Leases and Commitments

12 Months Ended

Dec. 31, 2017

The company leases a portion of its facilities, transportation equipment, data processing equipment and certain other equipment. These leases have terms from 1 to 20 years and provide for renewal options. Generally, the company was required to pay taxes and normal expenses of operating the facilities and equipment. As of December 31, 2017, the company is committed under non-cancelable operating leases, which have initial or remaining terms in excess of one year and expire on various dates through 2035. Lease expenses were approximately $18,102,000 in 2017, $18,805,000 in 2016 and $20,360,000 in 2015.

On April 23, 2015, the company sold and leased back, under four separate lease agreements, four properties located in Ohio and one property in Florida for net proceeds of $23,000,000, which were used to reduce debt under the U.S. and Canadian Credit Facility. The initial total annual rent for the properties was $2,275,000 and can increase annually over the 20-year term of the leases based on the applicable geographical consumer price index (CPI). Each of the four lease agreements contains three 10-year renewals with the rent for each option term based on the greater of the then-current fair market rent for each property or the then- current rate and increasing annually by the applicable CPI. Under the terms of the lease agreements, the company is responsible for all taxes, insurance and utilities. The company is permitted to sublet the properties; however, the properties are currently being utilized exclusively by the company and there is no current subletting. The company is required to adequately maintain each of the properties and any leasehold improvements will be amortized over the lesser of the lives of the improvements or the remaining lease lives.

In connection with the transaction, the requirements for sale lease-back accounting were met. Accordingly, the company recorded the sale of the properties, removed the related property and equipment from the company's balance sheet, recognized an initial deferred gain of $7,414,000 and an immediate loss of $257,000 related to one property and recorded new lease liabilities. Specifically, the company recorded four capital leases totaling $32,339,000 and one operating lease related to leased land, which was not a material component of the transaction. The gains on the sales of the properties were required to be deferred and recognized over the life of the leases as the property sold is being leased back. The deferred gain is classified under Other Long-Term Obligations on the Consolidated Balance Sheet.

The amount of buildings and equipment capitalized in connection with capital leases was $44,629,000 and $42,946,000 at December 31, 2017 and 2016, respectively. At December 31, 2017 and 2016, accumulated amortization was $13,215,000 and $9,795,000, respectively, which is included in depreciation expense.

Future minimum operating and capital lease commitments, as of December 31, 2017, are as follows (in thousands):



	Capital Leases			Operating Leases
2018	$	3,162		$	13,268
2019	2,925			8,177
2020	2,783			5,067
2021	2,722			2,786
2022	2,266			1,559
Thereafter	27,935			1,456
Total future minimum lease payments	41,793			$	32,313
Amounts representing interest	(10,378		)
Present value of minimum lease payments	$	31,415