XML 62 R13.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Investment in National CineMedia | 3 Months Ended
--- | ---
Mar. 31, 2012
Investment in National Cine Media [Abstract] |
Investment in National CineMedia | 6. Investment in National CineMedia The Company has an investment in National CineMedia, LLC (“NCM”). NCM operates a digital in-theatre network in the U.S. for providing cinema advertising and non-film events. Upon joining NCM, the Company entered into an Exhibitor Services Agreement with NCM (“ESA”), pursuant to which NCM provides advertising, promotion and event services to our theatres. As described further in Note 6 to the Company’s financial statements as included in its 2011 Annual Report on Form 10-K, on February 13, 2007, National CineMedia, Inc. (“NCM, Inc.”), an entity that serves as the sole manager of NCM, completed an IPO of its common stock. In connection with the NCM Inc. initial public offering, the Company amended its operating agreement and the ESA. Following the NCM, Inc. IPO, the Company does not recognize undistributed equity in the earnings on its original NCM membership units (referred to herein as the Company’s Tranche 1 Investment) until NCM’s future net earnings, less distributions received, surpass the amount of the excess distribution. The Company recognizes equity in earnings on its Tranche 1 Investment only to the extent it receives cash distributions from NCM. The Company recognizes cash distributions it receives from NCM on its Tranche 1 Investment as a component of earnings as Distributions from NCM. The Company believes that the accounting model provided by ASC 323-10-35-22 for recognition of equity investee losses in excess of an investor’s basis is analogous to the accounting for equity income subsequent to recognizing an excess distribution. Below is a summary of activity with NCM included in the Company’s condensed consolidated financial statements:
|  | Investment |  |  | Deferred |  |  | Distributions |  |  | Equity in |  |  | Other |  |  | Cash |
|  | in NCM |  |  | Revenue |  |  | from NCM |  |  | Earnings |  |  | Revenue |  |  | Received |
Balance as of January 1, 2012 |  | $ | 72,040 |  |  | $ | (236,310 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Receipt of common units due to annual common unit adjustment |  |  | 9,137 |  |  |  | (9,137 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Revenues earned under ESA (1) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,810 | ) |  |  | 1,810 |
Receipt of excess cash distributions |  |  | (1,691 | ) |  |  | — |  |  |  | (5,108 | ) |  |  | — |  |  |  | — |  |  |  | 6,799 |
Receipt under tax receivable agreement |  |  | (967 | ) |  |  | — |  |  |  | (2,923 | ) |  |  | — |  |  |  | — |  |  |  | 3,890 |
Equity in earnings |  |  | 716 |  |  |  | — |  |  |  | — |  |  |  | (716 | ) |  |  | — |  |  |  | — |
Amortization of deferred revenue |  |  | — |  |  |  | 958 |  |  |  | — |  |  |  | — |  |  |  | (958 | ) |  |  | — |
Balance as of and for the period ended March 31, 2012 |  | $ | 79,235 |  |  | $ | (244,489 | ) |  | $ | (8,031 | ) |  | $ | (716 | ) |  | $ | (2,768 | ) |  | $ | 12,499 |
(1 ) | Amount includes the per patron and per digital screen theatre access fees due to the Company, net of amounts due to NCM for on-screen advertising time provided to the Company’s beverage concessionaire of approximately $2,722.
During the three months ended March 31, 2012 and 2011, the Company recorded equity earnings of approximately $716 and $904, respectively. Pursuant to a Common Unit Adjustment Agreement dated as of February 13, 2007 between NCMI and the Company, AMC Entertainment, Inc. and Regal Entertainment Group, which we refer to collectively as the Founding Members, annual adjustments to the common membership units are made primarily based on increases or decreases in the number of theatre screens operated and theatre attendance generated by each Founding Member. To account for the receipt of additional common units under the Common Unit Adjustment Agreement, the Company follows the guidance in FASB ASC 323-10-35-29 (formerly EITF 02-18, “Accounting for Subsequent Investments in an Investee after Suspension of Equity Loss Recognition”) by analogy, which also refers to AICPA Technical Practice Aid 2220.14, which indicates that if a subsequent investment is made in an equity method investee that has experienced significant losses, the investor must determine if the subsequent investment constitutes funding of prior losses. The Company concluded that the construction or acquisition of new theatres that has led to the common unit adjustments equates to making additional investments in NCM. The Company evaluated the receipt of the additional common units in NCM and the assets exchanged for these additional units and have determined that the right to use its incremental new screens would not be considered funding of prior losses. The Company accounts for these additional common units, which it refers to herein as its Tranche 2 Investment, as a separate investment than its Tranche 1 Investment. The common units received are recorded at fair value as an increase in the Company’s investment in NCM with an offset to deferred revenue. The deferred revenue is amortized over the remaining term of the ESA. The Company’s Tranche 2 Investment is accounted for following the equity method, with undistributed equity earnings related to its Tranche 2 Investment included as a component of earnings in equity in income of affiliates and distributions received related to its Tranche 2 Investment are recorded as a reduction of its investment basis. In the event that a common unit adjustment is determined to be a negative number, the Founding Member can elect to either transfer and surrender to NCM the number of common units equal to all or part of such Founding Member’s common unit adjustment or to pay to NCM an amount equal to such Founding Member’s common unit adjustment calculated in accordance with the Common Unit Adjustment Agreement. If the Company then elects to surrender common units as part of a negative common unit adjustment, the Company would record a reduction to deferred revenue at the then fair value of the common units surrendered and a reduction of the Company’s Tranche 2 Investment at an amount equal to the weighted average cost for Tranche 2 common units, with the difference between the two values recorded as a gain or loss on sale of assets and other. During March 2012, NCM performed its annual common unit adjustment calculation under the Common Unit Adjustment Agreement. As a result of the calculation, the Company received an additional 598,724 common units of NCM, each of which is convertible into one share of NCM, Inc. common stock. The Company recorded the additional common units received at fair value as part of its Tranche 2 Investment with a corresponding adjustment to deferred revenue of approximately $9,137. The deferred revenue will be recognized over the remaining term of the ESA, which is approximately 24 years. As of March 31, 2012, the Company owned a total of 18,094,644 common units of NCM, representing an ownership interest of approximately 16%. Below is summary financial information for NCM for the year ended December 29, 2011 (financial information was not yet available for the three months ended March 29, 2012).
|  | Year Ended December 29, 2011 |
Gross revenues |  | $ | 435,434 |
Operating income |  | $ | 193,716 |
Net earnings |  | $ | 134,524 |

X
- Details
Name: | cnk_InvestmentInCompanyOneAbstract
Namespace Prefix: | cnk_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition Investment in company one equity method investee. + References No definition available. + Details
Name: | cnk_InvestmentInCompanyOneEquityMethodInvesteeTextBlock
Namespace Prefix: | cnk_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration