Annual report pursuant to Section 13 and 15(d)

Leases

v3.20.4
Leases
 12 Months Ended
Dec. 31, 2020
Leases [Abstract]  
Leases LEASES
We enter into a variety of operating lease agreements through the normal course of business including certain administrative offices. The leases are long-term, non-cancelable real estate lease agreements, expiring at various dates through fiscal 2028. The agreements generally provide for fixed minimum rental payments and the payment of utilities, real estate taxes, insurance and repairs. We also lease vehicles, IT equipment and certain land parcels related to our energy projects, expiring at various dates through fiscal 2050. The office and land leases make up a significant portion of our operating lease activity. Many of these leases have one or more renewal options that allow us, at our discretion, to renew the lease for six months to seven years. Only renewal options that we believed were likely to be exercised were included in our lease calculations. Many land leases include minimum lease payments that commence or increase when the related project becomes operational. In these cases, we estimated the commercial operation date used to calculate the ROU asset and minimum lease payments.
A portion of our real estate leases are generally subject to annual changes in the Consumer Price Index (“CPI”). We utilized each lease’s minimum lease payments to calculate the lease balances upon transition. The subsequent increases in rent based on changes in CPI were excluded and will be excluded for future leases from the calculation of the lease balances, but will be recorded to the consolidated statement of income as part of our operating lease costs.
The discount rate was calculated using an incremental borrowing rate based on financing rates on secured comparable notes with comparable terms and a synthetic credit rating calculated by a third party. We elected to apply the discount rate using the remaining lease term at the date of adoption.
We also enter into leases for service agreements and other leases related to our construction projects such as equipment, mobile trailers and other temporary structures. We utilize the portfolio approach for this class of lease, which are either short-term leases or are not material.
Rent and related expenses was as follows:
Year Ended December 31,
2020 2019 2018
Rent and related expenses $ 8,891  $ 8,179  $ 6,463 
We have a number of leases that are classified as financing leases, which related to transactions that were considered sale-leasebacks under ASC 840. See the sale-leaseback section below for additional information on our financing leases.
The table below sets forth supplemental balance sheet information related to leases:
December 31,
2020 2019
Operating Leases
Operating lease assets $ 39,151  $ 32,791 
Current portion of operating lease liabilities $ 6,106  $ 5,802 
Long-term operating lease liabilities, net of current portion 35,300  29,101 
Total Operating lease liabilities $ 41,406  $ 34,903 
Weighted-average remaining lease term 12 years 11 years
Weighted-average discount rate 5.9  % 6.3  %
Financing Leases (1)
Energy assets, net $ 34,005  $ 36,134 
Current portions of financing lease liabilities $ 4,273  $ 4,997 
Long-term financing lease liabilities, net of current portion, unamortized discount and debt issuance costs 19,227  23,500 
Total financing lease liabilities $ 23,500  $ 28,497 
Weighted-average remaining lease term 16 years 17 years
Weighted-average discount rate 11.94  % 11.8  %
(1) Includes sale-leaseback transactions entered into prior to January 1, 2019 and failed sales under ASC 842.
The costs related to our leases were as follows:
Year Ended December 31,
2020 2019
Operating Leases
Operating lease costs $ 7,970  $ 7,460 
Financing Leases
Amortization expense 2,129  2,129 
Interest on lease liabilities 3,019  3,630 
Total financing lease costs 5,148  5,759 
Total lease costs $ 13,118  $ 13,219 
Supplemental cash flow information related to our leases was as follows:
Year Ended December 31,
2020 2019
Cash paid for amounts included in the measurement of operating lease liabilities $ 7,600  $ 7,300 
Right-of-use assets obtained in exchange for new operating lease liabilities $ 12,158  $ 6,203 
The table below sets forth our estimated minimum future lease obligations under our leases:
  Operating Leases Financing Leases
Year ended December 31,  
2021 $ 8,231  $ 6,792 
2022 7,274  5,178 
2023 5,964  3,676 
2024 4,955  2,565 
2025 3,981  2,213 
Thereafter 28,956  21,867 
Total minimum lease payments $ 59,361  $ 42,291 
Less: interest 17,955  18,791 
Present value of lease liabilities $ 41,406  $ 23,500 
Sale-leasebacks
We entered into sale-leaseback arrangements for solar PV energy assets prior to January 1, 2019, which remain under the previous guidance.
The following table presents a summary of amounts related to these sale-leasebacks included in our consolidated balance sheets:
December 31,
2020 2019
Deferred loss, short-term, net 115  115 
Deferred loss, long-term, net 1,686  1,801 
Total deferred loss $ 1,801  $ 1,916 
Deferred gain, short-term, net 345  345 
Deferred gain, long-term, net 5,120  5,463 
Total deferred gain $ 5,465  $ 5,808 
Net gains and (losses) from amortization expense in cost of revenues related to deferred gains and losses was $228, $230 and $(109) for the years ended December 31, 2020, 2019 and 2018, respectively.
