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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended

June 30, 2019

Commission File Number 1-12984

 

EAGLE MATERIALS INC.

(Exact name of registrant as specified in its charter)

 

Delaware (State of Incorporation)

75-2520779 (I.R.S. Employer Identification No.)

5960 Berkshire Lane, Suite 900, Dallas, Texas 75225 (Address of principal executive offices)

(214) 432-2000 (Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock (par value $.01 per share)

 

EXP

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES  ☒    NO  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES  ☒    NO  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer         Accelerated filer       

Non-accelerated filer         Smaller reporting company  

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes  ☐    No  ☒

As of July 26, 2019, the number of outstanding shares of common stock was:

 

Class

 

Outstanding Shares

Common Stock, $.01 Par Value

 

42,022,827

 

 

 

 


TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION (unaudited)

 

 

 

 

 

Page

Item 1.

 

Consolidated Financial Statements

 

 

 

 

 

 

 

 

 

Consolidated Statements of Earnings for the Three Months Ended June 30, 2019 and 2018

 

1

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Earnings for the Three Months Ended June 30, 2019 and 2018

 

2

 

 

 

 

 

 

 

Consolidated Balance Sheets as of June 30, 2019, and March 31, 2019

 

3

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2019 and 2018

 

4

 

 

 

 

 

 

 

Consolidated Statements of Stockholders' Equity as of June 30, 2019 and 2018

 

5

 

 

 

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

 

6

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

24

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

38

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

39

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

40

 

 

 

 

 

Item 1a.

 

Risk Factors

 

40

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

51

 

 

 

 

 

Item 4.

 

Mine Safety Information

 

51

 

 

 

 

 

Item 6.

 

Exhibits

 

52

 

 

 

 

 

SIGNATURES

 

54

 

 

 

 


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)

 

 

 

 

For the Three Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

 

(dollars in thousands, except share and per share data)

 

Revenue

 

$

370,597

 

 

$

393,756

 

Cost of Goods Sold

 

 

295,268

 

 

 

302,122

 

Gross Profit

 

 

75,329

 

 

 

91,634

 

Equity in Earnings of Unconsolidated Joint Venture

 

 

9,432

 

 

 

9,251

 

Corporate General and Administrative Expense

 

 

(21,254

)

 

 

(8,003

)

Litigation Settlements and Losses

 

 

 

 

 

(1,800

)

Other Non-Operating Income

 

 

200

 

 

 

571

 

Interest Expense, Net

 

 

(8,846

)

 

 

(6,632

)

Earnings before Income Taxes

 

 

54,861

 

 

 

85,021

 

Income Taxes

 

 

(13,557

)

 

 

(18,682

)

Net Earnings

 

 

41,304

 

 

 

66,339

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

Basic

 

$

0.94

 

 

$

1.39

 

Diluted

 

$

0.94

 

 

$

1.38

 

AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

Basic

 

 

43,870,222

 

 

 

47,690,351

 

Diluted

 

 

44,150,211

 

 

 

48,144,325

 

CASH DIVIDENDS PER SHARE

 

$

0.10

 

 

$

0.10

 

See notes to unaudited consolidated financial statements.


 

1


 

EAGLE MATERIALS INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (unaudited)

 

 

 

 

For the Three Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

 

(dollars in thousands)

 

Net Earnings

 

$

41,304

 

 

$

66,339

 

Net Actuarial Change in Defined Benefit Plans:

 

 

 

 

 

 

 

 

Amortization of net actuarial loss

 

 

43

 

 

 

73

 

Tax expense

 

 

(10

)

 

 

(17

)

Comprehensive Earnings

 

$

41,337

 

 

$

66,395

 

See notes to unaudited consolidated financial statements.


