Print Page  |  Close Window

SEC Filings

10-Q
CINEMARK HOLDINGS, INC. filed this Form 10-Q on 05/09/2018
Entire Document
 

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

 

Below is a table summarizing the potential number of shares that could vest under restricted stock unit awards granted during the three months ended March 31, 2018 at each of the three target levels of financial performance (excluding forfeiture assumptions):

 

 

 

Number of

 

 

 

 

 

 

 

Shares

 

 

Value at

 

 

 

Vesting

 

 

Grant

 

at IRR of at least 7%

 

 

74,867

 

 

$

2,922

 

at IRR of at least 9.5%

 

 

149,735

 

 

$

5,844

 

at IRR of at least 13%

 

 

224,602

 

 

$

8,766

 

 

Due to the fact that the IRR for the two-year performance period could not be determined at the time of the 2018 grant, the Company estimated that the most likely outcome is the achievement of the target IRR level. The fair value of the restricted stock unit awards was determined based on the closing price of the Company’s common stock on the date of grant, which was $39.03 per share. The Company assumed a forfeiture rate of 5% for the restricted stock unit awards. If during the service period, additional information becomes available to lead the Company to believe a different IRR level will be achieved for the two-year performance period, the Company will reassess the number of units that are expected to vest for the grant and adjust its compensation expense accordingly on a prospective basis over the remaining service period.

 

 

 

March 31,

 

 

 

2018

 

 

2017

 

Number of restricted stock unit awards that vested during

   the period

 

 

125,063

 

 

 

97,115

 

Fair value of restricted stock unit awards that vested during

   the period

 

$

3,594

 

 

$

4,155

 

Accumulated dividends paid upon vesting of restricted stock

   unit awards

 

$

522

 

 

$

68

 

Compensation expense recognized during the period

 

$

1,051

 

 

$

1,114

 

Income tax benefit recognized upon vesting of restricted stock

   unit awards

 

$

723

 

 

$

1,745

 

 

During the three months ended March 31, 2018, the Company determined that the IRR reached for the restricted stock units granted in February 2016 was 7.2%, compared to a target IRR of 8.0%.  The Company recorded a reduction in compensation expense of $69 during the three months ended March 31, 2018 to reflect the revised number of shares expected to vest in February 2020 for the 2016 restricted stock unit grant.  

 

As of March 31, 2018, the estimated remaining unrecognized compensation expense related to the outstanding restricted stock unit awards was $10,776. The weighted average period over which this remaining compensation expense will be recognized is approximately two years. As of March 31, 2018, the Company had restricted stock units outstanding that represented a total of 596,726 hypothetical shares of common stock, net of actual cumulative forfeitures of 13,690 units, assuming an IRR of 7.2% was achieved for the 2016 grants and the maximum IRR level is achieved for all other grants outstanding.

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, 2018 (1)

 

$

1,174,041

 

 

$

110,038

 

 

$

1,284,079

 

Foreign currency translation adjustments

 

 

 

 

 

(134

)

 

 

(134

)

Balance at March 31, 2018 (1)

 

$

1,174,041

 

 

$

109,904

 

 

$

1,283,945

 

 

 

(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

18