Quarterly report pursuant to Section 13 or 15(d)

LEASES

v3.19.1
LEASES
3 Months Ended
Mar. 31, 2019
Leases [Abstract]  
LEASES
LEASES
The Company leases certain rail cars, rail equipment, office space and office equipment. The Company determines if a contract is a lease at the inception of the arrangement. The Company reviews all options to extend, terminate, or purchase its right of use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term.
The components of lease expense were as follows:

($ in thousands)
Classification in the Condensed Consolidated Statements of Income
Three Months Ended March 31, 2019
Operating lease cost (a)
Cost of sales, exclusive of depreciation and amortization
$
1,139

Operating lease cost (a)
Selling, general and administrative
34

Total operating lease cost
 
$
1,173

 
 
 
Finance lease cost:
 
 
Amortization of right-of-use assets
Depreciation
$

Interest on lease liabilities
Interest Expense

Total finance lease cost
 
$

 
 
 
Total lease cost
 
$
1,173

 
 
 
(a) Short-term lease costs were approximately $40 thousand during the period.


The Company had no variable lease expense, as defined by ASC 842, during the period.

($ in thousands)
Classification on the Condensed Consolidated Balance Sheets
March 31, 2019
Assets:
 
 
Operating
Operating lease assets
$
16,137

Finance
Property, plant, and equipment

Total leased assets
 
$
16,137

 
 
 
Liabilities:
 
 
Current
 
 
Operating
Current portion of operating lease liabilities
$
3,568

Finance
Short-term debt and current portion of long-term debt

Noncurrent
 
 
Operating
Operating lease liabilities
12,566

Finance
Long-term debt

Total lease liabilities
 
$
16,134

($ in thousands)
Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows used for operating leases
$
1,133

Operating cash flows used for finance leases

Financing cash flows used for finance leases

Right-of-use assets obtained in exchange for lease obligations:
 
Operating leases
$
113

Finance leases


 
As of March 31, 2019
Weighted-average remaining lease term (in years):
 
Operating leases
5.0

Finance leases
0.0

Weighted-average discount rate:
 
Operating leases
4.5
%
Finance leases
%

Nearly all of the Company’s lease contracts do not provide a readily determinable implicit rate. For these contracts, the Company’s estimated incremental borrowing rate is based on information available at the inception of the lease.
As of March 31, 2019, maturities of lease liabilities were as follows:

($ in thousands)
Operating Leases
Finance Leases
2020
$
4,202

$

2021
3,624


2022
3,486


2023
3,006


2024
1,885


Thereafter
1,787


Total lease payments
$
17,990

$

Less: Interest
1,856


Total lease obligations
$
16,134

$



Disclosures related to periods prior to adoption of ASU 2016-02
The Company adopted ASU 2016-02 using a modified retrospective transition approach on January 1, 2019 as noted in Note 1. As required, the following disclosure is provided for periods prior to adoption. Minimum lease commitments as of December 31, 2018 that have initial or remaining lease terms in excess of one year are as follows:

($ in thousands)
Operating Leases
2019
$
3,670

2020
3,583

2021
3,418

2022
3,107

2023
2,288

Beyond 2023
2,065

LEASES
LEASES
The Company leases certain rail cars, rail equipment, office space and office equipment. The Company determines if a contract is a lease at the inception of the arrangement. The Company reviews all options to extend, terminate, or purchase its right of use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term.
The components of lease expense were as follows:

($ in thousands)
Classification in the Condensed Consolidated Statements of Income
Three Months Ended March 31, 2019
Operating lease cost (a)
Cost of sales, exclusive of depreciation and amortization
$
1,139

Operating lease cost (a)
Selling, general and administrative
34

Total operating lease cost
 
$
1,173

 
 
 
Finance lease cost:
 
 
Amortization of right-of-use assets
Depreciation
$

Interest on lease liabilities
Interest Expense

Total finance lease cost
 
$

 
 
 
Total lease cost
 
$
1,173

 
 
 
(a) Short-term lease costs were approximately $40 thousand during the period.


The Company had no variable lease expense, as defined by ASC 842, during the period.

($ in thousands)
Classification on the Condensed Consolidated Balance Sheets
March 31, 2019
Assets:
 
 
Operating
Operating lease assets
$
16,137

Finance
Property, plant, and equipment

Total leased assets
 
$
16,137

 
 
 
Liabilities:
 
 
Current
 
 
Operating
Current portion of operating lease liabilities
$
3,568

Finance
Short-term debt and current portion of long-term debt

Noncurrent
 
 
Operating
Operating lease liabilities
12,566

Finance
Long-term debt

Total lease liabilities
 
$
16,134

($ in thousands)
Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows used for operating leases
$
1,133

Operating cash flows used for finance leases

Financing cash flows used for finance leases

Right-of-use assets obtained in exchange for lease obligations:
 
Operating leases
$
113

Finance leases


 
As of March 31, 2019
Weighted-average remaining lease term (in years):
 
Operating leases
5.0

Finance leases
0.0

Weighted-average discount rate:
 
Operating leases
4.5
%
Finance leases
%

Nearly all of the Company’s lease contracts do not provide a readily determinable implicit rate. For these contracts, the Company’s estimated incremental borrowing rate is based on information available at the inception of the lease.
As of March 31, 2019, maturities of lease liabilities were as follows:

($ in thousands)
Operating Leases
Finance Leases
2020
$
4,202

$

2021
3,624


2022
3,486


2023
3,006


2024
1,885


Thereafter
1,787


Total lease payments
$
17,990

$

Less: Interest
1,856


Total lease obligations
$
16,134

$



Disclosures related to periods prior to adoption of ASU 2016-02
The Company adopted ASU 2016-02 using a modified retrospective transition approach on January 1, 2019 as noted in Note 1. As required, the following disclosure is provided for periods prior to adoption. Minimum lease commitments as of December 31, 2018 that have initial or remaining lease terms in excess of one year are as follows:

($ in thousands)
Operating Leases
2019
$
3,670

2020
3,583

2021
3,418

2022
3,107

2023
2,288

Beyond 2023
2,065