Leases

6 Months Ended

Jun. 30, 2019

Leases Of Lessee Disclosure [Text Block]

15. Leases

Leasing Activities

We have operating leases related to office space, railcars, and land with remaining lease terms ranging from less than two years to approximately 27 years. In total, our operating leases were not material to our Unaudited Condensed Consolidated Balance Sheets, and required no significant judgments. As these leases do not provide an implicit discount rate, we calculated the discount rate using various inputs such as the interest rate on our 2021 Notes adjusted for fair value, and the credit curve for CCC rated companies. Some of our leases have renewal options. For purposes of calculating the right-of-use asset and lease liability, we have assumed we will not exercise those renewal options. Our office space lease includes common area maintenance, which is considered a non-lease component. These costs are variable in nature and as such we have excluded them from the calculation of the right-of-use asset and lease liability. Our leases related to office space and land are included in the Owned and Operated Mines segment, while the railcar lease is part of our Logistics and Related Activities segment.

We lease various equipment for use in our mining operations. This equipment was previously classified as a capital lease under ASC 840, and capitalized on the Unaudited Condensed Consolidated Balance Sheets. Under ASC 842, these leases are classified as finance leases as ownership transfers at the end of the lease term. These leases are included in the Owned and Operated Mines segment.

Weighted-average information related to our operating and finance leases as of June 30, 2019 was as follows:

Lease Term
	Weighted-average remaining lease term - finance leases	1.1	years
	Weighted-average remaining lease term - operating leases	3.3	years

Discount Rate
	Weighted-average discount rate - finance leases	4.3	%
	Weighted-average discount rate - operating leases	18.4	%

The components of our expenses related to our leases for the three and six months ended June 30, 2019 were as follows (in thousands):

		Three Months		Six Months
		Ended		Ended
		June 30,		June 30,
		2019		2019
Finance Lease Cost
	Amortization of right-of-use assets	$	280	$	563
	Interest expense on finance lease liabilities		19		46
Operating Lease Cost
	Lease expense		259		531
	Impairment of right-of-use asset		—		104
Short-term Lease Cost
	Short-term lease cost		32		64
Total lease cost		$	590	$	1,308

Supplemental balance sheet information related to our leases as of June 30, 2019 were as follows (in thousands):

Operating Leases
	Other assets (noncurrent)⁽¹⁾	$	—

	Liabilities subject to compromise (current portion)	$	943
	Liabilities subject to compromise (noncurrent portion)		481
	Total operating lease liabilities	$	1,424

Finance Leases
	Property, plant, and equipment	$	13,967
	Accumulated amortization		(10,265)
	Property, plant and equipment, net	$	3,702

	Other liabilities (current)	$	1,556
	Other liabilities (noncurrent)		181
	Total finance lease liabilities	$	1,737

During the second quarter of 2019, we recorded an impairment of our right-of-use assets to reflect the fair value as determined under the income approach based primarily on cash flows from the Winning Bid. See Note 6 for further details on the asset impairment.

Maturity of our lease liabilities as of June 30, 2019 were as follows (in thousands):

		Operating Leases		Finance Leases
2019	$	515	$	846
2020		937		871
2021		109		63
2022		13		—
2023		13		—
Thereafter		370		—
Total		1,957		1,780
Less: interest		533		43
Total principal payments		1,424		1,737
Less: current portion		943		1,556
Lease obligations, net of current portion	$	481	$	181

As we adopted ASC 842 as of January, 1, 2019, prior period information continues to be reported under ASC 840. As such, information regarding balances related to our leasing activities in these prior periods is included below.

Operating Leases

The minimum rental commitments under non-cancelable operating leases, with lease terms in excess of one year subsequent to December 31, 2018, were as follows (in thousands):

2019	$	1,525
2020		1,446
2021		201
2022		13
2023		13
Thereafter		370

Finance Leases

Assets under finance lease consisted of the following as of December 31, 2018 (in thousands):

Property, plant and equipment		$	13,967
Accumulated amortization			(8,987)
	Property, plant and equipment, net	$	4,980

Our finance equipment lease obligations are included in Other liabilities. Future payments for these obligations as of December 31, 2018 were as follows (in thousands):

2019	$	1,711
2020		858
2021		28
2022		—
2023		—
Total		2,597
Less: interest		91
Total principal payments		2,505
Less: current portion		1,633
Lease obligations, net of current portion	$	872

Interest on the variable rate finance leases is imputed based on the one-month LIBOR plus 1.95% for a rate of 4.41% as of December 31, 2018. Due to the variable nature of the imputed interest, fair value is equal to carrying value.

Federal Coal Lease Obligations

Our federal coal lease obligations consist of obligations payable to the Bureau of Land Management of the U.S. Department of the Interior for the West Antelope II South lease modification. Leases of this nature are excluded from the scope of ASC 842 as they represent a lease for natural resources. The future payments for our federal coal lease obligations are $0.6 million per year through 2022. The balance of our federal coal lease obligations is $1.4 million as of June 30, 2019, and has been reclassified to Liabilities subject to compromise in the Unaudited Condensed Consolidated Balance Sheets as of June 30, 2019.