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Leases (Notes) | 9 Months Ended
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Sep. 30, 2023
Leases [Abstract] |
Leases | LeasesThe Company utilizes lease agreements to meet its operating needs. These leases support global staff via the use of office space, warehouses, vehicles and IT equipment. The Company utilizes both operating and finance leases in its portfolio of leased assets, however, the majority of these leases are classified as operating. A significant portion of the volume of the lease portfolio is in fleet vehicles and IT office equipment; however, real estate leases constitute a majority of the value of the right-of-use (ROU) assets. Lease agreements are utilized worldwide, with the largest location concentration in the United States, Germany and India. The Company's lease population has initial lease terms ranging from less than one year to approximately fifteen years. Some leases include one or more options to renew, with renewal terms that can extend the lease term from six months to 15 years. The Company assesses these renewal/extension options using a threshold of reasonably certain, which is a high threshold and, therefore, the majority of its lease terms for accounting purposes do not include renewal periods. For leases where the Company is reasonably certain to renew, those optional periods are included within the lease term and, therefore, the measurement of the ROU asset and lease liability. Some of the vehicle and IT equipment leases also include options to purchase the leased asset, typically at end of term at fair market value. Some of the Company's leases include options to terminate the lease early. This allows the contract parties to terminate their obligations under the lease contract, sometimes in return for an agreed upon financial consideration. The terms and conditions of the termination options vary by contract, and for those leases where the Company is reasonably certain to use these options, the term and payments recognized in the measurement of ROU assets and lease liabilities has been updated accordingly. Additionally, there are several open-ended lease arrangements where the Company controls the option to continue or terminate the arrangement at any time after the first year. For these arrangements, the Company has analyzed a mix of historical use and future economic incentives to determine the reasonable expected holding period. This term is used for measurement of ROU assets and lease liabilities. The following table summarizes the weighted-average remaining lease terms and discount rates related to the Company's lease population:
| Successor
| September 30, 2023
Weighted-average remaining lease terms (in years) |
Operating leases | 4.9
Finance leases | 2.7
Weighted-average discount rate |
Operating leases | 8.5%
Finance leases | 6.6%
Certain lease agreements include payments based on a variety of global indexes or rates. These payment amounts have been projected using the index or rate as of lease commencement or the transition date and measured in ROU assets and lease liabilities. Other leases contain variable payments that are based on actual usage of the underlying assets and, therefore, are not measured in assets or liabilities as the variable payments are not based on an index or a rate. For real estate leases, these payments are most often tied to non-committed maintenance or utilities charges, and for equipment leases, to actual output or hours in operation. These amounts typically become known when the invoice is received, which is when expense is recognized. In rare circumstances, the Company's lease agreements may contain residual value guarantees. The Company's lease agreements do not contain any restrictions or covenants, such as those relating to dividends or incurring additional financial obligations. As of September 30, 2023, the Company did not have any material leases that have not yet commenced but that create significant rights and obligations. The Company determines whether an arrangement is or includes a lease at contract inception. All contracts containing the right to use an underlying asset are reviewed to confirm that the contract meets the definition of a lease. ROU assets and liabilities are recognized at commencement date and initially measured based on the present value of lease payments over the defined lease term. As most 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. In order to apply the incremental borrowing rate, a rate table was developed to assign the appropriate rate to each lease based on lease term and currency of payments. For leases with large numbers of underlying assets, a portfolio approach with a collateralized rate was utilized. Assets were grouped based on similar lease terms and economic environments in a manner whereby the Company reasonably expects that the application does not differ materially from a lease-by-lease approach. The following tables summarize the components of lease expense:
| Successor |  |  | Predecessor
| Period from |  |  | Period from |  | Three months ended
| 08/12/2023 through 09/30/2023 |  |  | 07/01/2023 through 08/11/2023 |  | September 30, 2022
Lease expense |  |  |  |  |  |
Operating lease expense | $ | 8.2 |  |  |  | $ | 7.5 |  |  | $ | 18.7 |
Finance lease expense |  |  |  |  |  |
Amortization of ROU lease assets | $ | 0.6 |  |  |  | $ | 0.8 |  |  | $ | 1.1 |
