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Leases | 12 Months Ended
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Dec. 31, 2019
Leases [Abstract] |
Leases | Leases NACCO adopted ASU 2016-02, Leases (Topic 842), on January 1, 2019 using the modified retrospective transition method. The most significant effect to the Consolidated Balance Sheet relates to the recognition of new right-of-use assets (“ROU assets”) and lease liabilities for operating leases of real estate, mining and other equipment that expire at various dates through 2031. The majority of the Company's leases are operating leases. See the table below for further information on the Consolidated Balance Sheet. Many leases include renewal and/or fair value or bargain purchase options, which are not recognized on the Consolidated Balance Sheet. The Company's lease agreements do not contain lease payments that depend on an index or a rate, as such, minimum lease payments do not include variable lease payments. There was no cumulative effect adjustment to the opening balance of retained earnings. The adoption of this guidance did not have a material effect on the Company’s results of operations, cash flows, liquidity or debt-covenant compliance. NACCO did not apply the standard to the comparative periods presented in the year of adoption. The Company elected many of the available practical expedients permitted under the guidance, which among other items, allow the Company to carry forward its historical lease classification, not reassess leases for the definition of a lease under the new standard and not separate lease components from nonlease components for all classes of underlying assets. The Company also elected the practical expedient to carry forward the historical accounting treatment for existing land easement agreements. Upon the adoption of ASC 842, NACCO did not record a ROU asset and related lease liability for leases with an initial term of 12 months or less. Leased assets and liabilities include the following:
Description | Location | DECEMBER 31 2019
Assets |  |
Operating | Operating lease right-of-use assets | $ | 11,398 |
Finance | Property, plant and equipment, net (a) | 544 |
Liabilities |  |
Current |  |
Operating | Other current liabilities | $ | 1,318 |
Finance | Current maturities of long-term debt | 558 |
Noncurrent |  |
Operating | Operating lease liabilities | $ | 12,448 |
Finance | Long-term debt | 85 |
(a) Finance leased assets are recorded net of accumulated amortization of $1.9 million as of December 31, 2019. The components of lease expense were as follows for the year ended December 31, 2019:
Description | Location |
Lease expense |  |
Operating lease cost | Selling, general and administrative expenses | $ | 2,251 |
Finance lease cost: |  |
Amortization of leased assets | Cost of sales | 570 |
Interest on lease liabilities | Interest expense | 18 |
Variable lease expense | Selling, general and administrative expenses | 555 |
Short-term lease expense | Selling, general and administrative expenses | 298 |
Total lease expense |  | $ | 3,692 |
Rental expense for all operating leases was $3.7 million in 2018. Depreciation of plant and equipment under capital leases was included in depreciation expense in the year ended December 31, 2018. Future minimum finance and operating lease payments were as follows at December 31, 2019:
| Finance Leases |  | Operating Leases |  | Total
2020 | $ | 567 |  |  | $ | 2,193 |  |  | $ | 2,760 |
2021 | 37 |  |  | 2,149 |  |  | 2,186 |
2022 | 37 |  |  | 2,175 |  |  | 2,212 |
2023 | 16 |  |  | 1,685 |  |  | 1,701 |
2024 | — |  |  | 1,661 |  |  | 1,661 |
Subsequent to 2024 | — |  |  | 9,330 |  |  | 9,330 |
Total minimum lease payments | 657 |  |  | 19,193 |  |  | $ | 19,850 |
Amounts representing interest | 14 |  |  | 5,427 |  |  |
Present value of net minimum lease payments | $ | 643 |  |  | $ | 13,766 |  |  |
As most of the Company's leases do not provide an implicit rate, the Company determines the incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The Company considers its credit rating and the current economic environment in determining this collateralized rate. The assumptions used in accounting for ASC 842 were as follows for the year ended December 31, 2019:
Lease term and discount rate |
Weighted average remaining lease term (years) |
Operating | 9.63 |
Finance | 0.75 |
Weighted average discount rate |
Operating | 6.99 | %
Finance | 5.95 | %
The following table details cash paid for amounts included in the measurement of lease liabilities for the year ended December 31, 2019:
Cash paid for amounts included in the measurement of lease liabilities |
Operating cash flows from operating leases | $ | 2,299 |
Operating cash flows from finance leases | 18 |
Financing cash flows from finance leases | 534 |
