v3.22.4
Leases
 12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Leases
NOTE 16 — LEASES

The Company is party to various lease agreements for real estate and transportation equipment. For each lease agreement, the Company determines its lease term as the non-cancellable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The Company also assesses whether each lease is an operating or finance lease at the lease commencement date. Rent expense of operating leases is recognized on a straight-line basis over the lease term and includes scheduled rent increases as well as amortization of tenant improvement allowances.

Operating Leases

As of December 31, 2022, the Company is a tenant under various operating leases related to certain of its hubs, vending machines, IRCs, storage, parking, and corporate offices. The initial terms expire at various dates between 2023 and 2038. Many of the leases include one or more renewal options ranging from one to twenty years and some contain purchase options.

The Company's operating leases are included in operating lease right-of-use assets, other current liabilities, and operating lease liabilities on the accompanying consolidated balance sheets.

Refer to Note 7 — Related Party Transactions for further discussion of operating leases with related parties.

Finance Leases

The Company has finance leases for certain equipment in its transportation fleet. The leases have initial terms of two to five years, some of which include extension options for up to four additional years, and require monthly payments. The Company's finance leases are included in long-term debt on the accompanying consolidated balance sheets.

Lease Costs and Activity

The Company's lease costs and activity during the years ended December 31, 2022, 2021, and 2020 were as follows:
December 31,
202220212020
(in millions)
Lease costs:
Finance leases:
  Amortization of finance lease assets$95 $38 $17 
  Interest obligations under finance leases19 8 4 
    Total finance lease costs$114 $46 $21 
Operating leases:
  Fixed lease costs to non-related parties (1)
$129 $56 $29 
  Fixed lease costs to related parties5 6 7 
  Variable short-term lease costs to related parties1 1 2 
     Total operating lease costs$135 $63 $38 
Cash payments related to lease liabilities included in operating cash flows:
  Operating lease liabilities to non-related parties$83 $35 $18 
  Operating lease liabilities to related parties$5 $5 $7 
  Interest payments on finance lease liabilities$19 $8 $4 
Cash payments related to lease liabilities included in financing cash flows:
  Principal payments on finance lease liabilities$139 $56 $20 
(1) The year ended December 31, 2022 includes $28 million of lease termination fees, net of amounts written off for the corresponding operating lease right-of-use assets and operating lease liabilities which were terminated.

Maturity Analysis of Lease Liabilities

The following table summarizes maturities of lease liabilities as of December 31, 2022:

Operating Leases (1)
Finance Leases
Related Party (2)
Non-Related PartyTotal OperatingTotal
(in millions)
2023$115 $5 $93 $98 $213 
2024103 3 96 99 202 
202591 2 92 94 185 
202674 2 88 90 164 
202731 2 81 83 114 
Thereafter4 2 304 306 310 
Total minimum lease payments418 16 754 770 1,188 
Less: amount representing interest(44)(3)(200)(203)(247)
Total lease liabilities$374 $13 $554 $567 $941 
(1) Leases that are on a month-to-month basis, short-term leases, and lease extensions that the Company does not expect to exercise are not included.
(2) Related party lease payments exclude rent payments due under the DriveTime Lease Agreement and the DriveTime Hub Lease Agreement for locations where the Company shares space with DriveTime, as those are variable lease payments contingent upon the Company's utilization of the leased assets.

As of December 31, 2022 and 2021, none of the Company's lease agreements contain material residual value guarantees or material restrictive covenants.

Lease Terms and Discount Rates

The weighted-average remaining lease terms and discount rates as of December 31, 2022, 2021, and 2020 were as follows, excluding short-term operating leases:
December 31,
202220212020
Weighted average remaining lease terms (years)
  Operating leases8.49.29.8
  Finance leases4.24.44.4
Weighted-average discount rate
  Operating leases7.1 %7.2 %8.3 %
  Finance leases5.7 %5.4 %5.3 %
Leases
NOTE 16 — LEASES

The Company is party to various lease agreements for real estate and transportation equipment. For each lease agreement, the Company determines its lease term as the non-cancellable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The Company also assesses whether each lease is an operating or finance lease at the lease commencement date. Rent expense of operating leases is recognized on a straight-line basis over the lease term and includes scheduled rent increases as well as amortization of tenant improvement allowances.

