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Leases
 6 Months Ended
Jun. 30, 2019
Leases [Abstract]  
Leases Leases
Basic adopted ASU No. 2016-02, Topic 842 - Leases, effective January 1, 2019. This ASU requires lessees to recognize an operating lease right-of-use ("ROU") asset and liability on the balance sheet for all operating leases with an initial lease term greater than twelve months.
Per ASU 2018-11 Leases – Targeted Improvements, allowed for a practical expedient wherein all periods previously reported under ASC 840 will continue to be reported under ASC 840, and periods beginning January 1, 2019, and after are reported under ASC 842. Basic elected to adopt this practical expedient along with the package of practical expedients, which allows Basic to combine lease and non-lease costs, and not to assess whether existing or expired land easements that were not previously accounted for as leases under Topic 840 are or contain a lease under this Topic.
Under this transition option, Basic will continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented and will make only annual disclosures for the comparative periods because ASC 840 does not require interim disclosures. Prior period amounts have not been adjusted and continue to be reflected in accordance with Basic’s historical accounting. The adoption of this standard resulted in the recording of ROU assets and lease liabilities of approximately of $20.8 million as of January 1, 2019, with no related impact on Basic’s Consolidated Statement of Shareholders' Equity or Consolidated Statement of Operations.
As a lessee, Basic leases its corporate office headquarters in Fort Worth, Texas, and conducts its business operations through various regional offices located throughout the United States. These operating locations typically include regional offices, storage and maintenance yards, disposal facilities and employee housing sufficient to support its operations in the area. Basic leases most of these properties under either non-cancelable term leases many of which contain renewal options that can extend the lease term from one to five years and some of which contain escalation clauses, or month-to-month operating leases. Options to renew these leases are generally not considered reasonably certain to be exercised. Therefore, the periods covered by such optional periods are not included in the determination of the term of the lease. Basic also leases supplemental equipment, typically under cancelable short-term or contracts which are less than 30 days. Due to the nature of the Company's business, any option to renew these short-term leases is generally not considered reasonably certain to be exercised. Therefore,
the periods covered by such optional periods are not included in the determination of the term of the lease, and the lease payments during these periods are similarly excluded from the calculation of operating lease asset and lease liability balances.
Operating lease expense consists of rent expense related to leases that were included in ROU assets under Topic 842. Basic recognizes operating lease expense on a straight-line basis, except for certain variable expenses that are recognized when the variability is resolved, typically during the period in which they are paid. Variable operating lease payments typically include charges for property taxes and insurance, and some leases contain variable payments related to non-lease components, including common area maintenance and usage of facilities or office equipment (for example, copiers), which totaled approximately $0.3 million and $0.6 million during the three and six months ended June 30, 2019, respectively. Prepaid rent totaled $0.2 million at June 30, 2019. The following table summarizes the components of the Company's lease expense recognized for the three and six months ending June 30, 2019, excluding variable lease and prepaid rent costs (in thousands):
Three Months Ended June 30, 2019Six Months Ended June 30, 2019
Operating lease expense:
   Short-term operating lease expense$1,538 $3,512 
   Long-term operating lease expense2,170 4,355 
Total operating lease expense$3,708 $7,867 
Finance lease expense:
   Amortization of right-of-use assets$3,897 $9,336 
   Interest on lease liabilities1,335 2,718 
Total finance lease expense$5,232 $12,054 
Supplemental information related to leases was as follows:
June 30, 2019
Operating leases
Weighted average remaining lease term3.1 years
Weighted average discount rate14.6%  
Finance leases
Weighted average remaining lease term2.4 years
Weighted average discount rate8.1%  
Supplemental cash flow information related to leases was as follows for the six months ended June 30, 2019 (in thousands):
Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities: 
   Operating cash outflows from operating leases$7,867 
   Operating cash outflows from finance leases2,718 
   Financing cash outflows from finance leases17,334 
Right-of-use assets obtained in exchange for lease obligations:
   Operating leases255 
   Finance leases$7,588 
Supplemental balance sheet information related to leases was as follows as of June 30, 2019 and December 31, 2018 (in thousands):
June 30, 2019December 31, 2018
Right-of-Use Assets under Operating Leases
Operating lease right-of-use assets$17,813 $20,819 
Operating lease right-of-use liabilities, current portion5,119 5,649 
Operating lease right-of-use liabilities, long-term portion12,694 15,170 
   Total operating lease liabilities$17,813 $20,819 
Right-of-Use Assets under Finance Leases
Property and equipment, at cost$81,956 $102,852 
Less accumulated depreciation26,221 31,954 
   Property and equipment, net$55,735 $70,898 
Current portion of long-term debt$24,384 $27,519 
Long-term debt26,779 33,390 
   Total finance lease liabilities$51,163 $60,909 
The Company adopted ASU 2016-02 on January 1, 2019 and as required, the following disclosure is provided for periods prior to adoption. Future annual minimum lease payments and capital lease commitments as of December 31, 2018 were as follows (in thousands):
December 31, 2018
Operating LeasesFinance Leases
2019$8,179 $27,519 
20206,323 19,322 
20215,438 10,697 
20224,696 3,233 
20231,248 83 
Thereafter1,215 55 
Total lease payments$27,099 $60,909 
June 30, 2019
Operating LeasesFinance Leases
2019$3,864 $11,946 
20206,484 20,771
20215,494 12,493
20224,707 5,160
20231,241 738
Thereafter1,149 55
Total lease payments$22,939 $51,163 
Impact of discounting(5,126)
Discounted value of operating lease obligations$17,813 
Leases Leases
Basic adopted ASU No. 2016-02, Topic 842 - Leases, effective January 1, 2019. This ASU requires lessees to recognize an operating lease right-of-use ("ROU") asset and liability on the balance sheet for all operating leases with an initial lease term greater than twelve months.
