LEASES

6 Months Ended

Jun. 30, 2019

LEASES

LEASES

13.  LEASES

The Company adopted ASU No. 2016-02, Leases (Topic 842) on January 1, 2019 and recognized leases with duration greater than 12 months on the balance sheet using the modified retrospective approach. Prior year financial statements have not been restated and therefore those amounts are not presented below. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed for a carry-forward of the historical lease classification. For leases with terms greater than 12 months, the Company has recorded the related Right-Of-Use (ROU) asset and liability at the present value of lease payments over the term. A few of the leases include rental escalation clauses or renewal options and they have been factored into the determination of lease payments when appropriate. There are no residual value guarantees on the existing leases. The Company estimates its incremental borrowing rate, at lease commencement,

to determine the present value of lease payments, since most of the Company’s leases do not provide an implicit rate of return. ROU assets exclude lessor incentives received.

The Company’s lease population consists primarily of real estate including its corporate headquarters, office space and warehouses, in addition to vehicles, railcars, storage containers and office equipment. The Company does not have any finance leases. The Company has a significant population of month-to-month real estate leases that have been classified as short-term leases, and therefore has not recognized a ROU asset or lease liability related to them. The Company determines at contract inception, if an arrangement is a lease or contains a lease based on whether the Company obtains the right to control the use of specifically identifiable property, plant and equipment for a period of time in exchange for consideration. The Company has elected not to separate non-lease components from lease components for its leases. Variable lease payments relate primarily to taxes and insurance on real estate contracts and are recognized as expense when incurred.

The Company subleases certain real estate to third parties. Our sublease portfolio consists solely of operating leases. As of June 30, 2019, the Company had no operating leases that had not yet commenced. During the six months ended June 30, 2019, the Company entered into new leases or modified existing leases that resulted in an increase of ROU assets in exchange for operating lease liabilities as disclosed below.

Lease position:

The table below presents the assets and liabilities related to operating leases recorded on the balance sheet:

(in thousands)	Classification on the Consolidated Balance Sheet	June 30, 2019
Assets:
Operating lease assets	Operating lease right-of-use assets	$	42,727
Liabilities:
Current – operating leases	Current portion of operating leases	$	12,181
Non-current – operating leases	Long-term operating lease liabilities		31,624
Total lease liabilities		$	43,805

Lease costs:

The components of lease expense for the period are reported as follows:

	Classification on the Consolidated	Three months ended		Six months ended
(in thousands)	Statements of Operations	June 30, 2019		June 30, 2019
Operating lease cost	Selling, general and administrative expenses	$	3,904	$	7,878
Short-term lease cost	Selling, general and administrative expenses		2,142		3,916
Variable lease cost	Selling, general and administrative expenses		26		52
Sublease income	Selling, general and administrative expenses		(18)		(36)
Total lease cost		$	6,054	$	11,810

	Six months ended
Other information:	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities – operating leases (in thousands)	$	6,992
ROU assets obtained in exchange for operating lease liabilities (in thousands)	$	6,559
Weighted average remaining lease term – operating leases		5.5	years
Weighted average discount rate – operating leases		3.74	%

	Operating
Maturity of lease liabilities (in thousands)	Leases
2019 (excluding the six months ended June 30, 2019)	$	7,021
2020		11,900
2021		9,147
2022		6,370
2023		3,881
Thereafter		10,868
Total lease payments		49,187
Less: Amounts representing interest		(5,382)
Present value of lease liabilities	$	43,805