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LEASE ACCOUNTING | 12 Months Ended
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Dec. 31, 2023
Leases [Abstract] |
Lease Accounting | 4. LEASE ACCOUNTING Real Estate Leases — The Company conducts a significant part of its theatre operations in leased properties under noncancelable operating and finance leases with base terms generally ranging from 10 to 25 years. In addition to fixed lease payments, some of the leases provide for variable lease payments and some require the payment of taxes, insurance, common area maintenance and other costs applicable to the property. Variable lease payments include payments based on a percentage of retail sales or a percentage of retail sales over defined thresholds. Other variable lease payments include payments adjusted periodically for inflation, changes in attendance or changes in average ticket price. The Company can renew, at its option, many of its leases at defined or then market rental rates for various renewal periods. Some leases also provide for escalating rent payments throughout the lease term. The Company also leases certain office and warehouse facilities in the U.S. and in international locations, which generally only include fixed payments. The Company recognizes fixed lease expense for the operating leases on a straight-line basis over the lease term. The Company’s real estate lease agreements do not contain any residual value guarantees or restrictive covenants. Equipment Leases — The Company leases certain equipment under operating leases, including trash compactors and various other equipment used in the day-to-day operation of its theatres. Certain of the leases require fixed lease payments to be made over the duration of the lease term, while others are variable in nature based on usage or sales. Certain of these leases are month-to-month, while others have noncancelable terms ranging from 1 to 7 years. The Company’s equipment lease agreements do not contain any residual value guarantees or restrictive covenants. The following table represents the operating and finance right-of-use assets and lease liabilities as of the periods indicated.
|  |  | As of |
Leases | Classification |  | December 31, 2022 |  |  | December 31, 2023 |
Assets (1) |  |  |  |  |  |  |
Operating lease assets | Operating lease right-of-use assets |  | $ | 1,102.7 |  |  | $ | 986.4 |
Finance lease assets | Theatre properties and equipment, net of accumulated depreciation (2) |  |  | 67.8 |  |  |  | 55.7 |
Total lease assets |  |  | $ | 1,170.5 |  |  | $ | 1,042.1 |
Liabilities (1) |  |  |  |  |  |  |
Current |  |  |  |  |  |  |
Operating | Current portion of operating lease obligations |  | $ | 219.3 |  |  | $ | 212.5 |
Finance | Current portion of finance lease obligations |  |  | 14.4 |  |  |  | 14.0 |
Noncurrent |  |  |  |  |  |  |
Operating | Operating lease obligations, less current portion |  |  | 970.6 |  |  |  | 853.3 |
Finance | Finance lease obligations, less current portion |  |  | 88.0 |  |  |  | 73.8 |
Total lease liabilities |  |  | $ | 1,292.3 |  |  | $ | 1,153.6 |
(1) The operating lease right-of-use assets and liabilities recorded on the Company’s consolidated balance sheets generally do not include renewal options that have not yet been exercised. The Company does not consider a lease renewal exercise as reasonably certain until immediately before the necessary notification is provided to the landlord after consideration of market conditions and performance of the theatre. (2) Finance lease assets are net of accumulated amortization of $62.5 and $73.9 as of December 31, 2022 and 2023, respectively. As of December 31, 2023, the Company had signed lease agreements with total noncancelable lease payments of approximately $44.8 related to theatre leases that had not yet commenced. The timing of lease commencement is dependent on the completion of construction of the related theatre facility. Additionally, these amounts are based on estimated square footage and costs to construct each facility and may be subject to adjustment upon final completion of each construction project. In accordance with ASC Topic 842, fixed minimum lease payments related to these theatres are not included in the right-of-use assets and lease liabilities as of December 31, 2023. The following table represents the Company’s aggregate lease costs, by lease classification, for the periods indicated.