 

2


 

EAGLE MATERIALS INC. AND SUBSDIARIES CONSOLIDATED BALANCE SHEETS (unaudited)

 

 

 

June 30,

 

 

March 31,

 

 

 

2019

 

 

2019

 

 

 

(dollars in thousands)

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets -

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

19,162

 

 

$

8,601

 

Accounts and Notes Receivable, net

 

 

174,279

 

 

 

128,722

 

Inventories

 

 

263,612

 

 

 

275,194

 

Income Tax Receivable

 

 

 

 

 

5,480

 

Prepaid and Other Assets

 

 

9,464

 

 

 

9,624

 

Total Current Assets

 

 

466,517

 

 

 

427,621

 

Property, Plant, and Equipment, net

 

 

1,424,703

 

 

 

1,426,939

 

Notes Receivable

 

 

2,772

 

 

 

2,898

 

Investment in Joint Venture

 

 

71,305

 

 

 

64,873

 

Operating Lease Right of Use Assets

 

 

63,344

 

 

 

 

Goodwill and Intangible Assets, net

 

 

228,316

 

 

 

229,115

 

Other Assets

 

 

12,121

 

 

 

17,717

 

 

 

$

2,269,078

 

 

$

2,169,163

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities -

 

 

 

 

 

 

 

 

Accounts Payable

 

$

83,916

 

 

$

80,884

 

Accrued Liabilities

 

 

56,636

 

 

 

61,949

 

Income Taxes Payable

 

 

3,914

 

 

 

 

Operating Lease Liabilities

 

 

11,990

 

 

 

 

Current Portion of Long-term Debt

 

 

36,500

 

 

 

36,500

 

Total Current Liabilities

 

 

192,956

 

 

 

179,333

 

Long-term Debt

 

 

840,259

 

 

 

655,092

 

Noncurrent Operating Lease Liabilities

 

 

55,884

 

 

 

 

Other Long-term Liabilities

 

 

30,257

 

 

 

34,492

 

Deferred Income Taxes

 

 

94,456

 

 

 

90,759

 

Total Liabilities

 

 

1,213,812

 

 

 

959,676

 

Stockholders’ Equity –

 

 

 

 

 

 

 

 

Preferred Stock, Par Value $0.01; Authorized 5,000,000 Shares; None Issued

 

 

 

 

 

 

Common Stock, Par Value $0.01; Authorized 100,000,000 Shares;

   Issued and Outstanding 42,924,186 and 45,117,393 Shares, respectively

 

 

429

 

 

 

451

 

Capital in Excess of Par Value

 

 

 

 

 

 

Accumulated Other Comprehensive Losses

 

 

(3,283

)

 

 

(3,316

)

Retained Earnings

 

 

1,058,120

 

 

 

1,212,352

 

Total Stockholders’ Equity

 

 

1,055,266

 

 

 

1,209,487

 

 

 

$

2,269,078

 

 

$

2,169,163

 

See notes to the unaudited consolidated financial statements.

 

3


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

 

 

 

For the Three Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

 

(dollars in thousands)

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net Earnings

 

$

41,304

 

 

$

66,339

 

Adjustments to Reconcile Net Earnings to Net Cash Provided

by Operating Activities, Net of Effect of Non-Cash Activity -

 

 

 

 

 

 

 

 

Depreciation, Depletion and Amortization

 

 

27,960

 

 

 

29,850

 

Deferred Income Tax Provision

 

 

3,687

 

 

 

6,173

 

Stock Compensation Expense

 

 

8,219

 

 

 

3,493

 

Equity in Earnings of Unconsolidated Joint Venture

 

 

(9,432

)

 

 

(9,251

)

Distributions from Joint Venture

 

 

3,000

 

 

 

9,500

 

Changes in Operating Assets and Liabilities:

 

 

 

 

 

 

 

 

Accounts and Notes Receivable

 

 

(45,431

)

 

 

(45,549

)

Inventories

 

 

11,582

 

 

 

17,159

 

Accounts Payable and Accrued Liabilities

 

 

(6,071

)

 

 

8,897

 

Other Assets

 

 

6,486

 

 

 

(3,137

)

Income Taxes Payable (Receivable)

 

 

9,394

 

 

 

(1,565

)

Net Cash Provided by Operating Activities

 

 

50,698

 

 

 

81,909

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Additions to Property, Plant, and Equipment

 

 

(21,813

)

 

 

(53,073

)

Proceeds from Sale of Property, Plant, and Equipment

 

 

 

 

 

2,281

 

Net Cash Used in Investing Activities

 

 

(21,813

)

 

 

(50,792

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Increase in Credit Facility

 

 

185,000

 

 

 

30,000

 

Dividends Paid to Stockholders

 

 

(4,499

)

 

 

(4,790

)

Purchase and Retirement of Common Stock

 

 

(198,355

)

 

 

(52,344

)

Proceeds from Stock Option Exercises

 

 

396

 

 

 

1,992

 

Shares Redeemed to Settle Employee Taxes on Stock Compensation

 

 

(866

)

 

 

(956

)

Net Cash Used in Financing Activities

 

 

(18,324

)

 

 

(26,098

)

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

 

10,561

 

 

 

5,019

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD

 

 

8,601

 

 

 

48,068

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

19,162

 

 

$

53,087

 

 

See notes to the unaudited consolidated financial statements.