Per ASU 2018-11 Leases – Targeted Improvements, allowed for a practical expedient wherein all periods previously reported under ASC 840 will continue to be reported under ASC 840, and periods beginning January 1, 2019, and after are reported under ASC 842. Basic elected to adopt this practical expedient along with the package of practical expedients, which allows Basic to combine lease and non-lease costs, and not to assess whether existing or expired land easements that were not previously accounted for as leases under Topic 840 are or contain a lease under this Topic.
Under this transition option, Basic will continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented and will make only annual disclosures for the comparative periods because ASC 840 does not require interim disclosures. Prior period amounts have not been adjusted and continue to be reflected in accordance with Basic’s historical accounting. The adoption of this standard resulted in the recording of ROU assets and lease liabilities of approximately of $20.8 million as of January 1, 2019, with no related impact on Basic’s Consolidated Statement of Shareholders' Equity or Consolidated Statement of Operations.
As a lessee, Basic leases its corporate office headquarters in Fort Worth, Texas, and conducts its business operations through various regional offices located throughout the United States. These operating locations typically include regional offices, storage and maintenance yards, disposal facilities and employee housing sufficient to support its operations in the area. Basic leases most of these properties under either non-cancelable term leases many of which contain renewal options that can extend the lease term from one to five years and some of which contain escalation clauses, or month-to-month operating leases. Options to renew these leases are generally not considered reasonably certain to be exercised. Therefore, the periods covered by such optional periods are not included in the determination of the term of the lease. Basic also leases supplemental equipment, typically under cancelable short-term or contracts which are less than 30 days. Due to the nature of the Company's business, any option to renew these short-term leases is generally not considered reasonably certain to be exercised. Therefore,
the periods covered by such optional periods are not included in the determination of the term of the lease, and the lease payments during these periods are similarly excluded from the calculation of operating lease asset and lease liability balances.
Operating lease expense consists of rent expense related to leases that were included in ROU assets under Topic 842. Basic recognizes operating lease expense on a straight-line basis, except for certain variable expenses that are recognized when the variability is resolved, typically during the period in which they are paid. Variable operating lease payments typically include charges for property taxes and insurance, and some leases contain variable payments related to non-lease components, including common area maintenance and usage of facilities or office equipment (for example, copiers), which totaled approximately $0.3 million and $0.6 million during the three and six months ended June 30, 2019, respectively. Prepaid rent totaled $0.2 million at June 30, 2019. The following table summarizes the components of the Company's lease expense recognized for the three and six months ending June 30, 2019, excluding variable lease and prepaid rent costs (in thousands):
Three Months Ended June 30, 2019Six Months Ended June 30, 2019
Operating lease expense:
   Short-term operating lease expense$1,538 $3,512 
   Long-term operating lease expense2,170 4,355 
Total operating lease expense$3,708 $7,867 
Finance lease expense:
   Amortization of right-of-use assets$3,897 $9,336 
   Interest on lease liabilities1,335 2,718 
Total finance lease expense$5,232 $12,054 
Supplemental information related to leases was as follows:
June 30, 2019
Operating leases
Weighted average remaining lease term3.1 years
Weighted average discount rate14.6%  
Finance leases
Weighted average remaining lease term2.4 years
Weighted average discount rate8.1%  
Supplemental cash flow information related to leases was as follows for the six months ended June 30, 2019 (in thousands):
Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities: 
   Operating cash outflows from operating leases$7,867 
   Operating cash outflows from finance leases2,718 
   Financing cash outflows from finance leases17,334 
Right-of-use assets obtained in exchange for lease obligations:
   Operating leases255 
   Finance leases$7,588 
Supplemental balance sheet information related to leases was as follows as of June 30, 2019 and December 31, 2018 (in thousands):
June 30, 2019December 31, 2018
Right-of-Use Assets under Operating Leases
Operating lease right-of-use assets$17,813 $20,819 
Operating lease right-of-use liabilities, current portion5,119 5,649 
Operating lease right-of-use liabilities, long-term portion12,694 15,170 
   Total operating lease liabilities$17,813 $20,819 
Right-of-Use Assets under Finance Leases
Property and equipment, at cost$81,956 $102,852 
Less accumulated depreciation26,221 31,954 
   Property and equipment, net$55,735 $70,898 
Current portion of long-term debt$24,384 $27,519 
Long-term debt26,779 33,390 
   Total finance lease liabilities$51,163 $60,909 
The Company adopted ASU 2016-02 on January 1, 2019 and as required, the following disclosure is provided for periods prior to adoption. Future annual minimum lease payments and capital lease commitments as of December 31, 2018 were as follows (in thousands):
December 31, 2018
Operating LeasesFinance Leases
2019$8,179 $27,519 
20206,323 19,322 
20215,438 10,697 
20224,696 3,233 
20231,248 83 
Thereafter1,215 55 
Total lease payments$27,099 $60,909 
June 30, 2019
Operating LeasesFinance Leases
2019$3,864 $11,946 
20206,484 20,771
20215,494 12,493
20224,707 5,160
20231,241 738
Thereafter1,149 55
Total lease payments$22,939 $51,163 
Impact of discounting(5,126)
Discounted value of operating lease obligations$17,813