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INVESTMENTS | 12 Months Ended
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Dec. 31, 2013
INVESTMENTS |
INVESTMENTS | NOTE 7—INVESTMENTS Investments in non-consolidated affiliates and certain other investments accounted for under the equity method generally include all entities in which the Company or its subsidiaries have significant influence, but not more than 50% voting control. Investments in non-consolidated affiliates as of December 31, 2013, include a 15.01% interest in National CineMedia, LLC ("NCM"), a 32% interest in AC JV, LLC, owner of Fathom Events, a 50% interest in two U.S. motion picture theatres and one IMAX screen, a 29% interest in Digital Cinema Implementation Partners, LLC ("DCIP") and a 50% interest in Open Road Releasing, LLC, operator of Open Road Films, LLC ("ORF"). Indebtedness held by equity method investees is non-recourse to the Company. RealD Inc. Common Stock The Company holds an investment in RealD Inc. common stock, which is accounted for as an equity security, available for sale, and is recorded in the Consolidated Balance Sheets in other long-term assets at fair value (Level 1). Under its RealD Inc. motion picture license agreement, the Company received a ten-year option to purchase 1,222,780 shares of RealD Inc. common stock at approximately $0.00667 per share. The stock options vested in 3 tranches upon the achievement of screen installation targets and were valued at the underlying stock price at the date of vesting. At the dates of exercise, the fair market value of the RealD Inc. common stock was recorded in other long-term assets with an offsetting entry recorded to other long-term liabilities as a deferred lease incentive. As a result of the Merger, the unamortized deferred lease incentive was recorded at fair value and is being amortized on a straight-line basis over the remaining contract life of approximately 9 years, to reduce RealD license expense recorded in the consolidated statements of operations under operating expense. For further information, see Note 2—Merger. As of December 31, 2013, the unamortized deferred lease incentive balance included in other long-term liabilities was $18,635,000. Fair value adjustments of RealD Inc. common stock are recorded to other long-term assets with an offsetting entry to accumulated other comprehensive income. At December 29, 2011, the Company evaluated its investment in RealD Inc. common stock for a possible other-than-temporary impairment given market prices for RealD Inc. common stock and determined that the loss as of December 29, 2011 was other-than-temporary and recognized an impairment loss of $17,751,000 within investment expense (income), related to unrealized losses previously recorded in accumulated other comprehensive loss, as the Company determined the decline in fair value below historical cost to be other-than-temporary. Consideration was given to the financial condition and near-term prospects of the issuer, the length of time and extent to which the fair value had been less than cost and the Company's intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value. DCIP Transactions On March 10, 2010, DCIP completed its financing of $660,000,000 for the deployment of digital projection systems for movie theatre screens across North America, including screens operated or managed by the Company, Cinemark and Regal. On March 31, 2011, DCIP completed an additional financing of $220,000,000, which has allowed the Company to substantially complete its planned digital deployments. Future digital cinema developments will be managed by DCIP, subject to certain approvals. NCM Transactions On March 29, 2005, the Company along with Regal combined their screen advertising operations to form NCM. On July 15, 2005, Cinemark joined the NCM joint venture by contributing its screen advertising business. The Company, Regal and Cinemark are known as "Founding Members" of NCM. On February 13, 2007, National CineMedia, Inc. ("NCM, Inc."), a newly formed entity that now serves as the sole manager of NCM, closed its initial public offering, or IPO, of 42,000,000 shares of its common stock at a price of $21.00 per share. In connection with the completion of NCM, Inc.'s IPO, on February 13, 2007, the Company entered into the Third Amended and Restated Limited Liability Company Operating Agreement (the "NCM Operating Agreement") among the Company, Regal and Cinemark (the "Founding Members") and NCM, Inc. Pursuant to the NCM Operating Agreement, the members are granted a redemption right to exchange common units of NCM for, at the option of NCM, Inc., NCM, Inc. shares of common stock on a one-for-one basis, or a cash payment equal to the market price of one share of NCM, Inc.'s common stock. Upon execution of the NCM Operating Agreement, each existing preferred unit of NCM held by the Founding Members was redeemed in exchange for $13.7782 per unit, resulting in the cancellation of each preferred unit. NCM used the proceeds of a new $725,000,000 term loan facility and $59,800,000 of net proceeds from the NCM, Inc. IPO