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Summary Of Significant Accounting Policies | 12 Months Ended
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Dec. 31, 2016
Summary Of Significant Accounting Policies [Abstract] |
Summary Of Significant Accounting Policies | NOTE 2 – Summary of Significant Accounting Policies Significant Accounting Policies ﻿ Basis of Consolidation Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). These consolidated financial statements include the accounts of our wholly-owned subsidiaries, which are RDGE, CRG, and CDL. We have also consolidated the following entities that are not wholly-owned for which we have control:
| · |  | Australia Country Cinemas Pty, Limited, a company in which we own a 75% interest and whose only assets are our leasehold cinemas in Townsville and Dubbo, Australia;
| · |  | Sutton Hill Properties, LLC (“SHP”), a company based in New York in which we own a 75% interest and whose only asset is the fee interest in the Cinemas 1,2,3; and,
| · |  | Shadow View Land and Farming, LLC in which we own a 50% controlling membership interest and whose only asset is a 202-acre land parcel in Coachella, California.
﻿ Our investment interests in certain joint venture arrangements, for which we own between 20% to 50% and for which we have no control over the operations, are accounted for as unconsolidated joint ventures, and hence, recorded in the consolidated financial statements under the equity method. These investment interests include our:
| · |  | 25% undivided interest in the unincorporated joint venture that owns 205-209 East 57th Street Associates, LLC a limited liability company formed to redevelop our former cinema site at 205 East 57th Street in Manhattan;
| · |  | 33.3% undivided interest in the unincorporated joint venture that owns the Mt. Gravatt cinema in a suburb of Brisbane, Australia;
| · |  | 33.3% undivided interest in Rialto Distribution, an unincorporated joint venture engaged in the business of distributing art film in New Zealand and Australia; and,
| · |  | 50% undivided interest in the unincorporated joint venture that owns Rialto Cinemas.
We consider that we have control over our partially-owned subsidiaries and joint venture interests (collectively “investee”) when these conditions exist: (i) we own a majority of the voting rights or interests of the investee (typically above 50%), or (ii) in the case when we own less than the majority voting rights or interests, we have the power over the investee when the voting rights or interests are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not our voting rights in the investee are sufficient to give it power, including: (i) the size of our voting rights and interests relative to the size and dispersion of holdings of other vote holders; (ii) potential voting rights and interests held by us; (iii) rights and interests arising from other contractual arrangements; and (iv) any additional other relevant facts. All significant intercompany balances and transactions have been eliminated in the consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Significant estimates and assumptions include, but not limited to: (i) valuations in relation to business acquisition, (ii) projections we make regarding the recoverability and impairment of our assets (including goodwill and intangibles), (iii) valuation o f our derivative instruments, (iv) recoverability of our deferred tax assets and (v) estimation of gift card and gift certificate breakage where we have concluded that the likelihood of redemption is remote. Actual results may differ from those estimates. Reclassifications Certain reclassifications have been made in the 2015 comparative information in the consolidated balance sheets and notes to conform to the 2016 presentation. These changes relate to the following:
| (i) |  | adoption of Accounting Standards Update (“ASU”) 2015-03, Interest – Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs, as discussed more fully in the section “Recently Adopted and Issued Accounting Pronouncements”; and,
| (ii) |  | reclassification of Investments in marketable securities and Restricted cash line items as part of Prepaid and other current assets due to their immaterial balances.
These reclassifications had no significant impact on our financial position as of December 31, 2015 and our results of operations and cash flows for the two years ended December 31, 2015, as previously reported. ﻿ Revenue Recognition
| (i) |  | Cinema Exhibition – revenue from cinema ticket sales and food and beverage sales are recognized when sold and collected. These sales, which are recorded net of taxes, are principally collected in cash or credit card at our theatre locations and through our online selling channels. Ancillary revenue from gift cards and gift certificate sales is deferred and recognized as revenue when redeemed. Gift card and gift certificate breakage income is recognized based upon our historical redemption patterns and represents the balance of gift cards and gift certificates for which we believe the likelihood of redemption by the customer is remote.
| (ii) |  | Real Estate – we have retained substantially all of the risks and benefits of ownership of our real estate properties and therefore, we account for our tenant leases as operating leases. Accordingly, rental revenue is recognized on a straight-line basis over the lease term. Revenue from our live theatre business is determined based on fixed and variable fees (percentage of ticket sales) pursuant to our license agreement with the production companies and is recorded on a weekly basis after performance of a show occurs.
