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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

 

the reporting unit exceeds its estimated fair value, a second step is performed to measure the potential goodwill impairment. Significant judgment is involved in estimating cash flows and fair value. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, are based on historical and projected operating performance, recent market transactions and current industry trading multiples. The fair value for the new reporting unit was determined based on a multiple of estimated cash flows, which was eight times, and exceeded its carrying value by more than 10%.

No events or changes in circumstances occurred during the three months ended March 31, 2016 that indicated the carrying value of goodwill might exceed its estimated fair value.

Intangible assets consisted of the following:

 

     Balance at
January 1,
                   Balance at
March 31,
 
   2016      Amortization      Other (1)      2016  

Intangible assets with finite lives:

           

Gross carrying amount

   $ 99,968       $ —         $ (642    $ 99,326   

Accumulated amortization

     (59,706      (1,338      661         (60,383
  

 

 

    

 

 

    

 

 

    

 

 

 

Total net intangible assets with finite lives

   $ 40,262         (1,338      19       $ 38,943   

Intangible assets with indefinite lives:

           

Tradename

     299,382         —           166         299,548   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total intangible assets — net

   $ 339,644       $ (1,338    $ 185       $ 338,491   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)  Includes non-compete agreement related to the acquisition of U.S. theatres, write-off of a fully amortized vendor contract, and foreign currency translation adjustments.

Estimated aggregate future amortization expense for intangible assets is as follows:

 

For the nine months ended December 31, 2016

   $ 3,975   

For the twelve months ended December 31, 2017

     4,957   

For the twelve months ended December 31, 2018

     4,882   

For the twelve months ended December 31, 2019

     3,977   

For the twelve months ended December 31, 2020

     4,252   

Thereafter

     16,900   
  

 

 

 

Total

   $ 38,943   
  

 

 

 

11. Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment indicators on a quarterly basis or whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable.

The Company considers actual theatre level cash flows, budgeted theatre level cash flows, theatre property and equipment carrying values, amortizing intangible asset carrying values, the age of a recently built theatre, competitive theatres in the marketplace, the impact of recent ticket price changes, available lease renewal options and other factors considered relevant in its assessment of impairment of individual theatre assets. Long-lived assets are evaluated for impairment on an individual theatre basis, which the Company believes is the lowest applicable level for which there are identifiable cash flows. The impairment evaluation is based on the estimated undiscounted cash flows from continuing use through the remainder of the theatre’s useful life. The remainder of the theatre’s useful life correlates with the available remaining lease period, which includes the probability of renewal periods, for leased properties and the lesser of twenty years or the building’s remaining useful life for fee-owned properties. If the estimated undiscounted cash flows are not sufficient to recover a long-lived asset’s carrying value, the Company then compares the carrying value of the asset group (theatre) with its estimated fair value. When estimated fair value is determined to be lower than the carrying value of the asset group (theatre), the asset group (theatre) is written down to its estimated fair value. Significant judgment is involved in estimating cash flows and fair value. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, are based on historical and projected operating performance, recent market transactions and current industry trading multiples. Fair value is determined based on a multiple of cash flows, which was six and a half times for the evaluations performed during the three months ended March 31, 2016 and 2015. As of March 31, 2016, the estimated aggregate fair value of the long-lived assets impaired during the three months ended March 31, 2016 was approximately $1,770.

 

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