CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
The Company licenses 3-D systems from RealD. The Company owns 1,222,780 shares of RealD and accounts for its investment in RealD as a
marketable security. The Company has determined that its RealD shares are available-for-sale securities in accordance with ASC Topic 320-10-35-1, therefore unrealized holding gains and losses are reported as a component of accumulated other
comprehensive loss until realized.
As of September 30, 2015, the estimated fair value of the Companys investment in RealD was
$11,751, which is based on the closing price of RealDs common stock on September 30, 2015, and falls under Level 1 of the U.S. GAAP fair value hierarchy as defined by ASC Topic 820-10-35. The Company paid licensing fees of $11,054 and
$12,897 during the nine months ended September 30, 2015 and 2014, respectively, which are included in utilities and other costs on the condensed consolidated statements of income.
AC JV, LLC
December 2013, the Company, Regal, AMC (the AC Founding Members) and NCM entered into a series of agreements that resulted in the formation of AC JV, LLC (AC), a new joint venture that now owns Fathom Events
(consisting of Fathom Events and Fathom Consumer Events) formerly operated by NCM. The Fathom Events business focuses on the marketing and distribution of live and pre-recorded entertainment programming to various theatre operators to provide
additional programs to augment their feature film schedule. The Fathom Consumer Events business includes live and pre-recorded concerts featuring contemporary music, opera and symphony, DVD product releases and marketing events, theatrical
premieres, Broadway plays, live sporting events and other special events. The Company paid event fees of $9,031 and $0 for the nine months ended September 30, 2015 and 2014, respectively, which are included in film rentals and advertising costs
on the condensed consolidated statements of income.
AC was formed by the AC Founding Members and NCM. NCM, under a contribution
agreement, contributed the assets associated with its Fathom Events division to AC in exchange for 97% ownership of the Class A Units of AC. Under a separate contribution agreement, the Founding Members each contributed cash of approximately
$268 to AC in exchange for 1% of the Class A Units of AC. Subsequently, NCM and the Founding Members entered into a Membership Interest Purchase Agreement, under which NCM sold each of the Founding Members 31% of its Class A Units in AC,
the aggregate value of which was determined to be $25,000, in exchange for a six-year Promissory Note. Each of the Founding Members Promissory Notes were originally for $8,333, bear interest at 5% per annum and require annual principal
and interest payments, with the first of such payments made during December 2014.
Digital Cinema Distribution Coalition
Digital Cinema Distribution Coalition, LLC (DCDC) is a joint venture among the Company, Universal, Warner Bros., AMC and Regal.
DCDC operates a satellite distribution network that distributes all digital content to U.S. theatres via satellite. The Company has an approximate 14.6% ownership in DCDC. The Company paid approximately $542 and $589 during the nine months ended
September 30, 2015 and 2014, respectively, related to content delivery services provided by DCDC. These fees are included in film rentals and advertising costs on the condensed consolidated statements of income.