Cash and Cash Equivalents We consider all highly liquid investments with original maturities of three months or less at the time of purchase as cash equivalents for which cost approximates fair value. Receivables Our receivables balance is composed primarily of credit card receivables, representing the purchase price of tickets, food & beverage items, or coupon books sold at our various businesses. Sales charged on customer credit cards are collected when the credit card transactions are processed. The remaining receivables balance is primarily made up of the goods and services tax refund receivable from our Australian taxing authorities and the management fee receivable from the managed cinemas and property damage insurance recovery proceeds. We have no history of significant bad debt losses and we have established an allowance for accounts that we deem uncollectible. Investment in Marketable Securities Our investment in marketable se curities, presented as part of p repaid and other current assets, includes equity instruments that are classified as available for sale and are recorded at market using the specific identification method. Available for sale securities are carried at their fair market value and any difference between cost and market value is recorded as unrealized gain or loss, net of income taxes, and is reported as accumulated other comprehensive income in the consolidated statement of stockholders’ equity. Inventory Inventory is composed of food and beverage items used in theater operations and is stated at the lower of cost (first-in, first-out method) or net realizable value. Restricted Cash Restricted cash includes those cash accounts for which the use of funds is restricted by any contract or bank covenant. At December 31, 2016 and 2015, our restricted cas h balance, included as part of p repaid and other current assets, was $17,000 and $160,000, respectively. Derivative Financial Instruments All of our derivative financial instruments are carried in our consolidated balance sheets at fair value. Derivatives are generally executed for interest rate management purposes but are not designated as hedges. Therefore, changes in market values are recognized in current earnings. Operating Property, net Operating property consists of land, buildings and improvements, leasehold improvements, fixtures and equipment which we use to derive operating income associated with our two business segments, cinema exhibition and real estate. Buildings and improvements, leasehold improvements, fixtures and equipment are initially recorded at the lower of cost or fair market value and depreciated over the useful lives of the related assets. Land is not depreciated. Expenditures relating to renovations, betterments or improvements to existing assets are capitalized if it improves or extends the lives of the respective assets and/or provide long-term future net cash inflows, including the potential for cost savings. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are generally as follows:
﻿ |
﻿Building and improvements | 15 – 60 years
Leasehold improvements | Shorter of the lease term or useful life of the improvement
Theater equipment | 7 years
Furniture and fixtures | 5 – 10 years
﻿ Investment and Development Property, net Investment and development property consists of land, buildings and improvements under development, and their associated capitalized interest and other development costs that we are either holding for development, currently developing, or holding for investment appreciation purposes. These properties are initially recorded at the lower of cost or fair market value. Within investment and development property are building and improvement costs directly associated with the development of potential cinemas (whether for sale or lease), the development of entertainment-themed centers (“ETCs”), or other improvements to real property. As incurred, we expense start-up costs (such as pre-opening cinema advertising and training expense) and other costs not directly related to the acquisition and development of long-term assets. We cease cost capitalization (including interest) on a development property when the property is complete and ready for its intended use, or if activities necessary to get the property ready for its intended use have been substantially curtailed. However, we do not suspend cost capitalization for brief interruptions and interruptions that are externally imposed, such as mandates from governmental authorities. Impairment of Long-Lived Assets We review long-lived assets, including goodwill and intangibles, for impairment as part of our annual budgeting process, at the beginning of the fourth quarter, and whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fully recoverable. We review internal management reports on a monthly basis as well as monitor current and potential future competition in film markets for indications of potential impairment.
| (i) |  | Impairment of Long-lived Assets (other than Goodwill and Intangible Assets with indefinite lives) – we evaluate our long-lived assets and finite-lived intangible assets using historical and projected data of cash flows as our primary indicator of potential impairment and we take into consideration the seasonality of our business. If the sum of the estimated, undiscounted future cash flows is less than the carrying amount of the asset, then an impairment is recognized for the amount by which the carrying value of the asset exceeds its estimated fair value based on an appraisal or a discounted cash flow calculation. For certain non-income producing properties or for those assets with no consistent historical or projected cash flows, we obtain appraisals or other evidence to evaluate whether there are impairment indicators for these assets.
No impairment losses were recorded for long-lived and finite-lived intangible assets for the three years ended December 31, 2016, other than the write-down of the carrying amount of our parking structure adjacent to our Courtenay Central ETC in Wellington, New Zealand due to earthquake damage during the Fourth Q uarter of 2016. Refer to Note 20 – Asset Impairment and Other Losses Recoverable through Insurance Claim for further details.
| (ii) |  | Impairment of Goodwill and Intangible Assets with indefinite lives – goodwill and intangible assets with indefinite useful lives are not amortized, but instead, tested for impairment at least annually on a reporting unit basis. The impairment evaluation is based on the present value of estimated future cash flows of the segment plus the expected terminal value. There are significant assumptions and estimates used in determining the future cash flows and terminal value. The most significant assumptions include our cost of debt and cost of equity assumptions that comprise the weighted average cost of capital for each reporting unit. Accordingly, actual results could vary materially from such estimates.