 

4


 

EAGLE MATERIALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

 

 

 

Common

Stock

 

 

Capital in

Excess of

Par Value

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Losses

 

 

Total

 

 

 

(dollars in thousands)

 

Balance at March 31, 2018

 

$

483

 

 

$

122,379

 

 

$

1,298,840

 

 

$

(4,012

)

 

$

1,417,690

 

Net Earnings

 

 

 

 

 

 

 

 

66,339

 

 

 

 

 

 

66,339

 

Stock Option Exercises and Restricted Share Vesting

 

 

 

 

 

1,992

 

 

 

 

 

 

 

 

 

1,992

 

Purchase and Retirement of Common Stock

 

 

(5

)

 

 

(52,339

)

 

 

 

 

 

 

 

 

(52,344

)

Dividends to Stockholders

 

 

 

 

 

 

 

 

(4,791

)

 

 

 

 

 

(4,791

)

Stock Compensation Expense

 

 

1

 

 

 

3,492

 

 

 

 

 

 

 

 

 

3,493

 

Shares Redeemed to Settle Employee Taxes

 

 

 

 

 

(956

)

 

 

 

 

 

 

 

 

(956

)

Unfunded Pension Liability, net of tax

 

 

 

 

 

 

 

 

 

 

 

56

 

 

 

56

 

Balance at June 30, 2018

 

$

479

 

 

$

74,568

 

 

$

1,360,388

 

 

$

(3,956

)

 

$

1,431,479

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

Stock

 

 

Capital in

Excess of

Par Value

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Losses

 

 

Total

 

 

 

(dollars in thousands)

 

Balance at March 31, 2019

 

$

451

 

 

$

 

 

$

1,212,352

 

 

$

(3,316

)

 

$

1,209,487

 

Net Earnings

 

 

 

 

 

 

 

 

41,304

 

 

 

 

 

 

41,304

 

Stock Option Exercises and Restricted Share Vesting

 

 

 

 

 

396

 

 

 

 

 

 

 

 

 

396

 

Purchase and Retirement of Common Stock

 

 

(23

)

 

 

(7,748

)

 

 

(190,584

)

 

 

 

 

 

(198,355

)

Dividends to Stockholders

 

 

 

 

 

 

 

 

(4,316

)

 

 

 

 

 

(4,316

)

Stock Compensation Expense

 

 

1

 

 

 

8,218

 

 

 

 

 

 

 

 

 

8,219

 

Shares Redeemed to Settle Employee Taxes

 

 

 

 

 

(866

)

 

 

 

 

 

 

 

 

(866

)

Cumulative Effect of Change in Accounting for Leases

 

 

 

 

 

 

 

 

(636

)

 

 

 

 

 

(636

)

Unfunded Pension Liability, net of tax

 

 

 

 

 

 

 

 

 

 

 

33

 

 

 

33

 

Balance at June 30, 2019

 

$

429

 

 

$

 

 

$

1,058,120

 

 

$

(3,283

)

 

$

1,055,266

 

See notes to the unaudited consolidated financial statements.

 


 

5


 

Eagle Materials Inc. and Subsidiaries
N
otes to Consolidated Financial Statements

 

(A) BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements as of and for the three-month period ended June 30, 2019 include the accounts of Eagle Materials Inc. and its majority-owned subsidiaries (collectively, the Company, us, or we) and have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 23, 2018.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading. In our opinion, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the information in the following unaudited consolidated financial statements of the Company have been included. The results of operations for interim periods are not necessarily indicative of the results for the full year.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

RECENTLY ADOPTED

In February 2016, the FASB issued ASU 2016-02, “Leases,” which supersedes existing lease guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by long-term leases and to disclose additional quantitative and qualitative information about leasing arrangements. We adopted the standard on April 1, 2019 using the modified retrospective approach. We also elected the package of practical expedients permitted under the transition guidance which, among other things, allowed us to maintain the historic lease classification for leases in effect at the date of adoption, and to not separate lease components from nonlease components for all leases in effect at the date of adoption. Upon adoption, we recorded a right of use asset of approximately $66.7 million, and operating lease liabilities of approximately $71.1 million. We do not expect the adoption of this standard to materially affect our consolidated statement of earnings or consolidated statement of cash flows. See Footnote (H) for more information.

