Annual report pursuant to Section 13 and 15(d)

Note 6 - Leases

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Note 6 - Leases
12 Months Ended
Dec. 31, 2018
Notes to Financial Statements  
Lessee, Operating Leases [Text Block]
6.
LEASES
 
As of
December 31, 2018,
the Company leases
eight
offshore support vessels as well as certain facilities and other equipment. These leasing agreements have been classified as operating leases for financial reporting purposes, and the related rental fees are charged as expenses over the lease terms. The leases typically contain purchase and lease renewal options or rights of
first
refusal with respect to the sale or lease of the equipment. The lease terms range in duration from
one
to
three
years. Certain of the equipment leases are the result of sale-leaseback transactions with finance companies and certain of the gains arising from such sale-leaseback transactions have been deferred in the accompanying consolidated balance sheets and are being amortized as reductions in rental expense over the lease terms (see Note
1
). 
 
Total rental expense for the Company's operating leases for the years ended
December 31, 2018,
2017
and
2016
totaled
$13.3
million,
$14.5
million, and
$19.4
million, respectively. Future minimum payments in the years ended
December 
31
under operating leases that have a remaining term in excess of
one
year as of
December 
31,
2018
were as follows (in thousands):
 
2019     $
14,288
 
2020      
13,826
 
2021      
6,480
 
2022      
331
 
2023 and beyond      
661
 
 
The Company performed an impairment analysis and determined that some of the leased offshore support vessels are impaired due to an operating or cash flow loss currently and in the forecasted future. The Company recorded impairment losses of
$6.8
million for
three
such leases for the years ended
December 31, 2018
and
$5.4
million for
one
such lease for the year ended
December 31, 2017. 
A liability was recorded to reflect the amount of future lease payments, expenses required to maintain the vessels, and expenses required  to return the vessels to their owners at the end of the lease term, offset by unamortized deferred gain on the sale-leaseback of the vessels.
 
On
February 25, 2016,
the FASB issued a comprehensive new leasing standard 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 will adopt the new standard on
January 1, 2019
and will apply the transition provisions of the new standard at its adoption date with recognition of a cumulative-effect adjustment to the opening balance of retained earnings.  The adoption of the new standard will have 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
include the
addition of
$33.9
million of right-of-use assets,
$32.1
million in leas
e liability, and a cumulative-effect adjustment to the opening balance of retained earnings of
$1.8
million for certain of its equipment, office and land leases.  In addition, unamortized deferred gains for
four
vessels leased under sale-leaseback arrangements will be fully recognized as an adjustment to the opening balance of retained earnings of
$8.7
million, net of tax.