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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________________________
FORM 10-Q
_______________________________________________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number: 001-36708
_______________________________________________________________
Uniti Group Inc.
(Exact name of registrant as specified in its charter)
_______________________________________________________________
Maryland46-5230630
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
2101 Riverfront Drive, Suite A
Little Rock, Arkansas
72202
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (501) 850-0820
_______________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockUNITThe NASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of July 28, 2022, the registrant had 237,251,277 shares of common stock, $0.0001 par value per share, outstanding.


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes forward-looking statements as defined under U.S. federal securities law. Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements regarding: our expectations regarding the settlement we have entered into with Windstream Holdings, Inc. (together with Windstream Holdings II, LLC, its successor in interest, and its subsidiaries, “Windstream”); the future prospects and financial health of Windstream; our expectations about our ability to maintain our status as a real estate investment trust (a “REIT”); our expectations regarding the effect of the COVID-19 pandemic on our results of operations and financial condition, including the potential need to perform an interim goodwill analysis and report an impairment charge related thereto; our expectations regarding the effect of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), the Consolidated Appropriations Act of 2021 (the “2021 Appropriations Act”) and other tax related legislation on our tax position; our expectations regarding the future growth and demand of the telecommunication industry, future financing plans, business strategies, growth prospects, operating and financial performance, and our future liquidity needs and access to capital; expectations regarding future deployment of fiber strand miles and small cell networks and recognition of revenue related thereto; expectations regarding levels of capital expenditures; expectations regarding the deductibility of goodwill for tax purposes; expectations regarding reclassification of accumulated other comprehensive income (loss) related to derivatives to interest expense; expectations regarding the amortization of intangible assets; and expectations regarding the payment of dividends.
Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to:
the future prospects of our largest customer, Windstream, following its emergence from bankruptcy;
adverse impacts of the COVID-19 pandemic, inflation and rising interest rates on our employees, our business, the business of our customers and other business partners and the global financial markets;
the ability and willingness of our customers to meet and/or perform their obligations under any contractual arrangements entered into with us, including master lease arrangements;
the ability of our customers to comply with laws, rules and regulations in the operation of the assets we lease to them;
the ability and willingness of our customers to renew their leases with us upon their expiration, our ability to reach agreement on the price of such renewal or ability to obtain a satisfactory renewal rent from an independent appraisal, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant;
our ability to renew, extend or retain our contracts or to obtain new contracts with significant customers (including customers of the businesses that we acquire);
the availability of and our ability to identify suitable acquisition opportunities and our ability to acquire and lease the respective properties on favorable terms or operate and integrate the acquired businesses;
our ability to generate sufficient cash flows to service our outstanding indebtedness and fund our capital funding commitments;
our ability to access debt and equity capital markets;
the impact on our business or the business of our customers as a result of credit rating downgrades and fluctuating interest rates;
adverse impacts of litigation or disputes involving us or our customers;
our ability to retain our key management personnel;
our ability to maintain our status as a REIT;
2

changes in the U.S. tax law and other federal, state or local laws, whether or not specific to REITs, including the impact of the CARES Act, the Families First Coronavirus Response Act and the 2021 Appropriations Act;
covenants in our debt agreements that may limit our operational flexibility;
the possibility that we may experience equipment failures, natural disasters, cyber attacks or terrorist attacks for which our insurance may not provide adequate coverage;
the risk that we fail to fully realize the potential benefits of or have difficulty in integrating the companies we acquire;
other risks inherent in the communications industry and in the ownership of communications distribution systems, including potential liability relating to environmental matters and illiquidity of real estate investments; and
additional factors discussed in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q and in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K, as well as those described from time to time in our future reports filed with the U.S. Securities and Exchange Commission (the “SEC”).
Forward-looking statements speak only as of the date of this Quarterly Report. Except in the normal course of our public disclosure obligations, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based.
3