|  | Year Ended December 31, |
Lease Cost | Classification | 2021 |  | 2022 |  | 2023 |
Operating lease costs |  |  |  |  |  |  |
Equipment (1) | Utilities and other | $ | 2.3 |  | $ | 4.4 |  | $ | 4.1 |
Real Estate (1) | Facility lease expense |  | 281.0 |  |  | 315.7 |  |  | 348.6 |
Total operating lease costs |  | $ | 283.3 |  | $ | 320.1 |  | $ | 352.7 |
Finance lease costs |  |  |  |  |  |  |
Depreciation of leased assets | Depreciation and amortization | $ | 12.6 |  | $ | 12.4 |  | $ | 12.0 |
Interest on lease liabilities | Interest expense |  | 5.9 |  |  | 5.3 |  |  | 4.9 |
Total finance lease costs |  | $ | 18.5 |  | $ | 17.7 |  | $ | 16.9 |
(1) Includes short-term lease payments, variable lease payments and office lease payments reflected in general and administrative expense as set forth in the following table for the periods presented:
|  | Year Ended December 31, |
Lease Cost | Classification | 2021 |  | 2022 |  | 2023 |
Operating lease costs |  |  |  |  |  |  |
Equipment - Short-term and variable lease payments | Utilities and other | $ | 1.8 |  | $ | 3.9 |  | $ | 3.6 |
Real Estate - Variable lease payments (1) | Facility lease expense | $ | 11.8 |  | $ | 36.4 |  | $ | 68.3 |
Real Estate - Office leases | General and administrative | $ | 1.3 |  | $ | 1.3 |  | $ | 1.4 |
(1) Represents lease payments that are based on a change in index, such as CPI or inflation, variable payments based on revenue or attendance and variable common area maintenance costs. The following table represents the maturity of lease liabilities, by lease classification, as of December 31, 2023.
|  | Operating |  | Finance |
Years Ending |  | Leases |  | Leases |
2024 |  | $ | 267.2 |  | $ | 18.0 |
2025 |  |  | 237.4 |  |  | 16.4 |
2026 |  |  | 199.6 |  |  | 12.0 |
2027 |  |  | 158.5 |  |  | 11.9 |
2028 |  |  | 121.9 |  |  | 11.6 |
Thereafter |  |  | 295.4 |  |  | 35.1 |
Total lease payments |  | $ | 1,280.0 |  | $ | 105.0 |
Less: Interest |  |  | 214.2 |  |  | 17.2 |
Present value of lease liabilities |  | $ | 1,065.8 |  | $ | 87.8 |
The following table represents the weighted-average remaining lease term and discount rate, disaggregated by lease classification, as of December 31, 2023.
|  | As of |
Lease Term and Discount Rate |  | December 31, 2023 |
Weighted-average remaining lease term (years) (1) |  |  |
Operating leases - equipment |  |  | 3.3 |
Operating leases - real estate |  |  | 6.4 |
Finance leases - equipment |  |  | 2.6 |
Finance leases - real estate |  |  | 7.6 |
Weighted-average discount rate (2) |  |  |
Operating leases - equipment |  |  | 6.3 | %
Operating leases - real estate |  |  | 11.5 | %
Finance leases - equipment |  |  | 3.6 | %
Finance leases - real estate |  |  | 4.9 | %
(1) The lease assets and liabilities recorded on the Company’s consolidated balance sheets generally do not include renewal options that have not yet been executed. The Company does not consider a lease renewal exercise as reasonably certain until immediately before the necessary notification is provided to the landlord after consideration of market conditions and performance of the theatre. (2) The discount rate for each lease represents the incremental borrowing rate at which the Company would borrow funds, on a collateralized basis, over a similar term and at an amount equal to the lease payments in a similar economic environment. The following table represents the minimum cash lease payments included in the measurement of lease liabilities and the non-cash addition of right-of-use assets for the periods presented.
|  | Year Ended December 31, |
Other Information |  | 2021 |  |  | 2022 |  |  | 2023 |
Cash paid for amounts included in the measurement of lease liabilities |  |  |  |  |  |  |  |  |
Cash outflows for operating leases |  | $ | 269.7 |  |  | $ | 279.8 |  |  | $ | 280.8 |
Cash outflows for finance leases - operating activities |  | $ | 5.9 |  |  | $ | 5.3 |  |  | $ | 4.9 |
Cash outflows for finance leases - financing activities |  | $ | 14.7 |  |  | $ | 14.3 |  |  | $ | 14.4 |
Non-cash amount of leased assets obtained in exchange for: |  |  |  |  |  |  |  |  |
Operating lease liabilities |  | $ | 180.1 |  |  | $ | 114.1 |  |  | $ | 87.0 |
Finance lease liabilities |  | $ | 0.7 |  |  | $ | — |  |  | $ | — |
Lessor Arrangements Under the Company’s Exhibitor Services Agreement (“ESA”) with National CineMedia, LLC (“NCM”), the nonconsecutive periods of use of the theatre screens by NCM qualify as a lease in accordance with ASC Topic 842. See further discussion in Note 9. The Company rents its theatre auditoriums for corporate meetings, screenings, education and training sessions and other private events. These rentals, which are not significant to the Company, are generally one-time events and the related revenue is reflected as other revenue on the consolidated statements of income (loss).

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