XML 26 R16.htm IDEA: XBRL DOCUMENT
v3.19.1

Leases | 3 Months Ended
--- | ---
Mar. 31, 2019
Leases [Abstract] |
LEASES | LEASES: As discussed in Note 3, effective January 1, 2019, Quanta adopted the new lease accounting standard utilizing the transition method that allows entities to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, if applicable. Quanta’s financial results for reporting periods after January 1, 2019 are presented under the new standard, while financial results for prior periods continue to be reported in accordance with the prior standard and Quanta’s historical accounting policy. Quanta’s leases primarily include leases of land, buildings, vehicles, construction equipment and office equipment. As of March 31, 2019, Quanta’s leases had remaining lease terms of up to nine years. Certain leases include options to extend their terms in increments of up to seven years and/or options to terminate. The components of lease costs in the accompanying condensed consolidated statement of operations were as follows (in thousands):
|  |  | Three Months Ended
|  |  | March 31, 2019
Lease cost | Classification |  |
Finance lease cost: |  |  |
Amortization of lease assets | Depreciation (1) |  | $ | 373 |
Interest on lease liabilities | Interest expense |  | 21 |
Operating lease cost | Costs of services and Selling, general and administrative expenses |  | 30,358 |
Short-term lease cost (2) | Costs of services and Selling, general and administrative expenses |  | 195,165 |
Variable lease cost (3) | Costs of services and Selling, general and administrative expenses |  | 5,133 |
Total lease cost |  |  | $ | 231,050 |
(1) | Depreciation is included within “Cost of services” and “Selling, general and administrative expenses” in the accompanying condensed consolidated statements of operations.
(2) | Short-term lease cost includes both leases and rentals with initial terms of one year or less.
(3) | Variable lease cost primarily relates to real estate leases and consists of common area maintenance charges, real estate taxes, insurance and other variable costs.
For the three months ended March 31, 2018, rent expense related to operating leases was $76.0 million; however, this amount did not include rent expense related to certain equipment under month-to-month rental periods, which is included in short-term lease cost in the table above. Additionally, Quanta has entered into lease arrangements for real property and facilities with related parties, typically employees of Quanta who are the former owners of acquired businesses that utilize the leased premises. These lease agreements generally have lease terms of up to 5 years and may include renewal options. Related party lease expense for the three months ended March 31, 2019 and 2018 was $4.1 million and $3.2 million. The components of leases in the accompanying condensed consolidated balance sheet were as follows (in thousands):
|  |  | March 31, 2019
Lease type | Classification |  |
Assets: |  |  |
Operating lease right-of-use assets | Operating lease right-of-use assets |  | $ | 285,768 |
Finance lease assets | Property and equipment, net of accumulated depreciation |  | 2,313 |
Total lease assets |  |  | $ | 288,081 |
Liabilities: |  |  |
Current: |  |  |
Operating | Current portion of operating lease liabilities |  | $ | 92,293 |
Finance | Current maturities of long-term debt and short-term debt |  | 1,168 |
Non-current: |  |  |
Operating | Operating lease liabilities, net of current portion |  | 193,475 |
Finance | Long-term debt, net of current maturities |  | 578 |
Total lease liabilities |  |  | $ | 287,514 |
Certain of Quanta’s equipment rental agreements contain purchase options pursuant to which the purchase price is offset by a portion of the rental payments. For rental purchase options exercised through a third-party lessor and for which a substantive benefit is deemed to be transferred to the lessor, such benefit is recorded in “Property, plant and equipment, net of accumulated depreciation,” with a corresponding increase in “Current maturities of long-term debt and short-term debt” and “Long-term debt, net of current maturities.” As of March 31, 2019, the benefit recorded was $2.8 million. Future minimum lease payments for operating and finance leases were as follows (in thousands):
