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SEC Filings

10-Q
CINEMARK HOLDINGS, INC. filed this Form 10-Q on 05/10/2016
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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

 

deferred revenue is amortized over the remaining term of the ESA. During March 2016, 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 753,598 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 $11,111. The deferred revenue will be recognized over the remaining term of the ESA, which is approximately 20 years.

As of March 31, 2016, the Company owned a total of 26,384,644 common units of NCM, representing an ownership interest of approximately 19%. The estimated fair value of the Company’s investment in NCM was approximately $401,310 as of March 31, 2016, using NCMI’s stock price as of March 31, 2016 of $15.21 per share.

Below is summary financial information for NCM for the periods indicated:

 

     Quarter Ended      Quarter Ended  
     March 31, 2016      April 2, 2015  

Gross revenues

   $ 76,242       $ 76,867   

Operating income (loss)

   $ 5,751       $ (24,111

Net loss

   $ (7,510    $ (38,729

7. Other Investments

The Company had the following other investments at March 31, 2016:

 

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

   $ 75,690   

AC JV, LLC, equity method investment

     7,636   

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

     3,043   

Other

     662   
  

 

 

 

Total

   $ 87,031   
  

 

 

 

Below is a summary of activity for each of the investments for the three months ended March 31, 2016:

 

     DCIP     RealD     AC JV,
LLC
     DCDC      Other     Total  

Balance at January 1, 2016

   $ 71,579      $ 12,900     $ 7,269       $ 2,562      $ 663     $ 94,973   

Cash contributions

     12        —          —           —           —          12   

Equity in income

     4,421        —          367         481         —          5,269   

Equity in comprehensive loss

     (322     —          —           —           —          (322

Sale of investment (1)

     —          (12,900     —           —           —          (12,900

Other

     —          —          —           —           (1     (1
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Balance at March 31, 2016

   $ 75,690      $ —        $ 7,636       $ 3,043       $ 662      $ 87,031   
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

(1) See further discussion of the sale of the investment held by the Company under RealD, Inc. below.

Digital Cinema Implementation Partners LLC

On February 12, 2007, the Company, AMC and Regal entered into a joint venture known as DCIP to facilitate the implementation of digital cinema in the Company’s theatres and to establish agreements with major motion picture studios for the financing of digital cinema. On March 10, 2010, the Company signed a master equipment lease agreement and other related agreements (collectively the “Agreements”) with Kasima LLC (“Kasima”), which is an indirect subsidiary of DCIP and a related party to the Company. Upon signing the Agreements, the Company contributed the majority of its U.S. digital projection systems to DCIP, which DCIP then contributed to Kasima. The Company has a variable interest in Kasima through the terms of its master equipment lease agreement; however, the Company has determined that it is not the primary beneficiary of Kasima, as the Company does not have the ability to direct the activities of Kasima that most significantly impact Kasima’s economic performance. As of March 31, 2016, the Company had a 33% voting interest in DCIP and a 24.3% economic interest in DCIP. The Company accounts for its investment in DCIP and its subsidiaries under the equity method of accounting.

 

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