LEASES

The Company enters into operating lease contracts for land, buildings, structures and other equipment. Arrangements are evaluated at inception to determine whether such arrangements contain a lease. Operating leases primarily include land and building lease contracts and leases of radio towers. Arrangements to lease building space consist primarily of the rental of office space, but may also include leases of other equipment, including automobiles and copiers. Operating leases are reflected on the Company's balance sheet within Operating lease right-of-use assets and the related short-term and long-term liabilities are included within Current and Noncurrent operating lease liabilities, respectively.

The Company's finance leases are included within Property, plant and equipment with the related liabilities included within Long-term debt or within Liabilities subject to compromise.

ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term.

Certain of the Company's operating lease agreements include rental payments that are adjusted periodically for inflationary changes. Payments due to changes in inflationary adjustments are included within variable rent expense, which is accounted for separately from periodic straight-line lease expense. Amounts related to insurance and property taxes in lease arrangements when billed on a pass-through basis are allocated to the lease and non-lease components of the lease based on their relative standalone selling prices.

Certain of the Company's leases provide options to extend the terms of the agreements. Generally, renewal periods are excluded from minimum lease payments when calculating the lease liabilities as, for most leases, the Company does not consider exercise of such options to be reasonably certain. As a result, unless a renewal option is considered reasonably assured, the optional terms and related payments are not included within the lease liability. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The implicit rate within the Company's lease agreements is generally not determinable. As such, the Company uses the incremental borrowing rate ("IBR") to determine the present value of lease payments at the commencement of the lease. The IBR, as defined in ASC 842, is "the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment." In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company applied the provisions of fresh start accounting to its Consolidated Financial Statements on the Effective Date. As a result, the Company adjusted the IBR used to value the Company's ROU assets and operating lease liabilities at the Effective Date (see Note 3 - Fresh Start Accounting). In addition, upon adoption of ASC 852 in the first quarter of 2019, the Company did not elect the practical expedient to combine non-lease components with the associated lease components. Upon application of fresh start accounting on the Effective Date, the Company elected to use the practical expedient to not separate non-lease components from the associated lease component for all classes of the Company's assets.

The following tables provide the components of lease expense included within the Consolidated Statement of Comprehensive Income (Loss) for the Period from May 2, 2019 through June 30, 2019 (Successor), the Period from April 1, 2019 through May 1, 2019 (Predecessor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor):



	Successor Company		Predecessor Company
(In thousands)	Period from May 2, 2019 through June 30, 2019		Period from April 1, 2019 through May 1, 2019
Operating lease expense	$	25,439	$	11,302
Variable lease expense	$	3,447	$	150



	Successor Company		Predecessor Company
(In thousands)	Period from May 2, 2019 through June 30, 2019		Period from January 1, 2019 through May 1, 2019
Operating lease expense	$	25,439	$	44,667
Variable lease expense	$	3,447	$	476

The following table provides the weighted average remaining lease term and the weighted average discount rate for the Company's leases as of June 30, 2019 (Successor):



	June 30, 2019
Operating lease weighted average remaining lease term (in years)	14.0
Operating lease weighted average discount rate	6.54	%

As of June 30, 2019 (Successor), the Company’s future maturities of operating lease liabilities were as follows:



(In thousands)
2019	$	60,870
2020	136,837
2021	126,445
2022	119,453
2023	106,385
Thereafter	841,655
Total lease payments	$	1,391,645
Less: Effect of discounting	508,729
Total operating lease liability	$	882,916

The following table provides supplemental cash flow information related to leases for the Period from May 2, 2019 through June 30, 2019 (Successor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor):



	Successor Company		Predecessor Company
(In thousands)	Period from May 2, 2019 through June 30, 2019		Period from January 1, 2019 through May 1, 2019
Cash paid for amounts included in measurement of operating lease liabilities	$	23,400	$	44,888
Lease liabilities arising from obtaining right-of-use assets⁽¹⁾	$	3,194	$	913,598

⁽¹⁾Lease liabilities from obtaining right-of-use assets include transition liabilities upon adoption of ASC 842, as well as new leases entered into during Period from May 2, 2019 through June 30, 2019 (Successor), Period from April 1, 2019 through May 1, 2019 (Predecessor) and the Period from January 1, 2019 through May 1, 2019 (Predecessor). Upon adoption of fresh start accounting upon Emergence from the Chapter 11 Cases, the Company increased its operating lease obligation by $459.0 million to reflect its operating lease obligation as estimated fair value (see Note 3 - Fresh Start Accounting).