to redeem the outstanding preferred units. The Company received approximately $259,347,000 in the aggregate for the redemption of all its preferred units in NCM. The Company received approximately $26,467,000 from selling common units in NCM to NCM, Inc. in connection with the exercise of the underwriters' over-allotment option in the NCM, Inc. IPO. Also in connection with the completion of NCM, Inc.'s IPO, the Company agreed to modify NCM's payment obligations under the prior Exhibitor Services Agreement ("ESA") in exchange for approximately $231,308,000. The ESA provides a term of 30 years for advertising and approximately five year terms (with automatic renewal provisions) for meeting event and digital programming services, and provides NCM with a five year right of first refusal for the services beginning one year prior to the end of the term. The ESA also changed the basis upon which the Company is paid by NCM from a percentage of revenues associated with advertising contracts entered into by NCM to a monthly theatre access fee. The theatre access fee is now composed of a fixed payment per patron and a fixed payment per digital screen, which increases by 8% every five years starting at the end of fiscal 2011 for payments per patron and by 5% annually starting at the end of fiscal 2007 for payments per digital screen. The theatre access fee paid in the aggregate to the Founding Members will not be less than 12% of NCM's aggregate advertising revenue, or it will be adjusted upward to meet this minimum payment. Additionally, the Company entered into the First Amended and Restated Loews Screen Integration Agreement with NCM on February 13, 2007, pursuant to which the Company paid NCM an amount that approximated the EBITDA that NCM would have generated if it had been able to sell advertising in the Loews Cineplex Entertainment Corporation ("Loews") theatre chain on an exclusive basis commencing upon the completion of NCM, Inc.'s IPO, and NCM issued to AMC common membership units in NCM, increasing the Company's ownership interest to approximately 33.7%; such Loews payments were made quarterly until the former screen advertising agreements expired in fiscal 2009. The Loews Screen Integration payments totaling $15,982,000 were paid in full in fiscal 2010. The Company is also required to purchase from NCM any on-screen advertising time provided to the Company's beverage concessionaire at a negotiated rate. In addition, the Company expects to receive mandatory quarterly distributions of excess cash from NCM. Immediately following the NCM, Inc. IPO, the Company held an 18.6% interest in NCM. As a result of NCM, Inc.'s IPO and debt financing, the Company recorded a change of interest gain of $132,622,000 and received distributions in excess of its investment in NCM related to the redemption of preferred and common units of $106,188,000. The Company reduced its investment in NCM to zero and recognized the change of interest gain and the excess distribution in earnings as it has not guaranteed any obligations of NCM and is not otherwise committed to provide further financial support for NCM. Annual adjustments to the common membership units are made pursuant to the Common Unit Adjustment Agreement dated as of February 13, 2007 between NCM, Inc. and the Founding Members. The Common Unit Adjustment Agreement was created to account for changes in the number of theatre screens operated by each of the Founding Members. Prior to fiscal 2011, each of the Founding Members had increased the number of screens it operates through acquisitions and newly built theatres. Since these incremental screens and increased attendance in turn provide for additional advertising revenues to NCM, NCM agreed to compensate the Founding Members by issuing additional common membership units to the Founding Members in consideration for their increased attendance and overall contribution to the joint venture. The Common Unit Adjustment Agreement also provides protection to NCM in that the Founding Members may be required to transfer or surrender common units to NCM based on certain limited events, including declines in attendance and the number of screens operated. As a result, each Founding Member's equity ownership interests are proportionately adjusted to reflect the risks and rewards relative to their contributions to the joint venture. The Common Unit Adjustment Agreement provides that transfers of common units are solely between the Founding Members and NCM. There are no transfers of units among the Founding Members. In addition, there are no circumstances under which common units would be surrendered by the Company to NCM in the event of an acquisition by one of the Founding Members. However, adjustments to the common units owned by one of the Founding Members will result in an adjustment to the Company's equity ownership interest percentage in NCM. Pursuant to the Company's Common Unit Adjustment Agreement, from time to time common units of NCM held by the Founding Members will be adjusted up or down through a formula ("Common Unit Adjustment"), primarily based on