Annual report pursuant to Section 13 and 15(d)

Other Long-Term Financial Liabilities (Notes)

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Other Long-Term Financial Liabilities (Notes)
12 Months Ended
Dec. 31, 2020
Other Long-Term Financial Liabilities [Abstract]  
Other Long-Term Financial Liabilities
8. OTHER LONG-TERM FINANCIAL LIABILITIES
During the year ended December 31, 2020, the Company sold and leased back three U.S.-flag harbor tugs for $33.7 million with original 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 at the end of the lease unless the purchase option is exercised. 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 consolidated 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 at an imputed rate of 3.35%.
During the twelve months ended December 31, the amounts recognized in the accompanying consolidated statements of income related to these "failed" sale-leasebacks were as follows (in thousands):
2020
Depreciation and amortization $ 766 
Interest expense 651 

As of December 31, 2020, the future minimum lease payments under these agreements for the years ended December 31, were as follows (in thousands):
2021 $ 2,568 
2022 2,568 
2023 2,568 
2024 2,568 
2025 2,568 
Years subsequent to 2025 2,803 
$ 15,643 
As of December 31, 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):
2021 $ 1,313 
2022 1,313 
2023 1,313 
2024 1,313 
2025 1,313 
Years subsequent to 2025 1,422 
$ 7,987