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Leases
12 Months Ended
Dec. 31, 2021
Leases [Abstract]  
Leases

7.

LEASES

On February 25, 2016, the FASB issued a comprehensive new leasing standard, ASC 842, Leases, meant to improve transparency and comparability among companies by requiring lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. The Company adopted the standard on January 1, 2019 and applied the transition provisions of the standard with recognition of a cumulative-effect adjustment to the opening balance of retained earnings. The adoption of the standard had a material impact on the Company’s consolidated financial position, results of operations and cash flows. The adjustment to the Company’s balance sheet on January 1, 2019 included the addition of $33.7 million of right-of-use assets, $31.9 million in lease liability, and a cumulative-effect adjustment to the opening balance of retained earnings of $1.7 million for certain of its equipment, office and land leases.  In addition, unamortized deferred gains for four vessels previously accounted for under sale-leaseback arrangements of $8.7 million, ($11.0 million deferred gains net of $2.3 million deferred taxes), were fully recognized as an adjustment to the opening balance of retained earnings.

The Company assesses at contract inception whether a contract is, or contains, a lease, defined as a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date when the interest rate implicit in the lease is not readily determinable. The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. As of December 31, 2021, the Company leased-in two AHTS vessels and certain facilities and other equipment. The leases typically contain purchase and renewal options or rights of first refusal with respect to the sale or lease of the equipment. As of December 31, 2021, the remaining lease terms of the vessels had a remaining duration of three to 23 months. The lease terms of certain facilities and other equipment range in duration from 11 to 300 months.

As of December 31, 2021, future minimum payments for leases for the years ended December 31 were as follows (in thousands):

 

 

 

Operating Leases

 

 

Finance Leases

 

2022

 

$

2,232

 

 

$

36

 

2023

 

 

1,561

 

 

 

36

 

2024

 

 

451

 

 

 

37

 

2025

 

 

515

 

 

 

6

 

2026

 

 

459

 

 

 

 

Years subsequent to 2026

 

 

3,614

 

 

 

 

 

 

 

8,832

 

 

 

115

 

Interest component

 

 

(1,961

)

 

 

(6

)

 

 

 

6,871

 

 

 

109

 

Current portion of long-term lease liabilities

 

 

1,986

 

 

 

33

 

Long-term lease liabilities

 

$

4,885

 

 

$

76

 

 

For the years ended December 31, the components of lease expense were as follows (in thousands):

 

 

2021

 

 

2020

 

Operating lease cost

 

$

5,174

 

 

$

6,205

 

Finance lease cost:

 

 

 

 

 

 

 

 

Amortization of finance lease asset (1)

 

 

28

 

 

 

11

 

Interest on lease liabilities (2)

 

 

3

 

 

 

1

 

Short-term lease costs

 

 

911

 

 

 

1,320

 

 

 

$

6,116

 

 

$

7,537

 

 

(1)

Included in amortization costs in the consolidated statements of income (loss).

(2)

Included in interest expense in the consolidated statements of income (loss).

 

For the year ended December 31, 2021, supplemental cashflow information related to leases were as follows (in thousands):

 

 

2021

 

Operating cash flows from operating leases

 

$

(7,456

)

Financing cash outflows from finance leases

 

 

(30

)

Right-of-use assets obtained for operating lease liabilities

 

 

3,582

 

Right-of-use assets obtained for finance lease liabilities

 

 

 

 

 

For the year ended December 31, 2021, other information related to leases were as follows:

 

 

2021

 

 

Weighted average remaining lease term, in years - operating leases

 

 

10.4

 

 

Weighted average remaining lease term, in years - finance leases

 

 

3.2

 

 

Weighted average discount rate - operating leases

 

 

5.3

 

%

Weighted average discount - finance leases

 

 

4.0

 

%

 

The Company recorded no impairment losses for the leased offshore support vessels for the year ended December 31, 2021. The Company recorded impairment losses of $5.9 million for two such leases in the year ended December 31, 2020, and $5.3 million for one such lease in the year ended December 31, 2019.