The Company leases parking facilities, office space, warehouses, vehicles and equipment and determines if an arrangement is a lease at inception. The Company subleases certain real estate to third parties. The Company's sublease portfolio consists of operating leases for space within leased parking facilities.

The Company accounts for leases in accordance with Topic 842. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent the Company's "right-of-use" over an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets include cumulative prepaid or accrued rent, as well as lease incentives, initial direct costs and acquired lease contracts. The short term lease exception has been applied to leases with an initial term of 12 months or less and these leases were not recorded within the Condensed Consolidated Balance Sheets.

As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. Lease expense is recognized on a straight-line basis over the lease term.

For leases that include one or more options to renew, the exercise of such renewal options is at the Company's sole discretion or mutual agreement. The Company’s lease term may include renewal options that are at the Company’s sole discretion and are reasonably certain to be exercised. Equipment and vehicle leases may also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Variable lease components comprising of payments that are a percentage of parking services revenue based on contractual levels and rental payments adjusted periodically for inflation are not included in the lease liability. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As discussed in Note 1. Significant Accounting Policies and Practices, the Company tests ROU assets when impairment indicators are present. During the nine months ended September 30, 2021, the Company determined certain impairment testing triggers had occurred for operating lease ROU assets associated with certain asset groups. Therefore, the Company performed an undiscounted cash flow analysis on these ROU assets as of March 31, 2021 and September 30, 2021. Based on the undiscounted

cash flow analysis of March 31, 2021 and September 30, 2021, the Company determined these ROU asset groups had net carrying values that exceeded their estimated undiscounted future cash flows and fair values for these asset groups were determined. The fair values of the ROU assets measured on a non-recurring basis, which are classified as Level 3 in the fair value hierarchy, were determined based on estimates of future discounted cash flows. The estimated fair values were compared to net carrying values, and as a result, ROU assets held and used with carrying amounts totaling $5.6 million were determined to have a fair value of $2.0 million, resulting in impairment charges of $3.5 million and $0.1 million in the Commercial segment and Aviation segments, respectively. The impairment charges of $3.5 million and $3.6 million for the three and nine months ended September 30, 2021, respectively, were included within Lease Impairment in the Condensed Consolidated Statements of Income.

In April 2020, the FASB provided accounting elections for entities that receive or provide lease-related concessions to mitigate the economic effects of COVID-19 on lessees. The Company elected not to evaluate whether certain concessions provided by lessors in response to COVID-19, that are within the scope of additional interpretation provided by the FASB in April 2020, were lease modifications and also elected not to apply modification guidance under Topic 842. These concessions are recognized as a reduction of rent expense in the month they occurred and were recorded in Cost of services – lease type contracts within the Condensed Consolidated Statements of Income.

As a result of COVID-19, the Company was able to negotiate lease concessions with certain landlords. These rent concessions were recorded in accordance with the guidance noted above. As a result, the Company recorded $1.3 million and $5.0 million related to rent concessions as a reduction to Cost of services – lease type contracts during the three and nine months ended September 30, 2022, respectively. The Company recorded $3.1 million and $14.2 million related to rent concessions as a reduction to cost of services during the three and nine months ended September 30, 2021, respectively.

Costs associated with the right to use the infrastructure on service concession arrangements are recorded as a reduction of revenue in accordance with the scope of ASU No. 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services. See Note 4. Revenue for further discussion on service concession arrangements.

The components of ROU assets and lease liabilities and the classification within the Condensed Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021 were as follows:


(millions)	Classification	September 30, 2022		December 31, 2021
Assets
Operating	Right-of-use assets	$	175.4	$	201.2
Finance	Property and equipment, net		23.4		22.4
Total leased assets		$	198.8	$	223.6
Liabilities
Current
Operating	Short-term lease liabilities	$	61.4	$	65.4
Finance	Current portion of long-term borrowings		6.5		6.7
Noncurrent
Operating	Long-term lease liabilities		165.6		200.3
Finance	Long-term borrowings, excluding current portion		14.3		14.0
Total lease liabilities		$	247.8	$	286.4

The components of lease cost and classification within the Condensed Consolidated Statements of Income during the three and nine months ended September 30, 2022 and 2021 (unaudited) were as follows:


		Three Months Ended				Nine Months Ended
(millions)	Classification	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Operating lease cost (a)(b)	Cost of services - lease type contracts	$	15.5	$	17.0	$	45.2	$	44.3
Short-term lease (a)	Cost of services - lease type contracts		4.5		4.3		14.9		13.2
Variable lease	Cost of services - lease type contracts		19.1		11.2		52.4		23.2
Operating lease cost			39.1		32.5		112.5		80.7
Finance lease cost
Amortization of leased assets	Depreciation and amortization		1.5		1.3		4.2		4.3
Interest on lease liabilities	Interest expense		0.2		0.2		0.7		0.8
Lease impairment	Lease impairment		—		3.5		—		3.6
Net lease cost		$	40.8	$	37.5	$	117.4	$	89.4

(a)

Operating lease cost included General and administrative expenses related to leases for office space amounting to $1.0 million and $2.9 million during the three and nine months ended September 30, 2022, respectively, compared to $1.1 million and $3.1 million during the three and nine months ended September 30, 2021, respectively.

(b)

Included rent concessions amounting to $1.3 and $5.0 million during the three and nine months ended September 30, 2022, respectively, compared to $3.1 and $14.2 million during the three and nine months ended September 30, 2021, respectively.

Sublease income was $0.4 million during the three months ended September 30, 2022 and 2021, and $1.0 and $1.1 million during the nine months ended September 30, 2022 and 2021, respectively.

The Company has not entered into operating lease arrangements as of September 30, 2022 that commence in future periods.

Maturities, lease term and discount rate information of lease liabilities as of September 30, 2022 (unaudited) were as follows:


(millions)	Operating Leases Liabilities			Finance Leases Liabilities			Total
2022	$	18.8		$	2.0		$	20.8
2023		66.2			6.9			73.1
2024		48.9			4.9			53.8
2025		37.4			2.9			40.3
2026		30.0			2.2			32.2
After 2026		60.1			4.3			64.4
Total lease payments		261.4			23.2			284.6
Less: Imputed interest		34.4			2.4			36.8
Present value of lease liabilities	$	227.0		$	20.8		$	247.8
Weighted-average remaining lease term (years)		5.4			4.6
Weighted-average discount rate		5.2	%		4.3	%

Future sublease income for the above periods shown was excluded, as the amounts are not material.

Supplemental cash flow information related to leases during the nine months ended September 30, 2022 and 2021 (unaudited) was as follows:


	Nine Months Ended
(millions)	September 30, 2022		September 30, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows related to operating leases	$	69.0	$	71.6
Operating cash outflows related to interest on finance leases		0.7		0.8
Financing cash outflows related to finance leases		7.7		6.0
Leased assets obtained in exchange for new operating liabilities		12.4		6.9
Leased assets obtained in exchange for new finance lease liabilities		5.8		0.4