|  | As of March 31, 2019
|  | Operating Leases |  | Finance Leases |  | Total
Remainder of 2019 |  | $ | 79,484 |  |  | $ | 1,130 |  |  | $ | 80,614 |
2020 |  | 82,627 |  |  | 291 |  |  | 82,918 |
2021 |  | 56,831 |  |  | 267 |  |  | 57,098 |
2022 |  | 35,537 |  |  | 97 |  |  | 35,634 |
2023 |  | 22,310 |  |  | 33 |  |  | 22,343 |
Thereafter |  | 37,152 |  |  | 2 |  |  | 37,154 |
Total future minimum lease payments |  | $ | 313,941 |  |  | $ | 1,820 |  |  | $ | 315,761 |
Less imputed interest |  | (28,173 | ) |  | (74 | ) |  | (28,247 | )
Total lease liabilities |  | $ | 285,768 |  |  | $ | 1,746 |  |  | $ | 287,514 |
Future minimum lease payments for operating leases under the prior standard were as follows (in thousands):
|  | As of December 31, 2018
|  | Operating Leases
2019 |  | $ | 124,530 |
2020 |  | 81,189 |
2021 |  | 55,827 |
2022 |  | 34,337 |
2023 |  | 21,450 |
Thereafter |  | 37,217 |
Total minimum lease payments |  | $ | 354,550 |
The weighted average remaining lease terms and discount rates were as follows:
|  | As of March 31, 2019
Weighted average remaining lease term (in years): |  |
Operating leases |  | 4.35 |
Finance leases |  | 1.77 |
Weighted average discount rate: |  |
Operating leases |  | 4.3 | %
Finance leases |  | 4.1 | %
Quanta has also guaranteed the residual value on certain of its equipment operating leases, agreeing to pay any difference between this residual value and the fair market value of the underlying asset at the date of termination of such leases. At March 31, 2019, the maximum guaranteed residual value was $697.3 million. While Quanta believes that no significant payments will be made as a result of these residual value guarantees, there can be no assurance that significant payments will not be required in the future. From time to time, Quanta has additional obligations related to operating and/or finance leases that have not commenced. These arrangements were not deemed material as of March 31, 2019.
LEASES | LEASES: As discussed in Note 3, effective January 1, 2019, Quanta adopted the new lease accounting standard utilizing the transition method that allows entities to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, if applicable. Quanta’s financial results for reporting periods after January 1, 2019 are presented under the new standard, while financial results for prior periods continue to be reported in accordance with the prior standard and Quanta’s historical accounting policy. Quanta’s leases primarily include leases of land, buildings, vehicles, construction equipment and office equipment. As of March 31, 2019, Quanta’s leases had remaining lease terms of up to nine years. Certain leases include options to extend their terms in increments of up to seven years and/or options to terminate. The components of lease costs in the accompanying condensed consolidated statement of operations were as follows (in thousands):
|  |  | Three Months Ended
|  |  | March 31, 2019
Lease cost | Classification |  |
Finance lease cost: |  |  |
Amortization of lease assets | Depreciation (1) |  | $ | 373 |
Interest on lease liabilities | Interest expense |  | 21 |
Operating lease cost | Costs of services and Selling, general and administrative expenses |  | 30,358 |
Short-term lease cost (2) | Costs of services and Selling, general and administrative expenses |  | 195,165 |
Variable lease cost (3) | Costs of services and Selling, general and administrative expenses |  | 5,133 |
Total lease cost |  |  | $ | 231,050 |
(1) | Depreciation is included within “Cost of services” and “Selling, general and administrative expenses” in the accompanying condensed consolidated statements of operations.
(2) | Short-term lease cost includes both leases and rentals with initial terms of one year or less.
(3) | Variable lease cost primarily relates to real estate leases and consists of common area maintenance charges, real estate taxes, insurance and other variable costs.
