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ACQUISITION | 12 Months Ended
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Mar. 29, 2012
ACQUISITION |
ACQUISITION |
NOTE 3—ACQUISITION On May 24, 2010, the Company completed the acquisition of substantially all of the assets (92 theatres and 928 screens) of Kerasotes Showplace Theatres, LLC ("Kerasotes"). Kerasotes operated 95 theatres and 972 screens in mid-sized, suburban and metropolitan markets, primarily in the Midwest. More than three quarters of the Kerasotes theatres feature stadium seating and almost 90 percent have been built since 1994. The Company acquired Kerasotes based on their highly complementary geographic presence in certain key markets. Additionally, the Company expects to realize synergies and cost savings related to the Kerasotes acquisition as a result of moving to the Company's operating practices, decreasing costs for newspaper advertising and concessions and general and administrative expense savings, particularly with respect to the consolidation of corporate related functions and elimination of redundancies. The purchase price for the Kerasotes theatres paid in cash at closing was $276,798,000, net of cash acquired, and was subject to working capital and other purchase price adjustments as described in the Unit Purchase Agreement. The Company paid working capital and other purchase price adjustments of $3,808,000 during the second quarter of fiscal 2011, based on the final closing date working capital and deferred revenue amounts, and has included this amount as part of the total purchase price. The acquisition of Kerasotes is being treated as a purchase in accordance with Accounting Standards Codification, ("ASC") 805, Business Combinations, which requires allocation of the purchase price to the estimated fair values of assets and liabilities acquired in the transaction. The allocation of purchase price is based on management's judgment after evaluating several factors, including bid prices from potential buyers and a valuation assessment. The following is a summary of the final allocation of the purchase price:
(In thousands) |  | Total |
--- | --- | --- | ---
Cash |  | $ | 809 |
Receivables, net(1) |  |  | 3,832 |
Other current assets |  |  | 13,428 |
Property, net |  |  | 201,520 |
Intangible assets, net(2) |  |  | 17,387 |
Goodwill(3) |  |  | 119,874 |
Other long-term assets |  |  | 4,531 |
Accounts payable |  |  | (13,538 | )
Accrued expenses and other liabilities |  |  | (12,439 | )
Deferred revenues and income |  |  | (1,806 | )
Capital and financing lease obligations |  |  | (12,583 | )
Other long-term liabilities(4) |  |  | (39,600 | )
Total estimated purchase price |  | $ | 281,415 |
(1) Receivables consist of trade receivables recorded at fair value. The Company did not acquire any other class of receivables as a result of the acquisition of Kerasotes. (2) Intangible assets consist of certain Kerasotes' trade names, a non-compete agreement, and favorable leases. See Note 6—Other Intangible Assets for further information. (3) Goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations. Amounts recorded for goodwill are not subject to amortization and are expected to be deductible for tax purposes. (4) Other long-term liabilities consist of certain theatre and ground leases that have been identified as unfavorable. During the fifty-two weeks ended March 31, 2011, the Company incurred acquisition-related costs for Kerasotes of approximately $12,600,000, which are included in general and administrative expense: merger, acquisition and transaction costs in the Consolidated Statements of Operations. In connection with the acquisition of Kerasotes, the Company divested of seven Kerasotes theatres with 85 screens as required by the Antitrust Division of the United States Department of Justice. The Company also sold the Kerasotes digital projector systems, one vacant theatre that had previously been closed by Kerasotes, and closed another Kerasotes theatre. Proceeds from the divested and closed theatres and other property exceeded the carrying amount by approximately $10,945,000, which was recorded as a reduction to goodwill. The Company was also required by the Antitrust Division of the United States Department of Justice to divest of four AMC theatres with 57 screens. The Company recorded a gain on disposition of assets of $10,056,000 for one divested AMC theatre with 14 screens during the fifty-two weeks ended March 31, 2011, which reduced operating expenses by approximately $10,056,000. Additionally, the Company acquired two theatres with 26 screens that were received in exchange for three of the AMC theatres with 43 screens. The Company recorded revenues of approximately $225,200,000 from May 24, 2010 through March 31, 2011 resulting from the acquisition of Kerasotes, and recorded operating costs and expenses of approximately $237,500,000, including $30,900,000 of depreciation and amortization and $12,600,000 of merger, acquisition and transaction costs. The Company recorded $934,000 of other expense related to Kerasotes. The unaudited pro forma financial information presented below sets forth the Company's historical statements of operations for the periods indicated and gives effect to the acquisition as if the business combination and required divestitures had occurred as of the beginning of fiscal 2010. Such information is presented for comparative purposes to the Consolidated Statements of Operations only and does not purport to represent what the Company's results of operations would actually have been had these transactions occurred on the date indicated or to project its results of operations for any future period or date.