Interest on lease liabilities | $ | 0.1 |  |  |  | $ | 0.2 |  |  | $ | 0.2 |
Variable lease expense | $ | 1.0 |  |  |  | $ | 0.9 |  |  | $ | 1.7 |
| Successor |  |  | Predecessor
| Period from |  |  | Period from |  | Nine months ended
| 08/12/2023 through 09/30/2023 |  |  | 01/01/2023 through 08/11/2023 |  | September 30, 2022
Lease expense |  |  |  |  |  |
Operating lease expense | $ | 8.2 |  |  |  | $ | 41.9 |  |  | $ | 57.7 |
Finance lease expense |  |  |  |  |  |
Amortization of ROU lease assets | $ | 0.6 |  |  |  | $ | 2.4 |  |  | $ | 3.0 |
Interest on lease liabilities | $ | 0.1 |  |  |  | $ | 0.5 |  |  | $ | 0.5 |
Variable lease expense | $ | 1.0 |  |  |  | $ | 5.2 |  |  | $ | 7.5 |
The following table summarizes the maturities of lease liabilities:
| Operating |  | Finance
2023 (excluding the nine months ended September 30, 2023) | $ | 15.1 |  |  | $ | 1.2 |
2024 | 40.1 |  |  | 3.8 |
2025 | 26.4 |  |  | 1.8 |
2026 | 15.7 |  |  | 1.1 |
2027 | 9.3 |  |  | 0.6 |
Thereafter | 20.2 |  |  | 0.2 |
Total | 126.8 |  |  | 8.7 |
Less: Present value discount | (21.1) |  |  | (0.7) |
Lease liability | $ | 105.7 |  |  | $ | 8.0 |
The following table summarizes the cash flow information related to leases:
| Successor |  |  | Predecessor
| Period from |  |  | Period from |  | Nine months ended
| 08/12/2023 through 09/30/2023 |  |  | 01/01/2023 through 08/11/2023 |  | September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |
Operating - operating cash flows | $ | 11.8 |  |  |  | $ | 43.3 |  |  | $ | 57.7 |
Finance - financing cash flows | $ | 0.5 |  |  |  | $ | 2.5 |  |  | $ | 3.1 |
Finance - operating cash flows | $ | 0.1 |  |  |  | $ | 0.5 |  |  | $ | 0.5 |
ROU lease assets obtained in the exchange for lease liabilities: |  |  |  |  |  |
Operating leases | $ | 0.8 |  |  |  | $ | 19.2 |  |  | $ | 24.7 |
Finance leases | $ | — |  |  |  | $ | 0.6 |  |  | $ | 6.6 |
Refer to Note 3 for further detail relating to Fresh Start Accounting adjustments related to leases. The following table summarizes the balance sheet information related to leases:
| Successor |  |  | Predecessor
| September 30, 2023 |  |  | December 31, 2022
Assets |  |  |  |
Operating | $ | 98.0 |  |  |  | $ | 108.5 |
Finance | 7.7 |  |  |  | 10.3 |
Total leased assets | $ | 105.7 |  |  |  | $ | 118.8 |
Current liabilities |  |  |  |
Operating | $ | 40.1 |  |  |  | $ | 39.0 |
Finance | 3.9 |  |  |  | 4.1 |
Noncurrent liabilities |  |  |  |
Operating | 65.5 |  |  |  | 76.7 |
Finance | 4.2 |  |  |  | 5.7 |
Total lease liabilities | $ | 113.7 |  |  |  | $ | 125.5 |
Operating and finance leases are included in other assets, other current liabilities and other liabilities on the consolidated balance sheets.
Leases | LeasesThe Company utilizes lease agreements to meet its operating needs. These leases support global staff via the use of office space, warehouses, vehicles and IT equipment. The Company utilizes both operating and finance leases in its portfolio of leased assets, however, the majority of these leases are classified as operating. A significant portion of the volume of the lease portfolio is in fleet vehicles and IT office equipment; however, real estate leases constitute a majority of the value of the right-of-use (ROU) assets. Lease agreements are utilized worldwide, with the largest location concentration in the United States, Germany and India. The Company's lease population has initial lease terms ranging from less than one year to approximately fifteen years. Some leases include one or more options to renew, with renewal terms that can extend the lease term from six months to 15 years. The Company assesses these renewal/extension options using a threshold of reasonably certain, which is a high threshold and, therefore, the majority of its lease terms for accounting purposes do not include renewal periods. For leases where the Company is reasonably certain to renew, those optional periods are included within the lease term and, therefore, the measurement of the ROU asset and lease liability. Some of the vehicle and IT equipment leases also include options to purchase the leased asset, typically at end of term at fair market value. Some of the Company's leases include options to terminate the lease early. This allows the contract parties to terminate their obligations under the lease contract, sometimes in return for an agreed upon financial consideration. The terms and conditions of the termination options vary by contract, and for those leases where the Company is reasonably certain to use these options, the term and payments recognized in the measurement of ROU assets and lease liabilities has been updated accordingly. Additionally, there are several open-ended lease arrangements where the Company controls the option to continue or terminate the arrangement at any time after the first year. For these arrangements, the Company has analyzed a mix of historical use and future economic incentives to determine the reasonable expected holding period. This term is used for measurement of ROU assets and lease liabilities. The following table summarizes the weighted-average remaining lease terms and discount rates related to the Company's lease population:
| Successor
| September 30, 2023
Weighted-average remaining lease terms (in years) |
Operating leases | 4.9
Finance leases | 2.7
Weighted-average discount rate |
Operating leases | 8.5%