No impairment losses were recorded for goodwill and indefinite-lived intangible assets for the three years ended December 31, 2016. Variable Interest Entity The Company enters into relationships or investments with other entities that may be a variable interest entity (“VIE”). A VIE is consolidated in the financial statements if the Company has the power to direct activities that most significantly impact the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Reading International Trust I is a VIE. It is not consolidated in our financial statements but instead accounted for under the equity method of accounting because we are not the primary beneficiary. We carry our investment in the Reading International Trust I using the equity method of accounting because we have the ability to exercise significant influence (but not control) over operating and financial policies of the entity. We eliminate transactions with an equity method entity to the extent of our ownership in such an entity. Accordingly, our share of net income/(loss) of this equity method entity is included in consolidated net income/(loss). We have no implicit or explicit obligation to further fund our investment in Reading International Trust I. Property Held for Sale When a property is classified as held for sale, we present the respective assets and liabilities related to the property held for sale separately on the balance sheet and cease to record depreciation and amortization expense. Properties held for sale are reported at the lower of their carrying value or their estimated fair value less the estimated costs to sell. As of December 31, 2016 and 2015, we have classified our landholding in Burwood, Australia as land held for sale as a result of a sale transaction on May 12, 2014 that is expected to close by December 31, 2017. Refer to Note 4 – Real Estate Transactions for details. Deferred Leasing/Financing Costs Direct costs incurred in connection with obtaining tenants and/or financing are amortized over the respective term of the lease or loan on a straight-line basis. Direct costs incurred in connection with financing are amortized over the respective term of the loan utilizing the effective interest method, or straight-line method if the result is not materially different. In addition, interest on loans with increasing interest rates and scheduled principal pre-payments are also recognized on the effective interest method. Net deferred financing costs are presented as a reduction in the associated Debt account (see Note 10 – Debt) in line with our adoption of ASU 2015-03 which became effective since January 1, 2016. Film Rental Costs Film rental costs are accrued based on the applicable box office receipts and estimates of the final settlement to the film licensees. Advertising Expense We expense our advertising as incurred. The amount of our advertising expense was $2.3 million, $2.3 million, and $2.1 million for the years ended December 2016, 2015, and 2014, respectively. Operating Leases A majority of our cinema operations are conducted in premises under non-cancellable lease arrangements with initial base terms generally ranging between 5 to 15 years, with certain leases containing renewal options to extend the lease term to an additional of up to 20 years. We evaluate the classification of our leases and concluded all of these arrangements as operating leases. Lease expense is recorded on a straight-line basis over the initial base terms, taking into effect any rate change clauses. Share-based Compensation The determination of the compensation cost for our share-based awards (primarily in the form of stock options or restricted stock units) is made at the grant date based on the estimated fair value of the award, and such cost is recognized over the grantee’s requisite service period (which typically equates our vesting term). Previously recognized compensation cost shall be reversed for any forfeited award to the extent unvested at the time of forfeiture. Refer to Note 14 – Stock-based Compensation and Stock Repurchases for further details. ﻿ Treasury Stock In recent years, we repurchased our own Class A common stock as part of a publicly announced stock repurchase plan with no current intent for retiring those reacquired shares. We account for these repurchases using the cost method and present as a separate line within the Stockholders’ Equity section in our consolidated balance sheets. Refer to Note 14 – Stock-based Compensation and Stock Repurchases for further details of our stock buyback plan. ﻿ Insurance Recoverability In the event we incur a loss attributable to an impairment of an asset or incurrence of a liability that is recoverable, in whole or in part, through an insurance claim, we record an insurance recoverable (not to exceed the amount of the total losses incurred) only when the collectability of such claim is probable. To evaluate the probable collectability of an insurance claim, we consider communications with third parties (such as with our insurance company), in addition to advice from legal counsel. ﻿ Contingency Matters
| (i) |  | Loss contingencies – we record any loss contingencies if the following two conditions are satisfied: (a) there is a “probable” likelihood that the liability had been incurred, that is, there is virtual certainty that we will eventually make payments as a result of an obligating past event, and (b) the amount of the loss can be reasonably estimated.
| (ii) |  | Gain contingencies – other than recoveries through an insurance claim (discussed in the preceding policy “Insurance Recoverability), our gain contingencies typically result from legal settlements and we record those settlements in income when cash or other forms of payments are received.
