Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leases

LEASES

In February 2016, the FASB issued ASU 2016-02, Leases, which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. In August 2018, the FASB issued ASU 2018-11, Targeted Improvements to ASC 842, which includes an option to not restate comparative periods in transition and elect to use the effective date of ASC 842, Leases, as the date of initial application of transition. The Partnership elected the effective date transition method in ASC 842 and adopted the standard beginning January 1, 2019.

The new standard provides a number of optional practical expedients in transition. The Partnership elected the "package of practical expedients", which permits the Partnership not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The Partnership also elected the short-term lease recognition exemption, meaning the Partnership does not recognize ROU assets or lease liabilities for all leases that qualify. Lease agreements for all classes of assets with lease and non-lease components are combined as a single lease component. Variable lease payments are generally expensed as incurred and include certain index-based changes in rent, certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. 

The adoption of this standard resulted in the recording of approximately $25,552 of additional assets and liabilities on the Partnership's Consolidated Balance Sheet as of January 1, 2019.

The Partnership has numerous operating leases primarily for terminal facilities and transportation and other equipment. The leases generally provide that all expenses related to the equipment are to be paid by the lessee.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of the Partnership's leases do not provide an implicit rate of return, the Partnership uses its imputed collateralized rate based on the information available at commencement date in determining the present value of lease payments. The estimated rate is based on a risk-free rate plus a risk-adjusted margin.

Our leases have remaining lease terms of 1 year to 17 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year. The Partnership includes extension periods and excludes termination periods from its lease term if, at commencement, it is reasonably likely that the Partnership will exercise the option.

The components of lease expense for the year ended December 31, 2019 were as follows:

	2019
Operating lease cost	$	10,897
Finance lease cost:
Amortization of right-of-use assets	2,686
Interest on lease liabilities	671
Short-term lease cost	13,756
Total lease cost	$	28,010

Supplemental cash flow information for the year ended December 31, 2019 related to leases was as follows:

	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	24,526
Operating cash flows from finance leases	671
Financing cash flows from finance leases	5,517
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	9,122
Finance leases	1,309

Supplemental balance sheet information related to leases was as follows:

	2019
Operating Leases
Operating lease right-of-use assets	$	23,901
Current portion of operating lease liabilities included in "Other accrued liabilities"	$	7,722
Operating lease liabilities	16,656
Total operating lease liabilities	$	24,378
Finance Leases
Property, plant and equipment, at cost	$	15,367
Accumulated depreciation	(3,941		)
Property, plant and equipment, net	$	11,426
Current installments of finance lease obligations	$	6,758
Finance lease obligations	717
Total finance lease obligations	$	7,475
Weighted Average Remaining Lease Term (years)
Operating leases	6.26
Finance leases	0.97
Weighted Average Discount Rate
Operating leases	5.27		%
Finance leases	6.83		%

The Partnership’s future minimum lease obligations as of December 31, 2019 consist of the following:

	Operating Leases			Finance Leases
Year 1	$	8,755		$	7,049
Year 2	5,999			489
Year 3	3,586			260
Year 4	2,280			—
Year 5	1,306			—
Thereafter	6,809			—
Total	28,735			7,798
Less amounts representing interest costs	(4,357		)	(323		)
Total lease liability	$	24,378		$	7,475

As of December 31, 2019, we have additional operating leases for marine vessels that have not yet commenced of $4,085. These operating leases will commence during the first quarter of 2020 with lease terms of 3 years.

The Partnership's future minimum lease obligations as of December 31, 2018 consisted of the following:

	Operating Leases		Finance Leases
Year 1	$	13,126	$	6,022
Year 2	7,194		6,068
Year 3	4,262		223
Year 4	2,642		260
Year 5	1,749		—
Thereafter	7,823		—
Total	$	36,796	12,573
Less amounts representing interest costs			(892		)
Present value of net minimum capital lease payments			11,681
Less current portion			(5,409		)
Present value of net minimum capital lease payments, excluding current portion			$	6,272

Rent expense for continuing operating leases for the years ended December 31, 2018 and 2017 was $26,606 and $30,911, respectively.

Lessor accounting under the new standard is substantially unchanged and all of the Partnership's leases will continue to be classified as operating leases under the new standard.

The Partnership has non-cancelable revenue arrangements that are under the scope of ASC 842 whereby we have committed certain terminalling and storage assets in exchange for a minimum fee. Future minimum revenues the Partnership expects to receive under these non-cancelable arrangements as of December 31, 2019 are as follows: 2020 - $19,358; 2021 - $14,019; 2022 - $13,004; 2023 - $12,609; 2024 - $12,609; subsequent years - $49,414.

