Table of Contents WEWORK COMPANIES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2019 (UNAUDITED) All cash payments for lease costs and cash receipts for lease incentives are included within operating activities in the statement of cash flows. Finance Lease Cost—For leases that qualify as a finance lease, the right-of-use assets related to finance lease obligations are recorded in property and equipment as finance lease assets and are depreciated over the shorter of the estimated useful life or the lease term and the expense is included as a component of depreciation and amortization expense on the accompanying consolidated statements of operations. Payments made under finance leases are allocated between a reduction of the lease obligation and interest expense using the effective interest method. In the statement of cash flows, cash payments associated with finance leases are allocated between financing cash flows, for the portion related to the reduction of the lease obligation, and operating cash flows for the portion representing interest expense. The real estate operating lease cost incurred before a location opens for member operations is recorded in pre-opening location expenses on the accompanying condensed consolidated statements of operations. Once a location opens for member operations, the entire real estate operating lease cost is included in location operating expenses on the accompanying condensed consolidated statement of operations. Real estate operating lease expense for Meetup, Flatiron School, Conductor and Managed by Q offerings is included in other operating expenses on the accompanying condensed consolidated statement of operations, while real estate operating lease cost for other We Company offerings are included in growth and new market development expenses on the accompanying condensed consolidated statement of operations. Real estate operating lease cost for the Company’s corporate offices is included in general and administrative expenses on the accompanying condensed consolidated statements of operations. “Lease cost contractually paid or payable” for each period presented below represents cash payments due for base and contingent rent, common area maintenance amounts and real estate taxes payable under the Company’s lease agreements, recorded on an accrual basis of accounting, regardless of the timing of when such amounts were actually paid. The non-cash adjustment to record lease cost “free rent” periods and lease cost escalation clauses on a straight-line basis over the term of the lease beginning on the date of initial possession is presented as “Non-cash GAAP straight-line lease cost” below. The tenant improvement allowances and broker commissions received by the Company for negotiating the Company’s leases are amortized on a straight-line basis over the lease term, as a reduction to the total operating lease cost and are presented as “amortization of lease incentives” below. The components of total real estate operating lease cost for leases recorded under ASC 840 are as follows: Six Months Ended June 30, 2018 Reported in: Growth and Location Pre-opening Other General & New Market Operating Location Operating Administrative Development (Amounts in thousands) Expenses Expenses Expenses Expenses Expenses Total (1) Lease cost contractually paid or payable for the period $337,729 $ 35,068 $ 1,835 $ 5,183 $ 84 $379,899 Non-cash GAAP straight-line lease cost 117,178 119,699 5 1,080 — 237,962 Amortization of lease incentives (38,891) (1,476) — (265) — (40,632) Total real estate operating lease cost $416,016 $ 153,291 $ 1,840 $ 5,998 $ 84 $577,229 F-90