Operating Leases (Notes)

9 Months Ended

Sep. 30, 2019

5. OPERATING LEASES

Lessee. As of September 30, 2019, the Company leased in two U.S.-flag petroleum and chemical carriers, five U.S.-flag harbor tugs, four U.S.-flag PCTCs, 50 inland river dry-cargo barges, four inland river towboats, six inland river harbor boats and certain facilities and other equipment. The leases generally contain purchase and renewal options or rights of first refusal with respect to the sale or lease of the equipment. As of September 30, 2019, the lease terms of the U.S.-flag petroleum and chemical carriers, which are subject to subleases, have remaining durations of 36 and 83 months. The lease terms of the other vessels, facilities and equipment range in duration from 3 to 198 months.

As of September 30, 2019, future minimum payments for operating leases for the remainder of 2019 and the years ended December 31 were as follows (in thousands):


Remainder of 2019	$	10,891
2020	41,837
2021	37,649
2022	27,453
2023	15,524
Years subsequent to 2023	40,623
	173,977
Interest component	(20,689)
	153,288
Current portion of long-term operating lease liabilities	(36,422)
Long-term operating lease liabilities	$	116,866

For the nine months ended September 30, 2019, the components of lease expense were as follows (in thousands):


Operating lease expense	$	32,009
Short-term lease expense (lease duration of twelve months or less at lease commencement)	17,136
Sublease income	(24,129)
	$	25,016

For the nine months ended September 30, 2019, other information related to operating leases was as follows (in thousands except weighted average data):


Operating cash outflows from operating leases	$	32,185
Right-of-use assets obtained in exchange for operating lease liabilities	$	179,746
Weighted average remaining lease term, in years	5.4
Weighted average discount rate	4.8		%

Lessor. As of September 30, 2019, lessor arrangements with remaining terms in excess of one year included the bareboat charter of three U.S.-flag petroleum and chemical carriers, five U.S.-flag ocean liquid tank barges and six foreign-flag harbor tugs, the time charter of four U.S.-flag petroleum and chemical carriers, four U.S.-flag PCTCs, seven inland river towboats and one U.S.-flag offshore tug, and other non-vessel rental arrangements of certain property and equipment. As of September 30, 2019, future minimum lease revenues from these arrangements for the remainder of 2019 and in the years ended December 31 were as follows (in thousands):


	Total Minimum Lease Revenues		Leased-in Obligations⁽¹⁾		Net Minimum Lease Income
Remainder of 2019	$	33,817	$	(7,995)	$	25,822
2020	142,748		(31,595)		111,153
2021	108,740		(29,590)		79,150
2022	54,374		(22,812)		31,562
2023	34,701		(11,315)		23,386
Years subsequent to 2023	87,375		(29,884)		57,491

____________________

(1)The total payments to be made under existing non-cancelable leases for the property and equipment subject to these future minimum lease revenues.

As of September 30, 2019, the major classes of owned property and equipment earning lease revenues were as follows (in thousands):


	Historical Cost		Accumulated Depreciation		Net Book Value
Ocean Services:
Petroleum and chemical carriers - U.S.-flag	$	471,049	$	(196,317)	$	274,732
Harbor and offshore tugs - U.S.-flag & foreign-flag	51,129		(16,696)		34,433
Ocean liquid tank barges - U.S.-flag	38,097		(14,649)		23,448
	560,275		(227,662)		332,613
Inland Services:
Towboats	36,236		(3,086)		33,150
	$	596,511	$	(230,748)	$	365,763