V2X, Inc. - 10-Q filing on 2019-11-05

Leases

9 Months Ended

Sep. 27, 2019

We determine whether an arrangement contains a lease at inception. We have operating leases for office space, apartments, vehicles, and machinery and equipment. Our operating leases have lease terms of less than one year to ten years.

We do not separate lease components from non-lease components (e.g., common area maintenance, property taxes, and insurance) but account for both components in a contract as a single lease component.

The components of lease expense are as follows:



	Three Months Ended		Nine Months Ended
(In thousands)	September 27, 2019		September 27, 2019
Operating lease expense	$	3,827	$	10,890
Variable lease expense	196		594
Short-term lease expense	12,436		35,055
Total lease expense	$	16,459	$	46,539

Supplemental balance sheet information related to our operating leases is as follows:



(In thousands)	September 27, 2019
Right-of-use assets	$	18,233

Current lease liabilities (recorded in other accrued liabilities)	$	8,402
Long-term lease liabilities (recorded in other non-current liabilities)	10,683
Total operating lease liabilities	$	19,085

Initial ROU assets of $19.2 million were recognized as non-cash asset additions when the new lease accounting standard was adopted on January 1, 2019. Additional ROU assets from operating lease arrangements of $7.1 million were recognized as non-cash asset additions during the nine months ended September 27, 2019, and; ROU assets of $1.9 million were recognized with the Advantor acquisition.

The weighted average remaining lease term and discount rate for our operating leases at September 27, 2019 were 4.1 years and 5.9%, respectively.

Maturities of lease liabilities at September 27, 2019 were as follows:



(In thousands)
2019 (excluding the nine months ended September 27, 2019)	$	3,832
2020	6,445
2021	3,315
2022	2,589
2023	1,426
2024 and beyond	4,537
Total lease payments	22,144
Less: Imputed interest	3,059
Total	$	19,085