Uniti Group Inc.
Table of Contents
Page
Uniti Group Inc.
4

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Uniti Group Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(Thousands, except par value)June 30, 2022December 31, 2021
Assets:
Property, plant and equipment, net$3,615,532 $3,508,939 
Cash and cash equivalents61,405 58,903 
Accounts receivable, net45,679 38,455 
Goodwill601,878 601,878 
Intangible assets, net349,737 364,630 
Straight-line revenue receivable55,621 41,323 
Operating lease right-of-use assets, net82,162 80,271 
Other assets84,976 38,900 
Investment in unconsolidated entities39,309 64,223 
Deferred income tax assets, net18,907 11,721 
Total Assets$4,955,206 $4,809,243 
Liabilities and Shareholders' Deficit:  
Liabilities:  
Accounts payable, accrued expenses and other liabilities$131,073 $86,868 
Settlement payable (Note 13)245,171 239,384 
Intangible liabilities, net172,439 177,786 
Accrued interest payable131,080 109,826 
Deferred revenue1,170,004 1,134,236 
Derivative liability, net4,067 10,413 
Dividends payable745 1,264 
Operating lease liabilities60,829 57,355 
Finance lease obligations15,214 15,348 
Notes and other debt, net5,099,782 5,090,537 
Total liabilities7,030,404 6,923,017 
Commitments and contingencies (Note 13)
Shareholders' Deficit:
Preferred stock, $0.0001 par value, 50,000 shares authorized, no shares issued and outstanding
  
Common stock, $0.0001 par value, 500,000 shares authorized, issued and outstanding: 235,700 shares at June 30, 2022 and 234,779 at December 31, 2021
24 23 
Additional paid-in capital1,224,427 1,214,830 
Accumulated other comprehensive loss(3,516)(9,164)
Distributions in excess of accumulated earnings(3,298,455)(3,333,481)
Total Uniti shareholders' deficit(2,077,520)(2,127,792)
Noncontrolling interests:  
Operating partnership units2,072 13,893 
Cumulative non-voting convertible preferred stock, $0.01 par value, 6 shares authorized, 3 issued and outstanding
250 125 
Total shareholders' deficit(2,075,198)(2,113,774)
Total Liabilities and Shareholders' Deficit$4,955,206 $4,809,243 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5

Uniti Group Inc.
Condensed Consolidated Statements of Income
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(Thousands, except per share data)2022202120222021
Revenues:
Leasing$205,614 $196,057 $410,255 $390,993 
Fiber Infrastructure78,361 72,123 151,754 149,773 
Total revenues283,975 268,180 562,009 540,766 
Costs and Expenses:
Interest expense, net96,377 106,388 192,549 246,969 
Depreciation and amortization72,303 69,671 143,760 140,635 
General and administrative expense25,085 24,900 48,955 50,723 
Operating expense (exclusive of depreciation and amortization)36,917 33,185 71,893 71,269 
Transaction related and other costs3,235 424 4,949 4,561 
Gain on sale of real estate(250)(442)(250)(442)
Gain on sale of operations (28,143) (28,143)
Other (income) expense, net(7,930)8,021 (8,328)8,475 
Total costs and expenses225,737 214,004 453,528 494,047 
  
Income before income taxes and equity in earnings from unconsolidated entities58,238 54,176 108,481 46,719 
Income tax expense4,944 5,084 2,873 2,527 
Equity in earnings from unconsolidated entities(480)(547)(1,024)(945)
Net income53,774 49,639 106,632 45,137 
Net income attributable to noncontrolling interests77 732 205 668 
Net income attributable to shareholders53,697 48,907 106,427 44,469 
Participating securities' share in earnings(340)(333)(671)(581)
Dividends declared on convertible preferred stock(5)(2)(10)(5)
Net income attributable to common shareholders$53,352 $48,572 $105,746 $43,883 
Income per common share:
Basic$0.23 $0.21 $0.45 $0.19 
Diluted$0.21 $0.20 $0.42 $0.19 
Weighted-average number of common shares outstanding:
Basic235,656 231,801 235,352 231,636 
Diluted267,361 262,268 267,045 231,862 
The accompanying notes are an integral part of these condensed consolidated financial statements.
6

Uniti Group Inc.
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(Thousands)2022202120222021
Net income$53,774 $49,639 $106,632 $45,137 
Other comprehensive income:
Interest rate swap termination2,829 2,829 5,659 5,658 
Other comprehensive income:2,829 2,829 5,659 5,658 
Comprehensive income56,603 52,468 112,291 50,795 
Comprehensive income attributable to noncontrolling interest81 773 216 751 
Comprehensive income attributable to shareholders$56,522 $51,695 $112,075 $50,044 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7