increases or decreases in the number of theatre screens operated and theatre attendance generated by each Founding Member. The common unit adjustment is computed annually, except that an earlier common unit adjustment will occur for a Founding Member if its acquisition or disposition of theatres, in a single transaction or cumulatively since the most recent common unit adjustment, will cause a change of 2% or more in the total annual attendance of all of the Founding Members. In the event that a common unit adjustment is determined to be a negative number, the Founding Member shall cause, at its election, either (a) the transfer and surrender to NCM of a number of common units equal to all or part of such Founding Member's common unit adjustment or (b) pay to NCM an amount equal to such Founding Member's common unit adjustment calculated in accordance with the Common Unit Adjustment Agreement. Effective March 27, 2008, the Company received 939,853 common membership units of NCM as a result of the Common Unit Adjustment, increasing the Company's interest in NCM to 19.1%. The Company recorded the additional units received as a result of the Common Unit Adjustment at a fair value of $21,598,000, based on a price for shares of NCM, Inc. on March 26, 2008, of $22.98 per share, and as a new investment (Tranche 2 Investment), with an offsetting adjustment to deferred revenue. Effective May 29, 2008, NCM issued 2,913,754 common membership units to another Founding Member due to an acquisition, which caused a decrease in the Company's ownership share from 19.1% to 18.52%. Effective March 17, 2009, the Company received 406,371 common membership units of NCM as a result of the Common Unit Adjustment, increasing the Company's interest in NCM to 18.53%. The Company recorded these additional units at a fair value of $5,453,000, based on a price for shares of NCM, Inc. on March 17, 2009, of $13.42 per share, with an offsetting adjustment to deferred revenue. Effective March 17, 2010, the Company received 127,290 common membership units of NCM. As a result of the Common Unit Adjustment among the Founding Members, the Company's interest in NCM decreased to 18.23% as of April 1, 2010. The Company recorded the additional units received at a fair value of $2,290,000, based on a price for shares of NCM, Inc. on March 17, 2010, of $17.99 per share, with an offsetting adjustment to deferred revenue. Effective June 14, 2010 and with a settlement date of June 28, 2010, the Company received 6,510,209 common membership units in NCM as a result of an Extraordinary Common Unit Adjustment in connection with the Company's acquisition of Kerasotes. The Company recorded the additional units at a fair value of $111,520,000, based on a price for shares of NCM, Inc. on June 14, 2010, of $17.13 per share, with an offsetting adjustment to deferred revenue. As a result of the Extraordinary Common Unit Adjustment, the Company's interest in NCM increased to 23.05%. All of the Company's NCM membership units are redeemable for, at the option of NCM, Inc., cash or shares of common stock of NCM, Inc. on a share-for-share basis. On August 18, 2010, the Company sold 6,500,000 shares of common stock of NCM, Inc. in an underwritten public offering for $16.00 per share and reduced the Company's related investment in NCM by $36,709,000, the carrying amount of all shares sold. Net proceeds received on this sale were $99,840,000 after deducting related underwriting fees and professional and consulting costs of $4,160,000, resulting in a gain on sale of $63,131,000. In addition, on September 8, 2010, the Company sold 155,193 shares of NCM, Inc. to the underwriters to cover over-allotments for $16.00 per share and reduced the Company's related investment in NCM by $867,000, the carrying amount of all shares sold. Net proceeds received on this sale were $2,384,000 after deducting related underwriting fees and professional and consulting costs of $99,000, resulting in a gain on sale of $1,517,000. As a result of the membership unit conversions and sales, the Company's ownership interest in NCM was reduced to 17.02% as of September 30, 2010. Effective March 17, 2011, the Company was notified by NCM that its Common Unit Adjustment was determined to be a negative number. The Company elected to surrender 1,479,638 common membership units to satisfy the Common Unit Adjustment, leaving it with 17,323,782 units, or a 15.66% ownership interest in NCM as of March 31, 2011. The Company recorded the surrendered common units as a reduction to deferred revenues for exhibitor services agreement at fair value of $25,361,000, based on a price per share of NCM, Inc. of $17.14 on March 17, 2011, and recorded the reduction of the Company's NCM investment at weighted average cost for Tranche 2 Investments of $25,568,000, resulting in a loss on the surrender of the units of $207,000. The gain from the NCM, Inc. stock sales and the loss from the surrendered NCM common units are reported as Gain on NCM transactions on the Consolidated Statements of Operations. As a result of theatre closings and a related decline in attendance, the