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Leases | 6 Months Ended
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Jun. 30, 2020
Leases [Abstract] |
Leases | Note 17 - Leases In all leases, whether we are the lessor or lessee, we define lease term as the non-cancellable term of the lease plus any renewals covered by renewal options that are reasonably certain of exercise based on our assessment of economic factors relevant to the lessee. The non-cancellable term of the lease commences on the date the lessor makes the underlying property in the lease available to the lessee, irrespective of when lease payments begin under the contract. As Lessee We have operating leases for certain cinemas and corporate offices, and finance leases for certain equipment assets. Our leases have remaining lease terms of 1 to 20 years, with certain leases having options to extend to up to a further 20 years. Contracts are analyzed in accordance with the criteria set out in ASC 842 to determine if there is a lease present. For contracts that contain an operating lease, we account for the lease component and the non-lease component together as a single component. For contracts that contain a finance lease we account for the lease component and the non-lease component separately in accordance with ASC 842. In leases where we are the lessee, we recognize a right of use asset and lease liability at lease commencement, which is measured by discounting lease payments using an incremental borrowing rate applicable to the relevant country and lease term of the lease as the discount rate. Subsequent amortization of the right of use asset and accretion of the lease liability for an operating lease is recognized as a single lease cost, on a straight-line basis, over the term of the lease. A finance lease right-of-use asset is depreciated on a straight-line basis over the lesser of the useful life of the leased asset or the lease term. Interest on each finance lease liability is determined as the amount that results in a constant periodic discount rate on the remaining balance of the liability. Property taxes and other non-lease costs are accounted for on an accrual basis. Lease payments for our cinema operating leases consist of fixed base rent, and for certain leases, variable lease payments consisting of contracted percentages of revenue, changes in the relevant CPI, and/or other contracted financial metrics. As a result of the impacts of COVID-19, we have obtained certain concessions from our landlords. We have elected to account for these concessions as if there have been no changes to the underlying contracts, thereby recognizing abatements secured as variable lease expenses, and increasing payables for lease payment deferrals. The components of lease expense are as follows:
|  | Quarter Ended |  | Six Months Ended
|  | June 30, |  | June 30,
(Dollars in thousands) |  | 2020 |  | 2019 |  | 2020 |  | 2019
Lease cost |  |  |  |  |  |  |  |  |  |  |  |
Finance lease cost: |  |  |  |  |  |  |  |  |  |  |  |
Amortization of right-of-use assets |  | $ | 24 |  | $ | 41 |  | $ | 64 |  | $ | 82
Interest on lease liabilities |  |  | 2 |  |  | 4 |  |  | 5 |  |  | 7
Operating lease cost |  |  | 8,079 |  |  | 7,899 |  |  | 16,099 |  |  | 15,784
Variable lease cost |  |  | (833) |  |  | 517 |  |  | (652) |  |  | 619
Total lease cost |  | $ | 7,272 |  | $ | 8,461 |  | $ | 15,515 |  | $ | 16,492
Supplemental cash flow information related to leases is as follows:
|  |  |  |  |  |  |  | Six Months Ended
|  |  |  |  |  |  |  | June 30,
(Dollars in thousands) |  |  |  |  |  |  |  | 2020 |  | 2019
Cash flows relating to lease cost |  |  |  |  |  |  |  |  |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Operating cash flows for finance leases |  |  |  |  |  |  |  | $ | 68 |  | $ | 87
Operating cash flows for operating leases |  |  |  |  |  |  |  |  | 8,436 |  |  | 15,531
Right-of-use assets obtained in exchange for new finance lease liabilities |  |  |  |  |  |  |  |  | — |  |  | —
Right-of-use assets obtained in exchange for new operating lease liabilities |  |  |  |  |  |  |  |  | 179 |  |  | 5,760
Supplemental balance sheet information related to leases is as follows:
|  |  |  |  |  |  |  | June 30, |  | December 31,
(Dollars in thousands) |  |  |  |  |  |  |  | 2020 |  | 2019
Operating leases |  |  |  |  |  |  |  |  |  |  |  |
Operating lease right-of-use assets |  |  |  |  |  |  |  | $ | 217,692 |  | $ | 229,879
Operating lease liabilities - current portion |  |  |  |  |  |  |  |  | 21,091 |  |  | 20,379
