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SEC Filings

10-Q
CINEMARK HOLDINGS, INC. filed this Form 10-Q on 08/09/2016
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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

 

Digital Cinema Distribution Coalition

Digital Cinema Distribution Coalition (“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 $465 and $390 during the six months ended June 30, 2016 and 2015, 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.

8. Treasury Stock and Share Based Awards

Treasury Stock — Treasury stock represents shares of common stock repurchased or withheld by the Company and not yet retired. The Company has applied the cost method in recording its treasury shares. Below is a summary of the Company’s treasury stock activity for the six months ended June 30, 2016:

 

     Number of
Treasury
Shares
     Cost  

Balance at January 1, 2016

     4,183,504       $ 66,577   

Restricted stock withholdings (1)

     205,860         6,802   

Restricted stock forfeitures

     31,243         —     
  

 

 

    

 

 

 

Balance at June 30, 2016

     4,420,607       $ 73,379   
  

 

 

    

 

 

 

 

(1)  The Company withheld restricted shares as a result of the election by certain employees to satisfy their tax liabilities upon vesting in restricted stock and restricted stock units. The Company determined the number of shares to be withheld based upon market values ranging from $29.17 to $35.83 per share.

As of June 30, 2016, the Company had no plans to retire any shares of treasury stock.

Restricted Stock – During the six months ended June 30, 2016, the Company granted 322,700 shares of restricted stock to employees and directors of the Company. The fair value of the restricted stock granted was determined based on the market value of the Company’s common stock on the dates of grant, which ranged from $29.83 to $36.46 per share. The Company assumed forfeiture rates ranging from 0% to 10% for the restricted stock awards. Restricted stock granted to employees vests over service periods that range from approximately one month to four years. Restricted stock granted to the Company’s directors vests over a one-year service period. The recipients of restricted stock are entitled to receive dividends and to vote their respective shares, however, the sale and transfer of the restricted shares is prohibited during the restriction period.

Below is a summary of restricted stock activity for the six months ended June 30, 2016:

 

     Shares of
Restricted
Stock
     Weighted
Average
Grant Date
Fair Value
 

Outstanding at January 1, 2016

     757,775       $ 30.73   

Granted

     322,700       $ 30.90   

Vested

     (423,772    $ 26.46   

Forfeited

     (31,243    $ 33.02   
  

 

 

    

Outstanding at June 30, 2016

     625,460       $ 33.59   
  

 

 

    

Unvested restricted stock at June 30, 2016

     625,460       $ 33.59   
  

 

 

    

 

     Six Months Ended June 30,  
     2016      2015  

Compensation expense recognized during the period

   $ 4,708       $ 4,736   

Fair value of restricted shares that vested during the period

   $ 14,423       $ 14,308   

Income tax deduction upon vesting of restricted stock awards

   $ 5,454       $ 3,788   

 

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