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Leases
 9 Months Ended
Sep. 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.
ASU 2018-11 Leases – Targeted Improvements, allows 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 cancellable 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 $0.8 million during the three and nine months ended September 30, 2019, respectively. Prepaid rent totaled $0.1 million at September 30, 2019.
The following table summarizes the components of the Company's lease expense recognized for the three and nine months ending September 30, 2019, excluding variable lease and prepaid rent costs (in thousands):
Three Months Ended September 30, 2019Nine Months Ended September 30, 2019
Operating lease expense:
   Short-term operating lease expense$1,118  $4,630  
   Long-term operating lease expense2,178  6,533  
Total operating lease expense$3,296  $11,163  
Finance lease expense:
   Amortization of right-of-use assets$4,052  $13,388  
   Interest on lease liabilities1,239  3,957  
Total finance lease expense$5,291  $17,345  
Supplemental information related to leases was as follows:
September 30, 2019
Operating leases
Weighted average remaining lease term3.0 years
Weighted average discount rate15.2%  
Finance leases
Weighted average remaining lease term2.2 years
Weighted average discount rate8.1%  
Supplemental cash flow information related to leases was as follows for the nine months ended September 30, 2019 (in thousands):
Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:  
   Operating cash outflows from operating leases$11,163  
   Operating cash outflows from finance leases3,957  
   Financing cash outflows from finance leases23,209  
Right-of-use assets obtained in exchange for lease obligations:
   Operating leases1,597  
   Finance leases$7,943  
Supplemental balance sheet information related to leases was as follows as of September 30, 2019, and December 31, 2018 (in thousands):
September 30, 2019December 31, 2018
Right-of-Use Assets under Operating Leases
Operating lease right-of-use assets$17,248  $20,819  
Operating lease right-of-use liabilities, current portion5,459  5,649  
Operating lease right-of-use liabilities, long-term portion11,789  15,170  
   Total operating lease liabilities$17,248  $20,819  
Right-of-Use Assets under Finance Leases
Property and equipment, at cost$81,929  $102,852  
Less accumulated depreciation30,000  31,954  
   Property and equipment, net$51,929  $70,898  
Current portion of long-term debt$22,747  $27,519  
Long-term debt22,896  33,390  
   Total finance lease liabilities$45,643  $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 and September 30, 2019 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  
September 30, 2019
Operating LeasesFinance Leases
2019$2,060  $6,241  
20207,075  20,840  
20215,712  12,567  
20224,807  5,250  
20231,257  810  
Thereafter1,091  55  
Total lease payments$22,002  $45,763  
Impact of discounting(4,754) (120) 
Discounted value of operating lease obligations$17,248  $45,643  
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.
ASU 2018-11 Leases – Targeted Improvements, allows 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 cancellable 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 $0.8 million during the three and nine months ended September 30, 2019, respectively. Prepaid rent totaled $0.1 million at September 30, 2019.
The following table summarizes the components of the Company's lease expense recognized for the three and nine months ending September 30, 2019, excluding variable lease and prepaid rent costs (in thousands):
Three Months Ended September 30, 2019Nine Months Ended September 30, 2019
Operating lease expense:
   Short-term operating lease expense$1,118  $4,630  
   Long-term operating lease expense2,178  6,533  
Total operating lease expense$3,296  $11,163  
Finance lease expense:
   Amortization of right-of-use assets$4,052  $13,388  
   Interest on lease liabilities1,239  3,957  
Total finance lease expense$5,291  $17,345  
Supplemental information related to leases was as follows:
September 30, 2019
Operating leases
Weighted average remaining lease term3.0 years
Weighted average discount rate15.2%  
Finance leases
Weighted average remaining lease term2.2 years
Weighted average discount rate8.1%  
Supplemental cash flow information related to leases was as follows for the nine months ended September 30, 2019 (in thousands):
Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:  
   Operating cash outflows from operating leases$11,163  
   Operating cash outflows from finance leases3,957  
   Financing cash outflows from finance leases23,209  
Right-of-use assets obtained in exchange for lease obligations:
   Operating leases1,597  
   Finance leases$7,943  
Supplemental balance sheet information related to leases was as follows as of September 30, 2019, and December 31, 2018 (in thousands):
September 30, 2019December 31, 2018
Right-of-Use Assets under Operating Leases
Operating lease right-of-use assets$17,248  $20,819  
Operating lease right-of-use liabilities, current portion5,459  5,649  
Operating lease right-of-use liabilities, long-term portion11,789  15,170  
   Total operating lease liabilities$17,248  $20,819  
Right-of-Use Assets under Finance Leases
Property and equipment, at cost$81,929  $102,852  
Less accumulated depreciation30,000  31,954  
   Property and equipment, net$51,929  $70,898  
Current portion of long-term debt$22,747  $27,519  
Long-term debt22,896  33,390  
   Total finance lease liabilities$45,643  $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 and September 30, 2019 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  
September 30, 2019
Operating LeasesFinance Leases
2019$2,060  $6,241  
20207,075  20,840  
20215,712  12,567  
20224,807  5,250  
20231,257  810  
Thereafter1,091  55  
Total lease payments$22,002  $45,763  
Impact of discounting(4,754) (120) 
Discounted value of operating lease obligations$17,248  $45,643