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.

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 are not recorded within the 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 with the landlord. 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 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 year ended December 31, 2022, the Company determined impairment testing triggers had occurred for an ROU asset associated with a certain asset group within the Commercial segment. Therefore, the Company performed an undiscounted cash flow analysis for the ROU asset as of December 31, 2022. Based on the undiscounted cash flow analysis, the Company determined the ROU asset had a net carrying value that exceeded its estimated undiscounted future cash flows and the fair value for the ROU asset. The fair value of the ROU asset measured on a non-recurring basis, which is classified as Level 3 in the fair value hierarchy, was determined based on estimates of future discounted cash flows. The estimated fair value was compared to the net carrying value, and as a result, the ROU asset held and used with a carrying amount of $8.4 million was determined to have a fair value of $4.7 million, resulting in an impairment charge of $3.7 million. The impairment charge of $3.7 million during the year ended December 31, 2022 was included in Lease impairment within the Consolidated Statements of Income (Loss).

In addition, the Company determined impairment testing triggers had occurred for operating lease ROU assets associated with certain asset groups during the year ended December 31, 2021. Accordingly, the Company performed undiscounted cash flow analysis on these ROU assets during the year ended December 31, 2021. Based on the undiscounted cash flow analysis as 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 the fair values for these asset groups were determined. The fair values were compared to the net carrying values, and, as a result, ROU assets held and used with a carrying amount of $5.6 million were determined to have a fair value of $2.0 million, resulting in impairment charges of $3.6 million, of which $3.5 million and $0.1 million were recorded in the Commercial and Aviation segments, respectively. The impairment charge of $3.6 during the year ended December 31, 2021 was included in Lease Impairment within the Consolidated Statements of Income (Loss). Additionally, during the year ended December 31, 2020, the Company recorded impairment charges of $98.7 million in the Commercial and Aviation segments, of which $97.1 million was included in Lease impairment within the Consolidated Statements of Income (Loss) and $1.6 million was included in General and administrative expenses within the Consolidated Statements of Income (Loss).

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. These concessions were recognized as a reduction of rent expense in the month they occurred and were recorded in Cost of services - lease type contracts within the Consolidated Statements of Income (Loss).

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. Accordingly, the Company recorded $6.2 million, $16.6 million and $26.0 million as a reduction to Cost of services - lease type contracts within the Consolidated Statements of Income (Loss) during the years ended December 31, 2022, 2021 and 2020, 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 5. Revenue for further discussion on service concession arrangements.

The components of ROU assets and lease liabilities and the classification within the Consolidated Balance Sheets as of December 31, 2022 and 2021 were as follows:


(millions)	Classification	2022		2021
Assets
Operating	Right-of-use assets	$	166.9	$	201.2
Finance	Property and equipment, net		24.4		22.4
Total leased assets		$	191.3	$	223.6
Liabilities
Current
Operating	Short-term lease liabilities	$	60.2	$	65.4
Finance	Current portion of long-term borrowings		7.2		6.7
Noncurrent
Operating	Long-term lease liabilities		158.5		200.3
Finance	Long-term borrowings, excluding current portion		16.0		14.0
Total lease liabilities		$	241.9	$	286.4

The components of lease cost and classification within the Consolidated Statements of Income (Loss) during the years ended December 31, 2022, 2021 and 2020 were as follows:


(millions)	Classification	2022		2021		2020
Operating lease (a)(b)	Cost of services - lease type contracts	$	61.6	$	57.5	$	81.1
Short-term lease (a)	Cost of services - lease type contracts		19.4		15.9		22.6
Variable lease	Cost of services - lease type contracts		72.1		36.7		20.1
Operating lease cost			153.1		110.1		123.8
Finance lease cost
Amortization of leased assets	Depreciation and amortization		5.9		5.7		4.2
Interest on lease liabilities	Interest expense		1.0		1.0		1.1
Lease Impairment	Lease impairment		3.7		3.6		97.1
Lease Impairment	General and administrative expenses		—		—		1.6
Net lease cost		$	163.7	$	120.4	$	227.8

(a)

Included expense related to leases for office space recorded in General and administrative expenses within the Consolidated Statements of Income (Loss) of $4.0 million, $4.1 million and $5.7 million during the years ended December 31, 2022, 2021 and 2020, respectively.

(b)

Included rent concessions of $6.2 million, $16.6 million and $26.0 million during the years ended December 31, 2022, 2021 and 2020, respectively.

Sublease income during the years ended December 31, 2022, 2021 and 2020 was $1.4 million, $1.4 million and $1.6 million, respectively.

The Company entered into new operating lease arrangements as of December 31, 2022 that commence in future periods. The total amount of ROU assets and lease liabilities related to these arrangements are immaterial.

Maturities, lease term and discount rate information of lease liabilities as of December 31, 2022 were as follows:


	Operating			Finance
(millions)	Leases			Leases			Total
2023	$	69.4		$	8.1		$	77.5
2024		51.8			6.2			58.0
2025		39.5			4.1			43.6
2026		31.4			3.0			34.4
2027		18.8			1.5			20.3
After 2027		42.9			2.9			45.8
Total lease payments		253.8			25.8			279.6
Less: Imputed interest		35.1			2.6			37.7
Present value of lease liabilities	$	218.7		$	23.2		$	241.9
Weighted-average remaining lease term (years)		5.2			4.4
Weighted-average discount rate		5.2	%		4.7	%

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

Supplemental cash flow information related to leases during the years ended December 31, 2022, 2021 and 2020 were as follows:


(millions)	2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows related to operating leases	$	91.5	$	96.4	$	120.3
Operating cash outflows related to interest on finance leases		1.0		1.0		1.1
Financing cash outflows related to finance leases		9.6		7.7		5.2
Leased assets obtained in exchange for new operating lease liabilities		22.2		40.7		38.2
Leased assets obtained in exchange for new finance lease liabilities		10.1		0.4		16.5