Note 4: Leases

The Company leases retail stores, warehouse facilities, and office space. These assets and properties are generally leased under noncancelable agreements that expire at various future dates with many agreements containing renewal options for additional periods. The agreements, which have been classified as either operating or finance leases, generally provide for minimum and, in some cases, percentage rent, and require the Company to pay all insurance, taxes, and other maintenance costs. As a result, the Company recognizes assets and liabilities for all leases with lease terms greater than 12 months. The amounts recognized reflect the present value of remaining lease payments for all leases. The discount rate used is an estimate of the Company’s blended incremental borrowing rate based on information available associated with each subsidiary’s debt outstanding at lease commencement. In considering the lease asset value, the Company considers fixed and variable payment terms, prepayments and options to extend, terminate or purchase. Renewal, termination, or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised.

As of March 31, 2023, the weighted average remaining lease term for operating leases is 8.6 years. The Company's weighted average discount rate for operating leases is 8.1%. Total cash payments for operating leases for the six months ended March 31, 2023 and 2022 were approximately $3.9 million and $4.9 million, respectively. Additionally, we obtained right-of-use assets in exchange for operating lease liabilities of approximately $15.6 million upon commencement of operating leases during the six months ended March 31, 2023.

As of March 31, 2023, the weighted average remaining lease term for finance leases is 27.1 years. The Company's weighted average discount rate for finance leases is 13.2%. Total cash payments for finance leases for the six months ended March 31, 2023 and 2022 were approximately $1.1 million and $0, respectively. Additionally, we obtained right-of-use assets in exchange for finance lease liabilities of approximately $387,000 upon commencement of operating leases during the six months ended March 31, 2023.

In connection with the acquisition of Flooring Liquidators (see Note 3), as of March 31, 2023, the Company has obtained right-of-use assets in exchange for operating lease liabilities of $14.7 million, and right-of-use assets in exchange for finance lease liabilities of $387,000.

During the six months ended March 31, 2023 and 2022, the Company recorded no gain or loss settlements, nor did it record impairment charges relating to any of its leases.