Anuvu Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Leases (Tables)

Leases (Tables)

12 Months Ended

Dec. 31, 2019

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 December 31, 2019 (in thousands):



	Impact of Change in Accounting Policy -- as of December 31, 2019
	As reported		ASC 842 Impact			Legacy GAAP
ASSETS
Right-of-use assets, net
Operating leases⁽¹⁾⁽⁴⁾	$	28,261	$	(28,261	)	$	—
Finance lease⁽²⁾⁽⁴⁾	10,926		(10,926		)	—
Total Right-of-Use Assets	39,187		(39,187		)	—
Net lease investment -- other non-current assets⁽³⁾⁽⁴⁾	1,508		(1,508		)	—
Total Lease Assets	$	40,695	$	(40,695	)	$	—

Property and equipment, net⁽⁴⁾	$	—	$	(1,408	)	$	(1,408	)

LIABILITIES
Operating lease liabilities⁽¹⁾ -- current portion	$	8,319	$	(8,319	)	$	—
-- long-term	23,636		(23,636		)	—
Finance lease liabilities⁽²⁾-- current portion	2,297		(2,297		)	—
-- long-term	16,666		(16,666		)	—
Total Lease Liabilities	$	50,918	$	(50,918	)	$	—

⁽¹⁾This includes arrangements for: (i) corporate and regional office operating leases, (ii) teleport co-location operating leases, and (iii) satellite bandwidth operating leases.

⁽²⁾This refers to the satellite bandwidth capacity arrangement assessed as a finance lease during the year ended December 31, 2019. The right-of-use asset balance as of December 31, 2019 included the unamortized lease incentive of $0.9 million and unamortized unfavorable contract liability of $6.7 million.

⁽³⁾This includes customer equipment arrangements classified as sales-type leases as of December 31, 2019. In addition, the Company elected the practical expedient which allows the use of hindsight in determining the lease term.

⁽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 assessment or re-assessment in accordance with ASC 842’s new accounting model.

Lease, Cost

The following table provides the components of the finance lease cost for the twelve months ended December 31, 2019 (in thousands):



	Amount
Amortization of right-of-use asset, net of lease incentive and contract liability credits	$	981
Interest accretion on finance lease liabilities	938
Total lease cost	$	1,919

The following table discloses the weighted-average remaining lease term and IBR, as well as supplemental cash flow information for the twelve months ended December 31, 2019 (in thousands):



	Amount
Supplemental cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities	$	7,027
Cash paid for amounts included in the measurement of finance lease liabilities	$	2,192
Right-of-use-assets obtained in exchange for operating lease obligations	$	9,564
Right-of-use-assets obtained in exchange for finance lease obligations	$	20,218
Weighted average remaining lease term:
Real estate operating leases	7.10 years
Teleport co-location operating leases	4.90 years
Satellite capacity operating leases	1.50 years
Satellite capacity finance lease	6.50 years
Weighted average IBR:
Real estate operating leases	8.17		%
Teleport co-location operating leases	8.90		%
Satellite capacity operating leases	7.49		%
Satellite capacity finance lease	8.30		%

Operating Lease, Lease Income

The service revenues (with embedded operating equipment leases) and recognized revenues on sales-type equipment leases in which the Company acts as the lessor for the year ended December 31, 2019 is presented in the following table (in thousands):



	Amount
Bandwidth service and equipment revenues⁽¹⁾	$	117,339
Earned revenues on sales-type leases at commencement⁽²⁾	1,711
Total Licensing and Service Revenues -- Maritime and Land Connectivity	$	119,050

⁽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.

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 December 31, 2019 (in thousands):



	As a Lessee															As a Lessor
Years Ending December 31,	Real Estate			Satellite Capacity			Satellite Capacity			Teleport Co-Location			Total			Equipment Held by Customers
Lease Classification	Operating			Finance			Operating			Operating			Total			Sales-Type
2020	$	5,227		$	3,758		$	2,131		$	1,702		$	12,818		$	469
2021	4,962			3,758			791			1,554			11,065			464
2022	4,652			3,758			—			1,241			9,651			386
2023	3,651			3,758			—			561			7,970			258
2024	3,655			3,758			—			550			7,963			223
Thereafter	10,974			5,640			—			966			17,580			—
Total Future Lease Payments	33,121			24,430			2,922			6,574			67,047			1,800
Less: Imputed interest	(9,232		)	(5,467		)	(155		)	(1,275		)	(16,129		)	(292		)
Present Value of Lease Liabilities	$	23,889		$	18,963		$	2,767		$	5,299		$	50,918
Net Investment in Sales-Type Leases																$	1,508

Schedule of Future Minimum Rental Payments for Operating Leases

The following is a schedule of future minimum lease payments for our operating leases as of December 31, 2018 (in thousands):



Years Ending December 31,	Amount
2019	$	4,941
2020	4,593
2021	4,359
2022	3,818
2023	3,541
Thereafter	13,115
Total minimum lease payments	$	34,367

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 December 31, 2019 (in thousands):



Years Ending December 31,	Amount
2020	$	80,459
2021	38,595
2022	7,680
2023 and thereafter	2,944
Total Maritime and Land Monthly Recurring Charges	$	129,678

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):



Years Ending December 31,	Amount
2019	$	89,111
2020	34,885
2021	20,594
2022	4,864
2023	2,396
Total Maritime and Land Monthly Recurring Charges	$	151,850

Lessor Operating Lease Carrying 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 5 - Property & Equipment, is as follows (in thousands):



	December 31,
	2019			2018
Equipment
Gross balance	$	57,369		$	57,162
Accumulated depreciation	(30,692		)	(27,987		)
Net Book Value	$	26,677		$	29,175