The Company adopted ASC 842 on January 1, 2019 using the modified retrospective transition method; and therefore, the comparative information has not been adjusted for the years ended December 31, 2018 and December 31, 2017 or as of December 31, 2018. Upon transition to the new standard, the Company elected the package of practical expedients which permitted the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs.

The following table provides the operating and finance lease ROU assets and lease liabilities:

(1)Included in the operating lease right-of-use assets and operating lease liabilities are assets and liabilities for leases related to previous build-to-suit failed sale leaseback transactions, that were derecognized and recorded as a cumulative effect adjustment to accumulated deficit upon adoption of ASC 842. These leases were classified and remeasured at January 1, 2019 as operating right-of-use assets and operating lease liabilities.

(2)Corresponding with the adoption of ASC 842, the Company renamed previously classified capital lease assets and capital lease obligations under ASC 840 as finance lease right-of-use assets and finance lease liabilities, respectively. The Company recognized the finance lease right-of-use assets and finance lease liabilities on January 1, 2019 at the carrying amount of the capital lease asset and capital lease obligation as of December 31, 2018.

The cumulative effect adjustment to accumulated deficit at January 1, 2019 is as follows:


	Accumulated
(In millions)	Deficit
Balance as of December 31, 2018	$	(550.9)
Derecognition of existing assets for certain sale leaseback transactions previously recorded in property, net		(405.9)
Derecognition of existing liabilities for certain sale leaseback transactions previously recorded in current maturities of capital and financing lease obligations and in finance lease liabilities		427.5
Derecognition of deferred gains from the sale leaseback transactions previously recorded in other long-term liabilities		102.4
Difference in fair value compared to the basis of the right-of-use assets for previously impaired asset groups		(49.0)
Deferred taxes		1.2
Cumulative effect adjustment to accumulated deficit		76.2
Balance as of January 1, 2019	$	(474.7)

The following is the impact of the adoption of ASC 842 on the Company’s consolidated statement of operations for the year ended December 31, 2019:


	Year Ended December 31, 2019
	Without Adoption of		U.S. Markets		International Markets
(In millions)	ASC 842		Adjustments		Adjustments		As Reported
Operating costs and expenses
Rent (1)(2)(4)	$	851.3	$	69.5	$	47.0	$	967.8
Depreciation and amortization (2)(3)		546.0		(53.6)		(42.4)		450.0
Operating costs and expenses		5,314.5		15.9		4.6		5,335.0
Operating income		156.5		(15.9)		(4.6)		136.0

Other expense (income)
Interest expense:
Capital and financing lease obligations (1)		35.2		(13.2)		(14.4)		7.6
Net loss		(156.2)		(2.7)		9.8		(149.1)

(1)Cash rent payments for build-to-suit failed sale leasebacks of $44.0 million and $39.6 million for U.S. Markets and International markets, respectively, are accounted for as operating leases under ASC 842 that were previously accounted for as financing leases under ASC 840.

(2)Non-cash amortization expense for favorable lease terms of $18.3 million and $7.4 million for U.S. Markets and International markets, respectively, reclassified to rent expense and amortized over the shorter base lease term under ASC 842.

(3)Depreciation on build-to-suit failed sale leaseback buildings that are eliminated upon adoption of ASC 842.

(4)Amortization of deferred gains on sale leaseback transactions of $7.2 million for U.S. markets is eliminated upon adoption of ASC 842.

The following table reflects the lease costs for the year ended December 31, 2019:


		Year Ended
(In millions)	Consolidated Statement of Operations	December 31, 2019
Operating lease cost
Theatre properties	Rent	$	876.0
Theatre properties	Operating expense		9.1
Equipment	Operating expense		14.4
Office and other	General and administrative: other		5.5
Finance lease cost
Amortization of finance lease assets	Depreciation and amortization		9.2
Interest expense on lease liabilities	Finance lease obligations		7.6
Variable lease cost
Theatre properties	Rent		91.8
Equipment	Operating expense		56.3
Total lease cost		$	1,069.9

The following table represents the weighted-average remaining lease term and discount rate as of December 31, 2019:


	As of December 31, 2019
	Weighted Average		Weighted Average
	Remaining		Discount
Lease Term and Discount Rate	Lease Term (years)		Rate
Operating leases		10.2		7.2%
Finance leases		13.0		6.5%

Cash flow and supplemental information is presented below:


	Year Ended
(In millions)	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in finance leases	$	(7.6)
Operating cash flows used in operating leases		(941.6)
Financing cash flows used in finance leases		(10.9)

Landlord contributions:
Operating cashflows provided by operating leases		106.5
Supplemental disclosure of noncash leasing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities (1)		463.2

(1)

Includes lease extensions and an option exercise.

Minimum annual payments required under existing operating and finance lease liabilities, (net present value thereof) as of December 31, 2019 are as follows:


	Operating Lease		Financing Lease
(In millions)	Payments (1)(2)		Payments
2020	$	952.5	$	16.4
2021		899.1		15.4
2022		836.1		14.9
2023		743.6		11.8
2024		667.2		10.6
Thereafter		3,738.4		80.5
Total lease payments		7,836.9		149.6
Less imputed interest		(2,337.3)		(49.7)
Total	$	5,499.6	$	99.9

(1)Included in this column upon adoption of ASC 842 are liabilities for leases that were previously classified as build-to-suit failed sale leaseback transactions that were included in the capital and finance lease obligations columns in the prior year.

(2)Included in this column upon adoption of ASC 842 are fixed executory costs that were previously excluded as part of the minimum lease payments. Fixed executory costs, which primarily consist of common area maintenance, insurance and taxes that meet the classification of fixed payments are included as part of the minimum lease payments.

As of December 31, 2019, the Company had signed additional operating lease agreements for 11 theatres that have not yet commenced of approximately $226.8 million, which are expected to commence between 2020 and 2023, and carry lease terms of approximately 5 to 25 years. The timing of lease commencement is dependent on the landlord providing the Company with control and access to the related facility.

During the year ended December 31, 2018, the Company modified the terms of an existing operating lease to reduce the lease term. The Company received a $35.0 million incentive from the landlord to enter into the new lease agreement. The Company has recorded amortization of the lease incentive as a reduction to rent expense on a straight-line basis over the remaining lease term which reduced rent expense by $35.0 million during the year ended December 31, 2018.