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Leases (Notes) | 3 Months Ended
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Mar. 31, 2019
Leases [Abstract] |
Leases | Leases We have cancelable and non-cancelable finance and operating lease obligations for the lease of land, vehicles, office space, retail facilities, and other facilities used in the storage and transportation of crude oil and refined products. Most of our leases have options and can extend the terms from one to 40 years. There are no material lease arrangements where we are the lessor. We determine whether a contract is or contains a lease when we have the right to control the use of the identified asset in exchange for consideration. Lease liabilities and ROU assets are recognized at the commencement date based on the present value of lease payments over the lease term. We use our incremental borrowing rate in the calculation of present value unless the implicit rate can be readily determined. Certain leases include provisions for variable payments based upon percentage of sales and/or other operating metrics; escalation provisions to adjust rental payments to reflect changes in price indices and fair market rents; and provisions for the renewal, termination, and/or purchase the leased asset. We only consider fixed payments and those options that are reasonably certain to be exercised in the determination of the lease term and the initial measurement of lease liabilities and ROU assets. Expense for operating lease payments is recognized as lease expense on a straight-line basis over the lease term. Expense for finance leases is recognized as amortization expense on a straight-line basis and interest expense on an effective rate basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. We do not separate lease and nonlease components of a contract. There are no material residual value guarantees associated with any of our leases. The following table provides information on the amounts (in thousands, except lease term and discount rates) of our leased assets and liabilities as of March 31, 2019 and their placement within our condensed consolidated balance sheets:
Lease type |  | Balance Sheet Location |  | March 31, 2019
Assets |  |  |  |
Finance |  | Property, plant, and equipment |  | $ | 10,649 |
Finance |  | Accumulated amortization |  | (2,919 | )
Finance |  | Property and equipment, net |  | $ | 7,730 |
Operating |  | Operating lease assets |  | 405,942 |
Total leased assets |  |  |  | $ | 413,672 |
Liabilities |  |  |  |
Current |  |  |  |
Finance |  | Other accrued liabilities |  | $ | 2,056 |
Operating |  | Operating lease liabilities |  | 64,868 |
Long-term |  |  |  |
Finance |  | Finance lease liabilities |  | 6,366 |
Operating |  | Operating lease liabilities |  | 344,620 |
Total lease liabilities |  |  |  | $ | 417,910 |
Weighted-average remaining lease term (in years) |  |
Finance |  |  |  | 6.37 |
Operating |  |  |  | 11.39 |
Weighted-average discount rate |  |
Finance |  |  |  | 6.60 | %
Operating |  |  |  | 7.88 | %
The following table summarizes the lease costs recognized on our condensed consolidated statements of operations (in thousands):
Lease cost type |  | Three Months Ended March 31, 2019
Finance lease cost |  |
Amortization of finance lease assets |  | $ | 499 |
Interest on lease liabilities |  | 156 |
Operating lease cost |  | 23,412 |
Variable lease cost |  | 1,630 |
Short-term lease cost |  | 253 |
Net lease cost |  | $ | 25,950 |
The following table summarizes the supplemental cash flow information related to leases as follows (in thousands):
Lease type |  | Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of liabilities |  |
Financing cash flows from finance leases |  | $ | 342 |
Operating cash flows from finance leases |  | 156 |
Operating cash flows from operating leases |  | 21,045 |
Non-cash supplemental amounts |  |
ROU assets obtained in exchange for new operating lease obligations |  | 14,130 |
The table below includes the estimated future undiscounted cash flows for finance and operating leases as of March 31, 2019 (in thousands):
For the year ending December 31, |  | Finance leases |  | Operating leases |  | Total
2019 (1) |  | $ | 2,035 |  |  | $ | 72,302 |  |  | $ | 74,337 |
2020 |  | 2,151 |  |  | 79,713 |  |  | 81,864 |
2021 |  | 1,444 |  |  | 51,584 |  |  | 53,028 |
2022 |  | 1,238 |  |  | 49,454 |  |  | 50,692 |
2023 |  | 1,156 |  |  | 48,396 |  |  | 49,552 |
2024 |  | 751 |  |  | 40,211 |  |  | 40,962 |
Thereafter |  | 1,098 |  |  | 198,494 |  |  | 199,592 |
Total lease payments |  | 9,873 |  |  | 540,154 |  |  | 550,027 |
Less amount representing interest |  | (1,451 | ) |  | (130,666 | ) |  | (132,117 | )
Present value of lease liabilities |  | $ | 8,422 |  |  | $ | 409,488 |  |  | $ | 417,910 |
_________________________________________________________
(1) | Represents period from April 1, 2019 to December 31, 2019.