Uniti Group Inc.
Condensed Consolidated Statements of Shareholders’ Deficit
(unaudited)
 For the Three Months Ended June 30,
(Thousands, except share data)Preferred StockCommon StockAdditional Paid-in
Capital
Accumulated Other
Comprehensive
Loss
Distributions in
Excess of
Accumulated
Earnings
Noncontrolling
Interest - OP Units
Noncontrolling
Interest - Non-
voting Preferred
Shares
Total Shareholders'
Deficit
SharesAmountSharesAmount
Balance at March 31, 2021— $— 231,694,203 $23 $1,150,550 $(17,580)$(3,355,423)$68,615 $125 $(2,153,690)
Net income— — — — — — 48,907 732 — 49,639 
Other comprehensive income— — — — — 2,788 — 41 — 2,829 
Common stock dividends declared ($0.15 per share)
— — — — — — (34,855)— — (34,855)
Distributions to noncontrolling interest declared— — — — — — — (520)— (520)
Payments related to tax withholding for stock-based compensation— — — — (336)— — — — (336)
Stock-based compensation— — 110,718 — 3,462 — — — — 3,462 
Issuance of common stock - employee stock purchase plan— —  — 31 — — — — 31 
Balance at June 30 2021— — 231,804,921 23 1,153,707 (14,792)(3,341,371)68,868 125 (2,133,440)
Balance at March 31, 2022— $— 235,297,990 $23 $1,220,039 $(6,341)$(3,316,781)$10,788 $250 $(2,092,022)
Net income— — — — — — 53,697 77 — 53,774 
Other comprehensive income— — — — — 2,825 — 4 — 2,829 
Common stock dividends declared ($0.15 per share)
— — — — — — (35,371)— — (35,371)
Distributions to noncontrolling interest declared— — — — — — — (78)— (78)
Exchange of noncontrolling interest— — 86,949 — 4,099 — — (8,719)— (4,620)
Payments related to tax withholding for stock-based compensation— — — — (2,911)— — — — (2,911)
Stock-based compensation— — 314,574 1 3,200 — — — — 3,201 
Balance at June 30, 2022— — 235,699,513 24 1,224,427 (3,516)(3,298,455)2,072 250 (2,075,198)
For the Six Months Ended June 30,
(Thousands, except share data)Preferred StockCommon StockAdditional Paid-in
Capital
Accumulated Other
Comprehensive
Loss
Distributions in
Excess of
Accumulated
Earnings
Noncontrolling
Interest - OP Units
Noncontrolling
Interest - Non-
voting Preferred
Shares
Total Shareholders'
Deficit
SharesAmountSharesAmount
Balance at December 31, 2020— $— 231,261,958 $23 $1,209,141 $(20,367)$(3,330,455)$69,157 $125 $(2,072,376)
Cumulative effect adjustment for adoption of new accounting standard— — — — (59,908)— 14,598 — — (45,310)
Net income— — — — — — 44,469 668 — 45,137 
Other comprehensive income— — — — — 5,575 — 83 — 5,658 
Common stock dividends declared ($0.30 per share)
— — — — — — (69,983)— — (69,983)
Distributions to noncontrolling interest declared— — — — — — — (1,040)— (1,040)
Payments related to tax withholding for stock-based compensation— — — — (2,642)— — — — (2,642)
Stock-based compensation— — 507,199 — 6,797 — — — — 6,797 
Issuance of common stock - employee stock purchase plan— — 35,764 — 319 — — — — 319 
Balance at June 30 2021— — 231,804,921 23 1,153,707 (14,792)(3,341,371)68,868 125 (2,133,440)
Balance at December 31, 2021— $— 234,779,247 $23 $1,214,830 $(9,164)$(3,333,481)$13,893 $125 $(2,113,774)
Net income— — — — — — 106,427 205 — 106,632 
Other comprehensive income— — — — — 5,648 — 11 — 5,659 
Common stock dividends declared ($0.30 per share)
— — — — — — (71,276)— — (71,276)
Distributions to noncontrolling interest declared— — — — — — — (160)— (160)
Cumulative non-voting convertible preferred stock— — — — — — (125)— 125  
Exchange of noncontrolling interest— — 244,682 — 7,257 — — (11,877)— (4,620)
Payments related to tax withholding for stock-based compensation— — — — (4,436)— — — — (4,436)
Stock-based compensation— — 646,260 1 6,512 — — — — 6,513 
Issuance of common stock - employee stock purchase plan— — 29,324 — 264 — — — — 264 
Balance at June 30, 2022— — 235,699,513 24 1,224,427 (3,516)(3,298,455)2,072 250 (2,075,198)
The accompanying notes are an integral part of these condensed consolidated financial statements.
8

