Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

LEASES

We have operating leases for some of our transportation equipment, office space, warehouse space, operating locations, and machinery and equipment. We have finance leases for certain storage tanks and equipment rentals. Our leases have remaining lease terms ranging from 1 to 16 years. Some of our leases have options to extend for various periods, while some have termination options with prior notice of generally 30 days or six months. The office space, warehouse space, operating location leases, and machinery and equipment leases generally require us to pay all maintenance and insurance costs. We do not have leases that have not yet commenced that create significant rights and obligations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Variable rent expense was not material.

Our corporate headquarters facility located in The Woodlands, Texas, was sold on December 31, 2012, pursuant to a sale and leaseback transaction. As a condition to the consummation of the purchase and sale of the facility, the parties entered into a lease agreement for the facility having an initial lease term of 15 years, which is classified as an operating lease. Under the terms of the lease agreement, we have the ability to extend the lease for five successive five year periods at base rental rates to be determined at the time of each extension.

Components of lease expense, included in either cost of revenues or general and administrative expense based on the use of the underlying asset, are as follows (inclusive of lease expense for leases not included on our consolidated balance sheet based on our accounting policy election to exclude leases with a term of 12 months or less):

	Three Months Ended March 31, 2019
	(In Thousands)
Operating lease expense	$	5,044
Short-term lease expense	11,161
Finance lease cost:
Accumulated depreciation	31
Interest on lease liabilities	3
Total lease expense	$	16,239

Supplemental cash flow information:

	Three Months Ended March 31, 2019
	(In Thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	4,657
Financing cash flows - finance leases	$	43
Operating cash flows - finance leases	$	3
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	3,257
Finance leases	$	—

Supplemental balance sheet information:

	March 31, 2019
	(In Thousands)
Operating leases:
Operating lease right-of-use assets	$	60,149
Accrued liabilities and other	$	12,659
Operating lease liabilities	49,632
Total operating lease liabilities	$	62,291
Finance leases:
Property, plant and equipment	$	875
Accumulated depreciation	(664		)
Net property, plant and equipment	$	211
Accrued liabilities and other	$	147
Other liabilities	48
Total finance lease liabilities	$	195

Additional operating and finance lease information:

	March 31, 2019
Weighted average remaining lease term:
Operating leases	7 years
Finance leases	1 year
Weighted average discount rate:
Operating leases	9.37	%
Finance leases	5.80	%

Future minimum lease payments by year and in the aggregate, under non-cancelable finance and operating leases with terms in excess of one year consist of the following at March 31, 2019:

	Finance Leases			Operating Leases
	(In Thousands)
2019	$	148		$	13,350
2020	33			15,536
2021	17			11,488
2022	—			9,009
2023	—			7,770
Thereafter	—			29,351
Total lease payments	198			86,504
Less imputed interest	(3		)	(24,213		)
Total lease liabilities	$	195		$	62,291

At March 31, 2019, future minimum rental receipts under a non-cancelable sublease for office space in one of our locations totaled $6.1 million. For the three months ended March 31, 2019, we recognized sublease income of $0.2 million.

Leases

LEASES

We have operating leases for some of our transportation equipment, office space, warehouse space, operating locations, and machinery and equipment. We have finance leases for certain storage tanks and equipment rentals. Our leases have remaining lease terms ranging from 1 to 16 years. Some of our leases have options to extend for various periods, while some have termination options with prior notice of generally 30 days or six months. The office space, warehouse space, operating location leases, and machinery and equipment leases generally require us to pay all maintenance and insurance costs. We do not have leases that have not yet commenced that create significant rights and obligations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Variable rent expense was not material.

Our corporate headquarters facility located in The Woodlands, Texas, was sold on December 31, 2012, pursuant to a sale and leaseback transaction. As a condition to the consummation of the purchase and sale of the facility, the parties entered into a lease agreement for the facility having an initial lease term of 15 years, which is classified as an operating lease. Under the terms of the lease agreement, we have the ability to extend the lease for five successive five year periods at base rental rates to be determined at the time of each extension.

Components of lease expense, included in either cost of revenues or general and administrative expense based on the use of the underlying asset, are as follows (inclusive of lease expense for leases not included on our consolidated balance sheet based on our accounting policy election to exclude leases with a term of 12 months or less):

	Three Months Ended March 31, 2019
	(In Thousands)
Operating lease expense	$	5,044
Short-term lease expense	11,161
Finance lease cost:
Accumulated depreciation	31
Interest on lease liabilities	3
Total lease expense	$	16,239

Supplemental cash flow information:

	Three Months Ended March 31, 2019
	(In Thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	4,657
Financing cash flows - finance leases	$	43
Operating cash flows - finance leases	$	3
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	3,257
Finance leases	$	—

Supplemental balance sheet information:

	March 31, 2019
	(In Thousands)
Operating leases:
Operating lease right-of-use assets	$	60,149
Accrued liabilities and other	$	12,659
Operating lease liabilities	49,632
Total operating lease liabilities	$	62,291
Finance leases:
Property, plant and equipment	$	875
Accumulated depreciation	(664		)
Net property, plant and equipment	$	211
Accrued liabilities and other	$	147
Other liabilities	48
Total finance lease liabilities	$	195

Additional operating and finance lease information:

	March 31, 2019
Weighted average remaining lease term:
Operating leases	7 years
Finance leases	1 year
Weighted average discount rate:
Operating leases	9.37	%
Finance leases	5.80	%

Future minimum lease payments by year and in the aggregate, under non-cancelable finance and operating leases with terms in excess of one year consist of the following at March 31, 2019:

	Finance Leases			Operating Leases
	(In Thousands)
2019	$	148		$	13,350
2020	33			15,536
2021	17			11,488
2022	—			9,009
2023	—			7,770
Thereafter	—			29,351
Total lease payments	198			86,504
Less imputed interest	(3		)	(24,213		)
Total lease liabilities	$	195		$	62,291

At March 31, 2019, future minimum rental receipts under a non-cancelable sublease for office space in one of our locations totaled $6.1 million. For the three months ended March 31, 2019, we recognized sublease income of $0.2 million.