During the year ended December 31, 2019, we amended an August 2018 agreement with an investor to extend the end date of the agreement to November 24, 2019 and sold and leased back three energy assets for $13,700 in cash. The agreements have low interest rates ranging from 0% to 0.28%, as a result of tax credits which were transferred to the counterparty.
In January 2020, we amended the August 2018 agreement to extend the end date of the agreement to November 24, 2020 and increased the maximum funding amount up to $150,000. In December 2020, we amended the agreement to extend the end date of the agreement to February 22, 2021 and in February 2021, we entered into a fourth amendment to extend this agreement to May 23, 2021.
We sold and leased back two energy assets for $19,717 under this facility during the year ended December 31, 2020. The lease agreements executed in connection with the sale of the two energy assets bear interest at a rate of 0%, as a result of tax credits which were transferred to the counterparty. As of December 31, 2020, approximately $111,705 remained available under this lending commitment.
During the year ended December 31, 2020, we entered into a master lease agreement with an investor and sold and leased back two energy assets for $4,342 in cash. The lease agreements executed in connection with the sale of the two energy assets bear interest at a rate of 0%, as a result of tax credits which were transferred to the counterparty, and have an expiration date of December 30, 2030, with an option to extend to December 30, 2040. As of December 31, 2020, approximately $158 remained available under this lending commitment.
All sale-leaseback transactions that occurred after December 31, 2018, were accounted for as failed sales and the proceeds received from the transactions were recorded as long-term financing facilities. See Note 9 for additional information on these financing facilities.
Leases LEASES
We enter into a variety of operating lease agreements through the normal course of business including certain administrative offices. The leases are long-term, non-cancelable real estate lease agreements, expiring at various dates through fiscal 2028. The agreements generally provide for fixed minimum rental payments and the payment of utilities, real estate taxes, insurance and repairs. We also lease vehicles, IT equipment and certain land parcels related to our energy projects, expiring at various dates through fiscal 2050. The office and land leases make up a significant portion of our operating lease activity. Many of these leases have one or more renewal options that allow us, at our discretion, to renew the lease for six months to seven years. Only renewal options that we believed were likely to be exercised were included in our lease calculations. Many land leases include minimum lease payments that commence or increase when the related project becomes operational. In these cases, we estimated the commercial operation date used to calculate the ROU asset and minimum lease payments.
A portion of our real estate leases are generally subject to annual changes in the Consumer Price Index (“CPI”). We utilized each lease’s minimum lease payments to calculate the lease balances upon transition. The subsequent increases in rent based on changes in CPI were excluded and will be excluded for future leases from the calculation of the lease balances, but will be recorded to the consolidated statement of income as part of our operating lease costs.
The discount rate was calculated using an incremental borrowing rate based on financing rates on secured comparable notes with comparable terms and a synthetic credit rating calculated by a third party. We elected to apply the discount rate using the remaining lease term at the date of adoption.
We also enter into leases for service agreements and other leases related to our construction projects such as equipment, mobile trailers and other temporary structures. We utilize the portfolio approach for this class of lease, which are either short-term leases or are not material.
Rent and related expenses was as follows:
Year Ended December 31,
2020 2019 2018
Rent and related expenses $ 8,891  $ 8,179  $ 6,463 
We have a number of leases that are classified as financing leases, which related to transactions that were considered sale-leasebacks under ASC 840. See the sale-leaseback section below for additional information on our financing leases.
The table below sets forth supplemental balance sheet information related to leases:
December 31,
2020 2019
Operating Leases
Operating lease assets $ 39,151  $ 32,791 
Current portion of operating lease liabilities $ 6,106  $ 5,802 
Long-term operating lease liabilities, net of current portion 35,300  29,101 
Total Operating lease liabilities $ 41,406  $ 34,903 
Weighted-average remaining lease term 12 years 11 years
Weighted-average discount rate 5.9  % 6.3  %
Financing Leases (1)
Energy assets, net $ 34,005  $ 36,134 
Current portions of financing lease liabilities $ 4,273  $ 4,997 
Long-term financing lease liabilities, net of current portion, unamortized discount and debt issuance costs 19,227  23,500 
Total financing lease liabilities $ 23,500  $ 28,497 
Weighted-average remaining lease term 16 years 17 years
Weighted-average discount rate 11.94  % 11.8  %
(1) Includes sale-leaseback transactions entered into prior to January 1, 2019 and failed sales under ASC 842.