Legal costs relating to our litigation matters, whether we are the plaintiff or the defendant, are recorded when incurred. For the years ended December 31, 2016, 2015, and 2014, we recorded gains/(losses) relating to litigation settlement of $415,000, ($495,000), and ($83,000), respectively. Translation Policy The financial statements and transactions of our Australian and New Zealand cinema and real estate operations are reported in their functional currencies, namely Australian and New Zealand dollars, respectively, and are then translated into U.S. dollars. Assets and liabilities of these operations are denominated in their functional currencies and are then translated at exchange rates in effect at the balance sheet date. Revenue and expenses are translated at the average exchange rate for the reporting period. Translation adjustments are reported in “Accumulated Other Comprehensive Income,” a component of Stockholders’ Equity. The carrying values of our Australian and New Zealand assets fluctuate due to changes in the exchange rate between the U.S. dollar and the Australian and New Zealand dollars. Presented in the table below are the currency exchange rates for Australia and New Zealand as of and for the three years ended December 31, 2016: ﻿
﻿ |  |  |  |  |
﻿ | As of and for the year ended December 31, 2016 |  | As of and for the year ended December 31, 2015 |  | As of and for the year ended December 31, 2014
﻿Spot Rate |  |  |  |  |
﻿Australian Dollar | 0.7230 |  | 0.7286 |  | 0.8173
﻿New Zealand Dollar | 0.6958 |  | 0.6842 |  | 0.7796
﻿Average Rate |  |  |  |  |
﻿Australian Dollar | 0.7440 |  | 0.7524 |  | 0.9027
﻿New Zealand Dollar | 0.6973 |  | 0.7004 |  | 0.8306
﻿ Income Taxes We account for income taxes under an asset and liability approach. Under the asset and liability method, deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled, and are classified as noncurrent on the balance sheets in accordance with current US GAAP. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Income tax expense (benefit) is the tax payable (refundable) for the period and the change during the period in deferred tax assets and liabilities. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, we begin with historical results adjusted for the results of discontinued operations and changes in accounting policies. We then include assumptions about the amount of projected future state, federal and foreign pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we use to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income/(loss). In the event we were to determine that we would be able to realize our deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes. A tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. We recognize tax liabilities for uncertain tax positions and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined. Earnings Per Share The Company presents both basic and diluted earnings per share amounts. Basic EPS is calculated by dividing net income attributable to the Company by the weighted average number of common shares outstanding during the year. Diluted EPS is based upon the weighted average number of common and common equivalent shares outstanding during the year, which is calculated using the treasury-stock method for equity-based awards. Common equivalent shares are excluded from the computation of diluted EPS in periods for which they have an anti-dilutive effect. Stock options for which the exercise price exceeds the average market price over the period are anti-dilutive and, accordingly, are excluded from the calculation. Business Acquisition Valuation and Purchase Price Allocation In recent years, our business acquisition efforts have been focused on our real estate segment. For real estate acquisitions meeting the definition of a “business” in accordance with ASC 805, Business Combinations, the assets acquired and the liabilities assumed are recorded at their fair values as of the acquisition date. To accomplish this, we typically obtain third party valuations to allocate the purchase price to the assets acquired and liabilities assumed, including both tangible and intangible components. The determination of the fair values of the acquisition components and its related determination of the estimated lives of depreciable tangible assets and amortizing intangible assets/liabilities require significant judgment and several considerations, described as follows:
| (i) |  | Tangible assets – we allocate the purchase price to the tangible assets of an acquired property (which typically includes land, building and site/tenant improvements) based on the estimated fair values of those tangible assets assuming the building was vacant. Estimates of fair value for land are based on factors such as comparisons to other properties sold in the same geographic area adjusted for unique characteristics. Estimates of fair values of buildings and site/tenant improvements are based on present values determined based upon the application of hypothetical leases with market rates and terms. Building and site improvements are depreciated over their remaining economic lives, while tenant improvements are depreciated over the remaining non-cancelable terms of the respective leases.
| (ii) |  | Intangible assets and liabilities – the valuation of the intangible assets and liabilities in a typical real estate acquisition is described below:
| · |  | Above-market and below-market leases – we record above-market and below-market in-place lease values for acquired properties based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. We amortize any capitalized above-market lease values (an intangible asset) and capitalized below-market lease values (an intangible liability) over the remaining non-cancelable terms of the respective leases.
| · |  | Benefit of avoided costs due to existing tenancies – this typically includes (i) in-place leases (the value of avoided lease-up costs) and (ii) leasing commissions and legal/marketing costs avoided with the leases in place. We measure the fair values of the in-place leases based on the difference between (i) the property valued with existing in-place leases adjusted to market rental rates and (ii) the property valued as if vacant. Factors considered in the fair value determination include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. We also consider information obtained about each property as a result of our pre-acquisition due diligence, marketing, and leasing activities in estimating the fair value of the intangible assets acquired. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods. Management also estimates costs to execute similar leases including leasing commissions, legal, and other related expenses to the extent that such costs are not already incurred in connection with a new lease origination as part of the transaction.
