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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

 

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 March 31, 2016:

 

Nominal

Amount

  

Effective

Date

  

Pay Rate

  

Receive Rate

  

Expiration

Date

  

Estimated Total

Fair Value at

March 31, 2016(1)

$ 100,000

   November 2011    1.7150%    1-Month LIBOR    April 2016    $ 53

 

(1)  Included in accounts payable and accrued expenses on the condensed consolidated balance sheet as of March 31, 2016.

The changes in accumulated other comprehensive loss, net of taxes, related to the Company’s interest rate swap agreements for the three months ended March 31, 2016 and 2015 were as follows:

 

     Interest Rate Swaps  
     2016      2015  

Beginning balances – January 1

   $ (234    $ (2,870
  

 

 

    

 

 

 

Other comprehensive loss before reclassifications, net of taxes

     (133      (689

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

     334         1,446   
  

 

 

    

 

 

 

Net other comprehensive income

     201         757   
  

 

 

    

 

 

 

Ending balances – March 31

   $ (33    $ (2,113
  

 

 

    

 

 

 

10. Goodwill and Other Intangible Assets

The Company’s goodwill was as follows:

 

     U.S.
Operating
Segment
     International
Operating
Segment
     Total  

Balance at January 1, 2016 (1)

   $ 1,156,556       $ 90,992       $ 1,247,548   

Acquisition of U.S. theatres

     8,350         —           8,350   

Foreign currency translation adjustments

     —           2,788         2,788   
  

 

 

    

 

 

    

 

 

 

Balance at March 31, 2016 (1)

   $ 1,164,906       $ 93,780       $ 1,258,686   
  

 

 

    

 

 

    

 

 

 

 

(1)  Balances are presented net of accumulated impairment losses of $214,031 for the U.S. operating segment and $27,622 for the international operating segment.

The Company evaluates goodwill for impairment annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value of the goodwill may not be fully recoverable. The Company evaluates goodwill for impairment at the reporting unit level and has allocated goodwill to the reporting unit based on an estimate of its relative fair value. Management considers the reporting unit to be each of its nineteen regions in the U.S. and seven countries internationally (Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala are considered one reporting unit).

For the year ended December 31, 2015, the Company performed a qualitative goodwill impairment assessment on all reporting units except one, in accordance with ASU 2011-08 Testing Goodwill for Impairment (“ASU 2011-08”). The qualitative assessment included consideration of historical and expected future industry performance, estimated future performance of the Company, current industry trading multiples and other economic factors. Based on the qualitative assessment performed, the Company determined that it was not more likely than not that the fair value of the reporting units were less than their carrying values. The Company performed a quantitative two-step approach on a new U.S. region that had not previously been assessed for goodwill impairment. The two-step approach requires the Company to compute the fair value of a reporting unit and compare it with its carrying value. If the carrying value of

 

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