NCM Common Unit Adjustment for calendar 2011 called for a reduction in common units. The Company elected to pay NCM $214,000 to retain 16,717 common units effective March 16, 2012. The amount paid to retain the units decreased the deferred revenues for exhibitor services agreement available for amortization to advertising income for future periods. As a result of the Rave theatre acquisitions in December 2012, the Company received 1,728,988 common membership units of NCM, effective March 14, 2013 from the annual Common Unit Adjustment. The Company recorded the additional units received at a fair value of $26,315,000, based on a price for shares of NCM, Inc. on March 14, 2013, of $15.22 per share, and as a new investment (Tranche 2 Investment), with an offsetting adjustment to the Exhibitor Services Agreement to be amortized to revenues over the remaining term of the ESA following the units-of-revenue method. The Rave theatre screens were under a contract with another screen advertising provider and the Company will continue to receive its share of the advertising revenues. During the remainder of the Rave screen contract, the Company will pay a screen integration fee to NCM in an amount that approximates the EBITDA that NCM would have generated if it had been able to sell advertising on the Rave theatre screens. The NCM, Inc. IPO and related transactions have the effect of reducing the amounts NCM, Inc. would otherwise pay in the future to various tax authorities as a result of an increase in its proportionate share of tax basis in NCM's tangible and intangible assets. On the IPO date, NCM, Inc. and the Founding Members entered into a tax receivable agreement. Under the terms of this agreement, NCM, Inc. will make cash payments to the Founding Members in amounts equal to 90% of NCM, Inc.'s actual tax benefit realized from the tax amortization of the NCM intangible assets. For purposes of the tax receivable agreement, cash savings in income and franchise tax will be computed by comparing NCM, Inc.'s actual income and franchise tax liability to the amount of such taxes that NCM, Inc. would have been required to pay had there been no increase in NCM Inc.'s proportionate share of tax basis in NCM's tangible and intangible assets and had the tax receivable agreement not been entered into. The tax receivable agreement shall generally apply to NCM, Inc.'s taxable years up to and including the 30th anniversary date of the NCM, Inc. IPO and related transactions. Pursuant to the terms of the tax receivable agreement, in fiscal year 2009, the Company received payments of $3,796,000 from NCM, Inc. with respect to NCM, Inc.'s 2007 taxable year; in fiscal year 2010, the Company received payments of $8,788,000 with respect to NCM, Inc.'s 2008 and 2009 taxable year; and in fiscal year 2011, the Company received $6,637,000 with respect to NCM, Inc.'s 2008 and 2010 taxable years. In fiscal 2012, the Company received $6,248,000 with respect to NCM, Inc.'s 2009, 2010 and 2011 taxable years. Prior to the date of the Merger on August 30, 2012, distributions received under the tax receivable agreement from NCM, Inc. were recorded as additional proceeds received related to the Company's Tranche 1 or 2 Investments and were recorded in earnings in a similar fashion to the proceeds received from the NCM, Inc. IPO and the receipt of excess cash distributions. Following the date of the Merger, the Company recorded an intangible asset of $20,900,000 as the fair value of the tax receivable agreement. The tax receivable agreement intangible asset is amortized on a straight-line basis against investment income over the remaining life of the ESA. Cash receipts from NCM, Inc. for the tax receivable agreement are recorded to the investment income account. Amounts related to the NCM tax receivable agreement of $4,408,000 and $3,949,000 were recorded in equity in earnings of non-consolidated entities during the fifty-two weeks ended March 29, 2012 and the period December 30, 2011 through August 30, 2012, respectively. During the twelve months ended December 31, 2013, payments received of $3,677,000 related to the NCM tax receivable agreement were recorded in investment income, net of related amortization, for the NCM tax receivable agreement intangible asset. As of December 31, 2013, the Company owns a 15.01% interest in NCM. As a founding member, the Company has the ability to exercise significant influence over the governance of NCM, and, accordingly accounts for its investment following the equity method. All of the Company's NCM membership units are redeemable for, at the option of NCM, Inc., cash or shares of common stock of NCM, Inc. on a share-for-share basis. The fair market value of the units in National CineMedia, LLC was approximately $380,293,000 based on a price for shares of NCM, Inc. on December 31, 2013 of $19.96 per share. AC JV Transactions On December 26, 2013, the Company amended and restated its existing ESA with NCM in connection with the spin-off by NCM of its Fathom Events business to AC JV, LLC ("AC JV "), a newly-formed company owned 32% by each of