Uniti Group Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
 Six Months Ended June 30,
(Thousands)20222021
Cash flow from operating activities  
Net income$106,632 $45,137 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization143,760 140,635 
Amortization of deferred financing costs and debt discount9,015 9,371 
Loss on debt extinguishment 43,369 
Interest rate swap termination5,659 5,658 
Deferred income taxes(7,185)605 
Equity in earnings of unconsolidated entities(1,024)(945)
Distributions of cumulative earnings from unconsolidated entities1,969 1,950 
Cash paid for interest rate swap settlement(6,346)(6,110)
Straight-line revenues and amortization of below-market lease intangibles(21,148)(14,215)
Stock-based compensation6,513 6,797 
Change in fair value of contingent consideration 21 
Gain on sale of unconsolidated entity (see Note 5)(7,923) 
Gain on sale of real estate(250)(442)
Gain on sale of operations (28,143)
Loss (gain) on asset disposals586 (218)
Accretion of settlement obligation5,787 8,889 
Other(630)143 
Changes in assets and liabilities, net of acquisitions:  
Accounts receivable(7,224)19,965 
Other assets559 39,019 
Accounts payable, accrued expenses and other liabilities5,858 46,991 
Net cash provided by operating activities234,608 318,477 
Cash flow from investing activities  
Capital expenditures(184,039)(177,934)
Proceeds from sale of unconsolidated entity (see Note 5)32,527  
Proceeds from sale of real estate, net of cash325 1,034 
Proceeds from sale of operations 62,113 
Proceeds from sale of other equipment431 399 
Net cash used in investing activities(150,756)(114,388)
Cash flow from financing activities  
Repayment of debt (1,660,000)
Proceeds from issuance of notes 1,680,000 
Dividends paid(71,771)(70,386)
Payments of settlement payable (49,011)
Payments of contingent consideration (2,979)
Distributions paid to noncontrolling interest(186)(1,039)
Payment for exchange of noncontrolling interest(4,620) 
Borrowings under revolving credit facility105,000 205,000 
Payments under revolving credit facility(105,000)(220,000)
Finance lease payments(601)(1,393)
Payments for financing costs (25,156)
Payment of tender premium (25,800)
Employee stock purchase program264 319 
Payments related to tax withholding for stock-based compensation(4,436)(2,642)
Net cash used in financing activities(81,350)(173,087)
   
Net increase in cash and cash equivalents2,502 31,002 
Cash and cash equivalents at beginning of period58,903 77,534 
Cash and cash equivalents at end of period$61,405 $108,536 
   
Non-cash investing and financing activities:  
Property and equipment acquired but not yet paid$10,739 $17,764 
Tenant capital improvements85,389 106,789 
The accompanying notes are an integral part of these condensed consolidated financial statements.
9