We amortize the value of in-place leases and unamortized leasing origination costs to expense over the remaining term of the respective leases. Should a tenant terminate its lease, the unamortized portion of the in-place lease values and leasing origination costs will be charged to expense. These assessments have a direct impact on revenue and net income. If we assign more fair value to the in-place leases versus buildings and tenant improvements, assigned costs would generally be depreciated over a shorter period, resulting in more depreciation expense and a lower net income on an annual basis. Likewise, if we estimate that more of our leases in-place at acquisition are on terms believed to be above the current market rates for similar properties, the calculated present value of the amount above-market would be amortized monthly as a direct reduction to rental revenue and ultimately reduce the amount of net income. In accordance with our adoption of ASU 2015-16 as discussed more fully in the section “Recently Adopted and Issued Accounting Pronouncements”, we record the changes in depreciation and amortization in the period we finalize our purchase price allocation. Accounting Changes ﻿ Change in Accounting Principle during the fourth quarter of fiscal year 2016 Prior to 2014, we recognized revenue for our gift cards and gift certificates issued in the U.S., which do not expire and have no dormancy fees, only when they were redeemed. At the end of fourth quarter of 2016, we determined that we have sufficient historical information to recognize breakage income on them. Based on our review of our own historical redemption patterns using company-wide data accumulated over many years, we considered it preferable to estimate a certain percentage of our gift card and gift certificate sales to be recorded as breakage income as it better reflects of our historical redemption patterns and our earnings process. Effectively, we concluded that a portion of these sales may have a remote likelihood of redemption based on our own historical redemption patterns and thus the liability is derecognized for them. We will continue to review historical gift card redemption information at each reporting period to assess the continued appropriateness of the gift card breakage rates and pattern of redemption. In accordance with ASC 250, Accounting Changes and Error Corrections, the Company adjusted its comparative financial statements as of and for the years ended December 31, 2015 and 2014 to apply this new accounting policy. ﻿ The impact of this change in accounting principle to our current and prior years’ financial statements is presented in the following tables (in condensed format): ﻿ Consolidated Statements of Operations ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  | 2016 |  | 2015 |  | 2014
﻿(Dollars in thousands) |  | With breakage revenue |  | Without breakage revenue |  | Effect of change |  | As restated |  | As previously reported |  | Effect of change |  | As restated |  | As previously reported |  | Effect of change(1)
﻿Revenues |  | $ | 270,473 |  | $ | 269,855 |  | $ | 618 |  | $ | 257,865 |  | $ | 257,323 |  | $ | 542 |  | $ | 255,242 |  | $ | 254,748 |  | $ | 494
﻿Costs and expenses |  |  | (250,162) |  |  | (250,162) |  |  | -- |  |  | (234,169) |  |  | (234,169) |  |  | -- |  |  | (232,575) |  |  | (232,575) |  |  | --
﻿Operating income |  |  | 20,311 |  |  | 19,693 |  |  | 618 |  |  | 23,696 |  |  | 23,154 |  |  | 542 |  |  | 22,667 |  |  | 22,173 |  |  | 494
﻿Interest expense (net), casualty loss and others |  |  | (7,873) |  |  | (7,873) |  |  | -- |  |  | 3,279 |  |  | 3,279 |  |  | -- |  |  | (7,329) |  |  | (7,329) |  |  | --
﻿Income before income taxes and equity earnings of unconsolidated joint ventures |  |  | 12,438 |  |  | 11,820 |  |  | 618 |  |  | 26,975 |  |  | 26,433 |  |  | 542 |  |  | 15,338 |  |  | 14,844 |  |  | 494
﻿Equity earnings of unconsolidated joint ventures |  |  | 999 |  |  | 999 |  |  | -- |  |  | 1,204 |  |  | 1,204 |  |  | -- |  |  | 1,015 |  |  | 1,015 |  |  | --
﻿Income before income taxes |  |  | 13,437 |  |  | 12,819 |  |  | 618 |  |  | 28,179 |  |  | 27,637 |  |  | 542 |  |  | 16,353 |  |  | 15,859 |  |  | 494
﻿Income tax benefit (expense) |  |  | (4,020) |  |  | (3,787) |  |  | (233) |  |  | (5,148) |  |  | (4,943) |  |  | (205) |  |  | 8,925 |  |  | 9,785 |  |  | (860)
﻿Net income |  | $ | 9,417 |  | $ | 9,032 |  | $ | 385 |  | $ | 23,031 |  | $ | 22,694 |  | $ | 337 |  | $ | 25,278 |  | $ | 25,644 |  | $ | (366)
﻿Basic EPS |  | $ | 0.40 |  | $ | 0.39 |  | $ | 0.01 |  | $ | 0.99 |  | $ | 0.98 |  | $ | 0.01 |  | $ | 1.08 |  | $ | 1.09 |  | $ | (0.01)
﻿Diluted EPS |  | $ | 0.40 |  | $ | 0.38 |  | $ | 0.02 |  | $ | 0.98 |  | $ | 0.97 |  | $ | 0.01 |  | $ | 1.07 |  | $ | 1.08 |  | $ | (0.01)