the Founding Members and 4% by NCM. In consideration for the spin-off, NCM received a total of $25,000,000 in promissory notes from its Founding Members (approximately $8,333,000 from each Founding Member). Interest on the promissory note is at a fixed rate of 5% per annum, compounded annually. Interest and principal payments are due annually in six equal installments commencing on the first anniversary of the closing. Cinemark and Regal also amended and restated their respective ESAs with NCM in connection with the spin-off. The ESAs were modified to remove those provisions addressing the rights and obligations related to digital programing services of the Fathom Events business. Those provisions are now contained in the Amended and Restated Digital Programming Exhibitor Services Agreements (the "Digital ESAs") that were entered into on December 26, 2013 by NCM and each of the Founding Members. These Digital ESAs were then assigned by NCM to AC JV as part of the Fathom spin-off. There were no significant operations from the closing date until December 31, 2013. Transactions with Non-consolidated Affiliates NCM Transactions. The Company recorded the following transactions with NCM:
(In thousands) |  | December 31, 2013 |  | December 31, 2012 |
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|  | (Successor) |  | (Successor) |
Due from NCM for on-screen advertising revenue |  | $ | 2,266 |  | $ | 1,978 |
Due to NCM for Exhibitor Services Agreement |  |  | 2,429 |  |  | 2,021 |
(In thousands) |  | 12 Months Ended December 31, 2013 |  | From Inception August 31, 2012 through December 31, 2012 |  |  |  | March 30, 2012 through August 30, 2012 |  | 52 Weeks Ended March 29, 2012 |
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|  | (Successor) |  | (Successor) |  |  |  | (Predecessor) |  | (Predecessor) |
Net NCM screen advertising revenues |  | $ | 33,790 |  | $ | 11,086 |  |  |  | $ | 11,731 |  | $ | 24,351 |
NCM beverage advertising expense |  |  | 13,809 |  |  | 4,197 |  |  |  |  | 6,326 |  |  | 13,447 |
DCIP Transactions. The Company will make capital contributions to DCIP for projector and installation costs in excess of an agreed upon cap ($68,000 per system for digital conversions and $44,000 for new build locations). The Company pays equipment rent monthly and records the equipment rental expense on a straight-line basis over 12 years, including scheduled escalations of rent to commence after six and one-half years from the inception of the agreement. The difference between the cash rent and straight-line rent is recorded to deferred rent, a long-term liability account. The Company recorded the following transactions with DCIP:
(In thousands) |  | December 31, 2013 |  | December 31, 2012 |
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|  | (Successor) |  | (Successor) |
Due from DCIP for equipment and warranty purchases |  | $ | 663 |  | $ | 736 |
Deferred rent liability for digital projectors |  |  | 7,747 |  |  | 1,810 |
(In thousands) |  | 12 Months Ended December 31, 2013 |  | From Inception August 31, 2012 through December 31, 2012 |  |  |  | March 30, 2012 through August 30, 2012 |  | 52 Weeks Ended March 29, 2012 |
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|  | (Successor) |  | (Successor) |  |  |  | (Predecessor) |  | (Predecessor) |
Digital equipment rental expense (continuing operations) |  | $ | 11,077 |  | $ | 3,338 |  |  |  | $ | 3,624 |  | $ | 6,969 |
Open Road Films Transactions. The Company recorded the following transactions with Open Road Films:
(In thousands) |  | December 31, 2013 |  | December 31, 2012 |
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|  | (Successor) |  | (Successor) |
Due from Open Road Films |  | $ | 2,658 |  | $ | 1,950 |
Film rent payable to Open Road Films |  |  | 1,959 |  |  | 326 |
(In thousands) |  | 12 Months Ended December 31, 2013 |  | From Inception August 31, 2012 through December 31, 2012 |  |  |  | March 30, 2012 through August 30, 2012 |  | 52 Weeks Ended March 29, 2012 |
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|  | (Successor) |  | (Successor) |  |  |  | (Predecessor) |  | (Predecessor) |
Gross film exhibition cost on Open Road Films |  | $ | 12,700 |  | $ | 5,500 |  |  |  | $ | 1,550 |  | $ | 7,000 |
Summary Financial Information Investments in non-consolidated affiliates accounted for under the equity method as of December 31, 2013, include interests in National CineMedia, LLC ("NCM"), AC JV, LLC, two U.S. motion picture theatres and one IMAX screen, Digital Cinema Implementation Partners, LLC ("DCIP"), Open Road Films("ORF"), and other immaterial investments. Condensed financial information of the Company's non-consolidated equity method investments is shown below. Amounts are presented under U.S. GAAP for the periods of ownership by the Company. Financial Condition:
|  | December 31, 2013 (Successor) |
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(In thousands) |  | NCM |  | DCIP |  | ORF |  | Other |  | Total |
Current assets |  | $ | 141,600 |  | $ | 140,353 |  | $ | 60,431 |  | $ | 14,069 |  | $ | 356,453 |
Noncurrent assets |  |  | 557,600 |  |  | 1,124,517 |  |  | 10,341 |  |  | 24,281 |  |  | 1,716,739 |
Total assets |  |  | 699,200 |  |  | 1,264,870 |  |  | 70,772 |  |  | 38,350 |  |  | 2,073,192 |
Current liabilities |  |  | 122,400 |  |  | 34,919 |  |  | 69,530 |  |  | 6,301 |  |  | 233,150 |
Noncurrent liabilities |  |  | 876,000 |  |  | 1,028,191 |  |  | 15,918 |  |  | — |  |  | 1,920,109 |
Total liabilities |  |  | 998,400 |  |  | 1,063,110 |  |  | 85,448 |  |  | 6,301 |  |  | 2,153,259 |
Stockholders' equity (deficit) |  |  | (299,200 | ) |  | 201,760 |  |  | (14,676 | ) |  | 32,049 |  |  | (80,067 | )
Liabilities and stockholders' equity (deficit) |  |  | 699,200 |  |  | 1,264,870 |  |  | 70,772 |  |  | 38,350 |  |  | 2,073,192 |
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The Company's recorded investment(1) |  | $ | 272,407 |  | $ | 45,831 |  | $ | (1,920 | ) | $ | 11,592 |  | $ | 327,910 |
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|  | December 31, 2012 (Successor) |
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(In thousands) |  | NCM |  | DCIP |  | ORF |  | Other |  | Total |
Current assets |  | $ | 112,100 |  | $ | 56,322 |  | $ | 42,712 |  | $ | 3,547 |  | $ | 214,681 |
Noncurrent assets |  |  | 325,300 |  |  | 1,153,610 |  |  | 7,352 |  |  | 14,558 |  |  | 1,500,820 |
Total assets |  |  | 437,400 |  |  | 1,209,932 |  |  | 50,064 |  |  | 18,105 |  |  | 1,715,501 |
Current liabilities |  |  | 82,600 |  |  | 54,211 |  |  | 67,402 |  |  | 1,976 |  |  | 206,189 |
Noncurrent liabilities |  |  | 879,000 |  |  | 1,016,135 |  |  | 7,060 |  |  | — |  |  | 1,902,195 |
Total liabilities |  |  | 961,600 |  |  | 1,070,346 |  |  | 74,462 |  |  | 1,976 |  |  | 2,108,384 |
Stockholders' equity (deficit) |  |  | (524,200 | ) |  | 139,586 |  |  | (24,398 | ) |  | 16,129 |  |  | (392,883 | )
Liabilities and stockholders' equity (deficit) |  |  | 437,400 |  |  | 1,209,932 |  |  | 50,064 |  |  | 18,105 |  |  | 1,715,501 |
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The Company's recorded investment(1) |  | $ | 245,047 |  | $ | 25,234 |  | $ | (6,781 | ) | $ | 3,922 |  | $ | 267,422 |
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(1) Certain differences in the Company's recorded investments, and its proportional ownership share resulting from the Merger where the investments were recorded at fair value, are amortized to equity in (earnings) or losses over the estimated useful lives the underlying assets and liabilities. Other non-amortizing differences are considered to represent goodwill and are evaluated for impairment annually. Operating Results:
|  | 12 Months Ended December 31, 2013 (Successor) |
--- | --- | --- | ---
(In thousands) |  | NCM |  | DCIP |  | ORF |  | Other |  | Total |
Revenues |  | $ | 462,800 |  | $ | 182,659 |  | $ | 140,350 |  | $ | 18,517 |  | $ | 804,326 |
Operating costs and expenses |  |  | 299,900 |  |  | 133,700 |  |  | 130,628 |  |  | 18,546 |  |  | 582,774 |
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Net earnings (loss) |  | $ | 162,900 |  | $ | 48,959 |  | $ | 9,722 |  | $ | (29 | ) | $ | 221,552 |
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|  | From Inception August 31, 2012 through December 31, 2012 (Successor) |
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(In thousands) |  | NCM |  | DCIP |  | ORF |  | Other |  | Total |
Revenues |  | $ | 178,100 |  | $ | 56,851 |  | $ | 39,701 |  | $ | 9,128 |  | $ | 283,780 |
Operating costs and expenses |  |  | 144,000 |  |  | 43,052 |  |  | 61,083 |  |  | 11,088 |  |  | 259,223 |
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Net earnings (loss) |  | $ | 34,100 |  | $ | 13,799 |  | $ | (21,382 | ) | $ | (1,960 | ) | $ | 24,557 |
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|  | March 30, 2012 through August 30, 2012 (Predecessor) |
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(In thousands) |  | NCM |  | DCIP |  | ORF |  | Other |  | Total |
Revenues |  | $ | 231,600 |  | $ | 71,560 |  | $ | 42,563 |  | $ | 14,680 |  | $ | 360,403 |
Operating costs and expenses |  |  | 167,900 |  |  | 55,378 |  |  | 55,395 |  |  | 14,820 |  |  | 293,493 |
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Net earnings (loss) |  | $ | 63,700 |  | $ | 16,182 |  | $ | (12,832 | ) | $ | (140 | ) | $ | 66,910 |
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|  | 52 Weeks Ended March 29, 2012 (Predecessor) |
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(In thousands) |  | NCM |  | DCIP |  | ORF |  | Other |  | Total |
Revenues |  | $ | 443,700 |  | $ | 134,640 |  | $ | 44,842 |  | $ | 35,758 |  | $ | 658,940 |
Operating costs and expenses |  |  | 311,100 |  |  | 129,690 |  |  | 74,294 |  |  | 36,837 |  |  | 551,921 |
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Net earnings (loss) |  | $ | 132,600 |  | $ | 4,950 |  | $ | (29,452 | ) | $ | (1,079 | ) | $ | 107,019 |
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(In thousands) |  | 12 Months Ended December 31, 2013 |  | From Inception August 31, 2012 through December 31, 2012 |  |  |  | March 30, 2012 through August 30, 2012 |  | 52 Weeks Ended March 29, 2012 |