For the three months ended March 31, 2018, rent expense related to operating leases was $76.0 million; however, this amount did not include rent expense related to certain equipment under month-to-month rental periods, which is included in short-term lease cost in the table above. Additionally, Quanta has entered into lease arrangements for real property and facilities with related parties, typically employees of Quanta who are the former owners of acquired businesses that utilize the leased premises. These lease agreements generally have lease terms of up to 5 years and may include renewal options. Related party lease expense for the three months ended March 31, 2019 and 2018 was $4.1 million and $3.2 million. The components of leases in the accompanying condensed consolidated balance sheet were as follows (in thousands):
|  |  | March 31, 2019
Lease type | Classification |  |
Assets: |  |  |
Operating lease right-of-use assets | Operating lease right-of-use assets |  | $ | 285,768 |
Finance lease assets | Property and equipment, net of accumulated depreciation |  | 2,313 |
Total lease assets |  |  | $ | 288,081 |
Liabilities: |  |  |
Current: |  |  |
Operating | Current portion of operating lease liabilities |  | $ | 92,293 |
Finance | Current maturities of long-term debt and short-term debt |  | 1,168 |
Non-current: |  |  |
Operating | Operating lease liabilities, net of current portion |  | 193,475 |
Finance | Long-term debt, net of current maturities |  | 578 |
Total lease liabilities |  |  | $ | 287,514 |
Certain of Quanta’s equipment rental agreements contain purchase options pursuant to which the purchase price is offset by a portion of the rental payments. For rental purchase options exercised through a third-party lessor and for which a substantive benefit is deemed to be transferred to the lessor, such benefit is recorded in “Property, plant and equipment, net of accumulated depreciation,” with a corresponding increase in “Current maturities of long-term debt and short-term debt” and “Long-term debt, net of current maturities.” As of March 31, 2019, the benefit recorded was $2.8 million. Future minimum lease payments for operating and finance leases were as follows (in thousands):
|  | As of March 31, 2019
|  | Operating Leases |  | Finance Leases |  | Total
Remainder of 2019 |  | $ | 79,484 |  |  | $ | 1,130 |  |  | $ | 80,614 |
2020 |  | 82,627 |  |  | 291 |  |  | 82,918 |
2021 |  | 56,831 |  |  | 267 |  |  | 57,098 |
2022 |  | 35,537 |  |  | 97 |  |  | 35,634 |
2023 |  | 22,310 |  |  | 33 |  |  | 22,343 |
Thereafter |  | 37,152 |  |  | 2 |  |  | 37,154 |
Total future minimum lease payments |  | $ | 313,941 |  |  | $ | 1,820 |  |  | $ | 315,761 |
Less imputed interest |  | (28,173 | ) |  | (74 | ) |  | (28,247 | )
Total lease liabilities |  | $ | 285,768 |  |  | $ | 1,746 |  |  | $ | 287,514 |
Future minimum lease payments for operating leases under the prior standard were as follows (in thousands):
|  | As of December 31, 2018
|  | Operating Leases
2019 |  | $ | 124,530 |
2020 |  | 81,189 |
2021 |  | 55,827 |
2022 |  | 34,337 |
2023 |  | 21,450 |
Thereafter |  | 37,217 |
Total minimum lease payments |  | $ | 354,550 |
The weighted average remaining lease terms and discount rates were as follows:
|  | As of March 31, 2019
Weighted average remaining lease term (in years): |  |
Operating leases |  | 4.35 |
Finance leases |  | 1.77 |
Weighted average discount rate: |  |
Operating leases |  | 4.3 | %
Finance leases |  | 4.1 | %
Quanta has also guaranteed the residual value on certain of its equipment operating leases, agreeing to pay any difference between this residual value and the fair market value of the underlying asset at the date of termination of such leases. At March 31, 2019, the maximum guaranteed residual value was $697.3 million. While Quanta believes that no significant payments will be made as a result of these residual value guarantees, there can be no assurance that significant payments will not be required in the future. From time to time, Quanta has additional obligations related to operating and/or finance leases that have not commenced. These arrangements were not deemed material as of March 31, 2019.

X
- References No definition available. + Details
Name: | us-gaap_LeasesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
Name: | us-gaap_LesseeFinanceLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
Name: | us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration