XML 14 R22.htm IDEA: XBRL DOCUMENT
v3.20.1

LEASES | 6 Months Ended
--- | ---
Mar. 31, 2020
Leases [Abstract] |
LEASES | 12. LEASES Lessee Accounting The Company determines if an arrangement is a lease at inception based on whether the Company has the right to control the use of an identified asset, the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset and accounts for leases in accordance with ASC 842, Leases. Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term, including payments at commencement that depend on an index or rate. Most leases in which the Company is the lessee do not have a readily determinable implicit rate, so an incremental borrowing rate, based on the information available at the lease commencement date, is utilized to determine the present value of lease payments. When a secured borrowing rate is not readily available, unsecured borrowing rates are adjusted for the effects of collateral to determine the incremental borrowing rate. The Company uses the implicit rate for agreements in which it is a lessor. The Company has not entered into any material agreements in which it is a lessor. Lease expense and lease income are recognized on a straight-line basis over the lease term for operating leases. For more information on the adoption of ASC 842, Leases, see Note 2. Summary of Significant Accounting Policies. The Company’s lease agreements primarily consist of commercial solar land leases, storage and capacity leases, equipment and real property, including land and office facilities, office equipment and the sale-leaseback of its natural gas meters. Certain leases contain escalation provisions for inflation metrics. The storage leases contain a variable payment component that relates to the change in the inflation metrics that are not known past the current payment period. These variable components of these lease payments are excluded from the lease payments that are used to determine the related right-of-use lease asset and liability. These variable portion of these leases are recognized as leasing expenses when they are incurred. The capacity lease payments are fully variable and based on the amount of gas stored in the storage caverns. Generally, the Company’s solar land leases terms are between 15 and 25 years and include options to extend the terms for multiple additional 5 to 10 year terms each. The Company’s office leases vary in duration, ranging from 1 to 25 years and may or may not include extension or early purchase options. The majority of the Company’s meter leases are for terms of 7 years with purchase options available prior to the end of the 7 year term. Equipment leases include general office equipment that also vary in duration, most are for a term of 5 years. The Company's storage and capacity leases have assumed terms of 50 years to coincide with the expected useful lives of the cavern assets with which the leases are associated. The Company's lease terms may include options to extend, purchase the leased asset or terminate a lease and they are included in the lease liability calculation when it is reasonably certain that those options will be exercised. The Company has elected an accounting policy that exempts leases with an original term of one year or less from the recognition requirements of ASC 842, Leases. The Company has lease agreements with lease and non-lease components and has elected the practical expedient to combine lease and non-lease components for certain classes of leases, such as office buildings, solar land leases and office equipment. Variable payments are not significant to the Company. The Company’s lease agreements do not contain any material residual value guarantees, material restrictions or material covenants. There are no material lease transactions with related parties. The following table presents the Company's lease costs included in the Unaudited Condensed Consolidated Statements of Operations:
|  | Three Months Ended | Six Months Ended
|  | March 31, | March 31,
(Thousands) | Income Statement Location | 2020 | 2020
Finance lease cost |  |  |
Amortization of right-of-use assets | Depreciation and amortization | $ | 1,299 |  | $ | 2,460 |
Interest on lease liabilities | Interest expense, net of capitalized interest | 301 |  | 548 |
Total finance lease cost |  | 1,600 |  | 3,008 |
Operating lease cost | Operation and maintenance, net of capitalized costs | $ | 1,719 |  | $ | 3,111 |
Short-term lease cost | Operation and maintenance | 172 |  | 626 |
Variable lease cost | Operation and maintenance | 403 |  | 1,110 |
Total lease cost |  | $ | 3,894 |  | $ | 7,855 |
The following table presents supplemental cash flow information related to leases:
| Six Months Ended
| March 31,
(Thousands) | 2020
Cash paid for amounts included in the measurement of lease liabilities |
Operating cash flows from operating leases | $ | 2,856 |
Operating cash flows from finance leases | $ | 704 |
Financing cash flows from finance leases | $ | 4,038 |
Assets obtained or modified through amendments in exchange for operating and finance lease liabilities during the three and six months ended March 31, 2020, were $12.4 million and $34 million, and $45.7 million and $49.7 million, respectively. The following table presents the balance and classifications of our right of use assets and lease liabilities included in the Unaudited Condensed Consolidated Balance Sheets:
(Thousands) | Balance Sheet Location | March 31, 2020
Assets |  |
Noncurrent |  |
Operating lease assets | Operating lease assets | $ | 102,395 |
Finance lease assets | Utility plant | 73,630 |
Total lease assets |  | $ | 176,025 |
Liabilities |  |
Current |  |
Operating lease liabilities | Operating lease liabilities | $ | 4,156 |
Finance lease liabilities | Current maturities of long-term debt | 10,872 |
Noncurrent |  |
Operating lease liabilities | Operating lease liabilities | 96,713 |
Finance lease liabilities | Long-term debt | 68,184 |
Total lease liabilities |  | $ | 179,925 |
As of March 31, 2020, the weighted average remaining lease term for the operating and finance leases is 27.4 and 2.63 years, respectively. The weighted average discount rate used in the valuation of the operating and finance lease liabilities and right-of-use assets over the remaining lease term is 3.18 percent and 2.56 percent, respectively. As of March 31, 2020, the Company has entered into three leases, which have not yet commenced, that would entitle the Company to significant rights or create additional obligations. The leases are expected to commence when construction of the assets are completed during fiscal 2020. Total estimated payments over the life of these leases are approximately $5.7 million. There are options to extend the term of these leases for two additional five-year periods. One of the leases has variable payment terms based upon the capacity of the solar facility and it is therefore excluded from the total estimated payments. The following table presents the Company's maturities of lease liabilities as of March 31, 2020:
(Thousands) | Operating Leases | Finance Leases
Remainder of fiscal 2020 | $ | 3,436 |  | $ | 5,133 |
2021 | 6,393 |  | 56,271 |
2022 | 6,326 |  | 6,004 |
2023 | 6,325 |  | 4,622 |
2024 | 5,963 |  | 5,279 |
Thereafter | 126,319 |  | 5,720 |
Total future minimum lease payments | 154,762 |  | 83,029 |
Less: Interest component | (53,893 | ) | (3,973 | )
Total lease liability | $ | 100,869 |  | $ | 79,056 |
The following table reflects the Company's future minimum lease payments due under non-cancelable operating leases for continuing operations as of September 30, 2019, under ASC 840 and is being presented for comparative purposes. These commitments relate principally to commercial solar land leases, equipment and real property leases, including land and office facility leases, gas meters and office equipment.
(Thousands) | Operating Leases | Capital Leases
2020 | $ | 4,411 |  | $ | 11,707 |
2021 | $ | 4,698 |  | $ | 6,603 |
2022 | $ | 4,609 |  | $ | 7,494 |
2023 | $ | 4,579 |  | $ | 3,995 |
2024 | $ | 4,199 |  | $ | 4,652 |
Thereafter | $ | 54,405 |  | $ | 4,173 |
LEASES | 12. LEASES Lessee Accounting The Company determines if an arrangement is a lease at inception based on whether the Company has the right to control the use of an identified asset, the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset and accounts for leases in accordance with ASC 842, Leases. Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term, including payments at commencement that depend on an index or rate. Most leases in which the Company is the lessee do not have a readily determinable implicit rate, so an incremental borrowing rate, based on the information available at the lease commencement date, is utilized to determine the present value of lease payments. When a secured borrowing rate is not readily available, unsecured borrowing rates are adjusted for the effects of collateral to determine the incremental borrowing rate. The Company uses the implicit rate for agreements in which it is a lessor. The Company has not entered into any material agreements in which it is a lessor. Lease expense and lease income are recognized on a straight-line basis over the lease term for operating leases. For more information on the adoption of ASC 842, Leases, see Note 2. Summary of Significant Accounting Policies. The Company’s lease agreements primarily consist of commercial solar land leases, storage and capacity leases, equipment and real property, including land and office facilities, office equipment and the sale-leaseback of its natural gas meters. Certain leases contain escalation provisions for inflation metrics. The storage leases contain a variable payment component that relates to the change in the inflation metrics that are not known past the current payment period. These variable components of these lease payments are excluded from the lease payments that are used to determine the related right-of-use lease asset and liability. These variable portion of these leases are recognized as leasing expenses when they are incurred. The capacity lease payments are fully variable and based on the amount of gas stored in the storage caverns. Generally, the Company’s solar land leases terms are between 15 and 25 years and include options to extend the terms for multiple additional 5 to 10 year terms each. The Company’s office leases vary in duration, ranging from 1 to 25 years and may or may not include extension or early purchase options. The majority of the Company’s meter leases are for terms of 7 years with purchase options available prior to the end of the 7 year term. Equipment leases include general office equipment that also vary in duration, most are for a term of 5 years. The Company's storage and capacity leases have assumed terms of 50 years to coincide with the expected useful lives of the cavern assets with which the leases are associated. The Company's lease terms may include options to extend, purchase the leased asset or terminate a lease and they are included in the lease liability calculation when it is reasonably certain that those options will be exercised. The Company has elected an accounting policy that exempts leases with an original term of one year or less from the recognition requirements of ASC 842, Leases. The Company has lease agreements with lease and non-lease components and has elected the practical expedient to combine lease and non-lease components for certain classes of leases, such as office buildings, solar land leases and office equipment. Variable payments are not significant to the Company. The Company’s lease agreements do not contain any material residual value guarantees, material restrictions or material covenants. There are no material lease transactions with related parties. The following table presents the Company's lease costs included in the Unaudited Condensed Consolidated Statements of Operations:
|  | Three Months Ended | Six Months Ended
|  | March 31, | March 31,
(Thousands) | Income Statement Location | 2020 | 2020
Finance lease cost |  |  |
Amortization of right-of-use assets | Depreciation and amortization | $ | 1,299 |  | $ | 2,460 |
Interest on lease liabilities | Interest expense, net of capitalized interest | 301 |  | 548 |
Total finance lease cost |  | 1,600 |  | 3,008 |
Operating lease cost | Operation and maintenance, net of capitalized costs | $ | 1,719 |  | $ | 3,111 |
Short-term lease cost | Operation and maintenance | 172 |  | 626 |
Variable lease cost | Operation and maintenance | 403 |  | 1,110 |
Total lease cost |  | $ | 3,894 |  | $ | 7,855 |
The following table presents supplemental cash flow information related to leases:
| Six Months Ended
| March 31,
(Thousands) | 2020
Cash paid for amounts included in the measurement of lease liabilities |
Operating cash flows from operating leases | $ | 2,856 |
Operating cash flows from finance leases | $ | 704 |
Financing cash flows from finance leases | $ | 4,038 |
Assets obtained or modified through amendments in exchange for operating and finance lease liabilities during the three and six months ended March 31, 2020, were $12.4 million and $34 million, and $45.7 million and $49.7 million, respectively. The following table presents the balance and classifications of our right of use assets and lease liabilities included in the Unaudited Condensed Consolidated Balance Sheets:
(Thousands) | Balance Sheet Location | March 31, 2020
Assets |  |
Noncurrent |  |
Operating lease assets | Operating lease assets | $ | 102,395 |
Finance lease assets | Utility plant | 73,630 |
Total lease assets |  | $ | 176,025 |
Liabilities |  |
Current |  |
Operating lease liabilities | Operating lease liabilities | $ | 4,156 |
Finance lease liabilities | Current maturities of long-term debt | 10,872 |
Noncurrent |  |
Operating lease liabilities | Operating lease liabilities | 96,713 |
Finance lease liabilities | Long-term debt | 68,184 |
Total lease liabilities |  | $ | 179,925 |
As of March 31, 2020, the weighted average remaining lease term for the operating and finance leases is 27.4 and 2.63 years, respectively. The weighted average discount rate used in the valuation of the operating and finance lease liabilities and right-of-use assets over the remaining lease term is 3.18 percent and 2.56 percent, respectively. As of March 31, 2020, the Company has entered into three leases, which have not yet commenced, that would entitle the Company to significant rights or create additional obligations. The leases are expected to commence when construction of the assets are completed during fiscal 2020. Total estimated payments over the life of these leases are approximately $5.7 million. There are options to extend the term of these leases for two additional five-year periods. One of the leases has variable payment terms based upon the capacity of the solar facility and it is therefore excluded from the total estimated payments. The following table presents the Company's maturities of lease liabilities as of March 31, 2020:
(Thousands) | Operating Leases | Finance Leases
Remainder of fiscal 2020 | $ | 3,436 |  | $ | 5,133 |
2021 | 6,393 |  | 56,271 |
2022 | 6,326 |  | 6,004 |
2023 | 6,325 |  | 4,622 |
2024 | 5,963 |  | 5,279 |
Thereafter | 126,319 |  | 5,720 |
Total future minimum lease payments | 154,762 |  | 83,029 |
Less: Interest component | (53,893 | ) | (3,973 | )
Total lease liability | $ | 100,869 |  | $ | 79,056 |
The following table reflects the Company's future minimum lease payments due under non-cancelable operating leases for continuing operations as of September 30, 2019, under ASC 840 and is being presented for comparative purposes. These commitments relate principally to commercial solar land leases, equipment and real property leases, including land and office facility leases, gas meters and office equipment.
(Thousands) | Operating Leases | Capital Leases
2020 | $ | 4,411 |  | $ | 11,707 |
2021 | $ | 4,698 |  | $ | 6,603 |
2022 | $ | 4,609 |  | $ | 7,494 |
2023 | $ | 4,579 |  | $ | 3,995 |
2024 | $ | 4,199 |  | $ | 4,652 |
Thereafter | $ | 54,405 |  | $ | 4,173 |

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