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Leases | 12 Months Ended
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Dec. 31, 2020
Leases [Abstract] |
Leases | LEASES: Quanta primarily leases land, buildings, vehicles, construction equipment and office equipment. As of December 31, 2020, the majority of Quanta’s leases had remaining lease terms not exceeding 9.8 years. Certain leases include options to extend their terms in increments of up to five years and/or options to terminate. The components of lease costs in the accompanying consolidated statements of operations are as follows (in thousands):
|  |  | Year Ended December 31,
Lease cost | Classification |  | 2020 |  | 2019
Finance lease cost: |  |  |  |  |
Amortization of lease assets | Depreciation (1) |  | $ | 1,234 |  |  | $ | 1,393 |
Interest on lease liabilities | Interest expense |  | 107 |  |  | 64 |
Operating lease cost | Cost of services and Selling, general and administrative expenses |  | 116,672 |  |  | 121,767 |
Short-term and variable lease cost (2) | Cost of services and Selling, general and administrative expenses |  | 656,649 |  |  | 837,244 |
Total lease cost |  |  | $ | 774,662 |  |  | $ | 960,468 |
(1) Depreciation is included within “Cost of services” and “Selling, general and administrative expenses” in the accompanying consolidated statements of operations. (2) Short-term lease cost includes both leases and rentals with initial terms of one year or less. Variable lease cost is insignificant and primarily relates to real estate leases and consists of common area maintenance charges, real estate taxes, insurance and other variable costs. For the year ended December 31, 2018, rent expense related to operating leases was $309.7 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 and variable lease cost for the years ended December 31, 2020 and 2019 in the table above. Additionally, Quanta has entered into arrangements with certain related parties, typically employees of Quanta who are the former owners of acquired businesses, to lease certain real property and facilities that continue to be utilized by Quanta subsequent to an acquisition. Quanta utilizes third party market valuations to evaluate rental rates for these properties and facilities, and the lease agreements generally have remaining lease terms of up to ten years, subject to renewal options. Related party lease expense was $14.3 million, $16.7 million and $14.0 million for the years ended December 31, 2020, 2019 and 2018. The components of leases in the accompanying consolidated balance sheet were as follows (in thousands):
|  |  | December 31, |  |
Lease type | Classification |  | 2020 |  | 2019 |  |
Assets: |  |  |  |  |  |  |
Operating lease right-of-use assets | Operating lease right-of-use assets |  | $ | 256,845 |  |  | $ | 284,369 |  |  |
Finance lease assets | Property and equipment, net of accumulated depreciation |  | 2,370 |  |  | 1,043 |  |  |
Total lease assets |  |  | $ | 259,215 |  |  | $ | 285,412 |  |  |
Liabilities: |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |
Operating | Current portion of operating lease liabilities |  | $ | 85,134 |  |  | $ | 92,475 |  |  |
Finance | Current maturities of long-term debt and short-term debt |  | 846 |  |  | 440 |  |  |
Non-current: |  |  |  |  |  |  |
Operating | Operating lease liabilities, net of current portion |  | 178,822 |  |  | 196,521 |  |  |
Finance | Long-term debt, net of current maturities |  | 1,382 |  |  | 517 |  |  |
Total lease liabilities |  |  | $ | 266,184 |  |  | $ | 289,953 |  |  |
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. When rental purchase options are exercised and a substantive benefit is deemed to be transferred to a third-party lessor, the transaction is deemed to be a financing transaction for accounting purposes. This results in the recognition of an asset equal to the purchase price being recorded in “Property, plant and equipment, net of accumulated depreciation,” and the recognition of a corresponding liability in “Current maturities of long-term debt and short-term debt” and “Long-term debt, net of current maturities.” As of December 31, 2020 and 2019, the assets recorded, net of accumulated depreciation, totaled $45.7 million and $11.8 million. Future minimum lease payments for operating and finance leases were as follows (in thousands):
|  | As of December 31, 2020
|  | Operating Leases |  | Finance Leases |  | Total
2021 |  | $ | 94,166 |  |  | $ | 920 |  |  | $ | 95,086 |
2022 |  | 68,284 |  |  | 690 |  |  | 68,974 |
2023 |  | 47,872 |  |  | 493 |  |  | 48,365 |
2024 |  | 29,362 |  |  | 264 |  |  | 29,626 |
2025 |  | 18,685 |  |  | — |  |  | 18,685 |
Thereafter |  | 30,311 |  |  | — |  |  | 30,311 |
Total future minimum operating and finance lease payments |  | 288,680 |  |  | 2,367 |  |  | 291,047 |
Less imputed interest |  | (24,724) |  |  | (139) |  |  | (24,863) |
Total lease liabilities |  | $ | 263,956 |  |  | $ | 2,228 |  |  | $ | 266,184 |
Future minimum lease payments for short-term leases, which are not recorded in the consolidated balance sheets due to Quanta’s accounting policy election, were $13.6 million as of December 31, 2020. Month-to-month rental expense associated primarily with certain equipment rentals is excluded from these amounts because Quanta is unable to accurately predict future rental amounts. The weighted average remaining lease terms and discount rates were as follows:
|  | As of December 31, 2020
Weighted average remaining lease term (in years): |  |  |  |
Operating leases |  | 4.28 |  |
Finance leases |  | 3.06 |  |
Weighted average discount rate: |  |  |  |
Operating leases |  | 4.2 | % |  |
Finance leases |  | 4.1 | % |  |
Quanta has also guaranteed the residual value under 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 lease termination. At December 31, 2020, the maximum guaranteed residual value of this equipment was $779.1 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. As of December 31, 2020, Quanta had additional operating lease obligations of $3.4 million for leases that had not yet commenced and that are expected to commence in 2021 or 2022 and have lease terms of one to seven years.
