borrowing rate over the lease term. Operating lease assets also include prepaid rent, initial direct costs less any tenant improvements. The Company’s real estate portfolio typically includes one or more options to renew, with renewal terms that generally can extend the lease term from one to 10 years. The exercise of these lease renewal options is at the Company’s discretion and is included in the lease term only if the Company is reasonably certain to exercise. The Company also has service arrangements whereby it controls specific space provided by a third-party service provider. These arrangements meet the definition of a lease and are accounted for under ASC 842. Rent expense for operating leases is recognized on a straight-line basis over the lease term and is included in the Consolidated Statements of Comprehensive Income (Loss). The Company’s lease agreements do not contain any material residual value guarantees or restrictive guarantees. The components of lease expense for the three and six months ended June 30, 2019 are as follows (in thousands):
|  | Location in Statements of |  | Three Months Ended |
Description |  | Comprehensive Income (Loss) |  | June 30, 2019 |
Amortization of ROU assets - finance leases |  | Depreciation and amortization |  | $ | 1,798 |
Interest on lease liabilities - finance leases |  | Interest expense |  |  | 32 |
Operating lease cost (cost resulting from lease payments) |  | Cost of services |  |  | 12,647 |
Operating lease cost (cost resulting from lease payments) |  | Selling, general and administrative |  |  | 1,363 |
Operating lease cost (cost resulting from lease payments) |  | Other income (expense), net |  |  | 242 |
Short-term lease cost |  | Cost of services |  |  | 1,247 |
Less: Sublease income |  | Selling, general and administrative |  |  | (126) |
Less: Sublease income |  | Other income (expense), net |  |  | (496) |
Total lease cost |  |  |  | $ | 16,707 |
|  | Location in Statements of |  | Six Months Ended |
Description |  | Comprehensive Income (Loss) |  | June 30, 2019 |
Amortization of ROU assets - finance leases |  | Depreciation and amortization |  | $ | 3,405 |
Interest on lease liabilities - finance leases |  | Interest expense |  |  | 40 |
Operating lease cost (cost resulting from lease payments) |  | Cost of services |  |  | 23,346 |
Operating lease cost (cost resulting from lease payments) |  | Selling, general and administrative |  |  | 2,630 |
Operating lease cost (cost resulting from lease payments) |  | Other income (expense), net |  |  | 484 |
Short-term lease cost |  | Cost of services |  |  | 2,312 |
Less: Sublease income |  | Selling, general and administrative |  |  | (193) |
Less: Sublease income |  | Other income (expense), net |  |  | (992) |
Total lease cost |  |  |  | $ | 31,032 |
Other supplementary information for the three and six months ended June 30, 2019 are as follows (dollar values in thousands):
|  | Three Months Ended |
|  | June 30, 2019 |
Finance lease - operating cash flows |  | $ | 32 |
Finance lease - financing cash flows |  | $ | 2,202 |
Operating lease - operating cash flows (fixed payments) |  | $ | 13,741 |
New ROU assets - operating leases |  | $ | 5,368 |
Modified ROU assets - operating leases |  | $ | 10,202 |
New ROU assets - finance leases |  | $ | 1,657 |
|  | Six Months Ended |
|  | June 30, 2019 |
Finance lease - operating cash flows |  | $ | 40 |
Finance lease - financing cash flows |  | $ | 5,985 |
Operating lease - operating cash flows (fixed payments) |  | $ | 26,075 |
New ROU assets - operating leases |  | $ | 7,057 |
Modified ROU assets - operating leases |  | $ | 23,201 |
New ROU assets - finance leases |  | $ | 4,247 |
|  | June 30, 2019 |
Weighted average remaining lease term - finance leases |  |  | 3.12 yrs |
Weighted average remaining lease term - operating leases |  |  | 4.61 yrs |
Weighted average discount rate - finance leases |  |  | 1.00% |
Weighted average discount rate - operating leases |  |  | 7.73% |
Operating and financing lease right-of-use assets and lease liabilities within our Consolidated Balance Sheet as of June 30, 2019 and January 1, 2019 (date of adoption of ASU 842) are as follows (in thousands):
|  |  |  |  |  | January 1, 2019 |
Description | Location in Balance Sheet |  | June 30, 2019 |  | (date of adoption) |
Assets |  |  |  |  |  |  |  |
Operating lease assets | Operating lease assets |  | $ | 137,260 |  | $ | 129,894 |
Finance lease assets | Property, plant and equipment, net |  |  | 19,883 |  |  | 18,261 |
Total leased assets |  |  | $ | 157,143 |  | $ | 148,155 |
Liabilities |  |  |  |  |  |  |  |
Current |  |  |  |  |  |  |  |
Operating | Current operating lease liabilities |  | $ | 38,719 |  | $ | 35,535 |
Finance | Other current liabilities |  |  | 7,861 |  |  | 8,770 |
Non-current |  |  |  |  |  |  |  |
Operating | Non-current operating lease liabilities |  |  | 118,350 |  |  | 112,754 |
Finance | Other long-term liabilities |  |  | 10,776 |  |  | 10,765 |
Total lease liabilities |  |  | $ | 175,706 |  | $ | 167,824 |
The future minimum operating lease and finance lease payments required under non-cancelable leases as of June 30, 2019 are as follows (in thousands):
|  | Operating |  | Sub-lease |  | Finance |
|  | Leases |  | Income |  | Leases |
Year 1 |  | $ | 48,647 |  | $ | (2,972) |  | $ | 7,909 |
Year 2 |  |  | 42,142 |  |  | (1,936) |  |  | 6,134 |
Year 3 |  |  | 35,454 |  |  | (345) |  |  | 3,453 |
Year 4 |  |  | 30,414 |  |  | (345) |  |  | 1,042 |
Year 5 |  |  | 14,753 |  |  | (29) |  |  | 398 |
Thereafter |  |  | 19,896 |  |  | — |  |  | — |
Total minimum lease payments |  | $ | 191,306 |  | $ | (5,627) |  | $ | 18,936 |
Less imputed interest |  |  | (34,237) |  |  |  |  |  | (299) |
Total lease liability |  | $ | 157,069 |  |  |  |  | $ | 18,637 |
The future minimum rental and capital lease payments under non-cancelable leases as of December 31, 2018 are as follows (in thousands):
|  | Operating |  | Sub-lease |  | Capital |
|  | Leases |  | Income |  | Leases |
Year 1 |  | $ | 47,379 |  | $ | (2,624) |  | $ | 8,770 |
Year 2 |  |  | 36,045 |  |  | (2,631) |  |  | 5,548 |
Year 3 |  |  | 30,678 |  |  | (276) |  |  | 3,798 |
Year 4 |  |  | 26,584 |  |  | — |  |  | 1,005 |
Year 5 |  |  | 17,226 |  |  | — |  |  | 414 |
Thereafter |  |  | 25,362 |  |  | — |  |  | — |
Total minimum lease payments |  | $ | 183,274 |  | $ | (5,531) |  | $ | 19,535 |
Less imputed interest |  |  |  |  |  |  |  |  | — |
Total lease liability |  |  |  |  |  |  |  | $ | 19,535 |

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