(In thousands) |  | 52 Weeks Ended Pro forma March 31, 2011 |  | 52 Weeks Ended Pro forma April 1, 2010 |
--- | --- | --- | --- | --- | ---
|  | (unaudited) |  | (unaudited) |
Revenues |  |  |  |  |  |  |
Admissions |  | $ | 1,716,426 |  | $ | 1,889,149 |
Concessions |  |  | 672,761 |  |  | 727,481 |
Other theatre |  |  | 75,921 |  |  | 80,716 |
Total revenues |  |  | 2,465,108 |  |  | 2,697,346 |
Operating Costs and Expenses |  |  |  |  |  |  |
Film exhibition costs |  |  | 897,590 |  |  | 1,021,725 |
Concession costs |  |  | 84,616 |  |  | 82,717 |
Operating expense |  |  | 729,833 |  |  | 680,638 |
Rent |  |  | 480,016 |  |  | 479,290 |
General and administrative: |  |  |  |  |  |  |
Merger, acquisition and transaction costs* |  |  | 14,085 |  |  | 2,280 |
Management fee |  |  | 5,000 |  |  | 5,000 |
Other |  |  | 59,787 |  |  | 74,825 |
Depreciation and amortization |  |  | 216,095 |  |  | 214,382 |
Impairment of long-lived assets |  |  | 12,779 |  |  | 3,765 |
Operating costs and expenses |  |  | 2,499,801 |  |  | 2,564,622 |
Operating income (loss) |  |  | (34,693 | ) |  | 132,724 |
Other expense (income) |  |  |  |  |  |  |
Other expense (income) |  |  | 27,847 |  |  | 11,032 |
Interest expense |  |  |  |  |  |  |
Corporate borrowings |  |  | 143,522 |  |  | 126,458 |
Capital and financing lease obligations |  |  | 6,370 |  |  | 6,768 |
Equity in earnings of non-consolidated entities |  |  | (17,178 | ) |  | (30,300 | )
Gains on NCM transactions |  |  | (64,441 | ) |  | — |
Investment income |  |  | (391 | ) |  | (7 | )
Total other expense |  |  | 95,729 |  |  | 113,951 |
Earnings (loss) from continuing operations before income taxes |  |  | (130,422 | ) |  | 18,773 |
Income tax provision (benefit) |  |  | (1,450 | ) |  | (65,000 | )
Earnings (loss) from continuing operations |  |  | (128,972 | ) |  | 83,773 |
Earnings (loss) from discontinued operations, net of income taxes |  |  | 569 |  |  | (7,534 | )
Net earnings (loss) |  | $ | (128,403 | ) | $ | 76,239 |
* Primarily represents non-recurring transaction costs for the acquisition and related transactions.
|  | 52 Weeks Ended Pro forma March 31, 2011 |  | 52 Weeks Ended Pro forma April 1, 2010 |
--- | --- | --- | --- | --- | ---
|  | (unaudited) |  | (unaudited) |
Average Screens—continuing operations(1) |  |  | 5,173 |  |  | 5,271 |
(1) Includes consolidated theatres only.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141 -Paragraph 51, 52 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1500-128463 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e7000-128479 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e6927-128479 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e7008-128479 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1490-128463 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e6996-128479 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4922-128472 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Appendix F -Paragraph F4 -Subparagraph e Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4926-128472 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1383-128463 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1392-128463 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1497-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Paragraph 67-73 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1524-128463 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 88-16 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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