Adoption of ASC 842

3 Months Ended

Mar. 31, 2019

2. Adoption of ASC 842

On January 1, 2019, we adopted ASC 842 using the additional transition method option provided by ASU 2018-11. Under this transition method, we applied the new accounting guidance on the date of adoption. Upon adoption, a cumulative effect adjustment was not required; however, the effect of this guidance on our consolidated financial statements impacted our balance sheet presentation by increasing the amount of our noncurrent assets for the inclusion of right-of-use assets of $15.9 million and increasing the amount of our liabilities for the inclusion of the associated lease obligations of $15.9 million, most of which are classified as noncurrent.

Under the transition option we elected, ASC 842 is applied only to the most current period presented in the financial statements and our reporting for the comparative periods presented in the financial statements continue to be in accordance with Topic 840, including disclosures. Upon adoption, we elected the following accounting policies or practical expedients related to ASC 842:

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not reassess whether any expired or existing contracts are or contain leases, not reassess the lease classification for any expired or existing leases, and not reassess initial direct costs for any existing leases;

•

apply accounting similar to Topic 840 operating leases accounting to leases that meet the definition of short-term leases; and

•

not evaluate land easements that exist or expired before January 1, 2019 and that were not previously accounted for as leases under Topic 840.

Currently, most of our leases are classified as operating leases under which we are the lessee and primarily relate to railcars, other equipment and office space. In addition, our leases that are classified as finance leases (previously classified as capital leases) and other leases under which we are the lessor are not material. Most of our leases do not include options to extend or terminate the lease prior to the end of the term. As of March 31, 2019, we did not have any material operating leases with lease terms greater than one year that have not yet commenced.

2. Adoption of ASC 842 (continued)

	Three Months Ended
	March 31, 2019
	(Dollars In Thousands)
Components of lease expense:
Operating lease cost	$	1,848
Short-term lease cost		705
Other cost (1)		18
Total lease cost	$	2,571
Supplemental cash flow information related to leases:
Operating cash flows from operating leases	$	1,799
Operating cash flows from finance leases		4
Financing cash flows from finance leases		36
Cash paid for amounts included in the measurement of lease liabilities	$	1,839

Right-of-use assets obtained in exchange for new operating lease liabilities	$	938
Other lease-related information:
Weighted-average remaining lease term - operating leases (in years)		4.3
Weighted-average remaining lease term - finance leases (in years)		4.5
Weighted-average discount rate - operating leases		8.96	%
Weighted-average discount rate - finance leases		8.94	%

(1)

Includes variable and finance lease costs.

Maturities of operating lease liabilities are as follows:

	Operating Leases
	(In thousands)
For the remainder of 2019	$	5,404
2020		3,997
2021		2,746
2022		2,099
2023		1,819
Thereafter		2,565
Total lease payments		18,630
Less imputed interest		(3,242	)
Present value of lease liabilities	$	15,388

Under Topic 840, expenses associated with our operating lease agreements, including month-to-month leases, for the first quarter of 2018 was approximately $2.2 million.