The Company adopted ASC 842, Leases, as of January 1, 2019 using the modified retrospective approach and elected the “Comparatives Under 840 Option” allowing the Company to not recast comparative periods in the period of adoption but present those periods under historical requirements of ASC 840. The Company has land, warehouse and office space, and equipment leases which are classified as either operating or financing obligations.

Under the provisions of ASC 842, right to use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Lease terms may include options to renew when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the term of the operating lease.

The present value of future minimum lease payments is calculated using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate, which reflects the rate of interest the Company would pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. As most of the Company’s leases do not provide an implicit rate, the Company uses incremental borrowing rates based on the information available at commencement date in determining the present value of the lease payments. In calculating the incremental borrowing rates, the Company considered recent ratings from credit agencies, recent trading prices on the Company’s debt, and current lease demographic information. The Company used the incremental borrowing rates on December 31, 2018 for newly recognized operating leases that commenced prior to that date. The Company applies the incremental borrowing rates at a portfolio level based on lease terms.

The Company has elected not to recognize on the balance sheet leases with an initial and expected term of 12 months or less, instead lease expense is recognized for these short-term leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed upon adoption of ASC 842, the Company has elected to combine lease and non-lease components for each class of underlying asset based on a practical expedient permitted under ASC 842.

Some of the Company’s leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years or more. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or a purchase option reasonably certain of exercise.

Certain of the Company’s lease agreements include rental payments based on a percentage of sales over contractual levels and others include rental payments adjusted periodically for inflation. These variable lease payments are typically recognized when the underlying event occurs and are included in operating expenses in the Company's unaudited condensed consolidated statements of comprehensive loss in the same line item as the expense arising from fixed lease payments. The Company’s lease agreements do not contain any material residual value guarantees, material restrictive covenants or material variable lease costs other than those described below related to the Company’s land lease.

The Company has a land lease which consists of a long-term lease with the City of San Diego covering approximately 190 acres, including approximately 17 acres of water in Mission Bay Park, California (the “Premises”). Under the terms of the lease, the Premises must be used as a marine park facility and related uses. In addition, the Company may not operate another marine park facility within a radius of 560 miles from the City of San Diego. The annual rent under the lease is variable and calculated on the basis of a specified percentage of the Company’s gross income from the Premises, or the minimum yearly rent, whichever is greater. The current lease term for the Premises ends in June 2048 with a corresponding lease liability being amortized using an estimated incremental borrowing rate of 8.2%. The minimum yearly rent is adjusted every three years to an amount equal to 80% of the average accounting year rent actually paid for the three previous years. The current minimum yearly rent is approximately $10.4 million, which is subject to adjustment on January 1, 2020. Actual payments may vary from the annual straight-line minimum base rent based on shift of seasonal performance results. Rent payments related to the Premises for the three months ended March 31, 2019 were approximately $1.7 million. Upon adoption of ASC 842, the Company also reclassified a favorable lease asset net balance of $14.0 million related to the Premises from other intangible assets, net, to right of use assets-operating on the accompanying unaudited condensed consolidated balance sheet as of March 31, 2019.

The tables below present the lease balances and their classification on the accompanying unaudited condensed consolidated balance sheets as of March 31, 2019 and December 31, 2018:

		March 31,
Leases	Classification	2019
Assets		(In thousands)
Operating leases	Right of use assets - operating	$	145,807
Financing leases	Other assets, net		3,990
Total lease assets		$	149,797
Liabilities
Current
Operating leases	Operating lease obligations		4,118
Financing leases	Other accrued liabilities		693
Noncurrent
Operating leases	Long-term operating lease obligations		128,119
Financing leases	Other liabilities		3,333
Total lease liabilities		$	136,263

		December 31,
Leases	Classification	2018
Assets		(In thousands)
Favorable lease asset	Other intangible assets, net	$	13,961
Capital leases	Property and equipment, at cost		3,066
Capital leases, accumulated depreciation	Accumulated depreciation		(122	)
Total lease assets			16,905
Liabilities
Current
Capital leases	Other accrued liabilities	$	143
Noncurrent
Capital leases	Other liabilities		2,822
Total lease liabilities		$	2,965

The table below presents the lease costs and their classification on the accompanying unaudited condensed consolidated statements of comprehensive loss for the three months ended March 31, 2019:

Lease Cost	Classification	(In thousands)
Operating lease cost	Operating expenses	$	2,758
Operating lease cost	Selling, general and administrative expenses		137
Financing lease cost
Amortization of leased assets	Depreciation and amortization		184
Interest on lease liabilities	Interest expense		40
Net lease cost		$	3,119

In addition to the operating lease costs above, short term rent expense for the three months ended March 31, 2019 was approximately $0.8 million and is included in operating expenses and selling, general and administrative expenses on the accompanying unaudited condensed consolidated statements of comprehensive loss.

	Operating leases
Years Ending December 31,	Land lease			Other operating leases			Total operating leases			Financing leases
	(In thousands)
Remainder of 2019	$	7,801		$	3,109		$	10,910		$	622
2020		10,401			3,824			14,225			825
2021		10,401			3,478			13,879			332
2022		10,401			2,497			12,898			208
2023		10,401			1,954			12,355			204
2024		10,401			1,740			12,141			201
Thereafter		244,431			2,993			247,424			2,593
Total lease payments		304,237			19,595			323,832			4,985
Less: Imputed Interest		(188,224	)		(3,371	)		(191,595	)		(959	)
Present value of lease liabilities	$	116,013		$	16,224		$	132,237		$	4,026

Operating lease payments include approximately $8.2 million related to options to extend lease terms that are reasonably certain of being exercised.

The table below presents the future minimum lease payments for long-term non-cancellable operating and financing leases under ASC 840 as of December 31, 2018:

Years Ending December 31,	Operating leases		Financing leases
	(In thousands)
2019	$	16,578	$	231
2020		14,179		226
2021		13,111		220
2022		11,416		208
2023		10,479		204
Thereafter		265,234		2,794
Total lease payments	$	330,997		3,883
Less: Interest				(918	)
Total principal payable on financing leases			$	2,965

The table below presents the weighted average remaining lease terms and applicable discount rates as of March 31, 2019:

The table below presents the cash flows and supplemental information associated with the Company’s leasing activities for the three months ended March 31, 2019:

All long-lived assets, including right to use assets associated with leases, are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable. The measurement of an impairment loss to be recognized is based upon the difference between the estimated fair value and the carrying amounts of the assets. Fair value is generally determined based upon a discounted cash flow analysis.