Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

Leases

The Company leases certain grain handling and storage facilities, ethanol storage terminals. warehouse space, railcars, locomotives, barges, office space, machinery and equipment, vehicles and information technology equipment under operating leases. Lease expense for these leases is recognized within the Consolidated Statements of Operations on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred.

The following table summarizes the amounts recognized in our Condensed Consolidated Balance Sheet related to leases:

(in thousands)	Condensed Consolidated Balance Sheet Classification	March 31, 2019
Assets
Operating lease assets	Right of use asset, net	$	85,766
Finance lease assets	Property, plant and equipment, net	25,379
Finance lease assets	Rail Group assets leased to others, net	3,796
Total leased assets		$	114,941
Liabilities
Current operating leases	Accrued expenses and other current liabilities	$	28,017
Non-current operating leases	Long-term lease liabilities	57,451
Total operating lease liabilities		85,468
Current finance leases	Current maturities of long-term debt	6,007
Non-current finance leases	Long-term debt	23,058
Total finance lease liabilities		29,065
Total lease liabilities		$	114,533

The components of lease cost recognized within our Condensed Consolidated Statement of Operations were as follows:

(in thousands)	Condensed Consolidated Statement of Operations Classification	March 31, 2019
Lease cost:
Operating lease cost	Cost of sales and merchandising revenues	$	7,239
Operating lease cost	Operating, administrative and general expenses	3,954
Finance lease cost
Amortization of right-of-use assets	Operating, administrative and general expenses	510
Interest expense on lease liabilities	Interest expense	123
Other lease cost (1)	Operating, administrative and general expenses	199
Other lease cost (1)	Interest expense	24
Total lease cost		$	12,049

(1) Other lease cost includes short-term lease costs and variable lease costs

We often have options to renew lease terms for buildings and other assets. The exercise of lease renewal options is generally at our sole discretion. In addition, certain lease agreements may be terminated prior to their original expiration date at our discretion. We evaluate each renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. The table below summarizes the weighted average remaining lease terms as of March 31, 2019.

Weighted Average Remaining Lease Term
Operating leases	4.88 years
Finance leases	11.0 years

The discount rate implicit within our leases is generally not determinable and therefore the Company determines the discount rate based on its incremental borrowing rate. The incremental borrowing rate for each lease is determined based on its term and the currency in which lease payments are made, adjusted for the impacts of collateral. The table below summarizes the weighted average discount rate used to measure our lease liabilities as of March 31, 2019.

Weighted Average Discount Rate
Operating leases	4.22	%
Finance leases	3.18	%

Supplemental Cash Flow Information Related to Leases

(in thousands)	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,418
Operating cash flows from finance leases	$	123
Financing cash flows from finance leases	$	387
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	1,995
Finance leases	$	3,796

Maturity Analysis of Lease Liabilities

	As of March 31, 2019
(in thousands)	Operating Leases		Finance Leases		Total
2019 (excluding the three months ended March 31, 2019)	$	31,076	$	6,293	$	37,369
2020	21,688		2,333		24,021
2021	16,289		2,334		18,623
2022	9,927		2,341		12,268
2023	5,793		2,342		8,135
Thereafter	8,688		18,331		27,019
Total lease payments	$	93,461	$	33,974	$	127,435
Less interest	7,993		4,909		12,902
Total	$	85,468	$	29,065	$	114,533

Leases

Leases

The Company leases certain grain handling and storage facilities, ethanol storage terminals. warehouse space, railcars, locomotives, barges, office space, machinery and equipment, vehicles and information technology equipment under operating leases. Lease expense for these leases is recognized within the Consolidated Statements of Operations on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred.

The following table summarizes the amounts recognized in our Condensed Consolidated Balance Sheet related to leases:

(in thousands)	Condensed Consolidated Balance Sheet Classification	March 31, 2019
Assets
Operating lease assets	Right of use asset, net	$	85,766
Finance lease assets	Property, plant and equipment, net	25,379
Finance lease assets	Rail Group assets leased to others, net	3,796
Total leased assets		$	114,941
Liabilities
Current operating leases	Accrued expenses and other current liabilities	$	28,017
Non-current operating leases	Long-term lease liabilities	57,451
Total operating lease liabilities		85,468
Current finance leases	Current maturities of long-term debt	6,007
Non-current finance leases	Long-term debt	23,058
Total finance lease liabilities		29,065
Total lease liabilities		$	114,533

The components of lease cost recognized within our Condensed Consolidated Statement of Operations were as follows:

(in thousands)	Condensed Consolidated Statement of Operations Classification	March 31, 2019
Lease cost:
Operating lease cost	Cost of sales and merchandising revenues	$	7,239
Operating lease cost	Operating, administrative and general expenses	3,954
Finance lease cost
Amortization of right-of-use assets	Operating, administrative and general expenses	510
Interest expense on lease liabilities	Interest expense	123
Other lease cost (1)	Operating, administrative and general expenses	199
Other lease cost (1)	Interest expense	24
Total lease cost		$	12,049

(1) Other lease cost includes short-term lease costs and variable lease costs

We often have options to renew lease terms for buildings and other assets. The exercise of lease renewal options is generally at our sole discretion. In addition, certain lease agreements may be terminated prior to their original expiration date at our discretion. We evaluate each renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. The table below summarizes the weighted average remaining lease terms as of March 31, 2019.

Weighted Average Remaining Lease Term
Operating leases	4.88 years
Finance leases	11.0 years

The discount rate implicit within our leases is generally not determinable and therefore the Company determines the discount rate based on its incremental borrowing rate. The incremental borrowing rate for each lease is determined based on its term and the currency in which lease payments are made, adjusted for the impacts of collateral. The table below summarizes the weighted average discount rate used to measure our lease liabilities as of March 31, 2019.

Weighted Average Discount Rate
Operating leases	4.22	%
Finance leases	3.18	%

Supplemental Cash Flow Information Related to Leases

(in thousands)	March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,418
Operating cash flows from finance leases	$	123
Financing cash flows from finance leases	$	387
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	1,995
Finance leases	$	3,796

Maturity Analysis of Lease Liabilities

	As of March 31, 2019
(in thousands)	Operating Leases		Finance Leases		Total
2019 (excluding the three months ended March 31, 2019)	$	31,076	$	6,293	$	37,369
2020	21,688		2,333		24,021
2021	16,289		2,334		18,623
2022	9,927		2,341		12,268
2023	5,793		2,342		8,135
Thereafter	8,688		18,331		27,019
Total lease payments	$	93,461	$	33,974	$	127,435
Less interest	7,993		4,909		12,902
Total	$	85,468	$	29,065	$	114,533