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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

 

9. Interest Rate Swap Agreements

The Company is currently a party to one interest rate swap agreement that is used to hedge interest rate risk associated with the variable interest rates on the Company’s term loan debt and qualify for cash flow hedge accounting. The fair value of the interest rate swap is recorded on the Company’s condensed consolidated balance sheet as an asset or liability with the effective portion of the interest rate swap’s gains or losses reported as a component of accumulated other comprehensive loss and the ineffective portion reported in earnings. The changes in fair values are reclassified from accumulated other comprehensive loss into earnings in the same period that the hedged item affects earnings.

The valuation technique used to determine fair value is the income approach and under this approach, the Company uses projected future interest rates as provided by its swap counterparty and the fixed rate that the Company is obligated to pay under the agreement. Therefore, the Company’s measurements use significant unobservable inputs, which fall in Level 3 of the U.S. GAAP hierarchy as defined by FASB ASC Topic 820-10-35. There were no changes in valuation techniques during the period and no transfers in or out of Level 3. See Note 12 for a summary of unrealized gains or losses recorded in accumulated other comprehensive loss and earnings.

Below is a summary of the Company’s current interest rate swap agreement designated as a cash flow hedge as of September 30, 2015:

 

Nominal

Amount

  Effective
Date
  Pay Rate   Receive Rate   Expiration
Date
  Estimated Total
Fair Value at
September 30,
2015(1)
$100,000   November 2011   1.7150%   1-Month LIBOR   April 2016   $781

 

(1)  Included in accounts payable and accrued expenses on the condensed consolidated balance sheet as of September 30, 2015.

The Company was previously a party to two interest rate swap agreements that expired in September 2015.

The changes in accumulated other comprehensive loss, net of taxes, related to the Company’s interest rate swap agreements for the three and nine months ended September 30, 2015 and 2014 were as follows:

 

     Interest Rate Swaps  
     2015      2014  

Beginning balances – July 1

   $ (1,258    $ (4,558
  

 

 

    

 

 

 

Other comprehensive loss before reclassifications, net of taxes

     (679      (641

Amounts reclassified from accumulated other comprehensive loss to interest expense, net of taxes

     1,446         1,533   
  

 

 

    

 

 

 

Net other comprehensive income

     767         892   
  

 

 

    

 

 

 

Ending balances- September 30

   $ (491    $ (3,666
  

 

 

    

 

 

 
     Interest Rate Swaps  
     2015      2014  

Beginning balances – January 1

   $ (2,870    $ (5,716
  

 

 

    

 

 

 

Other comprehensive loss before reclassifications, net of taxes

     (2,028      (2,468

Amounts reclassified from accumulated other comprehensive loss to interest expense, net of taxes

     4,407         4,518   
  

 

 

    

 

 

 

Net other comprehensive income

     2,379         2,050   
  

 

 

    

 

 

 

Ending balances – September 30

   $ (491    $ (3,666
  

 

 

    

 

 

 

 

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