The costs related to our leases were as follows:
Year Ended December 31,
2020 2019
Operating Leases
Operating lease costs $ 7,970  $ 7,460 
Financing Leases
Amortization expense 2,129  2,129 
Interest on lease liabilities 3,019  3,630 
Total financing lease costs 5,148  5,759 
Total lease costs $ 13,118  $ 13,219 
Supplemental cash flow information related to our leases was as follows:
Year Ended December 31,
2020 2019
Cash paid for amounts included in the measurement of operating lease liabilities $ 7,600  $ 7,300 
Right-of-use assets obtained in exchange for new operating lease liabilities $ 12,158  $ 6,203 
The table below sets forth our estimated minimum future lease obligations under our leases:
  Operating Leases Financing Leases
Year ended December 31,  
2021 $ 8,231  $ 6,792 
2022 7,274  5,178 
2023 5,964  3,676 
2024 4,955  2,565 
2025 3,981  2,213 
Thereafter 28,956  21,867 
Total minimum lease payments $ 59,361  $ 42,291 
Less: interest 17,955  18,791 
Present value of lease liabilities $ 41,406  $ 23,500 
Sale-leasebacks
We entered into sale-leaseback arrangements for solar PV energy assets prior to January 1, 2019, which remain under the previous guidance.
The following table presents a summary of amounts related to these sale-leasebacks included in our consolidated balance sheets:
December 31,
2020 2019
Deferred loss, short-term, net 115  115 
Deferred loss, long-term, net 1,686  1,801 
Total deferred loss $ 1,801  $ 1,916 
Deferred gain, short-term, net 345  345 
Deferred gain, long-term, net 5,120  5,463 
Total deferred gain $ 5,465  $ 5,808 
Net gains and (losses) from amortization expense in cost of revenues related to deferred gains and losses was $228, $230 and $(109) for the years ended December 31, 2020, 2019 and 2018, respectively.
During the year ended December 31, 2019, we amended an August 2018 agreement with an investor to extend the end date of the agreement to November 24, 2019 and sold and leased back three energy assets for $13,700 in cash. The agreements have low interest rates ranging from 0% to 0.28%, as a result of tax credits which were transferred to the counterparty.
In January 2020, we amended the August 2018 agreement to extend the end date of the agreement to November 24, 2020 and increased the maximum funding amount up to $150,000. In December 2020, we amended the agreement to extend the end date of the agreement to February 22, 2021 and in February 2021, we entered into a fourth amendment to extend this agreement to May 23, 2021.
We sold and leased back two energy assets for $19,717 under this facility during the year ended December 31, 2020. The lease agreements executed in connection with the sale of the two energy assets bear interest at a rate of 0%, as a result of tax credits which were transferred to the counterparty. As of December 31, 2020, approximately $111,705 remained available under this lending commitment.
During the year ended December 31, 2020, we entered into a master lease agreement with an investor and sold and leased back two energy assets for $4,342 in cash. The lease agreements executed in connection with the sale of the two energy assets bear interest at a rate of 0%, as a result of tax credits which were transferred to the counterparty, and have an expiration date of December 30, 2030, with an option to extend to December 30, 2040. As of December 31, 2020, approximately $158 remained available under this lending commitment.
All sale-leaseback transactions that occurred after December 31, 2018, were accounted for as failed sales and the proceeds received from the transactions were recorded as long-term financing facilities. See Note 9 for additional information on these financing facilities.
Leases LEASES
We enter into a variety of operating lease agreements through the normal course of business including certain administrative offices. The leases are long-term, non-cancelable real estate lease agreements, expiring at various dates through fiscal 2028. The agreements generally provide for fixed minimum rental payments and the payment of utilities, real estate taxes, insurance and repairs. We also lease vehicles, IT equipment and certain land parcels related to our energy projects, expiring at various dates through fiscal 2050. The office and land leases make up a significant portion of our operating lease activity. Many of these leases have one or more renewal options that allow us, at our discretion, to renew the lease for six months to seven years. Only renewal options that we believed were likely to be exercised were included in our lease calculations. Many land leases include minimum lease payments that commence or increase when the related project becomes operational. In these cases, we estimated the commercial operation date used to calculate the ROU asset and minimum lease payments.
A portion of our real estate leases are generally subject to annual changes in the Consumer Price Index (“CPI”). We utilized each lease’s minimum lease payments to calculate the lease balances upon transition. The subsequent increases in rent based on changes in CPI were excluded and will be excluded for future leases from the calculation of the lease balances, but will be recorded to the consolidated statement of income as part of our operating lease costs.
The discount rate was calculated using an incremental borrowing rate based on financing rates on secured comparable notes with comparable terms and a synthetic credit rating calculated by a third party. We elected to apply the discount rate using the remaining lease term at the date of adoption.
We also enter into leases for service agreements and other leases related to our construction projects such as equipment, mobile trailers and other temporary structures. We utilize the portfolio approach for this class of lease, which are either short-term leases or are not material.