Operating Leases

As of December 31, 2022, the Company is a tenant under various operating leases related to certain of its hubs, vending machines, IRCs, storage, parking, and corporate offices. The initial terms expire at various dates between 2023 and 2038. Many of the leases include one or more renewal options ranging from one to twenty years and some contain purchase options.

The Company's operating leases are included in operating lease right-of-use assets, other current liabilities, and operating lease liabilities on the accompanying consolidated balance sheets.

Refer to Note 7 — Related Party Transactions for further discussion of operating leases with related parties.

Finance Leases

The Company has finance leases for certain equipment in its transportation fleet. The leases have initial terms of two to five years, some of which include extension options for up to four additional years, and require monthly payments. The Company's finance leases are included in long-term debt on the accompanying consolidated balance sheets.

Lease Costs and Activity

The Company's lease costs and activity during the years ended December 31, 2022, 2021, and 2020 were as follows:
December 31,
202220212020
(in millions)
Lease costs:
Finance leases:
  Amortization of finance lease assets$95 $38 $17 
  Interest obligations under finance leases19 8 4 
    Total finance lease costs$114 $46 $21 
Operating leases:
  Fixed lease costs to non-related parties (1)
$129 $56 $29 
  Fixed lease costs to related parties5 6 7 
  Variable short-term lease costs to related parties1 1 2 
     Total operating lease costs$135 $63 $38 
Cash payments related to lease liabilities included in operating cash flows:
  Operating lease liabilities to non-related parties$83 $35 $18 
  Operating lease liabilities to related parties$5 $5 $7 
  Interest payments on finance lease liabilities$19 $8 $4 
Cash payments related to lease liabilities included in financing cash flows:
  Principal payments on finance lease liabilities$139 $56 $20 
(1) The year ended December 31, 2022 includes $28 million of lease termination fees, net of amounts written off for the corresponding operating lease right-of-use assets and operating lease liabilities which were terminated.

Maturity Analysis of Lease Liabilities

The following table summarizes maturities of lease liabilities as of December 31, 2022:

Operating Leases (1)
Finance Leases
Related Party (2)
Non-Related PartyTotal OperatingTotal
(in millions)
2023$115 $5 $93 $98 $213 
2024103 3 96 99 202 
202591 2 92 94 185 
202674 2 88 90 164 
202731 2 81 83 114 
Thereafter4 2 304 306 310 
Total minimum lease payments418 16 754 770 1,188 
Less: amount representing interest(44)(3)(200)(203)(247)
Total lease liabilities$374 $13 $554 $567 $941 
(1) Leases that are on a month-to-month basis, short-term leases, and lease extensions that the Company does not expect to exercise are not included.
(2) Related party lease payments exclude rent payments due under the DriveTime Lease Agreement and the DriveTime Hub Lease Agreement for locations where the Company shares space with DriveTime, as those are variable lease payments contingent upon the Company's utilization of the leased assets.

As of December 31, 2022 and 2021, none of the Company's lease agreements contain material residual value guarantees or material restrictive covenants.

Lease Terms and Discount Rates

The weighted-average remaining lease terms and discount rates as of December 31, 2022, 2021, and 2020 were as follows, excluding short-term operating leases:
December 31,
202220212020
Weighted average remaining lease terms (years)
  Operating leases8.49.29.8
  Finance leases4.24.44.4
Weighted-average discount rate
  Operating leases7.1 %7.2 %8.3 %
  Finance leases5.7 %5.4 %5.3 %