Leases (Tables)
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9 Months Ended |
Sep. 30, 2019 |
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| Leases [Abstract] |
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| Schedule of Operating Assets and Liabilities |
The foregoing table summarizes the impact of ASC 842 adoption on the Company’s condensed consolidated balance sheet as of September 30, 2019 (in thousands):
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Impact of Change in Accounting Policy --
as of September 30, 2019
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As reported |
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ASC 842 Impact |
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Legacy GAAP |
ASSETS |
Right-of-use assets, net |
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Operating leases(1)(4)
|
$ |
24,167 |
|
|
$ |
(24,167 |
) |
|
$ |
— |
|
Finance lease(2)(4)
|
10,754 |
|
|
(10,754 |
) |
|
— |
|
Total Right-of-Use Assets |
$ |
34,921 |
|
|
$ |
(34,921 |
) |
|
$ |
— |
|
Net lease investment -- other non-current assets(3)(4)
|
1,216 |
|
|
(1,216 |
) |
|
— |
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Total Lease Assets |
$ |
36,137 |
|
|
$ |
(36,137 |
) |
|
$ |
— |
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|
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Property and equipment, net(4)
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— |
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|
1,065 |
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|
1,065 |
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LIABILITIES |
Operating lease liabilities(1) -- current portion
|
$ |
5,177 |
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|
$ |
(5,177 |
) |
|
$ |
— |
|
-- long-term |
22,258 |
|
|
(22,258 |
) |
|
— |
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Finance lease liabilities(2) -- current portion
|
2,115 |
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|
(2,115 |
) |
|
— |
|
-- long-term |
16,819 |
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|
(16,819 |
) |
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— |
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Total Lease Liabilities |
$ |
46,369 |
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|
$ |
(46,369 |
) |
|
$ |
— |
|
(1) This includes arrangements for: (i) corporate and regional office leases, and (ii) teleport co-location leases.
(2) This refers to the satellite bandwidth capacity arrangement assessed as a finance lease during the quarter ended June 30, 2019. The right-of-use asset balance as of September 30, 2019 included the unamortized lease incentive of $0.9 million and unamortized unfavorable contract liability of $7.0 million.
(3) This includes customer equipment arrangements classified as sales-type leases as of September 30, 2019.
(4) All existing arrangements as of January 1, 2019 were not re-assessed as allowed under our ASC 842 implementation. Any new arrangements or modifications to existing contracts after January 1, 2019 adoption date are subject to lease classification assessment in accordance with ASC 842’s new lease accounting model.
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| Lease, Cost |
The following table provides the components of the finance lease cost for the three and nine months ended September 30, 2019:
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Three Months Ended September 30 |
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Nine Months Ended September 30 |
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2019 |
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2019 |
Amortization of right-of-use asset, net of lease incentive and contract liability credits |
398 |
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|
$ |
531 |
|
Interest accretion on finance lease liabilities |
441 |
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|
590 |
|
Total lease cost |
839 |
|
|
$ |
1,121 |
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The following table discloses the weighted-average remaining lease term and IBR, as well as supplemental cash flow information (in thousands):
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Nine Months Ended September 30, 2019 |
Supplemental cash flow information |
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Cash paid for amounts included in the measurement of operating lease liabilities |
$ |
4,436 |
|
Cash paid for amounts included in the measurement of finance lease liabilities |
$ |
1,253 |
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Right-of-use-assets obtained in exchange for operating lease obligations |
$ |
3,388 |
|
Right-of-use-assets obtained in exchange for finance lease obligations |
$ |
19,597 |
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Weighted average remaining lease term -- real estate operating leases
|
7.4 years |
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Weighted average remaining lease term -- teleport co-location operating leases
|
4.9 years |
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Weighted average remaining lease term -- finance lease
|
6.8 years |
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Weighted average IBR -- real estate operating leases
|
8.94 |
% |
Weighted average IBR -- teleport co-location operating leases
|
8.92 |
% |
Weighted average IBR -- finance lease
|
9.30 |
% |
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| Operating Lease, Lease Income |
The service revenues and recognized revenues on sales-type leases for the three and nine months ended September 30, 2019 is presented in the following table (in thousands):
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Three Months Ended September 30 |
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Nine Months Ended September 30 |
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2019 |
|
2019 |
Bandwidth service and equipment revenues(1)
|
$ |
34,244 |
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|
$ |
104,505 |
|
Earned revenues on sales-type leases at commencement(2)
|
— |
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|
1,310 |
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Total Licensing and Service Revenues -- Maritime and Land Connectivity |
$ |
34,244 |
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|
$ |
105,815 |
|
(1) This is presented as part of Revenues -- Licensing and services in our consolidated statement of operations, and includes the equipment lease component that is embedded in the overall bandwidth service arrangement. Since we adopted the practical expedient to not separate the lease and non-lease components as allowed with the ASC 842 implementation as of January 1, 2019, we will continue to classify existing embedded equipment arrangements as operating leases, to the extent unmodified.