Rent and related expenses was as follows:
Year Ended December 31,
2020 2019 2018
Rent and related expenses $ 8,891  $ 8,179  $ 6,463 
We have a number of leases that are classified as financing leases, which related to transactions that were considered sale-leasebacks under ASC 840. See the sale-leaseback section below for additional information on our financing leases.
The table below sets forth supplemental balance sheet information related to leases:
December 31,
2020 2019
Operating Leases
Operating lease assets $ 39,151  $ 32,791 
Current portion of operating lease liabilities $ 6,106  $ 5,802 
Long-term operating lease liabilities, net of current portion 35,300  29,101 
Total Operating lease liabilities $ 41,406  $ 34,903 
Weighted-average remaining lease term 12 years 11 years
Weighted-average discount rate 5.9  % 6.3  %
Financing Leases (1)
Energy assets, net $ 34,005  $ 36,134 
Current portions of financing lease liabilities $ 4,273  $ 4,997 
Long-term financing lease liabilities, net of current portion, unamortized discount and debt issuance costs 19,227  23,500 
Total financing lease liabilities $ 23,500  $ 28,497 
Weighted-average remaining lease term 16 years 17 years
Weighted-average discount rate 11.94  % 11.8  %
(1) Includes sale-leaseback transactions entered into prior to January 1, 2019 and failed sales under ASC 842.
The costs related to our leases were as follows:
Year Ended December 31,
2020 2019
Operating Leases
Operating lease costs $ 7,970  $ 7,460 
Financing Leases
Amortization expense 2,129  2,129 
Interest on lease liabilities 3,019  3,630 
Total financing lease costs 5,148  5,759 
Total lease costs $ 13,118  $ 13,219 
Supplemental cash flow information related to our leases was as follows:
Year Ended December 31,
2020 2019
Cash paid for amounts included in the measurement of operating lease liabilities $ 7,600  $ 7,300 
Right-of-use assets obtained in exchange for new operating lease liabilities $ 12,158  $ 6,203 
The table below sets forth our estimated minimum future lease obligations under our leases:
  Operating Leases Financing Leases
Year ended December 31,  
2021 $ 8,231  $ 6,792 
2022 7,274  5,178 
2023 5,964  3,676 
2024 4,955  2,565 
2025 3,981  2,213 
Thereafter 28,956  21,867 
Total minimum lease payments $ 59,361  $ 42,291 
Less: interest 17,955  18,791 
Present value of lease liabilities $ 41,406  $ 23,500 
Sale-leasebacks
We entered into sale-leaseback arrangements for solar PV energy assets prior to January 1, 2019, which remain under the previous guidance.
The following table presents a summary of amounts related to these sale-leasebacks included in our consolidated balance sheets:
December 31,
2020 2019
Deferred loss, short-term, net 115  115 
Deferred loss, long-term, net 1,686  1,801 
Total deferred loss $ 1,801  $ 1,916 
Deferred gain, short-term, net 345  345 
Deferred gain, long-term, net 5,120  5,463 
Total deferred gain $ 5,465  $ 5,808 
Net gains and (losses) from amortization expense in cost of revenues related to deferred gains and losses was $228, $230 and $(109) for the years ended December 31, 2020, 2019 and 2018, respectively.
During the year ended December 31, 2019, we amended an August 2018 agreement with an investor to extend the end date of the agreement to November 24, 2019 and sold and leased back three energy assets for $13,700 in cash. The agreements have low interest rates ranging from 0% to 0.28%, as a result of tax credits which were transferred to the counterparty.
In January 2020, we amended the August 2018 agreement to extend the end date of the agreement to November 24, 2020 and increased the maximum funding amount up to $150,000. In December 2020, we amended the agreement to extend the end date of the agreement to February 22, 2021 and in February 2021, we entered into a fourth amendment to extend this agreement to May 23, 2021.
We sold and leased back two energy assets for $19,717 under this facility during the year ended December 31, 2020. The lease agreements executed in connection with the sale of the two energy assets bear interest at a rate of 0%, as a result of tax credits which were transferred to the counterparty. As of December 31, 2020, approximately $111,705 remained available under this lending commitment.
During the year ended December 31, 2020, we entered into a master lease agreement with an investor and sold and leased back two energy assets for $4,342 in cash. The lease agreements executed in connection with the sale of the two energy assets bear interest at a rate of 0%, as a result of tax credits which were transferred to the counterparty, and have an expiration date of December 30, 2030, with an option to extend to December 30, 2040. As of December 31, 2020, approximately $158 remained available under this lending commitment.
All sale-leaseback transactions that occurred after December 31, 2018, were accounted for as failed sales and the proceeds received from the transactions were recorded as long-term financing facilities. See Note 9 for additional information on these financing facilities.