Operating lease liabilities - non-current portion |  |  |  |  |  |  |  |  | 210,560 |  |  | 223,164
Total operating lease liabilities |  |  |  |  |  |  |  | $ | 231,651 |  | $ | 243,543
Finance leases |  |  |  |  |  |  |  |  |  |  |  |
Property plant and equipment, gross |  |  |  |  |  |  |  |  | 366 |  |  | 370
Accumulated depreciation |  |  |  |  |  |  |  |  | (228) |  |  | (165)
Property plant and equipment, net |  |  |  |  |  |  |  | $ | 138 |  | $ | 205
Other current liabilities |  |  |  |  |  |  |  |  | 51 |  |  | 93
Other long-term liabilities |  |  |  |  |  |  |  |  | 92 |  |  | 116
Total finance lease liabilities |  |  |  |  |  |  |  | $ | 143 |  | $ | 209
Other information |  |  |  |  |  |  |  |  |  |  |  |
Weighted-average remaining lease term - finance leases |  |  |  |  |  |  |  |  | 3 |  |  | 3
Weighted-average remaining lease term - operating leases |  |  |  |  |  |  |  |  | 11 |  |  | 11
Weighted-average discount rate - finance leases |  |  |  |  |  |  |  |  | 5.25% |  |  | 5.13%
Weighted-average discount rate - operating leases |  |  |  |  |  |  |  |  | 4.78% |  |  | 4.86%
The maturities of our leases were as follows:
(Dollars in thousands) |  |  |  |  |  |  |  | Operating ‎leases |  | Finance ‎leases
2020 |  |  |  |  |  |  |  | $ | 15,819 |  | $ | 31
2021 |  |  |  |  |  |  |  |  | 32,010 |  |  | 53
2022 |  |  |  |  |  |  |  |  | 32,018 |  |  | 42
2023 |  |  |  |  |  |  |  |  | 31,292 |  |  | 28
2024 |  |  |  |  |  |  |  |  | 29,466 |  |  | —
Thereafter |  |  |  |  |  |  |  |  | 159,647 |  |  | —
Total lease payments |  |  |  |  |  |  |  | $ | 300,252 |  | $ | 154
Less imputed interest |  |  |  |  |  |  |  |  | (68,601) |  |  | (11)
Total |  |  |  |  |  |  |  | $ | 231,651 |  | $ | 143
As of June 30, 2020, we have additional operating leases, primarily for cinemas, that have not yet commenced operations of approximately $36.0 million. It is anticipated that these operating leases will commence between fiscal year 2020 and fiscal year 2021 with lease terms of 15 to 20 years. As Lessor We have entered into various leases as a lessor for our owned real estate properties. These leases vary in length between 1 and 20 years, with certain leases containing options to extend at the behest of the applicable tenants. Lease components consist of fixed base rent, and for certain leases, variable lease payments consisting of contracted percentages of revenue, changes in the relevant CPI, and/or other contracted financial metrics. None of our leases grant any right to the tenant to purchase the underlying asset. We recognize lease payments for operating leases as property revenue on a straight-line basis over the lease term. Lease incentive payments we make to lessees are amortized as a reduction in property revenue over the lease term. As a result of the impacts of COVID-19, we have provided certain concessions to specific tenants. We have elected to account for these concessions as if there have been no changes to the underlying contracts, thereby recognizing abatements granted as variable lease payments through revenue and increasing receivables for lease payment deferrals. Lease income relating to operating lease payments was as follows:
|  | Quarter Ended |  | Six Months Ended
|  | June 30, |  | June 30,
(Dollars in thousands) |  | 2020 |  | 2019 |  | 2020 |  | 2019
Components of lease income |  |  |  |  |  |  |  |  |  |  |  |
Lease payments |  | $ | 2,245 |  | $ | 2,344 |  | $ | 4,566 |  | $ | 4,573
Variable lease payments |  |  | (364) |  |  | 331 |  |  | (201) |  |  | 596
Total lease income |  | $ | 1,881 |  | $ | 2,675 |  | $ | 4,365 |  | $ | 5,169
The book value of underlying assets under operating leases from owned assets was as follows:
|  |  |  |  |  |  |  | June 30, |  | December 31,
(Dollars in thousands) |  |  |  |  |  |  |  | 2020 |  | 2019
Building and improvements |  |  |  |  |  |  |  |  |  |  |  |
Gross balance |  |  |  |  |  |  |  | $ | 69,123 |  | $ | 67,766
Accumulated depreciation |  |  |  |  |  |  |  |  | (20,677) |  |  | (20,220)
Net Book Value |  |  |  |  |  |  |  | $ | 48,446 |  | $ | 47,546
The Maturity of our leases were as follows:
(Dollars in thousands) |  |  |  |  |  |  |  |  |  |  | Operating ‎leases
2020 |  |  |  |  |  |  |  |  |  |  | $ | 3,890
2021 |  |  |  |  |  |  |  |  |  |  |  | 7,552
2022 |  |  |  |  |  |  |  |  |  |  |  | 6,780
2023 |  |  |  |  |  |  |  |  |  |  |  | 6,106
2024 |  |  |  |  |  |  |  |  |  |  |  | 5,208
Thereafter |  |  |  |  |  |  |  |  |  |  |  | 7,634
Total |  |  |  |  |  |  |  |  |  |  | $ | 37,170

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