ARTESIAN RESOURCES CORPARTNA
ARTESIAN RESOURCES CORP Leases Disclosure
NOTE 3 – LEASES
The Company leases land and office equipment under operating leases from non-related parties. Our leases have remaining lease terms of 2 years to 71 years, some of which include options to automatically extend the leases for up to 66 years and are included as part of the lease liability and right-of-use assets as we expect to exercise the options. One of the leases for land was terminated in its entirety effective October 10, 2024. The remaining lease liability and right-of-use asset for the terminated lease was removed in the fourth quarter of 2024. The difference between the carrying amounts of the right-of-use asset and the lease liability was recorded in the statement of operations. Payments made under operating leases are recognized in the consolidated statement of operations on a straight-line basis over the period of the lease. The annual lease payment for the remaining land operating lease increases each year by the most recent increase in the Consumer Price Index and includes a provision to periodically adjust the annual lease payment based on the fair market value of the parcel of land. None of the operating leases contain contingent rent provisions. The commencement date of all the operating leases is the earlier of the date we become legally obligated to make rent payments or the date we may exercise control over the use of the land or equipment. The Company currently does not have any financing leases and does not have any lessor leases that require disclosure.
Management made certain assumptions related to the separation of lease and nonlease components and to the discount rate used when calculating the right-of-use asset and liability amounts for the operating leases. As our leases do not provide an implicit rate, we use our incremental borrowing rates for long-term and short-term agreements and apply the rates accordingly based on the term of the lease agreements to determine the present value of lease payments.
In October 1997, Artesian Water entered into a 33-year operating lease for a parcel of land with improvements located in South Bethany, a municipality in Sussex County, Delaware. The annual lease payments increase each year by the most recent increase in the Consumer Price Index for Urban Workers, CPI-U, as published by the U.S. Department of Labor, Bureau of Labor Statistics. At each eleventh year of the lease term, the annual lease payment shall be determined based on the fair market value of the parcel of land. Rental payments for 2025, 2024 and 2023 were $21,000, $20,000, and $19,000, respectively. The future minimum rental payment as disclosed in the following table is calculated using CPI-U from August 2025 as well as the adjustment for an appraisal conducted in 2019 to determine the fair market value of the parcel of land.
In March 2023, Artesian Water entered into a 5-year operating lease for office equipment. The quarterly lease payments under the lease agreement remain fixed throughout the term of the lease. Payments pursuant to the lease agreements for 2025, 2024 and 2023 were $8,000, $8,000 and $6,000, respectively.
Rent expense for all operating leases except those with terms of 12 months or less comprises:
| For the Twelve Months Ended | |||||||
| (in thousands) | December 31, | ||||||
| 2025 | 2024 | ||||||
| Minimum rentals | $ | 29 | $ | 35 | |||
| Contingent rentals | - | - | |||||
| $ | 29 | $ | 35 | ||||
Supplemental cash flow information related to leases is as follows:
(in thousands)
| Twelve Months Ended | Twelve Months Ended | ||||||
| December 31, | December 31, | ||||||
| 2025 | 2024 | ||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||
| Operating cash flows from operating leases | $ | 29 | $ | 35 | |||
| Right-of-use assets obtained in exchange for lease obligations: | |||||||
| Operating leases | $ | - | $ | - |
Supplemental balance sheet information related to leases is as follows:
(in thousands, except lease term and discount rate)
| December 31, 2025 | December 31, 2024 | ||||||
| Operating Leases: | |||||||
| Operating lease right-of-use assets | $ | 414 | $ | 414 | |||
| Other current liabilities | $ | $ | |||||
| Operating lease liabilities | 407 | 404 | |||||
| Total operating lease liabilities | $ | 416 | $ | 412 | |||
| Weighted Average Remaining Lease Term | |||||||
| Operating leases | 68 years | 68 years | |||||
| Weighted Average Discount Rate | |||||||
| Operating leases | 5.0 | % | 5.0 | % |
Maturities of operating lease liabilities that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2025 are as follows:
| Maturities of Operating Lease Liabilities | |||
| (in thousands) | |||
| Operating Leases | |||
| Year | |||
| 2026 | $ | 29 | |
| 2027 | 29 | ||
| 2028 | 23 | ||
| 2029 | 21 | ||
| 2030 | 21 | ||
| Thereafter | 1,337 | ||
| Total undiscounted lease payments | $ | 1,460 | |
| Less effects of discounting | (1,044 | ) | |
| Total lease liabilities recognized | $ | 416 |
As of December 31, 2025, we have not entered into finance leases that will commence at a future date.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 26, 2025 | |
| 2023 | Mar 18, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2021 | Mar 11, 2022 | |
| 2020 | Mar 12, 2021 | |
| 2019 | Mar 13, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.