Leases | Leases NACCO adopted ASU 2016-02, Leases (Topic 842), on January 1, 2019 using the modified retrospective transition method. The most significant effect to the Consolidated Balance Sheet relates to the recognition of new right-of-use assets (“ROU assets”) and lease liabilities for operating leases of real estate, mining and other equipment that expire at various dates through 2031. The majority of the Company's leases are operating leases. See the table below for further information on the Consolidated Balance Sheet. Many leases include renewal and/or fair value or bargain purchase options, which are not recognized on the Consolidated Balance Sheet. The Company's lease agreements do not contain lease payments that depend on an index or a rate, as such, minimum lease payments do not include variable lease payments. There was no cumulative effect adjustment to the opening balance of retained earnings. The adoption of this guidance did not have a material effect on the Company’s results of operations, cash flows, liquidity or debt-covenant compliance. NACCO did not apply the standard to the comparative periods presented in the year of adoption. The Company elected many of the available practical expedients permitted under the guidance, which among other items, allow the Company to carry forward its historical lease classification, not reassess leases for the definition of a lease under the new standard and not separate lease components from nonlease components for all classes of underlying assets. The Company also elected the practical expedient to carry forward the historical accounting treatment for existing land easement agreements. Upon the adoption of ASC 842, NACCO did not record a ROU asset and related lease liability for leases with an initial term of 12 months or less. Leased assets and liabilities include the following:
Description | Location | DECEMBER 31 2019
Assets |  |
Operating | Operating lease right-of-use assets | $ | 11,398 |
Finance | Property, plant and equipment, net (a) | 544 |
Liabilities |  |
Current |  |
Operating | Other current liabilities | $ | 1,318 |
Finance | Current maturities of long-term debt | 558 |
Noncurrent |  |
Operating | Operating lease liabilities | $ | 12,448 |
Finance | Long-term debt | 85 |
(a) Finance leased assets are recorded net of accumulated amortization of $1.9 million as of December 31, 2019. The components of lease expense were as follows for the year ended December 31, 2019:
Description | Location |
Lease expense |  |
Operating lease cost | Selling, general and administrative expenses | $ | 2,251 |
Finance lease cost: |  |
Amortization of leased assets | Cost of sales | 570 |
Interest on lease liabilities | Interest expense | 18 |
Variable lease expense | Selling, general and administrative expenses | 555 |
Short-term lease expense | Selling, general and administrative expenses | 298 |
Total lease expense |  | $ | 3,692 |
Rental expense for all operating leases was $3.7 million in 2018. Depreciation of plant and equipment under capital leases was included in depreciation expense in the year ended December 31, 2018. Future minimum finance and operating lease payments were as follows at December 31, 2019:
| Finance Leases |  | Operating Leases |  | Total
2020 | $ | 567 |  |  | $ | 2,193 |  |  | $ | 2,760 |
2021 | 37 |  |  | 2,149 |  |  | 2,186 |
2022 | 37 |  |  | 2,175 |  |  | 2,212 |
2023 | 16 |  |  | 1,685 |  |  | 1,701 |
2024 | — |  |  | 1,661 |  |  | 1,661 |
Subsequent to 2024 | — |  |  | 9,330 |  |  | 9,330 |
Total minimum lease payments | 657 |  |  | 19,193 |  |  | $ | 19,850 |
Amounts representing interest | 14 |  |  | 5,427 |  |  |
Present value of net minimum lease payments | $ | 643 |  |  | $ | 13,766 |  |  |
As most of the Company's leases do not provide an implicit rate, the Company determines the incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The Company considers its credit rating and the current economic environment in determining this collateralized rate. The assumptions used in accounting for ASC 842 were as follows for the year ended December 31, 2019:
Lease term and discount rate |
Weighted average remaining lease term (years) |
Operating | 9.63 |
Finance | 0.75 |
Weighted average discount rate |
Operating | 6.99 | %
Finance | 5.95 | %
The following table details cash paid for amounts included in the measurement of lease liabilities for the year ended December 31, 2019:
Cash paid for amounts included in the measurement of lease liabilities |
Operating cash flows from operating leases | $ | 2,299 |
Operating cash flows from finance leases | 18 |
Financing cash flows from finance leases | 534 |

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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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- 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
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