(2) This includes the equipment lease revenues recognized at commencement date of the customer equipment arrangements classified as sales-type leases. As equipment leasing is a standard component in our connectivity business model, we present equipment revenues relating to these sales-type leases on a gross basis, and recognize a corresponding cost of sales equal to the net book value of the leased equipment. Interest income component is considered immaterial.
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| Lessee, Operating Lease, Liability, Maturity |
The following table reflects a summary of the undiscounted cash flows on an annual basis and reconciliation to the Company’s lease assets and liabilities as of September 30, 2019 (in thousands):
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As a Lessee |
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As a Lessor |
Years Ending December 31, |
Real Estate |
|
Satellite Capacity |
|
Teleport
Co-Location |
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Total |
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Equipment Held by Customers |
Lease Classification |
Operating |
|
Finance |
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Operating |
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Sales-Type |
2019 (remaining three months) |
$ |
1,197 |
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|
$ |
940 |
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|
$ |
272 |
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|
$ |
2,409 |
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|
$ |
106 |
|
2020 |
4,867 |
|
|
3,758 |
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|
1,046 |
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|
9,671 |
|
|
314 |
|
2021 |
4,784 |
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|
3,758 |
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|
803 |
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|
9,345 |
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|
314 |
|
2022 |
4,460 |
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|
3,758 |
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|
438 |
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|
8,656 |
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|
314 |
|
2023 |
3,982 |
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|
3,758 |
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|
438 |
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|
8,178 |
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|
258 |
|
Thereafter |
15,253 |
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|
9,397 |
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|
829 |
|
|
25,479 |
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|
222 |
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Total Future Lease Payments |
$ |
34,543 |
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|
$ |
25,369 |
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|
$ |
3,826 |
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|
$ |
63,738 |
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|
$ |
1,528 |
|
Less: Imputed interest |
(10,194 |
) |
|
(6,435 |
) |
|
(740 |
) |
|
(17,369 |
) |
|
(312 |
) |
Present Value of Lease Liabilities |
$ |
24,349 |
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|
$ |
18,934 |
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|
$ |
3,086 |
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|
$ |
46,369 |
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Net Investment in Sales-Type Leases |
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$ |
1,216 |
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| Finance Lease, Liability, Maturity |
The following table reflects a summary of the undiscounted cash flows on an annual basis and reconciliation to the Company’s lease assets and liabilities as of September 30, 2019 (in thousands):
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As a Lessee |
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As a Lessor |
Years Ending December 31, |
Real Estate |
|
Satellite Capacity |
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Teleport
Co-Location |
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Total |
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Equipment Held by Customers |
Lease Classification |
Operating |
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Finance |
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Operating |
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Sales-Type |
2019 (remaining three months) |
$ |
1,197 |
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|
$ |
940 |
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$ |
272 |
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$ |
2,409 |
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$ |
106 |
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2020 |
4,867 |
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|
3,758 |
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|
1,046 |
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|
9,671 |
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|
314 |
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2021 |
4,784 |
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|
3,758 |
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|
803 |
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|
9,345 |
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|
314 |
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2022 |
4,460 |
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|
3,758 |
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|
438 |
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|
8,656 |
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|
314 |
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2023 |
3,982 |