﻿ (1)The income tax effect of $860,000 in 2014 relates to the cumulative breakage revenue as of December 31, 2014. The tax effect of the portion that relates to years prior to 2014 was not recognized until 2014 due to full valuation allowance on our deferred tax assets in the U.S. as of December 31, 2013 and prior. Consolidated Balance Sheets ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  | 2016 |  | 2015
﻿(Dollars in thousands) |  | With breakage revenue |  | Without breakage revenue |  | Effect of change |  | As restated |  | As previously reported |  | Effect of change
﻿Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Current assets |  | $ | 72,641 |  | $ | 72,641 |  | $ | -- |  | $ | 36,921 |  | $ | 36,921 |  | $ | --
﻿Non-current assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Deferred tax asset, net |  |  | 28,667 |  |  | 28,900 |  |  | (233) |  |  | 24,584 |  |  | 25,649 |  |  | (1,065)
﻿Other non-current assets |  |  | 304,458 |  |  | 304,458 |  |  | -- |  |  | 310,693 |  |  | 310,693 |  |  | --
﻿Total Assets |  | $ | 405,766 |  | $ | 405,999 |  | $ | (233) |  | $ | 372,198 |  | $ | 373,263 |  | $ | (1,065)
﻿Liabilities and Stockholders' Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Current liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Deferred current revenue |  | $ | 10,758 |  | $ | 11,376 |  | $ | (618) |  | $ | 11,771 |  | $ | 14,591 |  | $ | (2,820)
﻿Other current liabilities |  |  | 55,228 |  |  | 55,228 |  |  | -- |  |  | 60,731 |  |  | 60,731 |  |  | --
﻿Non-current liabilities |  |  | 193,165 |  |  | 193,165 |  |  | -- |  |  | 160,745 |  |  | 160,745 |  |  | --
﻿Total Liabilities |  | $ | 259,151 |  | $ | 259,769 |  | $ | (618) |  | $ | 233,247 |  | $ | 236,067 |  | $ | (2,820)
﻿Stockholders' Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Retained earnings (accumulated deficit) |  | $ | 1,680 |  | $ | 1,295 |  | $ | 385 |  | $ | (7,723) |  | $ | (9,478) |  | $ | 1,755
﻿Other equity components |  |  | 144,935 |  |  | 144,935 |  |  | -- |  |  | 146,674 |  |  | 146,674 |  |  | --
﻿Total Stockholders' Equity |  | $ | 146,615 |  | $ | 146,230 |  | $ | 385 |  | $ | 138,951 |  | $ | 137,196 |  | $ | 1,755
﻿Total Liabilities and Stockholders' Equity |  | $ | 405,766 |  | $ | 405,999 |  | $ | (233) |  | $ | 372,198 |  | $ | 373,263 |  | $ | (1,065)
﻿ As a result of this accounting change, accumulated deficit as of January 1, 2014 decreased from $58.0 million to $56.2 million, or a net change of $1.8 million representing the cumulative breakage income adjustment (net of taxes) as of December 31, 2013. ﻿ Consolidated Statements of Cash Flows ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  | 2016 |  | 2015 |  | 2014
﻿(Dollars in thousands) |  | With breakage revenue |  | Without breakage revenue |  | Effect of change |  | As restated |  | As previously reported |  | Effect of change |  | As restated |  | As previously reported |  | Effect of change
﻿Operating Activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Net income |  | $ | 9,417 |  | $ | 9,032 |  | $ | 385 |  | $ | 23,031 |  | $ | 22,694 |  | $ | 337 |  | $ | 25,278 |  | $ | 25,644 |  | $ | (366)
﻿Adjustments to reconcile net income to net cash provided by operating activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Change in net deferred tax assets |  |  | (5,060) |  |  | (5,293) |  |  | 233 |  |  | (4,067) |  |  | (4,272) |  |  | 205 |  |  | (14,029) |  |  | (14,889) |  |  | 860
﻿Other reconciling adjustments |  |  | 19,128 |  |  | 19,128 |  |  | -- |  |  | 5,786 |  |  | 5,786 |  |  | -- |  |  | 18,775 |  |  | 18,775 |  |  | --
﻿Net changes in operating assets and liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Deferred revenue and other liabilities |  |  | 3,626 |  |  | 4,244 |  |  | (618) |  |  | (745) |  |  | (203) |  |  | (542) |  |  | 2,183 |  |  | 2,677 |  |  | (494)
﻿Other operating assets and liabilities |  |  | 3,077 |  |  | 3,077 |  |  | -- |  |  | 4,569 |  |  | 4,569 |  |  | -- |  |  | (3,864) |  |  | (3,864) |  |  | --
﻿Net cash provided by operating activities |  | $ | 30,188 |  | $ | 30,188 |  | $ | -- |  | $ | 28,574 |  | $ | 28,574 |  | $ | -- |  | $ | 28,343 |  | $ | 28,343 |  | $ | --
﻿Investing Activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Net cash used in investing activities |  | $ | (42,861) |  | $ | (42,861) |  | $ | -- |  | $ | (29,710) |  | $ | (29,710) |  | $ | -- |  | $ | (9,898) |  | $ | (9,898) |  | $ | --
﻿Financing Activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Net cash provided by/(used in) financing activities |  | $ | 11,246 |  | $ | 11,246 |  | $ | -- |  | $ | (27,961) |  | $ | (27,961) |  | $ | -- |  | $ | (3,275) |  | $ | (3,275) |  | $ | --
﻿Effect of exchange rate on cash |  |  | 742 |  |  | 742 |  |  | -- |  |  | (1,449) |  |  | (1,449) |  |  | -- |  |  | (2,618) |  |  | (2,618) |  |  | --
﻿Net increase (decrease) in cash and cash equivalents |  |  | (685) |  |  | (685) |  |  | -- |  |  | (30,546) |  |  | (30,546) |  |  | -- |  |  | 12,552 |  |  | 12,552 |  |  | --
