Company: MTZ
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0000015615-25-000021
Chunk: 169

Company: MASTEC INC
Filing Date: 2025-02-28
Form: 10-K
Item: Item 4
Chunk 169
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 Company generally uses an incremental borrowing rate to determine the value of its lease obligations.  The incremental borrowing rate represents the rate of interest that would be paid to borrow on a collateralized basis over a similar term.  The Company determines its incremental borrowing rate using a portfolio approach based on information available as of the lease commencement date, including applicable lease terms and the current economic environment.Finance Leases Finance lease assets are recorded within property and equipment, with a corresponding amount recorded within the Company’s debt obligations.  Finance lease expense is composed of depreciation expense on the leased asset and interest on the lease liability.  Additions to finance leases are included within the supplemental disclosures of non-cash information in the consolidated statements of cash flows.  Many of the Company’s finance leases contain a purchase option which the Company is reasonably certain to exercise at the end of the lease term, given that the purchase option prices are typically below the estimated fair market values of the related assets.Operating LeasesOperating lease right-of-use assets and liabilities are recorded on the consolidated balance sheets, with the related lease expense recognized over the term of the lease on a straight-line basis.  Operating lease expense is recorded as rent expense, primarily within costs of revenue, excluding depreciation and amortization.  Fixed costs for operating leases are composed of initial base rent amounts plus any fixed annual increases.  Variable costs for operating leases consist primarily of common area maintenance expenses and taxes for facility leases.  Certain of the Company’s operating 

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leases contain purchase options, for which the purchase option price is generally considered to be at fair market value.  From time to time, the Company may terminate a lease before the end of the lease term.  Payments related to such early lease terminations are generally recorded within general and administration expenses.Self-InsuranceThe Company is self-insured up to the amount of its deductible for its insurance policies.  MasTec maintains insurance policies subject to per claim deductibles of $2.0 million for its workers’ compensation policy and $10.0 million for each of its general liability and automobile liability policies.  In addition, the Company also maintains excess umbrella coverage.  The Company manages certain of its insurance liabilities indirectly through its wholly-owned captive insurance company, which reimburses claims up to the applicable insurance limits.  Cash balances held by the Company’s captive insurance company are generally not available for use in the Company’s other operations.Estimated liabilities under the Company’s insurance programs are accrued based upon management’s estimates of the ultimate liability for claims reported and an estimate of