 

(B) SUPPLEMENTAL CASH FLOW INFORMATION  

Supplemental cash flow information is as follows:

 

 

For the Three Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

 

(dollars in thousands)

 

Cash Payments:

 

 

 

 

 

 

 

 

Interest

 

$

5,241

 

 

$

3,765

 

Income Taxes

 

 

90

 

 

 

14,722

 

Operating Cash Flows used for Operating Leases

 

 

3,961

 

 

 

 

 

 

 

 

 

 

 

 

 

Non Cash Financing Activities:

 

 

 

 

 

 

 

 

Property and Equipment Purchases Included in Accrued Liabilities

 

$

3,675

 

 

$

 

 

 

 

6


 

(C) REVENUE

We earn Revenue primarily from the sale of products, which include cement, concrete, aggregates, gypsum wallboard, recycled paperboard, and frac sand. The vast majority of Revenue from the sale of cement, concrete, aggregates, and gypsum wallboard are originated by purchase orders from our customers, who are primarily third-party contractors and suppliers. Revenue from our Recycled Paperboard and Oil and Gas Proppants segments is generated primarily through long-term supply agreements that mature between 2019 and 2025. We also earn Revenue from transload services and storage; we recognize Revenue from these services when the product is transferred from the rail car to the truck or silo, or from the silo to the railcar or truck. We invoice customers upon shipment, and our collection terms range from 30-65 days. Revenue from the sale of cement, concrete, aggregates, and gypsum wallboard that is not related to long-term supply agreements is recognized upon shipment of the related products to customers, which is when title and ownership are transferred and the customer is obligated to pay.  

Revenue from sales under our long-term supply agreements is also recognized upon transfer of control to the customer, which generally occurs at the time the product is shipped from the production facility or transload location. Our long-term supply agreements with customers define, among other commitments, the volume of product that we must provide and the volume that the customer must purchase by the end of the defined periods. Pricing structures under our agreements are generally market-based but are subject to certain contractual adjustments. Historically the pricing and volume requirements under certain of these contracts have been renegotiated during volatile market conditions. Shortfall amounts, if applicable under these arrangements, are constrained and not recognized as Revenue until an agreement is reached with the customer and not subject to the risk of reversal. 

The Company offers certain of its customers, including those with long-term supply agreements, rebates and incentives, which we treat as variable consideration. We adjust the amount of Revenue recognized for the variable consideration using the most likely amount method based on past history and projected volumes in the rebate and incentive period. Any amounts billed to customers for taxes are excluded from Revenue.

The Company has elected to treat freight and delivery charges we pay for the delivery of goods to our customers as a fulfilment activity rather than a separate performance obligation. When we arrange for a third party to deliver products to customers, fees for shipping and handling that are billed to the customer are recorded as Revenue, while costs we incur for shipping and handling are recorded as expenses and included in Cost of Goods Sold.

Other Non-Operating Income includes lease and rental income, asset sale income, non-inventoried aggregates sales income, distribution center income, and trucking income, as well as other miscellaneous revenue items and costs that have not been allocated to a business segment.

See Footnote (N) to the Unaudited Consolidated Financial Statements for disaggregation of revenue by segment.

(D) ACCOUNTS AND NOTES RECEIVABLE

Accounts and Notes Receivable have been shown net of the allowance for doubtful accounts of $11.6 million and $9.9 million at June 30, 2019 and March 31, 2019, respectively. We perform ongoing credit evaluations of our customers’ financial condition and generally require no collateral from our customers. The allowance for non-collection of receivables is based upon analysis of economic trends in the construction industry, detailed analysis of the expected collectability of accounts receivable that are past due, and the expected collectability of overall receivables. We have no significant credit risk concentration among our diversified customer base.

