Lease Obligations

3 Months Ended

Mar. 31, 2020

Note 8 – Lease Obligations

In the ordinary course of business, the Company enters into agreements that provide financing for machinery and equipment and for other of its facility, vehicle and equipment needs, including related party leases. As of March 31, 2020, the Company’s leases have remaining lease terms of up to nine years. Lease agreements may contain renewal clauses, which, if elected, generally extend the term of the lease for one to five years for both equipment and facility leases. Certain lease agreements may also contain options to purchase the leased property and/or options to terminate the lease. In addition, lease agreements may include periodic adjustments to payment amounts for inflation or other variables, or may require payments for taxes, insurance, maintenance or other expenses, which are generally referred to as non-lease components. The Company’s lease agreements do not contain significant residual value guarantees or material restrictive covenants.

Finance Leases

The gross amount of assets held under finance leases as of March 31, 2020 and December 31, 2019 totaled $484.2 million and $463.5 million, respectively. Assets held under finance leases, net of accumulated depreciation, totaled $384.4 million and $375.9 million as of March 31, 2020 and December 31, 2019, respectively. Depreciation expense associated with finance leases totaled $15.8 million and $10.0 million for the three month periods ended March 31, 2020 and 2019, respectively.

Operating Leases

Operating lease additions for the three month period ended March 31, 2020 totaled $5.8 million and totaled $12.0 million for the three month period ended March 31, 2019, excluding the effect of adoption of ASU 2016-02, Leases (Topic 842), of approximately $230.0 million. For the three month periods ended March 31, 2020 and 2019, rent expense for leases that have terms in excess of one year totaled approximately $35.3 million and $27.9 million, respectively, of which $2.9 million and $2.3 million, respectively, represented variable lease costs. The Company also incurred rent expense for leases with terms of one year or less totaling approximately $77.5 million and $92.8 million for the three month periods ended March 31, 2020 and 2019, respectively. 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, 2020 were as follows (in millions):



	Finance Leases			Operating Leases
2020, remaining nine months	$	96.6		$	66.8
2021	115.0			68.2
2022	74.6			43.3
2023	26.9			21.2
2024	3.0			13.8
Thereafter	—			30.6
Total minimum lease payments	$	316.1		$	243.9
Less amounts representing interest	(17.9		)	(20.4		)
Total lease obligations, net of interest	$	298.2		$	223.5
Less current portion	116.9			80.1
Long-term portion of lease obligations, net of interest	$	181.3		$	143.4

As of March 31, 2020, finance leases had a weighted average remaining lease term of 2.7 years and a weighted average discount rate of 4.1%. Non-cancelable operating leases had a weighted average remaining lease term of 4.2 years and a weighted average discount rate of 4.1% as of March 31, 2020.