LEASE ACCOUNTING

12 Months Ended

Dec. 31, 2024

LEASE ACCOUNTING

Real Estate Leases — The Company conducts a significant part of its theater 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. Some 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 and finance leases, including trash compactors and various other equipment used in the day-to-day operation of its theaters. 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, 2023		December 31, 2024
Assets (1)
Operating lease assets	Operating lease right-of-use assets	$	986.4	$	930.4
Finance lease assets	Theater properties and equipment, net of accumulated depreciation (2)		55.7		93.8
Total lease assets		$	1,042.1	$	1,024.2

Liabilities (1)
Current
Operating	Current portion of operating lease obligations	$	212.5	$	212.1
Finance	Current portion of finance lease obligations		14.0		15.4
Noncurrent
Operating	Operating lease obligations, less current portion		853.3		784.0
Finance	Finance lease obligations, less current portion		73.8		109.9
Total lease liabilities		$	1,153.6	$	1,121.4

(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 as reasonably certain until immediately before the necessary notification is provided to the landlord after consideration of market conditions and performance of the theater.

(2)

Finance lease assets are net of accumulated amortization of $73.9 and $58.4 as of December 31, 2023 and 2024, respectively.

As of December 31, 2024, the Company had signed lease agreements with total noncancelable lease payments of approximately $21.6 related to theater leases that had not yet commenced. The timing of lease commencement is dependent on the completion of construction of the related theater 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, Leases, fixed minimum lease payments related to these theaters are not included in the right-of-use assets and lease liabilities as of December 31, 2024.

The following table represents the Company’s aggregate lease costs, by lease classification, for the periods indicated.


		Year Ended December 31,
Lease Cost	Classification	2022		2023		2024
Operating lease costs
Equipment (1)	Utilities and other, General and administrative	$	4.4	$	4.1	$	3.8
Real Estate (1)	Facility lease expense		315.7		348.6		334.5
Total operating lease costs		$	320.1	$	352.7	$	338.3

Finance lease costs
Amortization of leased assets	Depreciation and amortization	$	12.4	$	12.0	$	13.5
Interest on lease liabilities	Interest expense		5.3		4.9		5.8
Total finance lease costs		$	17.7	$	16.9	$	19.3

(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	2022		2023		2024
Operating lease costs
Equipment - Short-term and variable lease payments	Utilities and other	$	3.9	$	3.6	$	3.4
Real Estate - Variable lease payments (1)	Facility lease expense	$	36.4	$	68.3	$	64.4
Office and equipment leases	General and administrative	$	1.3	$	1.4	$	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, 2024.


	Operating		Finance
Years Ending	Leases		Leases
2025	$	266.0	$	21.9
2026		231.9		22.1
2027		191.0		21.9
2028		152.8		21.5
2029		115.5		20.2
Thereafter		238.5		45.3
Total lease payments	$	1,195.7	$	152.9
Less: Interest		199.6		27.6
Present value of lease liabilities	$	996.1	$	125.3

The following table represents the weighted-average remaining lease term and discount rate, disaggregated by lease classification, as of December 31, 2024.


	As of
Lease Term and Discount Rate	December 31, 2024
Weighted-average remaining lease term (years) (1)
Operating leases - equipment		3.2
Operating leases - real estate		6.3
Finance leases - equipment		3.1
Finance leases - real estate		7.5

Weighted-average discount rate (2)
Operating leases - equipment		6.6	%
Operating leases - real estate		11.6	%
Finance leases - equipment		7.2	%
Finance leases - real estate		5.6	%

(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 theater.

(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	2022		2023		2024
Cash paid for amounts included in the measurement of lease liabilities
Cash outflows for operating leases	$	279.8	$	280.8	$	270.5
Cash outflows for finance leases - operating activities	$	5.3	$	4.9	$	5.7
Cash outflows for finance leases - financing activities	$	14.3	$	14.4	$	15.3
Non-cash amount of leased assets obtained in exchange for:
Operating lease liability additions, net	$	114.1	$	87.0	$	154.6
Finance lease liability additions, net	$	—	$	—	$	52.9

Lessor Arrangements

Under the Company’s Exhibitor Services Agreement (“ESA”) with National CineMedia, LLC (“NCM”), the nonconsecutive periods of use of the theater screens by NCM qualify as a lease in accordance with ASC Topic 842. See further discussion in Note 7.

The Company rents its theater auditoriums for corporate meetings, screenings, education and training sessions and other private events. These rentals are one-time events and the related revenue is reflected as other revenue on the consolidated statements of income (loss).