Leases

12 Months Ended

Dec. 31, 2023

Lessee Disclosures

The Company primarily leases real estate for offices, retail stores and central offices, as well as equipment, cell towers, designated space on third party towers and fleet vehicles. The Company leases its real estate for terms between 1 and 55 years, its equipment for terms between 3 and 10 years, its cell towers for terms between 5 and 21 years, its designated space on third party cell towers for terms between 5 and 55 years and its vehicles for terms of 5 years. Our leases have various expiration dates through 2071, some of which include options to extend the leases for up to 15 years.

Upon adoption of ASC 842 on January 1, 2019, the Company elected not to recognize leases with terms of one-year or less on the balance sheet. The Company's leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease.

Supplemental balance sheet information related to the Company's leases was as follows:


		December 31,		December 31,
(dollars in millions)	Balance Sheet Location	2023		2022
Operating lease assets, net of amortization	Operating lease right-of-use assets	$	78.3	$	73.1
Finance lease assets, net of amortization	Property, plant and equipment, net		21.9		16.5
Operating lease liabilities:
Current operating lease liabilities	Other current liabilities		12.8		12.7
Noncurrent operating lease liabilities	Operating lease liabilities		72.0		66.1
Total operating lease liabilities			84.8		78.8
Finance lease liabilities:
Current finance lease liabilities	Current portion of long-term debt		12.9		9.9
Noncurrent finance lease liabilities	Long-term debt, less current portion		42.1		43.1
Total finance lease liabilities		$	55.0	$	53.0

The components of lease expense were as follows:


	Successor						Predecessor
(dollars in millions)	Year Ended December 31, 2023		Year Ended December 31, 2022		September 8, 2021 to December 31, 2021		January 1, 2021 to September 7, 2021
Operating lease cost	$	16.0	$	14.6	$	4.3	$	8.1
Short-term lease cost		0.6		0.3		0.1		0.2
Variable lease cost		3.5		3.6		1.1		2.3
Finance lease cost:
Depreciation on leased assets		8.0		4.7		2.0		4.5
Interest on lease liabilities		3.9		3.5		1.2		2.9
Total lease cost	$	32.0	$	26.7	$	8.7	$	18.0

Supplemental cash flow information related to leases was as follows:


	Successor						Predecessor
(dollars in millions)	Year Ended December 31, 2023		Year Ended December 31, 2022		September 8, 2021 to December 31, 2021		January 1, 2021 to September 7, 2021
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	3.9	$	3.4	$	1.2	$	2.9
Operating cash flows from operating leases	$	13.4	$	11.1	$	3.4	$	7.2
Financing cash flows from finance leases	$	12.4	$	8.3	$	3.9	$	9.9
Right-of-use assets obtained in exchange for lease obligations:
New operating leases	$	15.7	$	12.2	$	5.4	$	11.5
New finance leases	$	14.4	$	12.3	$	2.0	$	3.8

Additional quantitative information related to leases was as follows:


	December 31,			December 31,
Weighted Average Remaining Lease Term	2023			2022
Operating leases	14.03 years			12.06 years
Finance leases	4.82 years			5.67 years
Weighted Average Discount Rate
Operating leases		7.34	%		5.85	%
Finance leases		7.55	%		7.23	%

Future minimum lease payments under non-cancellable leases as of December 31, 2023 are as follows:


(dollars in millions)	Operating Leases			Finance Leases
Year ended December 31,
2024	$	15.5		$	16.8
2025		13.1			13.9
2026		11.4			10.8
2027		9.5			9.6
2028		9.1			8.5
Thereafter		91.9			7.5
Total future minimum lease payments		150.5			67.1
Less imputed interest		(64.7	)		(11.2	)
Total	$	85.8		$	55.9

As of December 31, 2023, we have additional future payments on operating leases that have not yet commenced for $1.0 million. These leases will commence in 2024 and have lease terms of three to thirty-three years. As of December 31, 2023, we have additional future payments for a finance lease that has not yet commenced for $0.9 million. This lease will commence in 2024 and has a lease term of five years.

Sale-Leaseback Disclosures

On August 31, 2021, the Company simultaneously exercised its bargain purchase option on real property located in Cincinnati, Ohio, previously classified as a finance lease, and sold it to a third party for $9.1 million. Net proceeds from the transactions were approximately $6.6 million after transactional costs. Concurrently with the sale, the Company entered into an operating lease arrangement with the third party purchaser of the property for a portion of the building to maintain use of the location as an office space. The transaction qualified for sale-leaseback accounting in accordance with ASC 842, and the Company recognized a gain on the sale of $2.8 million in August, 2021. The Company recorded an operating lease right-of-use asset and liability of $7.7 million related to the leaseback agreement on September 1, 2021.

Lessor Disclosures

The Company has operating leases related to its dark fiber arrangements for terms between 1 and 30 years. Our leases have various expiration dates through 2048, some of which include options to extend the lease. The Company recorded lease income related to operating lease payments of $3.4 million in 2023, $3.0 million in 2022, and $0.9 million and $2.0 million in the Successor and Predecessor periods of 2021, respectively.

The Company owns the underlying assets associated with its operating leases and records them in "Property, plant and equipment, net" on the Consolidated Balance Sheets.

Future minimum lease payments to be received under non-cancellable leases as of December 31, 2023 are as follows:


(dollars in millions)	Operating Leases
Year ended December 31,
2024	$	3.4
2025		3.1
2026		2.9
2027		2.9
2028		2.6
Thereafter		11.8
Total future minimum lease payments		26.7
Less imputed interest		(7.7	)
Total	$	19.0