NOTE 5—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, and are recorded in the Consolidated Balance Sheets in other long-term assets. Investments in non-consolidated affiliates as of December 31, 2015, include interests in NCM of 17.66%, DCIP of 29%, DCDC of 15.45%, Open Road Films of 50%, and AC JV, owner of Fathom Events, of 32%. The Company also has partnership interests in two U.S. motion picture theatres and one IMAX screen of 50% ("Theatre Partnerships"). Indebtedness held by equity method investees is non-recourse to the Company.

At December 31, 2015, the Company's recorded investments are less than its proportional ownership of the underlying equity in these entities by approximately $16,876,000, excluding NCM and Open Road Films.

Amounts payable to Theatre Partnerships were $2,897,000 and $6,194,000 as of December 31, 2015 and December 31, 2014, respectively.

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 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. The unamortized deferred lease incentive is being amortized on a straight-line basis over the remaining contract life of approximately 5 years as of December 31, 2015, to reduce RealD license expense recorded in the consolidated statements of operations under operating expense. As of December 31, 2015, the unamortized deferred lease incentive balance included in other long-term liabilities was $13,408,000. Fair value adjustments for RealD Inc. common stock are recorded to other long-term assets with an offsetting entry to accumulated other comprehensive income.

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 the "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.

As of December 31, 2015, the Company owns a 17.66% 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. In December 2015, the Company elected to exchange 200,000 NCM membership units for 200,000 common shares of NCM, Inc. No gain or loss was recorded on the exchange and the common stock investment in NCM, Inc. follows the equity method of accounting. The fair value of the 23,862,988 units in National CineMedia, LLC and the 200,000 shares of NCM, Inc. was approximately $378,030,000 based on a price for shares of NCM, Inc. on December 31, 2015 of $15.71 per share.

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.

In March 2013, the Company received 1,728,988 common membership units of NCM from the annual Common Unit Adjustment, primarily due to the increase in screens from the Rave theatre acquisitions in December 2012. 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. In March 2014, the Company received 141,731 membership units recorded at a fair value of $2,137,000 ($15.08 per unit), in March 2015, the Company received 469,163 membership units recorded at a fair value of $6,812,000 ($14.52 per unit), and in December 2015, the Company received 4,399,324 membership units recorded at a fair value of $69,289,000 ($15.75 per unit), primarily due to the increase in screens from the Starplex Cinemas acquisition in December 2015.

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. As a result of Wanda acquiring Holdings on August 30, 2012, 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 expense (income) account.

During the twelve months ended December 31, 2015, the twelve months ended December 31, 2014, and the twelve months ended December 31, 2013, payments received of $6,555,000, $8,730,000, $3,677,000, related to the NCM tax receivable agreement were recorded in investment expense (income), net of related amortization, respectively, for the NCM tax receivable agreement intangible asset.

The Company's recorded investment in NCM exceeds its proportional ownership in the equity of NCM by approximately $732,788,000 as of December 31, 2015.

The Company recorded the following related party transactions with NCM:

(In thousands)	December 31, 2015		December 31, 2014
Due from NCM for on-screen advertising revenue	$	2,406	$	2,072
Due to NCM for Exhibitor Services Agreement		1,226		1,784
Promissory note payable to NCM		5,555		6,944

(In thousands)	12 Months Ended December 31, 2015		12 Months Ended December 31, 2014		12 Months Ended December 31, 2013
Other theatre revenues:
Net NCM screen advertising revenues	$	35,893	$	34,523	$	33,790
Operating expense:
NCM beverage advertising expense		8,256		12,226		13,809

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 as of December 31, 2015, $39,000 for new build locations). The Company pays equipment rent monthly and records the equipment rental expense on a straight-line basis over 12 years.

The Company recorded the following related party transactions with DCIP:

(In thousands)	December 31, 2015		December 31, 2014
Due from DCIP for equipment and warranty purchases	$	1,460	$	1,048
Deferred rent liability for digital projectors		8,725		9,031

(In thousands)	12 Months Ended December 31, 2015		12 Months Ended December 31, 2014		12 Months Ended December 31, 2013
Operating expense:
Digital equipment rental expense	$	4,963	$	6,639	$	11,077
Warranty reimbursements from DCIP		5,241		3,651		2,166

Open Road Films Transactions. Open Road Films was launched by the Company and Regal in March 2011, as an acquisition-based domestic theatrical distribution company that concentrates on wide-release movies. Open Road titles are also distributed in the pay-TV and home entertainment markets. The Company has a remaining commitment to invest up to an additional $10,000,000, in the event additional capital is required.

