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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

 

During the three months ended September 30, 2015 and 2014, the Company recorded equity in earnings of approximately $6,263 and $5,389, respectively. During the nine months ended September 30, 2015 and 2014, the Company recorded equity in earnings of approximately $6,672 and $5,746, respectively.

Pursuant to a Common Unit Adjustment Agreement dated as of February 13, 2007 between NCM, Inc. and the Company, AMC Entertainment, Inc. (“AMC”) and Regal Entertainment Group (“Regal”), annual adjustments to the common membership units are made primarily based on increases or decreases in the number of theatre screens operated and theatre attendance generated by each Founding Member. As further discussed in Note 6 to the Company’s financial statements as included in its 2014 Annual Report on Form 10-K, the common units received are recorded at fair value as an increase in the Company’s investment in NCM with an offset to deferred revenue. The deferred revenue is amortized over the remaining term of the ESA. During March 2015, NCM performed its annual common unit adjustment calculation under the Common Unit Adjustment Agreement. As a result of the calculation, the Company received an additional 1,074,910 common units of NCM, each of which is convertible into one share of NCM, Inc. common stock. The Company recorded the additional common units received at fair value with a corresponding adjustment to deferred revenue of approximately $15,421. The deferred revenue will be recognized over the remaining term of the ESA, which is approximately 21 years.

As of September 30, 2015, the Company owned a total of 25,631,046 common units of NCM, representing an ownership interest of approximately 20%.

Below is summary financial information for NCM for the three and nine months ended September 25, 2014 and the three and six months ended July 2, 2015 (the financial information for the period ended October 1, 2015 is not yet available):

 

     Three Months
Ended

July 2, 2015
     Six Months
Ended
July 2, 2015
     Three Months
Ended
September 25, 2014
     Nine Months
Ended
September 25, 2014
 

Gross revenues

   $ 121,532       $ 198,399       $ 100,738       $ 270,911   

Operating income

   $ 16,658       $ 31,276       $ 42,858       $ 97,756   

Net earnings

   $ 42,404       $ 3,675       $ 26,909       $ 50,612   

 

7. Other Investments

The Company had the following other investments at September 30, 2015:

 

Digital Cinema Implementation Partners LLC (“DCIP”), equity method investment

   $  65,188   

RealD, Inc. (“RealD”), investment in marketable security

     11,751   

AC JV, LLC, equity method investment

     8,923   

Digital Cinema Distribution Coalition (“DCDC”), equity method investment

     2,562   

Other

     635   
  

 

 

 

Total

   $ 89,059   
  

 

 

 

Below is a summary of activity for each of the investments for the nine months ended September 30, 2015:

 

     DCIP     RealD     AC JV,
LLC
     DCDC      Other     Total  

Balance at January 1, 2015

   $ 51,277     $ 14,429     $ 7,899       $ 2,438      $ 1,615     $ 77,658  

Cash contributions, net of cash distributions received

     1,635        —          —           —           —          1,635   

Equity in income

     12,552        —          1,024         124         —          13,700   

Equity in comprehensive loss

     (276     —          —           —           —          (276

Unrealized holding loss

     —          (2,678     —           —           —          (2,678

Sale of investment in Taiwan (1)

     —          —          —           —           (1,383     (1,383

Other

     —          —          —           —           403        403   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Balance at September 30, 2015

   $ 65,188      $ 11,751      $ 8,923       $ 2,562       $ 635      $ 89,059   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)  The Company sold its investment in a Taiwan joint venture for approximately $2,634, resulting in a gain of $1,251, which is included in (gain) loss on sale of assets and other for the three and nine months ended September 30, 2015.

 

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