Leases | LEASES: On January 1, 2019, the Partnership adopted Accounting Standards Codification (“ASC”) Topic 842 using the transition option, “Comparatives Under 840 Option,” established by ASU 2018-11, Leases (Topic 842), Targeted Improvements. As allowed under this guidance, the Partnership elected not to recast the comparative periods presented when transitioning to ASC 842. As most of the Partnership's leases do not provide an implicit rate, CONSOL Coal Resources has taken a portfolio approach of applying its incremental borrowing rate based on the information available at the adoption date to calculate the present value of lease payments over the lease term. The Partnership has elected the package of practical expedients permitted under the transition guidance within the standard, which allows the Partnership (1) to not reassess whether any expired or existing contracts are or contain leases, (2) to not reassess the lease classification for any expired or existing leases, and (3) to not reassess initial direct costs for any existing leases. The Partnership has also elected the practical expedient to not evaluate land easements that existed or expired before its adoption of Topic 842 and the practical expedient to not separate lease and non-lease components; that is, to account lease and non-lease components in a contract as a single lease component for all classes of underlying assets. Further, the Partnership made an accounting policy election to keep leases with an initial term of twelve months or less off the balance sheet. CONSOL Coal Resources will recognize those lease payments in the unaudited Consolidated Statements of Operations over the lease term. For the three months ended March 31, 2019, these short term lease expenses were not material to the Partnership's financial statements. Based on the Partnership's lease portfolio, the standard had a material impact on the Partnership’s unaudited Consolidated Balance Sheet, but did not have a significant impact on the Partnership’s consolidated net earnings and cash flows. The most significant impact was the recognition of Right of Use (“ROU”) assets and lease liabilities for operating leases, while the accounting for finance leases remained substantially unchanged. The Partnership's bank covenants were not affected by this update. The Partnership recorded operating lease ROU assets and operating lease liabilities of $ 20 million as of January 1, 2019, primarily related to mining equipment, based on the present value of the future lease payments on the date of adoption. The Partnership determines if an arrangement is an operating or finance lease at inception of the applicable lease. For leases where the Partnership is the lessee, ROU assets represent the Partnership’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of the Partnership’s leases do not provide an implicit interest rate, the Partnership uses its incremental borrowing rate based on the information available on the commencement date in determining the present value of lease payments. The ROU asset also consists of any prepaid lease payments, lease incentives received, and costs which will be incurred in exiting a lease. The lease terms used to calculate the ROU asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Partnership will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while the expense for finance leases is recognized as depreciation expense and interest expense using the interest method of recognition. The Partnership has operating leases for mining or other equipment used in operations and office space. Many leases include one or more options to renew, some of which include options to extend the leases, and some leases include options to terminate or buy out the leases within a set period of time. In certain of the Partnership’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for inflation and/or changes in other indexes. Many of our operating lease payments for mining equipment contain a variable component which is calculated based upon production metrics such as feet of advance or raw tonnage mined. While most of our leases contain clauses regarding the general condition of the equipment upon lease termination, they do not contain residual value guarantees. For the three months ended March 31, 2019, the components of operating lease expense were as follows: Fixed Operating Lease Expense $ 1,642 Variable Operating Lease Expense 763 Total Operating Lease Expense $ 2,405 Supplemental cash flow information related to the Partnership’s operating leases for the three months ended March 31, 2019 was as follows: Cash Paid for Amounts Included in the Measurement of Operating Lease Liabilities $ 936 ROU Assets Obtained in Exchange for Operating Lease Obligations $ — The following table presents the lease balances within the unaudited Consolidated Balance Sheet, weighted average lease term, and weighted average discount rates related to the Partnership’s operating leases as of March 31, 2019: Lease Assets and Liabilities Classification Amount Assets: Operating Lease ROU Assets Other Assets $ 19,190 Liabilities: Current: Operating Lease Liabilities Other Accrued Liabilities $ 4,791 Long-Term: Operating Lease Liabilities Operating Lease Liabilities 15,191 Total Operating Lease Liabilities $ 19,982 Weighted Average Remaining Lease Term (in Years) 4.53 Weighted Average Discount Rate 6.68 % The Partnership also enters into finance leases for mining equipment and automobiles. Assets arising from finance leases are included in Property, Plant and Equipment, Net and the liabilities are included in Other Accrued Liabilities and Long-Term Debt in the Partnership's unaudited Consolidated Balance Sheet. For the three months ended March 31, 2019, the components of finance lease expense were as follows: Amortization of Right of Use Assets $ 967 Interest Expense $ 109 The following table presents the weighted average lease term and weighted average discount rates related to the Partnership’s finance leases as of March 31, 2019: Weighted Average Remaining Lease Term (in Years) 1.95 Weighted Average Discount Rate 5.25 % The following table presents the future maturities of the Partnership’s operating and finance lease liabilities, together with the present value of the net minimum lease payments, at March 31, 2019: Finance Leases Operating Leases Remainder of 2019 $ 2,794 $ 4,719 2020 4,181 5,686 2021 1,055 5,483 2022 15 3,029 2023 11 1,314 Thereafter — 3,003 Total minimum lease payments $ 8,056 $ 23,234 Less amount representing interest 413 3,252 Present value of minimum lease payments $ 7,643 $ 19,982 As of March 31, 2019, the Partnership had no additional significant operating or finance leases that had not yet commenced. |