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|  | (Successor) |  | (Successor) |  |  |  | (Predecessor) |  | (Predecessor) |
National CineMedia, LLC |  | $ | 23,196 |  | $ | 4,271 |  |  |  | $ | 7,473 |  | $ | 28,489 |
Digital Cinema Implementation Partners, LLC |  |  | 18,660 |  |  | 4,436 |  |  |  |  | 4,941 |  |  | 1,726 |
Open Road Releasing, LLC |  |  | 4,861 |  |  | (10,691 | ) |  |  |  | (6,416 | ) |  | (14,726 | )
Other |  |  | 718 |  |  | (496 | ) |  |  |  | 1,547 |  |  | (2,930 | )
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The Company's recorded equity in earnings (losses) |  | $ | 47,435 |  | $ | (2,480 | ) |  |  | $ | 7,545 |  | $ | 12,559 |
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The Company reviews investments in non-consolidated subsidiaries accounted for under the equity method for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be fully recoverable. The Company reviews unaudited financial statements on a quarterly basis and audited financial statements on an annual basis for indicators of triggering events or circumstances that indicate the potential impairment of these investments as well as current equity prices for its investment in NCM and discounted projections of cash flows for certain of its other investees. Additionally, the Company has quarterly discussions with the management of significant investees to assist in the identification of any factors that might indicate the potential for impairment. In order to determine whether the carrying value of investments may have experienced an "other-than-temporary" decline in value necessitating the write-down of the recorded investment, the Company considers the period of time during which the fair value of the investment remains substantially below the recorded amounts, the investees financial condition and quality of assets, the length of time the investee has been operating, the severity and nature of losses sustained in current and prior years, a reduction or cessation in the investee's dividend payments, suspension of trading in the security, qualifications in accountant's reports due to liquidity or going concern issues, investee announcement of adverse changes, downgrading of investee debt, regulatory actions, changes in reserves for product liability, loss of a principal customer, negative operating cash flows or working capital deficiencies and the recording of an impairment charge by the investee for goodwill, intangible or long-lived assets. Once a determination is made that an other-than-temporary impairment exists, the Company writes down its investment to fair value. The Company recorded the following changes in the carrying amount of its investment in NCM and equity in earnings of NCM during twelve months ended December 31, 2013, the period August 31, 2012 through December 31, 2012, the period March 30, 2012 through August 30, 2012, and the fifty-two weeks ended March 29, 2012.
(In thousands) |  | Investment in NCM(1) |  | Exhibitor Services Agreement(2) |  | Other Comprehensive (Income) |  | Cash Received (Paid) |  | Equity in (Earnings) Losses |  | Advertising (Revenue) |
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Ending balance March 31, 2011 |  | $ | 74,551 |  | $ | (333,792 | ) | $ | — |  |  |  |  |  |  |  |  |  |
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Receipt of excess cash distributions |  | $ | (6,444 | ) | $ | — |  | $ | — |  | $ | 25,275 |  | $ | (18,831 | ) | $ | — |
Receipt under Tax Receivable Agreement(5) |  |  | (1,840 | ) |  | — |  |  | — |  |  | 6,248 |  |  | (4,408 | ) |  | — |
Payment to retain Common Units(6) |  |  | — |  |  | 214 |  |  | — |  |  | (214 | ) |  | — |  |  | — |
Amortization of ESA |  |  | — |  |  | 5,136 |  |  | — |  |  | — |  |  | — |  |  | (5,136 | )
Equity in earnings(3) |  |  | 5,250 |  |  | — |  |  | — |  |  | — |  |  | (5,250 | ) |  | — |
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Ending balance March 29, 2012 |  | $ | 71,517 |  | $ | (328,442 | ) | $ | — |  | $ | 31,309 |  | $ | (28,489 | ) | $ | (5,136 | )
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Receipt of excess cash distributions |  | $ | (1,701 | ) | $ | — |  | $ | — |  | $ | 6,667 |  | $ | (4,966 | ) | $ | — |
Change in interest loss |  |  | (16 | ) |  | — |  |  | — |  |  | — |  |  | 16 |  |  | — |
Amortization of ESA |  |  | — |  |  | 2,367 |  |  | — |  |  | — |  |  | — |  |  | (2,367 | )
Equity in earnings(3) |  |  | 2,523 |  |  | — |  |  | — |  |  | — |  |  | (2,523 | ) |  | — |
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Ending balance August 30, 2012 |  | $ | 72,323 |  | $ | (326,075 | ) | $ | — |  | $ | 6,667 |  | $ | (7,473 | ) | $ | (2,367 | )
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Purchase price fair value adjustment |  |  | 177,832 |  |  | 3,453 |  |  | — |  |  | — |  |  | — |  |  | — |
Receipt of excess cash distributions |  |  | (10,176 | ) |  | — |  |  | — |  |  | 10,176 |  |  |  |  |  | — |
Amortization of ESA |  |  | — |  |  | 4,468 |  |  | — |  |  | — |  |  | — |  |  | (4,468 | )
Unrealized gain |  |  | 797 |  |  | — |  |  | (797 | ) |  | — |  |  | — |  |  | — |
