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Lease Obligations
3 Months Ended
Mar. 31, 2019
Leases [Abstract]  
Lease Obligations
Note 8Lease Obligations
Finance Leases
MasTec enters into agreements that provide financing for machinery and equipment. Assets associated with these arrangements, are recorded within property and equipment, with a corresponding amount recorded within the Company’s debt obligations. Expense associated with finance leases is recorded within depreciation and interest expense, and additions are reflected in the consolidated statements of cash flows within the supplemental disclosures of non-cash information. Many of the Company’s finance lease agreements contain a purchase option, which the Company generally intends to exercise, as the purchase option prices are typically below the estimated fair market values of the related assets. The gross amount of assets held under finance leases as of March 31, 2019 and December 31, 2018 totaled $353.0 million and $337.6 million, respectively. Assets held under finance leases, net of accumulated depreciation, totaled $271.3 million and $246.8 million as of March 31, 2019 and December 31, 2018, respectively. Depreciation expense associated with finance leases totaled $10.0 million for the three month period ended March 31, 2019.
Operating Leases
In the ordinary course of business, the Company enters into non-cancelable operating leases for certain of its facility, vehicle and equipment needs, including related party leases. See Note 15 - Related Party Transactions. These leases allow the Company to conserve cash and provide flexibility as compared with purchasing these assets. The terms of these agreements vary from lease to lease, including some with renewal options. Operating lease costs, which are recorded as rent expense, primarily within costs of revenue, excluding depreciation and amortization, include both fixed and variable components. Fixed costs for operating leases are composed of initial base rent amounts plus any fixed annual increases. Variable costs for operating leases consist primarily of common area maintenance expenses and taxes. In the event the Company cancels or terminates a lease before the end of the lease term, the Company is typically liable for the remaining lease payments, and such payments are generally recorded within rent expense. For operating leases with purchase options, the option to purchase equipment is considered to be at its estimated fair market value. For the three month period ended March 31, 2019, operating lease additions, excluding the effect of the adoption of $233 million, totaled $12 million.
For the three month period ended March 31, 2019, rent expense for leases that have terms in excess of one year totaled approximately $27.9 million, of which $2.3 million represented variable lease costs. The Company also incurred rent expense for leases with terms of one year or less totaling approximately $92.8 million for the three month period ended March 31, 2019. For the three month period ended March 31, 2018, rent and related expense for operating leases that have non-cancelable terms in excess of one year totaled approximately $26.9 million, and rent and related expense for operating leases having original terms of one year or less totaled approximately $91.7 million. Rent expense for operating leases is generally consistent with the amount of the related payments, and is included within operating activities in the consolidated statements of cash flows.
Additional Lease Information
Future minimum lease commitments as of March 31, 2019 were as follows (in millions):
 
 Finance
 Leases
 
Operating Leases
2019, remaining nine months
$
60.7

 
$
64.6

2020
71.0

 
64.7

2021
57.3

 
42.2

2022
28.1

 
26.9

2023
3.4

 
16.9

Thereafter
0.1

 
36.1

Total minimum lease payments
$
220.6

 
$
251.4

Less amounts representing interest
(14.9
)
 
(24.2
)
Total lease obligations, net of interest
$
205.7

 
$
227.2

Less current portion
69.9

 
73.3

Long-term portion of lease obligations, net of interest
$
135.8

 
$
153.9


The Company reviews all contracts for potential leasing arrangements. As of March 31, 2019, finance leases had a weighted average remaining lease term of 2.8 years and a weighted average discount rate of 4.3%. Non-cancelable operating leases had a weighted average remaining lease term of 4.5 years and a weighted average discount rate of 4.4% as of March 31, 2019. If a lease does not contain an implicit rate, the Company uses its incremental borrowing rate to determine the present value of the total lease payments, which is based on the information available as of the lease commencement date, including applicable lease terms and the current economic environment. The Company applies a portfolio approach in determining its incremental borrowing rate given that it has a centrally managed treasury function.
See Note 1 - Business, Basis of Presentation and Significant Accounting Policies for information pertaining to the Company’s January 1, 2019 adoption of ASU 2016-02, Leases (Topic 842), which, together with its related clarifying ASUs, provided revised guidance for lease accounting and related disclosure requirements.