Uniti Group Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Note 1. Organization and Description of Business
Uniti Group Inc. (the “Company,” “Uniti,” “we,” “us,” or “our”) was incorporated in the state of Maryland on September 4, 2014. We are an independent internally managed real estate investment trust (“REIT”) engaged in the acquisition, construction and leasing of mission critical infrastructure in the communications industry. We are principally focused on acquiring and constructing fiber optic, copper and coaxial broadband networks and data centers. We manage our operations focused on our two primary lines of business: Uniti Fiber and Uniti Leasing.
The Company operates through a customary “up-REIT” structure, pursuant to which we hold substantially all of our assets through a partnership, Uniti Group LP, a Delaware limited partnership (the “Operating Partnership”) that we control as general partner. The up-REIT structure is intended to facilitate future acquisition opportunities by providing the Company with the ability to use common units of the Operating Partnership as a tax-efficient acquisition currency. As of June 30, 2022, we are the sole general partner of the Operating Partnership and own approximately 99.96% of the partnership interests in the Operating Partnership.
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
The accompanying Condensed Consolidated Financial Statements include all accounts of the Company and its wholly-owned and/or controlled subsidiaries, including the Operating Partnership. Under the Accounting Standards Codification 810, Consolidation (“ASC 810”), the Operating Partnership is considered a variable interest entity and is consolidated in the Condensed Consolidated Financial Statements of Uniti Group Inc. because the Company is the primary beneficiary. All material intercompany balances and transactions have been eliminated.
ASC 810 provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and substantially all of the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is defined as the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance; and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE.
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”), and with the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. Operating results from any interim period are not necessarily indicative of the results that may be expected for the full fiscal year. The accompanying Condensed Consolidated Financial Statements and related notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC on February 25, 2022, as amended by Amendment No. 1 thereto filed on Form 10-K/A with the SEC on March 22, 2022 (the “Annual Report”). Accordingly, significant accounting policies and other disclosures normally provided have been omitted from the accompanying Condensed Consolidated Financial Statements and related notes since such items are disclosed in our Annual Report.
Concentration of Credit Risks—Prior to September 2020, we were party to a long-term exclusive triple-net lease (the “Master Lease”) with Windstream Holdings, Inc. (together with Windstream Holdings II, LLC, its successor in interest, and its subsidiaries, “Windstream”) pursuant to which a substantial portion of our real property was leased to Windstream and from which a substantial portion of our leasing revenues were derived. On September 18, 2020, Uniti and Windstream
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bifurcated the Master Lease and entered into two structurally similar master leases (collectively, the “Windstream Leases”), which amended and restated the Master Lease in its entirety. Revenue under the Windstream Leases provided 66.3% and 67.1% of our revenue for the six months ended June 30, 2022 and 2021, respectively. Because a substantial portion of our revenue and cash flows are derived from lease payments by Windstream pursuant to the Windstream Leases, there could be a material adverse impact on our consolidated results of operations, liquidity, financial condition and/or ability to pay dividends and service debt if Windstream were to default under the Windstream Leases or otherwise experiences operating or liquidity difficulties and becomes unable to generate sufficient cash to make payments to us.
Prior to its emergence from bankruptcy on September 21, 2020, Windstream was a publicly traded company subject to the periodic filing requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Windstream’s historic filings through their quarter ended June 30, 2020 can be found at www.sec.gov. Additionally, the Windstream audited financial statements as of December 31, 2021, and for the year ended December 31, 2021, as of December 31, 2020 and for the period from September 22, 2020 to December 31, 2020 and for the period from January 1, 2020 to September 21, 2020 and for the year ended December 31, 2019 are included as an exhibit to our Annual Report. On September 22, 2020, Windstream filed a Form 15 to terminate all filing obligations under Sections 12(g) and 15(d) under the Exchange Act. Windstream filings are not incorporated by reference in this Quarterly Report on Form 10-Q.
We monitor the credit quality of Windstream through numerous methods, including by (i) reviewing credit ratings of Windstream by nationally recognized credit agencies, (ii) reviewing the financial statements of Windstream that are required to be delivered to us pursuant to the Windstream Leases, (iii) monitoring news reports regarding Windstream and its business, (iv) conducting research to ascertain industry trends potentially affecting Windstream, (v) monitoring Windstream’s compliance with the terms of the Windstream Leases and (vi) monitoring the timeliness of its payments under the Windstream Leases.
As of the date of this Quarterly Report on Form 10-Q, Windstream is current on all lease payments. We note that in August 2020, Moody’s Investor Service assigned a B3 corporate family rating with a stable outlook to Windstream in connection with its post-emergence exit financing. At the same time, S&P Global Ratings assigned Windstream a B- issuer rating with a stable outlook. Both ratings remain current as of the date of this filing. In order to assist us in our continuing assessment of Windstream’s creditworthiness, we periodically receive certain confidential financial information and metrics from Windstream.
