XML 32 R16.htm IDEA: XBRL DOCUMENT v3.19.2
Leases
6 Months Ended
Jun. 30, 2019
Leases [Abstract]  
Leases

Note 8.  Leases



We determine if a contract contains a lease at the inception of an arrangement. If so, ROU assets representing the right to use an underlying asset for the lease term and lease liabilities representing an obligation to make lease payments arising from the lease are included on the condensed consolidated balance sheet.



We have operating and finance leases for facilities, vehicles, and equipment. Some leases include one or more options to renew, with renewal terms that can extend the lease term from five to ten years with exercise of lease renewal options being at the sole discretion of NCS as lessee. Certain leases also include options to purchase the leased property. Some leases may include an option to terminate the contract with notice. ROU assets and lease liabilities with a term of longer than 12 months are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, our interest rate under the senior secured credit facility is used as an incremental borrowing rate applied to the present value calculation at the lease commencement date unless the implicit rate is readily determinable. Lease expense for operating leases is recognized on a straight-line basis over the lease term. At adoption, ROU assets included any lease payments already made and excluded any initial direct costs.



Our lease agreements are from a lessee perspective and do not contain (i) any leases with variable lease payments (e.g., payments that depend on a percentage of sales of a lessee or payments that increase based upon an index such as a consumer price index), (ii) residual value guarantees probable of being paid or (iii) material restrictive covenants. Lease agreements with lease and non-lease components are generally accounted for separately when practical. For leases where the lease and non-lease component are comingled and the non-lease component is determined to be insignificant when compared to the lease component, the lease and non-lease components are treated as a single lease component for all asset classes.



As of June 30, 2019, we do not have any lessor leases and we do not have any additional operating and finance leases that have not yet commenced.



Supplemental balance sheet information related to leases are as follows (in thousands):







 

 

 

 

 



 

 

 

June 30,

Leases

 

Condensed Consolidated Balance Sheet Classification

 

2019

Assets

 

 

 

 

 

Operating lease right-of-use assets

 

Deposits and other assets

 

$

6,330 

Finance lease right-of-use assets (1)

 

Property and equipment, net

 

 

4,141 

Total leased right-of-use assets

 

 

 

$

10,471 



 

 

 

 

 

Liabilities

 

 

 

 

 

Current

 

 

 

 

 

Operating lease liabilities

 

Other current liabilities

 

$

2,481 

Finance lease liabilities

 

Current maturities of long-term debt

 

 

1,646 



 

 

 

 

 

Noncurrent

 

 

 

 

 

Operating lease liabilities

 

Other long-term liabilities

 

 

3,962 

Finance lease liabilities

 

Long-term debt, less current maturities

 

 

1,869 

Total lease liabilities

 

 

 

$

9,958 

_______________

(1)

Finance lease right-of-use assets are recorded net of accumulated amortization of $2.0 million as of June 30, 2019.



The components of lease expense are as follows (in thousands):







 

 

 

 

 

 

 

 



 

 

 

Three Months Ended

 

Six Months Ended



 

 

 

June 30,

 

June 30,

Lease Cost

 

Condensed Consolidated Statements of Operations Classification

 

2019

 

2019

Operating lease cost

 

Cost of sales; Selling, general and administrative expenses

 

$

696 

 

$

1,376 

Finance lease cost

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

Depreciation

 

 

356 

 

 

690 

Interest on lease liabilities

 

Interest expense, net

 

 

70 

 

 

133 

Short-term lease cost

 

Cost of sales; Selling, general and administrative expenses

 

 

154 

 

 

425 

Total lease cost

 

 

 

$

1,276 

 

$

2,624 



Maturities of lease liabilities are as follows (in thousands):







 

 

 

 

 

 

Year Ending December 31,

 

Operating Leases

 

Finance Leases

2019 (excluding the six months ended June 30, 2019)

 

$

1,624 

 

$

1,023 

2020

 

 

2,230 

 

 

1,483 

2021

 

 

1,589 

 

 

986 

2022

 

 

784 

 

 

367 

2023

 

 

269 

 

 

 —

Thereafter

 

 

594 

 

 

 —

Total lease payments

 

$

7,090 

 

$

3,859 

Less: interest

 

 

647 

 

 

344 

Present value of lease liabilities

 

$

6,443 

 

$

3,515 



Lease term and discount rate consist of the following:







 

 

 

 

 



 

 

June 30,

Lease Term and Discount Rate

 

 

2019

Weighted-average remaining lease term (years):

 

 

 

 

 

Operating leases

 

 

 

3.4 

 

Finance leases

 

 

 

1.7 

 

Weighted-average discount rate:

 

 

 

 

 

Operating leases

 

 

 

5.9 

%

Finance leases

 

 

 

5.5 

%



Supplemental cash flow and other information related to leases are as follows (in thousands):







 

 

 



 

Six Months Ended



 

June 30,

Other Information

 

2019

Cash paid for amounts included in measurement of lease liabilities:

 

 

 

Operating cash flows from operating leases

 

$

1,656 

Operating cash flows from finance leases

 

 

133 

Financing cash flows from finance leases

 

 

881 

Right-of-use assets obtained in exchange for new lease liabilities:

 

 

 

Operating leases

 

$

377 

Finance leases

 

 

1,141 



Future annual commitments at December 31, 2018 under ASC 840 are as follows:











 

 

 

 

 

 

Year Ending December 31,

 

Operating Leases

 

Finance Leases

2019

 

$

2,867 

 

$

1,768 

2020

 

 

1,276 

 

 

973 

2021

 

 

757 

 

 

686 

2022

 

 

434 

 

 

198 

2023

 

 

292 

 

 

 —

Thereafter

 

 

398 

 

 

 —

Total lease payments

 

$

6,024 

 

$

3,625 

Less: interest

 

 

 —

 

 

346 

Present value of lease liabilities

 

$

6,024 

 

$

3,279