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|
3,758 |
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|
438 |
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|
8,178 |
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|
258 |
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Thereafter |
15,253 |
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|
9,397 |
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|
829 |
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|
25,479 |
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|
222 |
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Total Future Lease Payments |
$ |
34,543 |
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$ |
25,369 |
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$ |
3,826 |
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|
$ |
63,738 |
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|
$ |
1,528 |
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Less: Imputed interest |
(10,194 |
) |
|
(6,435 |
) |
|
(740 |
) |
|
(17,369 |
) |
|
(312 |
) |
Present Value of Lease Liabilities |
$ |
24,349 |
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|
$ |
18,934 |
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$ |
3,086 |
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$ |
46,369 |
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Net Investment in Sales-Type Leases |
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$ |
1,216 |
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| Schedule of Future Minimum Rental Payments for Operating Leases |
The following is a schedule of future MRCs arising from our contractual arrangements with Maritime and Land Connectivity customers as of December 31, 2018 (in thousands):
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Years Ending December 31, |
Amount |
2019 |
$ |
89,111 |
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2020 |
34,885 |
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2021 |
20,594 |
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2022 |
4,864 |
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2023 |
2,396 |
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Total Maritime and Land Monthly Recurring Charges |
$ |
151,850 |
|
The following is a schedule of future minimum lease payments for our real estate operating leases as of December 31, 2018 (in thousands):
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Years Ending December 31, |
Amount |
2019 |
$ |
4,941 |
|
2020 |
4,593 |
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2021 |
4,359 |
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2022 |
3,818 |
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2023 |
3,541 |
|
Thereafter |
13,115 |
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Total minimum lease payments |
$ |
34,367 |
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| Schedule of Future Payments to be Received, Maturity |
Maritime & Land MRC’s
The following is a schedule of future monthly recurring charges (“MRCs”) arising from our contractual arrangements with Maritime & Land Connectivity customers as of September 30, 2019 (in thousands):
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Years Ending December 31, |
Amount |
2019 (remaining three months) |
$ |
30,949 |
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2020 |
62,344 |
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2021 |
31,260 |
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2022 and thereafter |
9,436 |
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Total Maritime and Land Monthly Recurring Charges |
$ |
133,989 |
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The following table reflects a summary of the undiscounted cash flows on an annual basis and reconciliation to the Company’s lease assets and liabilities as of September 30, 2019 (in thousands):
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As a Lessee |
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As a Lessor |
Years Ending December 31, |
Real Estate |
|
Satellite Capacity |
|
Teleport
Co-Location |
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Total |
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Equipment Held by Customers |
Lease Classification |
Operating |
|
Finance |
|
Operating |
|
|
Sales-Type |
2019 (remaining three months) |
$ |
1,197 |
|
|
$ |
940 |
|
|
$ |
272 |
|
|
$ |
2,409 |
|
|
$ |
106 |
|
2020 |
4,867 |
|
|
3,758 |
|
|
1,046 |
|
|
9,671 |
|
|
314 |
|
2021 |
4,784 |
|
|
3,758 |
|
|
803 |
|
|
9,345 |
|
|
314 |
|
2022 |
4,460 |
|
|
3,758 |
|
|
438 |
|
|
8,656 |
|
|
314 |
|
2023 |
3,982 |
|
|
3,758 |
|
|
438 |
|
|
8,178 |
|
|
258 |
|
Thereafter |
15,253 |
|
|
9,397 |
|
|
829 |
|
|
25,479 |
|
|
222 |
|
Total Future Lease Payments |
$ |
34,543 |
|
|
$ |
25,369 |
|
|
$ |
3,826 |
|
|
$ |
63,738 |
|
|
$ |
1,528 |
|
Less: Imputed interest |
(10,194 |
) |
|
(6,435 |
) |
|
(740 |
) |
|
(17,369 |
) |
|
(312 |
) |
Present Value of Lease Liabilities |
$ |
24,349 |
|
|
$ |
18,934 |
|
|
$ |
3,086 |
|
|
$ |
46,369 |
|
|
|
Net Investment in Sales-Type Leases |
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|
|
|
|
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|
$ |
1,216 |
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| Lessor, Operating Lease, Book Value of Assets Subject to Leases |
The book value of the equipment held by customers under operating leases, which are classified as “Equipment” in Note 4 - Property & Equipment, is as follows:
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September 30, 2019 |
|
December 31, 2018 |
Equipment |
|
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|
Gross balance |
$ |
57,162 |
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|
$ |
62,012 |
|
Accumulated depreciation |
(27,987 |
) |
|
(25,232 |
) |
Net Book Value |
$ |
29,175 |
|
|
$ |
36,780 |
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