Quarterly report pursuant to Section 13 or 15(d)

Other Long-Term Financial Liabilities (Notes)

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Other Long-Term Financial Liabilities (Notes)
6 Months Ended
Jun. 30, 2020
Other Long-Term Financial Liabilities [Abstract]  
Other Long-Term Financial Liabilities
7. OTHER LONG-TERM FINANCIAL LIABILITIES

During the six months ended June 30, 2020, the Company sold and leased back three U.S.-flag harbor tugs for $33.7 million with leaseback terms ranging from 72-84 months (see Note 3). Each of the sale-leaseback agreements provides the Company an option to purchase the applicable U.S.-flag harbor tug for a fixed price one year prior to the expiration of the original lease term.
As a result of the fixed price purchase options, in accordance with Topic 842 and Topic 606, the transactions resulted in "failed" sale-leasebacks as the purchasers do not obtain control of the assets. As a consequence, the Company has not derecognized the assets from its property and equipment and accumulated depreciation balances and will continue to depreciate the assets in accordance with its useful life and depreciation policies. The proceeds received from the sales are included in the accompanying condensed balance sheets as other long-term financial liabilities. As the Company makes rental payments, a portion of each payment will reduce the balance of the other long-term financial liabilities and a portion will be recorded as interest expense.
During the six months ended June 30, the amounts recognized in the accompanying condensed consolidated statements of income related to these "failed" sale-leasebacks were as follows (in thousands):
2020
Depreciation and amortization $ 109   
Interest expense 94   
As of June 30, 2020, the future minimum lease payments under these agreements for the years ended December 31, were as follows (in thousands):
Remainder of 2020 $ 1,284   
2021 2,568   
2022 2,568   
2023 2,568   
2024 2,568   
Years subsequent to 2024 5,371   
$ 16,927   
As of June 30, 2020, depreciation expense to be recognized on these U.S.-flag harbor tugs through the end of the lease term for the years ended December 31, was as follows (in thousands):
Remainder of 2020 $ 657   
2021 1,313   
2022 1,313   
2023 1,313   
2024 1,313   
Years subsequent to 2024 2,735   
$ 8,644