Equity in earnings(3) |  |  | 4,271 |  |  | — |  |  | — |  |  | — |  |  | (4,271 | ) |  | — |
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Ending balance December 31, 2012 |  | $ | 245,047 |  | $ | (318,154 | ) | $ | (797 | ) | $ | 10,176 |  | $ | (4,271 | ) | $ | (4,468 | )
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Receipt of common units |  |  | 26,315 |  |  | (26,315 | ) |  | — |  |  | — |  |  | — |  |  | — |
Receipt of excess cash distributions |  |  | (27,453 | ) |  | — |  |  | — |  |  | 27,453 |  |  | — |  |  | — |
Amortization of ESA |  |  | — |  |  | 14,556 |  |  | — |  |  | — |  |  | — |  |  | (14,556 | )
Unrealized gain from cash flow hedge |  |  | 1,485 |  |  | — |  |  | (1,485 | ) |  | — |  |  | — |  |  | — |
Adjust carrying value of AC JV, LLC(8) |  |  | 3,817 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Change in interest gain(4) |  |  | 5,012 |  |  | — |  |  | — |  |  | — |  |  | (5,012 | ) |  | — |
Equity in earnings(3) |  |  | 21,149 |  |  | — |  |  | — |  |  | — |  |  | (21,149 | ) |  | — |
Equity in loss from amortization of basis difference(7) |  |  | (2,965 | ) |  | — |  |  | — |  |  | — |  |  | 2,965 |  |  | — |
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Ending balance December 31, 2013 |  | $ | 272,407 |  | $ | (329,913 | ) | $ | (2,282 | ) | $ | 27,453 |  | $ | (23,196 | ) | $ | (14,556 | )
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(1) Represents AMC's investment through the date of the Merger on August 30, 2012 in 4,417,042 common membership units received under the Common Unit Adjustment Agreement dated as of February 13, 2007 (Predecessor Tranche 2 Investments). AMC's investment in 12,906,740 common membership units (Predecessor Tranche 1 Investment) was carried at zero cost through the date of the Merger. As of the date of the Merger, the Company's investment in NCM consisted of a single investment tranche (Tranche 1 Investment) consisting of 17,323,782 membership units recorded at fair value (Level 1). As a result of the Rave theatre acquisitions in December of 2012, and as provided under the Common Unit Adjustment Agreement, the Company received 1,728,988 additional NCM common membership units in 2013 valued at $26,315,000 and is recorded in a new tranche, (Tranche 2 Investment). (2) Represents the unamortized portion of the Exhibitor Services Agreement ("ESA") with NCM. Such amounts are being amortized to other theatre revenues over the remainder of the 30 year term of the ESA ending in 2036, using a units-of-revenue method, as described in ASC 470-10-35 (formerly EITF 88-18, Sales of Future Revenues). In connection with the Merger on August 30, 2012, the amounts related to the ESA were adjusted to estimated fair value. (3) Represents equity in earnings on the Predecessor Tranche 2 investments only through August 30, 2012. Subsequent to August 30, 2012, represents percentage of ownership equity in earnings for Successor on both Tranche 1 and Tranche 2 Investments. (4) Two non-cash gains were recorded to adjust the Company's investment balance due to NCM's issuance of 8,688,078 common membership units to other founding members, at a price per share in excess of the Company's average carrying amount per share. (5) Distributions received under the Tax Receivable Agreement ("TRA") in fiscal 2012, were allocated among the Predecessor Tranche 1 Investment and the Predecessor Tranche 2 Investments based on the ownership percentages as of the date of the related NCM, Inc. taxable year to which the distribution relates. Post Merger, the TRA was recorded at fair value as an Intangible Asset. Amortization of the TRA intangible asset and cash receipts are recorded to Investment Expense (Income). (6) As a result of theatre closings and a related decline in attendance, the NCM Common Unit Adjustment for calendar 2011 called for a reduction in common units. The Company elected to pay NCM $214,000 to retain 16,717 common units effective March 16, 2012. The amount paid to retain the units decreased the amount for exhibitor services agreement available for amortization to advertising income for future periods. (7) Certain differences between the Company's carrying value and the Company's share of NCM's membership equity have been identified and are amortized to equity in earnings over the respective lives of the assets and liabilities. (8) On December 26, 2013, NCM spun-off its Fathom Events business to a newly formed limited liability company, AC JV, LLC which is owned 32% by each founding member and 4% by NCM. In consideration for the sale, each of the three founding members issued promissory notes of approximately $8,333,000 to NCM. The Company's share of the gain recorded by NCM, as a result of the spin-off, has been excluded from equity in earnings and has been applied as a reduction in the carrying value of AC JV, LLC investment.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=7658923&loc=d3e32847-111569 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=7658923&loc=d3e32787-111569 + Details
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