Virgin Orbit Holdings, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Leases

Leases

3 Months Ended

Mar. 31, 2022

The Company leases out offices and other facilities and certain manufacturing and office equipment under long-term, non-cancelable operating and finance leases. Some leases include options to purchase, terminate, or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised. The Company does not recognize ROU assets and lease obligations for short-term leases.

The components of lease expense related to leases for the period are as follows:


	Three Months Ended March 31,
	2022		2021

	(In thousands)
Lease Cost:
Operating lease expense	$	784	$	673
Short-term lease expense	$	875	$	810
Finance lease cost:
Amortization of right-of-use assets	$	79	$	64
Interest on lease obligations	7		7
Total finance lease cost	86		71
Total lease cost	$	1,745	$	1,554

The components of supplemental cash flow information related to leases for the period are as follows:


	Three Months Ended March 31,
	2022			2021

	(In thousands)
Cash flow information:
Cash paid for amounts included in the measurement of lease obligations for the period ended:
Operating cash flows for operating leases	$	731		$	638
Operating cash flows for finance leases	$	7		$	7
Financing cash flows for finance leases	$	91		$	61

Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—		$	—
Finance leases	$	—		$	—

Other information:
Weighted average remaining lease term:
Operating leases (in years)	8			9
Finance leases (in years)	1			2

Weighted average discount rates:
Operating leases	11.0		%	11.8		%
Finance leases	6.2		%	5.1		%

The supplemental condensed consolidated balance sheet information related to leases for the period is as follows:


	As of
	March 31, 2022		December 31, 2021
	(In thousands)
Finance leases
Long-term right-of-use assets	$	301	$	252

Short-term finance lease liabilities	$	257	$	258
Long-term finance lease liabilities	118		79
Total finance lease liabilities	$	375	$	337

Operating leases
Long-term right-of-use assets	$	14,078	$	14,433

Short-term operating lease liabilities	$	1,406	$	1,384
Long-term operating lease liabilities	13,639		13,999
Total operating lease liabilities	$	15,045	$	15,383

Lease Obligations

The Company has several non-cancelable operating leases primarily related to the lease of its manufacturing and testing facilities. These leases generally contain renewal options for periods ranging from 3 to 10 years and require the Company to pay all executory costs, such as maintenance and insurance. Certain lease arrangements have rent-free periods or escalating payment provisions, and the Company recognizes rent expense of such arrangements on a straight-line basis.

Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) and future minimum capital lease payments as of March 31, 2022 are as follows:


	Operating Leases		Finance Leases

	(In thousands)
2022	$	2,278	$	217
2023	3,064		126
2024	3,121		63
2025	2,444		—
2026	2,631		—
Thereafter	9,647		—
Total payments	$	23,185	$	406
Less:
Imputed interest/present value discount	(8,140)		(31)
Present value of lease liabilities	$	15,045	$	375

Leases

The components of lease expense related to leases for the period are as follows:


	Three Months Ended March 31,
	2022		2021

	(In thousands)
Lease Cost:
Operating lease expense	$	784	$	673
Short-term lease expense	$	875	$	810
Finance lease cost:
Amortization of right-of-use assets	$	79	$	64
Interest on lease obligations	7		7
Total finance lease cost	86		71
Total lease cost	$	1,745	$	1,554

The components of supplemental cash flow information related to leases for the period are as follows:


	Three Months Ended March 31,
	2022			2021

	(In thousands)
Cash flow information:
Cash paid for amounts included in the measurement of lease obligations for the period ended:
Operating cash flows for operating leases	$	731		$	638
Operating cash flows for finance leases	$	7		$	7
Financing cash flows for finance leases	$	91		$	61

Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—		$	—
Finance leases	$	—		$	—

Other information:
Weighted average remaining lease term:
Operating leases (in years)	8			9
Finance leases (in years)	1			2

Weighted average discount rates:
Operating leases	11.0		%	11.8		%
Finance leases	6.2		%	5.1		%

The supplemental condensed consolidated balance sheet information related to leases for the period is as follows:


	As of
	March 31, 2022		December 31, 2021
	(In thousands)
Finance leases
Long-term right-of-use assets	$	301	$	252

Short-term finance lease liabilities	$	257	$	258
Long-term finance lease liabilities	118		79
Total finance lease liabilities	$	375	$	337

Operating leases
Long-term right-of-use assets	$	14,078	$	14,433

Short-term operating lease liabilities	$	1,406	$	1,384
Long-term operating lease liabilities	13,639		13,999
Total operating lease liabilities	$	15,045	$	15,383

Lease Obligations


	Operating Leases		Finance Leases

	(In thousands)
2022	$	2,278	$	217
2023	3,064		126
2024	3,121		63
2025	2,444		—
2026	2,631		—
Thereafter	9,647		—
Total payments	$	23,185	$	406
Less:
Imputed interest/present value discount	(8,140)		(31)
Present value of lease liabilities	$	15,045	$	375