Leases

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

LEASES

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 Right-of-Use ("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 three months ended March 31, 2020 and 2019 were as follows:

	Three Months Ended March 31,
	2020		2019
Operating lease cost	$	6,296	$	5,177
Finance lease cost:
Amortization of right-of-use assets	589		622
Interest on lease liabilities	110		183
Short-term lease cost	3,423		2,551
Total lease cost	$	10,418	$	8,533

Supplemental balance sheet information related to leases was as follows:

	Three Months Ended March 31,
	2020			2019
Operating Leases
Operating lease right-of-use assets	$	25,771		$	23,901
Current portion of operating lease liabilities included in "Other accrued liabilities"	$	8,358		$	7,722
Operating lease liabilities	17,810			16,656
Total operating lease liabilities	$	26,168		$	24,378
Finance Leases
Property, plant and equipment, at cost	$	13,163		$	14,058
Accumulated depreciation	(3,634		)	(1,888		)
Property, plant and equipment, net	$	9,529		$	12,170
Current installments of finance lease obligations	$	5,114		$	5,540
Finance lease obligations	526			4,886
Total finance lease obligations	$	5,640		$	10,426

The Partnership’s future minimum lease obligations as of March 31, 2020 consist of the following:

	Operating Leases			Finance Leases
Year 1	$	9,519		$	5,307
Year 2	7,113			336
Year 3	4,379			213
Year 4	1,978			—
Year 5	1,115			—
Thereafter	6,564			—
Total	$	30,668		$	5,856
Less amounts representing interest costs	(4,500		)	(216		)
Total lease liability	$	26,168		$	5,640

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 March 31, 2020 are as follows: 2020 - $14,386; 2021 - $14,019; 2022 - $13,004; 2023 - $12,609; 2024 - $12,609; subsequent years - $49,414.

Leases

LEASES

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 Right-of-Use ("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 three months ended March 31, 2020 and 2019 were as follows:

	Three Months Ended March 31,
	2020		2019
Operating lease cost	$	6,296	$	5,177
Finance lease cost:
Amortization of right-of-use assets	589		622
Interest on lease liabilities	110		183
Short-term lease cost	3,423		2,551
Total lease cost	$	10,418	$	8,533

Supplemental balance sheet information related to leases was as follows:

	Three Months Ended March 31,
	2020			2019
Operating Leases
Operating lease right-of-use assets	$	25,771		$	23,901
Current portion of operating lease liabilities included in "Other accrued liabilities"	$	8,358		$	7,722
Operating lease liabilities	17,810			16,656
Total operating lease liabilities	$	26,168		$	24,378
Finance Leases
Property, plant and equipment, at cost	$	13,163		$	14,058
Accumulated depreciation	(3,634		)	(1,888		)
Property, plant and equipment, net	$	9,529		$	12,170
Current installments of finance lease obligations	$	5,114		$	5,540
Finance lease obligations	526			4,886
Total finance lease obligations	$	5,640		$	10,426

The Partnership’s future minimum lease obligations as of March 31, 2020 consist of the following:

	Operating Leases			Finance Leases
Year 1	$	9,519		$	5,307
Year 2	7,113			336
Year 3	4,379			213
Year 4	1,978			—
Year 5	1,115			—
Thereafter	6,564			—
Total	$	30,668		$	5,856
Less amounts representing interest costs	(4,500		)	(216		)
Total lease liability	$	26,168		$	5,640

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 March 31, 2020 are as follows: 2020 - $14,386; 2021 - $14,019; 2022 - $13,004; 2023 - $12,609; 2024 - $12,609; subsequent years - $49,414.