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SEC Filings

10-Q
CINEMARK HOLDINGS, INC. filed this Form 10-Q on 11/05/2015
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Table of Contents

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

 

(1) Below is a summary of dividends paid to stockholders during the nine months ended September 30, 2014:

 

Declaration

Date

   Record
Date
   Date Paid    Amount per
Share of
Common
Stock
     Total Amount
Paid
 

02/14/14

   03/04/14    03/19/14    $ 0.25       $ 28,845   

05/22/14

   06/06/14    06/20/14    $ 0.25         28,926   

08/13/14

   08/28/14    09/12/14    $ 0.25         28,929   
        

 

 

    

 

 

 

Total

         $ 0.75       $ 86,700   
        

 

 

    

 

 

 

 

6. Investment in National CineMedia

The Company has an investment in National CineMedia, LLC (“NCM”). NCM operates a digital in-theatre network in the U.S. for providing cinema advertising. Upon joining NCM, the Company entered into an Exhibitor Services Agreement with NCM (“ESA”), pursuant to which NCM provides advertising, promotion and event services to our theatres. As described further in Note 6 to the Company’s financial statements as included in its 2014 Annual Report on Form 10-K, on February 13, 2007, National CineMedia, Inc. (“NCM, Inc.”), an entity that serves as the sole manager of NCM, completed an initial public offering (“IPO”) of its common stock. In connection with the NCM Inc. initial public offering, the Company amended its operating agreement and the ESA. Following the NCM, Inc. IPO, the Company does not recognize undistributed equity in the earnings on its original NCM membership units (referred to herein as the Company’s Tranche 1 Investment) until NCM’s future net earnings, less distributions received, surpass the amount of the excess distribution. The Company recognizes equity in earnings on its Tranche 1 Investment only to the extent it receives cash distributions from NCM. The Company recognizes cash distributions it receives from NCM on its Tranche 1 Investment as a component of earnings as Distributions from NCM. The Company believes that the accounting model provided by ASC 323-10-35-22 for recognition of equity investee losses in excess of an investor’s basis is analogous to the accounting for equity income subsequent to recognizing an excess distribution.

Below is a summary of activity with NCM included in the Company’s condensed consolidated financial statements:

 

     Investment
in NCM
    Deferred
Revenue
    Distributions
from

NCM
    Equity in
Earnings
    Other
Revenue
    Other
Comprehensive
Loss
     Cash
Received
 

Balance as of January 1, 2015

   $ 178,939      $ (335,219           

Receipt of common units due to annual common unit adjustment

     15,421        (15,421   $ —        $ —        $ —        $ —         $ —     

Revenues earned under ESA (1)

     —          —          —          —          (8,478     —           8,478   

Receipt of excess cash distributions

     (9,763     —          (10,859     —          —          —           20,622   

Receipt under tax receivable agreement

     (1,872     —          (2,241     —          —          —           4,113   

Equity in earnings

     6,672        —          —          (6,672     —          —           —     

Equity in other comprehensive income

     (2,734     —          —          —          —          2,734         —     

Amortization of deferred revenue

     —          6,327        —          —          (6,327     —           —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Balance as of and for the nine month period ended September 30, 2015

   $ 186,663      $ (344,313   $ (13,100   $ (6,672   $ (14,805   $ 2,734       $ 33,213   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

(1)  Amount includes the per patron and per digital screen theatre access fees due to the Company, net of amounts due to NCM for on-screen advertising time provided to the Company’s beverage concessionaire of approximately $7,338.

On May 5, 2014, NCM, Inc. announced that it had entered into a merger agreement to acquire Screenvision, LLC. On November 3, 2014, the U.S. Department of Justice (“DOJ”) filed an antitrust lawsuit seeking to enjoin the proposed merger between NCM, Inc. and Screenvision, LLC. On March 16, 2015, NCM, Inc. announced that it had agreed with Screenvision, LLC to terminate the merger agreement. The termination of the merger agreement resulted in a $26.8 million termination payment to Screenvision by NCM, Inc. NCM indemnified NCM, Inc. for the termination fee. The impact of the termination payment and related merger costs resulted in NCM not making an excess cash distribution to its shareholders during the second quarter of 2015.

 

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