We had Notes Receivable totaling approximately $3.4 million at June 30, 2019, of which approximately $0.7 million has been classified as current and presented with Accounts Receivable on the balance sheet. We lend funds to certain companies in the ordinary course of business, and the notes bear interest, on average, at 4.5%. Remaining unpaid amounts, plus accrued interest, mature in fiscal 2025. The notes are collateralized by certain assets of the borrowers, namely property and equipment, and are generally payable monthly. We monitor the

 

7


 

credit risk of each borrower by assessing the timeliness of payments, credit history, credit metrics, and our ongoing interactions with each borrower.

(E) STOCKHOLDERS’ EQUITY

During the three months ended June 30, 2019, we repurchased 2,239,873 shares at an average price of $88.56. Subsequent to June 30, 2019, we repurchased an additional 881,000 shares at an average price of $87.26. Including the repurchases subsequent to June 30, 2019, we have authorization to purchase an additional 7,758,885 shares.

(F) INVENTORIES

Inventories are stated at the lower of average cost (including applicable material, labor, depreciation, and plant overhead) or net realizable value, and consist of the following:

 

 

 

June 30,

 

 

March 31,

 

 

 

2019

 

 

2019

 

 

 

(dollars in thousands)

 

Raw Materials and Materials-in-Progress

 

$

119,212

 

 

$

125,828

 

Finished Cement

 

 

27,000

 

 

 

27,826

 

Aggregates

 

 

7,758

 

 

 

7,351

 

Gypsum Wallboard

 

 

6,124

 

 

 

7,124

 

Paperboard

 

 

13,281

 

 

 

15,660

 

Frac Sand

 

 

3,666

 

 

 

2,557

 

Repair Parts and Supplies

 

 

77,735

 

 

 

80,676

 

Fuel and Coal

 

 

8,836

 

 

 

8,172

 

 

 

$

263,612

 

 

$

275,194

 

 

(G) ACCRUED EXPENSES

Accrued Expenses consist of the following:

 

 

 

June 30,

 

 

March 31,

 

 

 

2019

 

 

2019

 

 

 

(dollars in thousands)

 

Payroll and Incentive Compensation

 

$

14,131

 

 

$

26,225

 

Benefits

 

 

13,082

 

 

 

12,673

 

Interest

 

 

7,197

 

 

 

3,852

 

Property Taxes

 

 

6,711

 

 

 

5,058

 

Power and Fuel

 

 

1,502

 

 

 

1,644

 

Litigation Settlements

 

 

 

 

 

1,900

 

Sales and Use Tax

 

 

2,391

 

 

 

2,167

 

Legal and Professional

 

 

5,061

 

 

 

 

Other

 

 

6,561

 

 

 

8,430

 

 

 

$

56,636

 

 

$

61,949

 

 

 


 

8


 

(H) LEASES

We lease certain real estate, buildings and equipment. Certain of these leases contain escalations of rent over the term of the lease, as well as options for us to extend the term of the lease at the end of the original term. These extensions range from periods of one year to twenty years. Our lease agreements do not contain material residual value guarantees or material restrictive covenants. In calculating the present value of future minimum lease payments, we use the rate implicit in the lease if it can be determined. Otherwise we use our incremental borrowing rate in effect at the commencement of the lease to determine the present value of the future minimum lease payments. Additionally, we lease certain equipment under short-term leases with initial terms of less than twelve months, which are not recorded on the balance sheet.

Lease expense for our operating and short-term leases is as follows:

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2019

 

 

 

(dollars in thousands)

 

Operating Lease Cost

 

$

3,947

 

Short-term Lease Cost

 

 

584

 

Total Lease Cost

 

$

4,531

 

 

The Right of Use Assets and Lease Liabilities are reflected on our Balance Sheet as follows:

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2019

 

 

 

(dollars in thousands)

 

Operating Leases:

 

 

 

 

Operating Lease Right of Use Assets

 

$

63,344

 

 

 

 

 

 

Current Operating Lease Liabilities

 

$

11,990

 

Noncurrent Operating Lease Liabilities

 

 

55,884

 

Total Operating Lease Liabilities

 

$

67,874

 

 

Future payments for operating leases are as follows (dollars in thousands):

 

 

 

 

 

 

Fiscal Year

 

Amount

 

2020 (remaining nine months)

 

$