Additionally, the Company has $5.9 million in future undiscounted cash flows for an operating lease of a retail facility that has not yet commenced. This lease is expected to commence when the lessor has made the location available to the Company to construct the store location. At December 31, 2018, the estimated minimum lease payments for capital and operating leases with initial or remaining non-cancelable lease terms in excess of one year were as follows (in thousands):
| Capital leases |  | Operating leases
2019 | $ | 2,723 |  |  | $ | 62,589 |
2020 | 2,264 |  |  | 62,132 |
2021 | 1,757 |  |  | 39,821 |
2022 | 1,512 |  |  | 38,402 |
2023 | 1,148 |  |  | 38,827 |
Thereafter | 2,600 |  |  | 191,717 |
Total minimum rental payments | $ | 12,004 |  |  | $ | 433,488 |
Less amount representing interest | 1,865 |  |  |
Present value of minimum rental payments | $ | 10,139 |  |  |
Leases | Leases We have cancelable and non-cancelable finance and operating lease obligations for the lease of land, vehicles, office space, retail facilities, and other facilities used in the storage and transportation of crude oil and refined products. Most of our leases have options and can extend the terms from one to 40 years. There are no material lease arrangements where we are the lessor. We determine whether a contract is or contains a lease when we have the right to control the use of the identified asset in exchange for consideration. Lease liabilities and ROU assets are recognized at the commencement date based on the present value of lease payments over the lease term. We use our incremental borrowing rate in the calculation of present value unless the implicit rate can be readily determined. Certain leases include provisions for variable payments based upon percentage of sales and/or other operating metrics; escalation provisions to adjust rental payments to reflect changes in price indices and fair market rents; and provisions for the renewal, termination, and/or purchase the leased asset. We only consider fixed payments and those options that are reasonably certain to be exercised in the determination of the lease term and the initial measurement of lease liabilities and ROU assets. Expense for operating lease payments is recognized as lease expense on a straight-line basis over the lease term. Expense for finance leases is recognized as amortization expense on a straight-line basis and interest expense on an effective rate basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. We do not separate lease and nonlease components of a contract. There are no material residual value guarantees associated with any of our leases. The following table provides information on the amounts (in thousands, except lease term and discount rates) of our leased assets and liabilities as of March 31, 2019 and their placement within our condensed consolidated balance sheets:
Lease type |  | Balance Sheet Location |  | March 31, 2019
Assets |  |  |  |
Finance |  | Property, plant, and equipment |  | $ | 10,649 |
Finance |  | Accumulated amortization |  | (2,919 | )
Finance |  | Property and equipment, net |  | $ | 7,730 |
Operating |  | Operating lease assets |  | 405,942 |
Total leased assets |  |  |  | $ | 413,672 |
Liabilities |  |  |  |
Current |  |  |  |
Finance |  | Other accrued liabilities |  | $ | 2,056 |
Operating |  | Operating lease liabilities |  | 64,868 |
Long-term |  |  |  |
Finance |  | Finance lease liabilities |  | 6,366 |
Operating |  | Operating lease liabilities |  | 344,620 |
Total lease liabilities |  |  |  | $ | 417,910 |
Weighted-average remaining lease term (in years) |  |
Finance |  |  |  | 6.37 |
Operating |  |  |  | 11.39 |
Weighted-average discount rate |  |
Finance |  |  |  | 6.60 | %
Operating |  |  |  | 7.88 | %
The following table summarizes the lease costs recognized on our condensed consolidated statements of operations (in thousands):
Lease cost type |  | Three Months Ended March 31, 2019
Finance lease cost |  |
Amortization of finance lease assets |  | $ | 499 |
Interest on lease liabilities |  | 156 |
Operating lease cost |  | 23,412 |
Variable lease cost |  | 1,630 |
Short-term lease cost |  | 253 |
Net lease cost |  | $ | 25,950 |
The following table summarizes the supplemental cash flow information related to leases as follows (in thousands):
Lease type |  | Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of liabilities |  |
Financing cash flows from finance leases |  | $ | 342 |
Operating cash flows from finance leases |  | 156 |
Operating cash flows from operating leases |  | 21,045 |
Non-cash supplemental amounts |  |
ROU assets obtained in exchange for new operating lease obligations |  | 14,130 |
The table below includes the estimated future undiscounted cash flows for finance and operating leases as of March 31, 2019 (in thousands):
For the year ending December 31, |  | Finance leases |  | Operating leases |  | Total
2019 (1) |  | $ | 2,035 |  |  | $ | 72,302 |  |  | $ | 74,337 |
2020 |  | 2,151 |  |  | 79,713 |  |  | 81,864 |
2021 |  | 1,444 |  |  | 51,584 |  |  | 53,028 |
2022 |  | 1,238 |  |  | 49,454 |  |  | 50,692 |
2023 |  | 1,156 |  |  | 48,396 |  |  | 49,552 |
2024 |  | 751 |  |  | 40,211 |  |  | 40,962 |
Thereafter |  | 1,098 |  |  | 198,494 |  |  | 199,592 |
Total lease payments |  | 9,873 |  |  | 540,154 |  |  | 550,027 |
Less amount representing interest |  | (1,451 | ) |  | (130,666 | ) |  | (132,117 | )
Present value of lease liabilities |  | $ | 8,422 |  |  | $ | 409,488 |  |  | $ | 417,910 |
_________________________________________________________
(1) | Represents period from April 1, 2019 to December 31, 2019.
Additionally, the Company has $5.9 million in future undiscounted cash flows for an operating lease of a retail facility that has not yet commenced. This lease is expected to commence when the lessor has made the location available to the Company to construct the store location. At December 31, 2018, the estimated minimum lease payments for capital and operating leases with initial or remaining non-cancelable lease terms in excess of one year were as follows (in thousands):
| Capital leases |  | Operating leases
2019 | $ | 2,723 |  |  | $ | 62,589 |
2020 | 2,264 |  |  | 62,132 |
2021 | 1,757 |  |  | 39,821 |
2022 | 1,512 |  |  | 38,402 |
2023 | 1,148 |  |  | 38,827 |
Thereafter | 2,600 |  |  | 191,717 |
Total minimum rental payments | $ | 12,004 |  |  | $ | 433,488 |
Less amount representing interest | 1,865 |  |  |
Present value of minimum rental payments | $ | 10,139 |  |  |

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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