Leases | LEASES: Quanta primarily leases land, buildings, vehicles, construction equipment and office equipment. As of December 31, 2020, the majority of Quanta’s leases had remaining lease terms not exceeding 9.8 years. Certain leases include options to extend their terms in increments of up to five years and/or options to terminate. The components of lease costs in the accompanying consolidated statements of operations are as follows (in thousands):
|  |  | Year Ended December 31,
Lease cost | Classification |  | 2020 |  | 2019
Finance lease cost: |  |  |  |  |
Amortization of lease assets | Depreciation (1) |  | $ | 1,234 |  |  | $ | 1,393 |
Interest on lease liabilities | Interest expense |  | 107 |  |  | 64 |
Operating lease cost | Cost of services and Selling, general and administrative expenses |  | 116,672 |  |  | 121,767 |
Short-term and variable lease cost (2) | Cost of services and Selling, general and administrative expenses |  | 656,649 |  |  | 837,244 |
Total lease cost |  |  | $ | 774,662 |  |  | $ | 960,468 |
(1) Depreciation is included within “Cost of services” and “Selling, general and administrative expenses” in the accompanying consolidated statements of operations. (2) Short-term lease cost includes both leases and rentals with initial terms of one year or less. Variable lease cost is insignificant and primarily relates to real estate leases and consists of common area maintenance charges, real estate taxes, insurance and other variable costs. For the year ended December 31, 2018, rent expense related to operating leases was $309.7 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 and variable lease cost for the years ended December 31, 2020 and 2019 in the table above. Additionally, Quanta has entered into arrangements with certain related parties, typically employees of Quanta who are the former owners of acquired businesses, to lease certain real property and facilities that continue to be utilized by Quanta subsequent to an acquisition. Quanta utilizes third party market valuations to evaluate rental rates for these properties and facilities, and the lease agreements generally have remaining lease terms of up to ten years, subject to renewal options. Related party lease expense was $14.3 million, $16.7 million and $14.0 million for the years ended December 31, 2020, 2019 and 2018. The components of leases in the accompanying consolidated balance sheet were as follows (in thousands):
|  |  | December 31, |  |
Lease type | Classification |  | 2020 |  | 2019 |  |
Assets: |  |  |  |  |  |  |
Operating lease right-of-use assets | Operating lease right-of-use assets |  | $ | 256,845 |  |  | $ | 284,369 |  |  |
Finance lease assets | Property and equipment, net of accumulated depreciation |  | 2,370 |  |  | 1,043 |  |  |
Total lease assets |  |  | $ | 259,215 |  |  | $ | 285,412 |  |  |
Liabilities: |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |
Operating | Current portion of operating lease liabilities |  | $ | 85,134 |  |  | $ | 92,475 |  |  |
Finance | Current maturities of long-term debt and short-term debt |  | 846 |  |  | 440 |  |  |
Non-current: |  |  |  |  |  |  |
Operating | Operating lease liabilities, net of current portion |  | 178,822 |  |  | 196,521 |  |  |
Finance | Long-term debt, net of current maturities |  | 1,382 |  |  | 517 |  |  |
Total lease liabilities |  |  | $ | 266,184 |  |  | $ | 289,953 |  |  |
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. When rental purchase options are exercised and a substantive benefit is deemed to be transferred to a third-party lessor, the transaction is deemed to be a financing transaction for accounting purposes. This results in the recognition of an asset equal to the purchase price being recorded in “Property, plant and equipment, net of accumulated depreciation,” and the recognition of a corresponding liability in “Current maturities of long-term debt and short-term debt” and “Long-term debt, net of current maturities.” As of December 31, 2020 and 2019, the assets recorded, net of accumulated depreciation, totaled $45.7 million and $11.8 million. Future minimum lease payments for operating and finance leases were as follows (in thousands):
|  | As of December 31, 2020
|  | Operating Leases |  | Finance Leases |  | Total
2021 |  | $ | 94,166 |  |  | $ | 920 |  |  | $ | 95,086 |
2022 |  | 68,284 |  |  | 690 |  |  | 68,974 |
2023 |  | 47,872 |  |  | 493 |  |  | 48,365 |
2024 |  | 29,362 |  |  | 264 |  |  | 29,626 |
2025 |  | 18,685 |  |  | — |  |  | 18,685 |
Thereafter |  | 30,311 |  |  | — |  |  | 30,311 |
Total future minimum operating and finance lease payments |  | 288,680 |  |  | 2,367 |  |  | 291,047 |
Less imputed interest |  | (24,724) |  |  | (139) |  |  | (24,863) |
Total lease liabilities |  | $ | 263,956 |  |  | $ | 2,228 |  |  | $ | 266,184 |
Future minimum lease payments for short-term leases, which are not recorded in the consolidated balance sheets due to Quanta’s accounting policy election, were $13.6 million as of December 31, 2020. Month-to-month rental expense associated primarily with certain equipment rentals is excluded from these amounts because Quanta is unable to accurately predict future rental amounts. The weighted average remaining lease terms and discount rates were as follows:
|  | As of December 31, 2020
Weighted average remaining lease term (in years): |  |  |  |
Operating leases |  | 4.28 |  |
Finance leases |  | 3.06 |  |
Weighted average discount rate: |  |  |  |
Operating leases |  | 4.2 | % |  |
Finance leases |  | 4.1 | % |  |
Quanta has also guaranteed the residual value under 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 lease termination. At December 31, 2020, the maximum guaranteed residual value of this equipment was $779.1 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. As of December 31, 2020, Quanta had additional operating lease obligations of $3.4 million for leases that had not yet commenced and that are expected to commence in 2021 or 2022 and have lease terms of one to seven years.

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- 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
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