Leases | LEASES: On January 1, 2019, the Partnership adopted Accounting Standards Codification (“ASC”) Topic 842 using the transition option, “Comparatives Under 840 Option,” established by ASU 2018-11, Leases (Topic 842), Targeted Improvements. As allowed under this guidance, the Partnership elected not to recast the comparative periods presented when transitioning to ASC 842. As most of the Partnership's leases do not provide an implicit rate, CONSOL Coal Resources has taken a portfolio approach of applying its incremental borrowing rate based on the information available at the adoption date to calculate the present value of lease payments over the lease term. The Partnership has elected the package of practical expedients permitted under the transition guidance within the standard, which allows the Partnership (1) to not reassess whether any expired or existing contracts are or contain leases, (2) to not reassess the lease classification for any expired or existing leases, and (3) to not reassess initial direct costs for any existing leases. The Partnership has also elected the practical expedient to not evaluate land easements that existed or expired before its adoption of Topic 842 and the practical expedient to not separate lease and non-lease components; that is, to account lease and non-lease components in a contract as a single lease component for all classes of underlying assets. Further, the Partnership made an accounting policy election to keep leases with an initial term of twelve months or less off the balance sheet. CONSOL Coal Resources will recognize those lease payments in the unaudited Consolidated Statements of Operations over the lease term. For the three months ended March 31, 2019, these short term lease expenses were not material to the Partnership's financial statements. Based on the Partnership's lease portfolio, the standard had a material impact on the Partnership’s unaudited Consolidated Balance Sheet, but did not have a significant impact on the Partnership’s consolidated net earnings and cash flows. The most significant impact was the recognition of Right of Use (“ROU”) assets and lease liabilities for operating leases, while the accounting for finance leases remained substantially unchanged. The Partnership's bank covenants were not affected by this update. The Partnership recorded operating lease ROU assets and operating lease liabilities of $ 20 million as of January 1, 2019, primarily related to mining equipment, based on the present value of the future lease payments on the date of adoption. The Partnership determines if an arrangement is an operating or finance lease at inception of the applicable lease. For leases where the Partnership is the lessee, ROU assets represent the Partnership’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of the Partnership’s leases do not provide an implicit interest rate, the Partnership uses its incremental borrowing rate based on the information available on the commencement date in determining the present value of lease payments. The ROU asset also consists of any prepaid lease payments, lease incentives received, and costs which will be incurred in exiting a lease. The lease terms used to calculate the ROU asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Partnership will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while the expense for finance leases is recognized as depreciation expense and interest expense using the interest method of recognition. The Partnership has operating leases for mining or other equipment used in operations and office space. Many leases include one or more options to renew, some of which include options to extend the leases, and some leases include options to terminate or buy out the leases within a set period of time. In certain of the Partnership’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for inflation and/or changes in other indexes. Many of our operating lease payments for mining equipment contain a variable component which is calculated based upon production metrics such as feet of advance or raw tonnage mined. While most of our leases contain clauses regarding the general condition of the equipment upon lease termination, they do not contain residual value guarantees. For the three months ended March 31, 2019, the components of operating lease expense were as follows: Fixed Operating Lease Expense $ 1,642 Variable Operating Lease Expense 763 Total Operating Lease Expense $ 2,405 Supplemental cash flow information related to the Partnership’s operating leases for the three months ended March 31, 2019 was as follows: Cash Paid for Amounts Included in the Measurement of Operating Lease Liabilities $ 936 ROU Assets Obtained in Exchange for Operating Lease Obligations $ — The following table presents the lease balances within the unaudited Consolidated Balance Sheet, weighted average lease term, and weighted average discount rates related to the Partnership’s operating leases as of March 31, 2019: Lease Assets and Liabilities Classification Amount Assets: Operating Lease ROU Assets Other Assets $ 19,190 Liabilities: Current: Operating Lease Liabilities Other Accrued Liabilities $ 4,791 Long-Term: Operating Lease Liabilities Operating Lease Liabilities 15,191 Total Operating Lease Liabilities $ 19,982 Weighted Average Remaining Lease Term (in Years) 4.53 Weighted Average Discount Rate 6.68 % The Partnership also enters into finance leases for mining equipment and automobiles. Assets arising from finance leases are included in Property, Plant and Equipment, Net and the liabilities are included in Other Accrued Liabilities and Long-Term Debt in the Partnership's unaudited Consolidated Balance Sheet. For the three months ended March 31, 2019, the components of finance lease expense were as follows: Amortization of Right of Use Assets $ 967 Interest Expense $ 109 The following table presents the weighted average lease term and weighted average discount rates related to the Partnership’s finance leases as of March 31, 2019: Weighted Average Remaining Lease Term (in Years) 1.95 Weighted Average Discount Rate 5.25 % The following table presents the future maturities of the Partnership’s operating and finance lease liabilities, together with the present value of the net minimum lease payments, at March 31, 2019: Finance Leases Operating Leases Remainder of 2019 $ 2,794 $ 4,719 2020 4,181 5,686 2021 1,055 5,483 2022 15 3,029 2023 11 1,314 Thereafter — 3,003 Total minimum lease payments $ 8,056 $ 23,234 Less amount representing interest 413 3,252 Present value of minimum lease payments $ 7,643 $ 19,982 As of March 31, 2019, the Partnership had no additional significant operating or finance leases that had not yet commenced. |