Note 15 — Leases:

The adoption of ASC 842 had a material impact in our condensed consolidated balance sheet due to the recognition of ROU assets and corresponding operating lease liabilities as disclosed below but did not have an impact in our lease expenses as disclosed below for the three and nine months ended September 30, 2019. Certain amounts recorded for prepaid/accrued charter hire expenses associated with historical operating leases were reclassified to the newly captioned Operating lease right-of-use asset in the condensed consolidated balance sheet as of September 30, 2019. The expense for leases under the ASC 842 will continue to be classified in their historical statements of operations captions (primarily in Charter hire expenses, General and administrative, Voyage expenses, and Vessel expenses).

As permitted under ASC 842, the Company has elected not to apply the provisions of ASC 842 to short term leases, which include: (i) tanker vessels chartered-in where the duration of the charter was one year or less at inception; (ii) workboats employed in the Crude Tankers Lightering business which are cancellable upon 180 days' notice; and (iii) short term leases of office and other space.

Contracts under which the Company is a Lessee

The Company currently has two major categories of leases - chartered-in vessels and leased office and other space. The expenses recognized during the three and nine months ended September 30, 2019 for the lease component of these leases are as follows:


		Three Months Ended		Nine Months Ended
	Statement of Operations Line Item	September 30, 2019		September 30, 2019
Operating lease cost
Vessel assets	Charter hire expenses	$	3,940	$	11,029

Office and other space	General and administrative		249		747
	Voyage expenses		42		126

Short-term lease cost
Vessel assets (1)	Charter hire expenses		2,976		7,922

Office and other space	General and administrative		29		87
	Voyage expenses		-		52
	Vessel expenses		-		8
Total lease cost		$	7,236	$	19,971

⁽¹⁾

Excludes vessels spot chartered-in under operating leases and employed in the Crude Tankers Lightering business for periods of less than one month each, totaling $1,768 and $10,211 for the three and nine months ended September 30, 2019, respectively, including both lease and non-lease components.

Supplemental cash flow information related to leases was as follows:


	Nine Months Ended
	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	11,827

Supplemental balance sheet information related to leases was as follows:


	September 30, 2019
Operating lease right-of-use assets	$	36,580

Current portion of operating lease liabilities	$	(13,463)
Long-term operating lease liabilities		(20,530)
Total operating lease liabilities	$	(33,993)

Weighted average remaining lease term - operating leases		3.54 years
Weighted average discount rate - operating leases		7.23%

1. Charters-in of vessel assets:

As of September 30, 2019, INSW had commitments to charter in three MRs, two Aframaxes, and one LR1 and one workboat employed in the Crude Tankers Lightering business. All of the charters-in, of which the two Aframaxes are bareboat charters with expiry dates ranging from December 2023 to March 2024 and the others are time charters with expiry dates ranging from January 2020 to August 2021, are accounted for as operating leases. Some of the Company’s time charters contain renewal options to extend the leases for six to 12 months. The Company’s bareboat charters contain purchase options commencing in the first quarter of 2021. As of September 30, 2019, the Company has determined that the purchase options are not yet reasonably certain of being exercised. Lease liabilities related to time charters-in vessels exclude estimated days that the vessels will not be available for employment due to drydock because the Company does not pay charter hire when time chartered-in vessels are not available for its use.

Payments of lease liabilities and related number of operating days under these operating leases as of September 30, 2019 and December 31, 2018 (prior to adoption of ASC 842 effective January 1, 2019) are as follows:

Bareboat Charters-in:


At September 30, 2019	Amount		Operating Days
2019	$	1,582	184
2020		6,295	732
2021		6,278	730
2022		6,278	730
2023		4,532	556
Total lease payments		24,965	2,932
less imputed interest		(3,320)
Total operating lease liabilities	$	21,645

Bareboat Charters-in:


At December 31, 2018 (prior to adoption of ASC 842 effective January 1, 2019)	Amount		Operating Days
2019	$	6,278	730
2020		6,295	732
2021		6,278	730
2022		6,278	730
2023		4,782	556
Net minimum lease payments	$	29,911	3,478

Time Charters-in:


At September 30, 2019	Amount		Operating Days
2019	$	2,398	460
2020		5,335	1,087
2021		2,170	408
Total lease payments (lease component only)		9,903	1,955
less imputed interest		(472)
Total operating lease liabilities	$	9,431

Time Charters-in:


At December 31, 2018 (prior to adoption of ASC 842 effective January 1, 2019)	Amount			Operating Days
2019	$	12,934	(1)	1,421
Net minimum lease payments	$	12,934		1,421

⁽¹⁾

Includes non-lease components totaling approximately $5,530 related to the Company's time charters, which are accounted for under ASC 842 effective January 1, 2019 and therefore excluded from the operating lease liability, and approximately $3,615 related to short term leases of workboats employed in the Crude Tankers Lightering business that are not in scope of ASC 842 based on the Company's accounting policy election.

2. Office and other space:

The Company has operating leases for office and lightering workboat dock space. These leases have expiry dates ranging from August 2021 to December 2027.

Payments of lease liabilities for office and other space as of September 30, 2019 and December 31, 2018 (prior to adoption of ASC 842 effective January 1, 2019) are as follows:

Office and other space:


At September 30, 2019		Amount
2019	$	291
2020		1,166
2021		838
2022		173
2023		178
Thereafter		734
Total lease payments		3,380
less imputed interest		(463)
Total operating lease liabilities	$	2,917

Office and other space:


At December 31, 2018 (prior to adoption of ASC 842 effective January 1, 2019)		Amount
2019	$	1,219
2020		1,152
2021		665
Net minimum lease payments	$	3,036

Contracts under which the Company is a Lessor

See Note 14, “Revenue,” for discussion on the Company’s revenues from operating leases accounted for under the lease guidance (ASC 842).

The future minimum revenues, before reduction for brokerage commissions, expected to be received on non-cancelable time charters and the related revenue days as of September 30, 2019 and December 31, 2018 (prior to adoption of ASC 842 effective January 1, 2019) are as follows:

Time Charters-out:


At September 30, 2019	Amount		Revenue Days
2019	$	6,266	445
2020		698	49
Future minimum revenues	$	6,964	494

Time Charters-out:


At December 31, 2018 (prior to adoption of ASC 842 effective January 1, 2019)	Amount		Revenue Days
2019	$	2,587	221
Future minimum revenues	$	2,587	221

Future minimum revenues do not include (i) the Company’s share of time charters entered into by the pools in which it participates, and (ii) the Company’s share of time charters entered into by the joint ventures, which the Company accounts for under the equity method. Revenues from a time charter are not generally received when a vessel is off-hire, including time required for normal periodic maintenance of the vessel. In arriving at the minimum future charter revenues, an estimated time off-hire to perform periodic maintenance on each vessel has been deducted, although there is no assurance that such estimate will be reflective of the actual off-hire in the future.