For the twelve months ended December 31, 2015, the Company suspended equity method accounting for its investment in Open Road Films when the negative investment in Open Road Films reached the Company's capital commitment of $10,000,000. The Company's share of cumulative losses from Open Road Films in excess of the Company's capital commitment was $14,422,000 as of December 31, 2015. The Company's recorded investment in Open Road Films exceeds its proportional ownership in the equity of Open Road Films by approximately $19,840,000 as of December 31, 2015.

The Company recorded the following related party transactions with Open Road Films:

(In thousands)	December 31, 2015		December 31, 2014
Due from Open Road Films	$	2,472	$	2,560
Film rent payable to Open Road Films		1,061		709

(In thousands)	12 Months Ended December 31, 2015		12 Months Ended December 31, 2014		12 Months Ended December 31, 2013
Film exhibition costs:
Gross exhibition cost on Open Road Films	$	6,380	$	13,300	$	12,700

AC JV Transactions

On December 26, 2013, the Company amended and restated its existing Exhibitor Services Agreement ("ESA") with NCM in connection with the spin-off by NCM of its Fathom Events business to 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.

The Company recorded the following related party transactions with AC JV:

(In thousands)		December 31, 2015			December 31, 2014
Due to AC JV for Fathom Events programming		$	445		$	333

(In thousands)	12 Months Ended December 31, 2015		12 Months Ended December 31, 2014		12 Months Ended December 31, 2013
Film exhibition costs:
Gross exhibition cost on Fathom Events programming	$	8,511	$	6,898	$	—

Summary Financial Information

Investments in non-consolidated affiliates accounted for under the equity method as of December 31, 2015, include interests in NCM, DCIP, Open Road Films, AC JV, DCDC, two U.S. motion picture theatres and one IMAX screen, and other immaterial investments.

Condensed financial information of the Company's non-consolidated equity method investments is shown below and amounts are presented under GAAP for the periods of ownership by the Company:

	December 31, 2015
(In thousands)	NCM			DCIP		Open Road			AC JV		Other		Total
Current assets	$	159,500		$	48,833	$	48,954		$	9,967	$	9,083	$	276,337
Noncurrent assets		623,100			955,924		52,359			21,502		29,470		1,682,355
Total assets		782,600			1,004,757		101,313			31,469		38,553		1,958,692
Current liabilities		113,100			32,533		65,076			3,802		4,867		219,378
Noncurrent liabilities		936,000			642,659		95,916			—		—		1,674,575
Total liabilities		1,049,100			675,192		160,992			3,802		4,867		1,893,953
Stockholders' equity (deficit)		(266,500	)		329,565		(59,679	)		27,667		33,686		64,739
Liabilities and stockholders' equity (deficit)		782,600			1,004,757		101,313			31,469		38,553		1,958,692

The Company's recorded investment(1)	$	327,471		$	85,710	$	(10,000	)	$	5,605	$	10,886	$	419,672

	December 31, 2014
(In thousands)	NCM			DCIP		Open Road			AC JV		Other		Total
Current assets	$	134,900		$	53,229	$	44,498		$	10,993	$	11,649	$	255,269
Noncurrent assets		546,200			1,044,417		12,260			22,948		25,296		1,651,121
Total assets		681,100			1,097,646		56,758			33,941		36,945		1,906,390
Current liabilities		106,500			24,036		41,080			4,238		3,538		179,392
Noncurrent liabilities		892,000			821,282		45,582			—		—		1,758,864
Total liabilities		998,500			845,318		86,662			4,238		3,538		1,938,256
Stockholders' equity (deficit)		(317,400	)		252,328		(29,904	)		29,703		33,407		(31,866	)
Liabilities and stockholders' equity (deficit)		681,100			1,097,646		56,758			33,941		36,945		1,906,390

The Company's recorded investment(1)	$	265,839		$	62,236	$	(9,570	)	$	6,255	$	7,680	$	332,440


(1)	Certain differences in the Company's recorded investments, and its proportional ownership share resulting from the acquisition of Holdings by Wanda on August 30, 2012, where the investments were recorded at fair value, are amortized to equity in (earnings) losses of non-consolidated entities over the estimated useful lives of the underlying assets and liabilities. Other non-amortizing differences are considered to represent goodwill and are evaluated for impairment annually.

