Note 12 Leases

Prior to January 1, 2019, we accounted for leases under ASC 840 and did not record any right of use asset or corresponding lease liability. We adopted ASC 842 using a modified retrospective with an effective date of January 1, 2019. As such, financial information for prior periods has not been adjusted and continues to be reported under ASC 840. Effective with the adoption of ASC 842, we have changed our accounting policy for leases as detailed below.

We have evaluated the provisions of ASC 842, including certain practical expedients allowed. The significant practical expedients we adopted include the following:

We elected the practical expedient to apply the transition approach as of the beginning of the period of adoption and not restate comparative periods;

We elected to utilize the “package of three” expedients, as defined in ASC 842, whereby we did not reassess whether contracts existing prior to the effective date contain leases, nor did we reassess lease classification determinations nor whether initial direct costs qualify for capitalization;

We elected the practical expedient to not capitalize any leases with initial terms of twelve months or less on our condensed consolidated balance sheet;

For all underlying classes of leased assets, we elected the practical expedient to not separate lease and non-lease components; and

We elected the practical expedient to continue to account for land easements (also known as “rights of way”) that were not previously accounted for as leases consistent with prior accounting until such contracts are modified or replaced, at which time they would be assessed for lease classification under ASC 842.

As of the date of implementation on January 1, 2019, the impact of the adoption of ASC 842 resulted in the recognition of a right of use asset and lease payable obligation on our condensed consolidated balance sheet of approximately $33.1 million. As the right of use asset and the lease payable obligation were the same, there was no cumulative effect impact on retained earnings.

We determine whether a contract is or contains a lease at inception of the contract based on answers to a series of questions that address whether an identified asset exists and whether we have the right to obtain substantially all of the benefit of the assets and to control its use over the full term of the agreement. When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate using a credit notching approach to discount the lease payments based on information available at lease commencement. We do not separate lease and nonlease components of contracts. There are no material residual value guarantees nor any restrictions or covenants included in our lease agreements. Certain of our leases include provisions for variable payments. These variable payments are typically determined based on a measure of throughput or actual days or another measure of usage and are not included in the calculation of lease liabilities and right-of-use assets.

Lease Position

The table below presents the lease related assets and liabilities recorded on our condensed consolidated balance sheet as of March 31, 2019:


		March 31,
		2019
	Classification on the Balance Sheet	(In thousands)
Assets
Operating lease assets	Other long-term assets	$	29,798
Total lease assets		$	29,798

Liabilities
Current liabilities:
Operating lease liabilities	Current lease liabilities	$	10,991
Noncurrent liabilities:
Operating lease liabilities	Other long-term liabilities	$	18,807
Total lease liabilities		$	29,798

Lease Costs

The table below presents certain information related to the lease costs for our operating leases for the three months ended March 31, 2019:


		Three Months Ended
		March 31,
		2019
	(In thousands)
Operating lease cost		$	3,669
Short-term lease cost			1,390
Variable lease cost			—
Total lease cost		$	5,059

Other Information

The table below presents supplemental cash flow information related to leases for the three months ended March 31, 2019:


	Three Months Ended March 31,
	2019
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	3,669

Lease Terms and Discount Rates

The table below presents certain information related to the weighted average remaining lease terms and weighted average discount rates for our operating leases as of March 31, 2019:


	Three Months Ended
	March 31,
	2019

Weighted-average remaining lease term - operating leases		2.63 years
Weighted-average discount rate - operating leases		5.71%

Undiscounted Cash Flows

The table below reconciled the undiscounted cash flows for each of the first five years and the total remaining years to the operating lease liabilities recorded on the balance sheet as of March 31, 2019:


	March 31, 2019
	(In thousands)
2019	$	9,407
2020		8,846
2021		5,832
2022		3,301
2023		1,918
Thereafter		7,682
Total undiscounted lease liability		36,986
Less: amount of lease payments representing interest		(7,188)
Long-term lease obligations	$	29,798

As of March 31, 2019, we had additional leases that have not yet commenced of approximately $8.6 million. These leases will commence in the fourth quarter of 2019 with lease terms of 12 years.

The minimum rental commitments under non-cancelable operating leases under ASC 840 as disclosed in our 2018 Annual Report, with lease terms in excess of one year subsequent to December 31, 2018, were as follows:


	December 31, 2018
	(In thousands)
2019	$	10,701
2020		7,104
2021		3,774
2022		2,356
2023		1,538
Thereafter		7,482
Total minimum lease payments	$	32,955