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SEC Filings

10-K
CINEMARK HOLDINGS, INC. filed this Form 10-K on 02/23/2018
Entire Document
 

CINEMARK HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

 

Uncertain Tax Positions

The following is a reconciliation of the total amounts of unrecognized tax benefits excluding interest and penalties, for the years ended December 31, 2015, 2016 and 2017:

 

 

 

Year Ended December 31,

 

 

 

2015

 

 

2016

 

 

2017

 

Balance at January 1,

 

$

16,515

 

 

$

17,133

 

 

$

17,403

 

Gross increases - tax positions in prior periods

 

 

40

 

 

 

13

 

 

 

92

 

Gross decreases - tax positions in prior periods

 

 

 

 

 

 

(12

)

Gross increases - current period tax positions

 

 

2,112

 

 

 

923

 

 

 

265

 

Settlements

 

 

(871

)

 

 

(924

)

 

 

(177

)

Foreign currency translation adjustments

 

 

(663

)

 

 

258

 

 

 

695

 

Balance at December 31,

 

$

17,133

 

 

$

17,403

 

 

$

18,266

 

 

The Company had $18,190 and $20,232 of unrecognized tax benefits, including interest and penalties, as of December 31, 2016 and 2017, respectively. Of these amounts, $18,190 and $20,232  represent the amount of unrecognized tax benefits that, if recognized, would impact the effective income tax rate for the years ended December 31, 2016 and 2017, respectively. The Company had $4,111 and $5,288 accrued for interest and penalties as of December 31, 2016 and 2017, respectively.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and in certain state and foreign jurisdictions and are routinely under audit by many different tax authorities. The Company believes that its accrual for tax liabilities is adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. The Company is no longer subject to income tax audits from the Internal Revenue Service for years before 2014. The Company is no longer subject to state income tax examinations by tax authorities in its major state jurisdictions for years before 2013. The Company is no longer subject to non-U.S. income tax examinations by tax authorities in its major non-U.S. tax jurisdictions for years before 2005.

The Company is currently under audit in the non-U.S. tax jurisdictions of Brazil and Chile. The Company believes that it is reasonably possible that the Chile audit will be completed within the next twelve months.

17.

COMMITMENTS AND CONTINGENCIES

Leases — The Company conducts a significant part of its theatre operations in leased properties under noncancelable operating and capital leases with terms generally ranging from 10 to 25 years. In addition to the minimum annual lease payments, some of the leases provide for contingent rentals based on operating results of the theatre and most require the payment of taxes, insurance and other costs applicable to the property. The Company can renew, at its option, a substantial portion of the leases at defined or then market rental rates for various periods. Some leases also provide for escalating rent payments throughout the lease term. A liability for deferred lease expenses of $42,378 and $40,929 at December 31, 2016 and 2017, respectively, has been provided to account for lease expenses on a straight-line basis, where lease payments are not made on such a basis. Theatre rent expense was as follows:

 

 

 

Year Ended December 31,

 

 

 

2015

 

 

2016

 

 

2017

 

Fixed rent expense

 

$

240,057

 

 

$

242,927

 

 

$

247,908

 

Contingent rent and other facility lease expenses

 

 

79,704

 

 

 

78,367

 

 

 

80,289

 

Total facility lease expense

 

$

319,761

 

 

$

321,294

 

 

$

328,197

 

 

F-37