Reclassifications—Certain prior year asset and liability categories and related amounts have been reclassified to conform with current year presentation.
Recently Adopted Accounting Pronouncements
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation— Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815- 40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, which clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange (“ASU 2021-04”). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted ASU 2021-04 effective January 1, 2022, and there was no impact on our consolidated financial statements.
In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments (“ASU 2021-05”), which requires lessors to classify leases as operating leases if they (1) have variable lease payments that do not depend on a reference index or rate, and (2) would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing. ASU 2021-05 is effective for all entities which have previously adopted Topic 842 for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted ASU 2021-05 effective January 1, 2022, and there was no impact on our consolidated financial statements.
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Note 3. Revenues
Disaggregation of Revenue
The following table presents our revenues disaggregated by revenue stream.
Three Months Ended
June 30,
Six Months Ended
June 30,
(Thousands)2022202120222021
Revenue disaggregated by revenue stream
Revenue from contracts with customers
Fiber Infrastructure
Lit backhaul$19,937 $22,979 $39,375 $48,023 
Enterprise and wholesale21,001 21,327 41,936 42,327 
E-Rate and government18,505 15,926 32,782 35,290 
Other712 824 1,373 1,640 
Fiber Infrastructure$60,155 $61,056 $115,466 $127,280 
Leasing1,194 1,000 2,352 2,167 
Total revenue from contracts with customers61,349 62,056 117,818 129,447 
Revenue accounted for under leasing guidance  
Leasing204,420 195,057 407,903 388,826 
Fiber Infrastructure18,206 11,067 36,288 22,493 
Total revenue accounted for under leasing guidance222,626 206,124 444,191 411,319 
Total revenue$283,975 $268,180 $562,009 $540,766 
At June 30, 2022 and December 31, 2021, lease receivables were $19.5 million and $19.4 million, respectively, and receivables from contracts with customers were $22.7 million and $14.7 million, respectively.
Contract Assets (Unbilled Revenue) and Liabilities (Deferred Revenue)
Contract assets primarily consist of unbilled construction revenue where we are utilizing our costs incurred as the measure of progress of satisfying our performance obligation. Contract assets are reported within accounts receivable, net on our Condensed Consolidated Balance Sheets. When the contract price is invoiced, the related unbilled receivable is reclassified to trade accounts receivable, where the balance will be settled upon the collection of the invoiced amount. Contract liabilities are generally comprised of upfront fees charged to the customer for the cost of establishing the necessary components of the Company’s network prior to the commencement of use by the customer. Fees charged to customers for the recurring use of the Company’s network are recognized during the related periods of service. Upfront fees that are billed in advance of providing services are deferred until such time the customer accepts the Company’s network and then are recognized as service revenues ratably over a period in which substantive services required under the revenue arrangement are expected to be performed, which is the initial term of the arrangement. During the three and six months ended June 30, 2022, we recognized revenues of $1.2 million and $3.0 million, respectively, which was included in the December 31, 2021 contract liabilities balance.
The following table provides information about contract assets and contract liabilities accounted for under ASC 606.
(Thousands)Contract AssetsContract Liabilities
Balance at December 31, 2021$4,066 $9,099 
Balance at June 30, 2022$805 $8,853 
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Transaction Price Allocated to Remaining Performance Obligations
Performance obligations within contracts to stand ready to provide services are typically satisfied over time or as those services are provided. Contract liabilities primarily relate to deferred revenue from upfront customer payments. The deferred revenue is recognized, and the liability reduced, over the contract term as the Company completes the performance obligation. As of June 30, 2022, our future revenues (i.e., transaction price related to remaining performance obligations) under contract accounted for under ASC 606 totaled $438.1 million, of which $341.2 million is related to contracts that are currently being invoiced and have an average remaining contract term of 1.7 years, while $96.9 million represents our backlog for sales bookings which have yet to be installed and have an average contract term of 5.5 years. We do not disclose the value of unsatisfied performance obligations for contracts that have an original expected duration of one year or less.
Note 4. Leases
Lessor Accounting
We lease communications towers, ground, colocation, and dark fiber to tenants under operating leases. Our leases have initial lease terms ranging from less than one year to 35 years, most of which include options to extend or renew the leases for less than one year to 20 years (based on the satisfaction of certain conditions as defined in the lease agreements), and some of which may include options to terminate the leases within one to six months. Certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include fixed payments plus, for some of our leases, variable payments.
The components of lease income for the three and six months ended June 30, 2022 and 2021, respectively, are as follows:
Three Months Ended June 30,Six Months Ended June 30,
(Thousands)2022202120222021
Lease income - operating leases$222,626 $206,124 $444,191 $411,319 
Lease payments to be received under non-cancellable operating leases where we are the lessor for the remainder of the lease terms as of June 30, 2022 are as follows:
(Thousands)June 30, 2022⁽¹⁾
2022$379,415 
2023