Leases

LEASES

In February 2016, the FASB issued ASU 2016-02, Leases, which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. In August 2018, the FASB issued ASU 2018-11, Targeted Improvements to ASC 842, which includes an option to not restate comparative periods in transition and elect to use the effective date of ASC 842, Leases, as the date of initial application of transition. The Partnership elected the effective date transition method in ASC 842 and adopted the standard beginning January 1, 2019.

The new standard provides a number of optional practical expedients in transition. The Partnership elected the "package of practical expedients", which permits the Partnership not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The Partnership also elected the short-term lease recognition exemption, meaning the Partnership does not recognize ROU assets or lease liabilities for all leases that qualify. Lease agreements for all classes of assets with lease and non-lease components are combined as a single lease component. Variable lease payments are generally expensed as incurred and include certain index-based changes in rent, certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. 

The adoption of this standard resulted in the recording of approximately $25,552 of additional assets and liabilities on the Partnership's Consolidated Balance Sheet as of January 1, 2019.

The Partnership has numerous operating leases primarily for terminal facilities and transportation and other equipment. The leases generally provide that all expenses related to the equipment are to be paid by the lessee.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of the Partnership's leases do not provide an implicit rate of return, the Partnership uses its imputed collateralized rate based on the information available at commencement date in determining the present value of lease payments. The estimated rate is based on a risk-free rate plus a risk-adjusted margin.

Our leases have remaining lease terms of 1 year to 17 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year. The Partnership includes extension periods and excludes termination periods from its lease term if, at commencement, it is reasonably likely that the Partnership will exercise the option.

The components of lease expense for the year ended December 31, 2019 were as follows:

	2019
Operating lease cost	$	10,897
Finance lease cost:
Amortization of right-of-use assets	2,686
Interest on lease liabilities	671
Short-term lease cost	13,756
Total lease cost	$	28,010

Supplemental cash flow information for the year ended December 31, 2019 related to leases was as follows:

	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	24,526
Operating cash flows from finance leases	671
Financing cash flows from finance leases	5,517
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	9,122
Finance leases	1,309

Supplemental balance sheet information related to leases was as follows:

	2019
Operating Leases
Operating lease right-of-use assets	$	23,901
Current portion of operating lease liabilities included in "Other accrued liabilities"	$	7,722
Operating lease liabilities	16,656
Total operating lease liabilities	$	24,378
Finance Leases
Property, plant and equipment, at cost	$	15,367
Accumulated depreciation	(3,941		)
Property, plant and equipment, net	$	11,426
Current installments of finance lease obligations	$	6,758
Finance lease obligations	717
Total finance lease obligations	$	7,475
Weighted Average Remaining Lease Term (years)
Operating leases	6.26
Finance leases	0.97
Weighted Average Discount Rate
Operating leases	5.27		%
Finance leases	6.83		%

The Partnership’s future minimum lease obligations as of December 31, 2019 consist of the following:

	Operating Leases			Finance Leases
Year 1	$	8,755		$	7,049
Year 2	5,999			489
Year 3	3,586			260
Year 4	2,280			—
Year 5	1,306			—
Thereafter	6,809			—
Total	28,735			7,798
Less amounts representing interest costs	(4,357		)	(323		)
Total lease liability	$	24,378		$	7,475

As of December 31, 2019, we have additional operating leases for marine vessels that have not yet commenced of $4,085. These operating leases will commence during the first quarter of 2020 with lease terms of 3 years.

The Partnership's future minimum lease obligations as of December 31, 2018 consisted of the following:

	Operating Leases		Finance Leases
Year 1	$	13,126	$	6,022
Year 2	7,194		6,068
Year 3	4,262		223
Year 4	2,642		260
Year 5	1,749		—
Thereafter	7,823		—
Total	$	36,796	12,573
Less amounts representing interest costs			(892		)
Present value of net minimum capital lease payments			11,681
Less current portion			(5,409		)
Present value of net minimum capital lease payments, excluding current portion			$	6,272

Rent expense for continuing operating leases for the years ended December 31, 2018 and 2017 was $26,606 and $30,911, respectively.

Lessor accounting under the new standard is substantially unchanged and all of the Partnership's leases will continue to be classified as operating leases under the new standard.

The Partnership has non-cancelable revenue arrangements that are under the scope of ASC 842 whereby we have committed certain terminalling and storage assets in exchange for a minimum fee. Future minimum revenues the Partnership expects to receive under these non-cancelable arrangements as of December 31, 2019 are as follows: 2020 - $19,358; 2021 - $14,019; 2022 - $13,004; 2023 - $12,609; 2024 - $12,609; subsequent years - $49,414.