| 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 Condensed Consolidated Balance Sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term.
The Company has no finance leases.
The components of lease expense were as follows:
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($ in thousands) |
Classification in the Condensed Consolidated Statements of Income |
Three Months Ended
June 30, |
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Six Months Ended
June 30, |
2020 |
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2019 |
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2020 |
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2019 |
Operating lease cost (a) |
Cost of sales, exclusive of depreciation and amortization |
$ |
987 |
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$ |
1,152 |
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$ |
1,922 |
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$ |
2,291 |
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Operating lease cost (a) |
Selling, general and administrative |
34 |
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38 |
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68 |
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72 |
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Total lease cost |
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$ |
1,021 |
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$ |
1,190 |
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$ |
1,990 |
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$ |
2,363 |
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(a) Short-term lease costs were approximately $0.1 million and $0.1 million for the three months ended June 30, 2020 and 2019, respectively. Short-term lease costs were approximately $0.1 million and $0.1 million for the six months ended June 30, 2020 and 2019, respectively. |
The Company had no variable lease expense, as defined by ASC 842, during the periods.
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($ in thousands) |
Classification on the Condensed Consolidated Balance Sheets |
June 30, 2020 |
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December 31, 2019 |
Assets: |
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Operating |
Operating lease assets |
$ |
11,915 |
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$ |
13,512 |
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Total leased assets |
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$ |
11,915 |
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$ |
13,512 |
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Liabilities: |
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Current: |
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Operating |
Current portion of operating lease liabilities |
$ |
3,142 |
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$ |
3,174 |
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Noncurrent: |
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Operating |
Operating lease liabilities |
8,773 |
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10,338 |
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Total lease liabilities |
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$ |
11,915 |
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$ |
13,512 |
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
($ in thousands) |
2020 |
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2019 |
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2020 |
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2019 |
Cash paid for amounts included in the measurement of lease liabilities: |
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Operating cash flows used for operating leases |
$ |
933 |
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$ |
1,122 |
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$ |
1,881 |
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$ |
3,385 |
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Right-of-use assets obtained in exchange for lease obligations: |
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Operating leases |
$ |
— |
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$ |
— |
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$ |
— |
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$ |
138 |
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June 30, 2020 |
Weighted-average remaining lease term (in years): |
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Operating leases |
4.1 |
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Weighted-average discount rate: |
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Operating leases |
4.5 |
% |
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 June 30, 2020, maturities of lease liabilities were as follows:
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($ in thousands) |
Operating Leases |
2020 |
$ |
1,824 |
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2021 |
3,540 |
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2022 |
3,218 |
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2023 |
2,329 |
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2024 |
1,026 |
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Thereafter |
1,082 |
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Total lease payments |
$ |
13,019 |
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Less: Interest |
1,104 |
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Total lease obligations |
$ |
11,915 |
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