﻿Cash and cash equivalents beginning of the year |  |  | 19,702 |  |  | 19,702 |  |  | -- |  |  | 50,248 |  |  | 50,248 |  |  | -- |  |  | 37,696 |  |  | 37,696 |  |  | --
﻿Cash and cash equivalents at the end of the year |  | $ | 19,017 |  | $ | 19,017 |  | $ | -- |  | $ | 19,702 |  | $ | 19,702 |  | $ | -- |  | $ | 50,248 |  | $ | 50,248 |  | $ | --
﻿ Out-of-Period Adjustment during the fourth quarter of fiscal year 2016 In the fourth quarter of fiscal year 2016, we recorded out-of-period adjustments of $611,000 to decrease our income tax expenses in our consolidated statements of operations. The adjustments, which increased deferred tax asset by $611,000, were made to correct our income tax and related deferred tax asset accounts. We determined that the adjustments did not have a material impact to our current or prior period consolidated financial statements. ﻿ Out-of-Period Adjustment during the fourth quarter of fiscal year 2015 In the fourth quarter of fiscal year 2015, we recorded out-of-period adjustments of $514,000 to decrease our income tax expense in our consolidated statements of operations. The adjustments, which increased deferred tax asset by $2,116,000, increased additional paid in capital by $793,000, increased other comprehensive income by $1,859,000 and decreased other non-current liabilities by $1,050,000, were made to correct our income tax and related equity and liability accounts. Of the $514,000 adjustment to decrease the income tax expense in 2015, $1,286,000 relates to the adjustment that should have been recorded in 2014, thus reducing our income tax benefit by this amount. The remaining $1,800,000 relates to income taxes pertaining to years prior to 2014 cumulatively, that would have increased our deferred tax asset by such amount. We determined that the adjustments did not have a material impact to our prior period consolidated financial statements. Recently Adopted and Issued Accounting Pronouncements Adopted: On January 1, 2016, the Company adopted ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, issued by the Financial Accounting Standards Board (“FASB”). This new standard, which became effective for fiscal years beginning after December 15, 2015, required that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The impact of this adoption included reclassification of the deferred financing costs (net of amortization) from “Other Assets” to a reduction in the associated Debt account. Please refer to Note 10 – Debt for further details. ﻿ Also, on January 1, 2016, the Company adopted ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. Under this new standard, an acquirer in a business combination transaction must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The effect on earnings of changes in depreciation or amortization, or other income effects, if any, because of the change to the provisional amounts, calculated as if the accounting had been completed as of the acquisition date, must be recorded in the reporting period in which the adjustment amounts are determined rather than retrospectively. The ASU also requires that the acquirer present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The adoption of this standard had an impact on the finalization of the purchase price allocation of Cannon Park acquired in December 2015, which was completed during this current third quarter of 2016. Please refer to Note 4 – Real Estate Transactions for the Cannon Park acquisition discussion. ﻿ Further, on January 1, 2016, the Company adopted ASU 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. This new guidance eliminated from GAAP the concept of extraordinary items. Rather, a material event or transaction that an entity considers to be of an unusual nature or of a type that indicates infrequency of occurrence or both shall be reported as a separate component of income from continuing operations. In accordance with this standard, we are hereby classifying the income statement effect of casualty losses due to earthquake affecting our Courtenay Central Parking Building in Wellington, New Zealand as a separate line in our Statement of Operations. Please refer to Note 20 – Asset Impairment and Other Losses Recoverable through Insurance Claim for further discussion. ﻿ Issued: In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force). The new guidance requires that amounts generally described as restricted cash and cash equivalents should be combined with unrestricted cash and cash equivalents when reconciling the beginning and end of period balances on the statement of cash flows. The new standard becomes effective for the Company on January 1, 2018. Early adoption is permissible. The Company does not anticipate the adoption of ASU 2016-18 to have a material impact on the consolidated financial statements and related disclosures. ﻿ In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests Held through Related