Leases

9 Months Ended

Sep. 30, 2019

Leases of Lessee Disclosure [Text Block]

Leases

Most of the leases the Company enters into are for equipment, buildings, easements and vehicles as part of their ongoing operations. The Company also leases certain equipment to third parties through its utility and construction services segments. The Company determines if an arrangement contains a lease at inception of a contract and accounts for all leases in accordance with ASC 842 - Leases. For more information on the adoption of ASC 842, see Note 6.

The recognition of leases requires the Company to make estimates and assumptions that affect the lease classification and the assets and liabilities recorded. The accuracy of lease assets and liabilities reported on the Consolidated Financial Statements depends on, among other things, management's estimates of interest rates used to discount the lease assets and liabilities to their present value, as well as the lease terms based on the unique facts and circumstances of each lease.

Lessee accounting

The leases the Company has entered into as part of its ongoing operations are considered operating leases and are recognized on the balance sheet as right-of-use assets, current lease liabilities and, if applicable, noncurrent lease liabilities. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The Company determines the lease term based on the non-cancelable and cancelable periods in each contract. The non-cancelable period consists of the term of the contract that is legally enforceable and cannot be canceled by either party without incurring a significant penalty. The cancelable period is determined by various factors that are based on who has the right to cancel a contract. If only the lessor has the right to cancel the contract, the Company will assume the contract will continue. If the lessee is the only party that has the right to cancel the contract, the Company looks to asset, entity and market-based factors. If both the lessor and the lessee have the right to cancel the contract, the Company assumes the contract will not continue.

Generally, the leases for vehicles and equipment have a term of five years or less and buildings and easements have a longer term of up to 35 years or more. To date, the Company does not have any residual value guarantee amounts probable of being owed to a lessor, financing leases or material agreements with related parties.

The Company has elected to recognize leases with an original lease term of 12 months or less in income on a straight-line basis over the term of the lease and not recognize a corresponding right-of-use asset or lease liability. Lease costs are included in operation and maintenance expense on the Company's Consolidated Statements of Income. The discount rate used to calculate the present value of the lease liabilities is based upon the implied rate within each contract. If the rate is unknown or cannot be determined, the Company uses an incremental borrowing rate which is determined by the length of the contract, asset class and the Company's borrowing rates as of the commencement date of the contract.

The following tables provide information on the Company's operating leases:



	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2019		2019
	(In thousands)
Lease costs:
Operating lease cost	$	10,536	$	32,444
Variable lease cost	381		1,180
Short-term lease cost	28,270		85,982
Total lease costs	$	39,187	$	119,606



	September 30, 2019
	(Dollars in thousands)
Weighted average remaining lease term	2.98 years
Weighted average discount rate	4.63		%
Cash paid for amounts included in the measurement of lease liabilities	$	32,261

The reconciliation of the future undiscounted cash flows to the operating lease liabilities presented on the Company's Consolidated Balance Sheet at September 30, 2019, was as follows:



	(In thousands)
Remainder of 2019	$	10,619
2020	32,605
2021	23,488
2022	15,838
2023	9,913
Thereafter	54,765
Total	147,228
Less discount	28,478
Total operating lease liabilities	$	118,750

As previously disclosed in the 2018 Annual Report, the undiscounted annual minimum lease payments due under the Company's leases following the previous lease accounting standard as of December 31, 2018, were as follows:



	2019		2020		2021		2022		2023		Thereafter
	(In thousands)
Operating leases	$	37,740	$	26,255	$	17,868	$	11,647	$	7,278	$	49,098

Leases of Lessor Disclosure [Text Block]

Lessor accounting

The Company leases certain equipment to third parties which are considered operating leases. The Company recognized revenue from operating leases of $11.2 million and $37.7 million for the three and nine months ended September 30, 2019, respectively.

The majority of the Company's operating leases are short-term leases of less than 12 months. At September 30, 2019, the Company had $10.0 million of lease receivables with a majority due within 12 months.