Finance leases | 6.6%
Certain lease agreements include payments based on a variety of global indexes or rates. These payment amounts have been projected using the index or rate as of lease commencement or the transition date and measured in ROU assets and lease liabilities. Other leases contain variable payments that are based on actual usage of the underlying assets and, therefore, are not measured in assets or liabilities as the variable payments are not based on an index or a rate. For real estate leases, these payments are most often tied to non-committed maintenance or utilities charges, and for equipment leases, to actual output or hours in operation. These amounts typically become known when the invoice is received, which is when expense is recognized. In rare circumstances, the Company's lease agreements may contain residual value guarantees. The Company's lease agreements do not contain any restrictions or covenants, such as those relating to dividends or incurring additional financial obligations. As of September 30, 2023, the Company did not have any material leases that have not yet commenced but that create significant rights and obligations. The Company determines whether an arrangement is or includes a lease at contract inception. All contracts containing the right to use an underlying asset are reviewed to confirm that the contract meets the definition of a lease. ROU assets and liabilities are recognized at commencement date and initially measured based on the present value of lease payments over the defined lease term. As most 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. In order to apply the incremental borrowing rate, a rate table was developed to assign the appropriate rate to each lease based on lease term and currency of payments. For leases with large numbers of underlying assets, a portfolio approach with a collateralized rate was utilized. Assets were grouped based on similar lease terms and economic environments in a manner whereby the Company reasonably expects that the application does not differ materially from a lease-by-lease approach. The following tables summarize the components of lease expense:
| Successor |  |  | Predecessor
| Period from |  |  | Period from |  | Three months ended
| 08/12/2023 through 09/30/2023 |  |  | 07/01/2023 through 08/11/2023 |  | September 30, 2022
Lease expense |  |  |  |  |  |
Operating lease expense | $ | 8.2 |  |  |  | $ | 7.5 |  |  | $ | 18.7 |
Finance lease expense |  |  |  |  |  |
Amortization of ROU lease assets | $ | 0.6 |  |  |  | $ | 0.8 |  |  | $ | 1.1 |
Interest on lease liabilities | $ | 0.1 |  |  |  | $ | 0.2 |  |  | $ | 0.2 |
Variable lease expense | $ | 1.0 |  |  |  | $ | 0.9 |  |  | $ | 1.7 |
| Successor |  |  | Predecessor
| Period from |  |  | Period from |  | Nine months ended
| 08/12/2023 through 09/30/2023 |  |  | 01/01/2023 through 08/11/2023 |  | September 30, 2022
Lease expense |  |  |  |  |  |
Operating lease expense | $ | 8.2 |  |  |  | $ | 41.9 |  |  | $ | 57.7 |
Finance lease expense |  |  |  |  |  |
Amortization of ROU lease assets | $ | 0.6 |  |  |  | $ | 2.4 |  |  | $ | 3.0 |
Interest on lease liabilities | $ | 0.1 |  |  |  | $ | 0.5 |  |  | $ | 0.5 |
Variable lease expense | $ | 1.0 |  |  |  | $ | 5.2 |  |  | $ | 7.5 |
The following table summarizes the maturities of lease liabilities:
| Operating |  | Finance
2023 (excluding the nine months ended September 30, 2023) | $ | 15.1 |  |  | $ | 1.2 |
2024 | 40.1 |  |  | 3.8 |
2025 | 26.4 |  |  | 1.8 |
2026 | 15.7 |  |  | 1.1 |
2027 | 9.3 |  |  | 0.6 |
Thereafter | 20.2 |  |  | 0.2 |
Total | 126.8 |  |  | 8.7 |
Less: Present value discount | (21.1) |  |  | (0.7) |
Lease liability | $ | 105.7 |  |  | $ | 8.0 |
The following table summarizes the cash flow information related to leases:
| Successor |  |  | Predecessor
| Period from |  |  | Period from |  | Nine months ended
| 08/12/2023 through 09/30/2023 |  |  | 01/01/2023 through 08/11/2023 |  | September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |
Operating - operating cash flows | $ | 11.8 |  |  |  | $ | 43.3 |  |  | $ | 57.7 |
Finance - financing cash flows | $ | 0.5 |  |  |  | $ | 2.5 |  |  | $ | 3.1 |
Finance - operating cash flows | $ | 0.1 |  |  |  | $ | 0.5 |  |  | $ | 0.5 |
ROU lease assets obtained in the exchange for lease liabilities: |  |  |  |  |  |
Operating leases | $ | 0.8 |  |  |  | $ | 19.2 |  |  | $ | 24.7 |
Finance leases | $ | — |  |  |  | $ | 0.6 |  |  | $ | 6.6 |
Refer to Note 3 for further detail relating to Fresh Start Accounting adjustments related to leases. The following table summarizes the balance sheet information related to leases:
| Successor |  |  | Predecessor
| September 30, 2023 |  |  | December 31, 2022
Assets |  |  |  |
Operating | $ | 98.0 |  |  |  | $ | 108.5 |
Finance | 7.7 |  |  |  | 10.3 |
Total leased assets | $ | 105.7 |  |  |  | $ | 118.8 |
Current liabilities |  |  |  |
Operating | $ | 40.1 |  |  |  | $ | 39.0 |
Finance | 3.9 |  |  |  | 4.1 |
Noncurrent liabilities |  |  |  |
Operating | 65.5 |  |  |  | 76.7 |
Finance | 4.2 |  |  |  | 5.7 |
Total lease liabilities | $ | 113.7 |  |  |  | $ | 125.5 |
Operating and finance leases are included in other assets, other current liabilities and other liabilities on the consolidated balance sheets.

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + Details
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