Parties that are under Common Control. This new guidance alters how a decision maker needs to consider interests in a variable interest entity (“VIE”) held through an entity under common control and amends the previously issued ASU 2015-02. Under the new ASU, if a decision maker is required to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in the VIE held through a common control party. The new standard becomes effective for the Company on January 1, 2017. Early adoption is permissible. The Company does not anticipate the adoption of ASU 2016-17 to have a material impact on the consolidated financial statements and related disclosures. ﻿ In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments covered in this ASU are improvements to current GAAP, as it will provide guidance to eight (8) specific cash flow classification issues, thereby reducing the current and potential future diversity in practice. The new standard becomes effective for the Company on January 1, 2018. Early adoption is permissible. The Company does not anticipate the adoption of ASU 2016-15 to have a material impact on the consolidated financial statements and related disclosures. ﻿ In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This new guidance provides simplifications involving several aspects of the accounting for share-based payment transactions, including the income tax consequences (such as excess tax benefits recorded in income tax expense/benefit, rather than additional paid-in capital), classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for the Company on January 1, 2017. Early adoption is permitted. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is currently assessing the impact of this new guidance on the consolidated financial statements and related disclosures. ﻿ Also, in March 2016, the FASB issued ASU 2016-04, Liabilities—Extinguishment of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products (a consensus of the FASB Emerging Issues Task Force). The new guidance requires issuers that record financial and non-financial liabilities related to prepaid stored-value products (such as gift cards) to follow the same breakage model required by ASC 606, Revenue from Contracts with Customers for non-financial liabilities. Accordingly, issuers will be required to recognize the expected breakage amount (i.e., derecognize the liability) either (1) proportionally in earnings as redemptions occur, or (2) when redemption is remote. The new standard becomes effective for the Company on January 1, 2018. Early adoption is permissible. While this guidance is not effective until 2018, we have effectively applied this through our recording of the gift card breakage income as a change in accounting policy in this 2016 Form 10-K with retrospective application to January 1, 2014, as discussed in more detail in the “Accounting Changes” section. As a result, the Company does not anticipate the adoption of ASU 2016-04 to have a material impact on the consolidated financial statements and related disclosures when it becomes effective in 2018. ﻿ Further, in March 2016, the FASB issued ASU 2016-07, Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. This new guidance effectively removes the retroactive application imposed in current guidance when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The new standard becomes effective for the Company on January 1, 2017. Early adoption is permissible. The Company does not anticipate the adoption of ASU 2016-07 to have a material impact on the consolidated financial statements and related disclosures. ﻿ In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This new guidance establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The new standard becomes effective for the Company on January 1, 2019. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently assessing the impact of this new guidance on the consolidated financial statements and related disclosures. ﻿ In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under U.S. GAAP. Under the new model, recognition of revenues occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Subsequently, in March 2016, FASB issued ASU 2016-08 to provide guidance on principal versus agent considerations. The new standard becomes effective for the Company on January 1, 2018. Early adoption is permitted but cannot be earlier than January 1, 2017. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. We have not yet selected a transition method nor have we determined the impact of the new standard on our consolidated financial statements. While we believe the proposed guidance will not have a material impact on our business because our revenue predominantly comes from movie ticket sales and food and beverage purchases, we plan to complete the analysis to ensure that we are in compliance prior to the effective date.

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