Condensed financial information of the Company's non-consolidated equity method investments is shown below and amounts are presented under GAAP for the periods of ownership by the Company:

	12 Months Ended December 31, 2015
(In thousands)	NCM		DCIP		Open Road			AC JV		Other		Total
Revenues	$	446,500	$	172,256	$	119,227		$	53,371	$	30,637	$	821,991
Operating costs and expenses		359,000		93,001		149,002			50,600		27,634		679,237

Net earnings (loss)	$	87,500	$	79,255	$	(29,775	)	$	2,771	$	3,003	$	142,754

	12 Months Ended December 31, 2014
(In thousands)	NCM		DCIP		Open Road			AC JV		Other		Total
Revenues	$	394,000	$	170,724	$	175,374		$	42,102	$	26,887	$	809,087
Operating costs and expenses		297,700		109,430		190,602			37,669		26,072		661,473

Net earnings (loss)	$	96,300	$	61,294	$	(15,228	)	$	4,433	$	815	$	147,614

	12 Months Ended December 31, 2013
(In thousands)	NCM		DCIP		Open Road		AC JV		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

Net earnings (loss)	$	162,900	$	48,959	$	9,722	$	—	$	(29	)	$	221,552

The components of the Company's recorded equity in earnings (losses) of non-consolidated entities are as follows:

(In thousands)	12 Months Ended December 31, 2015			12 Months Ended December 31, 2014			12 Months Ended December 31, 2013
National CineMedia, LLC	$	11,194		$	11,311		$	23,196
Digital Cinema Implementation Partners, LLC		24,522			20,929			18,660
Open Road Releasing, LLC		(430	)		(7,650	)		4,861
AC JV, LLC		950			1,470			—
Other		895			555			718

The Company's recorded equity in earnings	$	37,131		$	26,615		$	47,435

The Company recorded the following changes in the carrying amount of its investment in NCM and equity in earnings of NCM during the twelve months ended December 31, 2015, December 31, 2014, and December 31, 2013:

(In thousands)	Investment in NCM(1)			Exhibitor Services Agreement(2)			Other Comprehensive (Income)			Cash Received		Equity in (Earnings) Losses			Advertising (Revenue)
Ending balance at December 31, 2012	$	245,047		$	(318,154	)	$	(797	)


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(3)		3,817			—			—			—		—			—
Change in interest gain(4)		5,012			—			—			—		(5,012	)		—
Equity in earnings(5)		21,149			—			—			—		(21,149	)		—
Equity in loss from amortization of basis difference(6)		(2,965	)		—			—			—		2,965			—

Ending balance at December 31, 2013	$	272,407		$	(329,913	)	$	(2,282	)	$	27,453	$	(23,196	)	$	(14,556	)


Receipt of common units		2,137			(2,137	)		—			—		—			—
Receipt of excess cash distributions		(21,514	)		—			—			21,514		—			—
Amortization of ESA		—			15,235			—			—		—			(15,235	)
Unrealized gain from cash flow hedge		1,498			—			(1,498	)		—		—			—
Equity in earnings(5)		14,446			—			—			—		(14,446	)		—
Equity in loss from amortization of basis difference(6)		(3,135	)		—			—			—		3,135			—

Ending balance at December 31, 2014	$	265,839		$	(316,815	)	$	(3,780	)	$	21,514	$	(11,311	)	$	(15,235	)


Receipt of common units		76,101			(76,101	)		—			—		—			—
Exchange of common units		(3,156	)		—			—			—		—			—
Receipt of excess cash distributions		(22,741	)		—			—			22,741		—			—
Amortization of ESA		—			15,317			—			—		—			(15,317	)
Unrealized gain from cash flow hedge		234			—			(234	)		—		—			—
Equity in earnings(5)		14,435			—			—			—		(14,435	)		—
Equity in loss from amortization of basis difference(6)		(3,241	)		—			—			—		3,241			—

Ending balance at December 31, 2015	$	327,471		$	(377,599	)	$	(4,014	)	$	22,741	$	(11,194	)	$	(15,317	)


(1)	The following table represents AMC's investment in common membership units including units received under the Common Unit Adjustment Agreement dated as of February 13, 2007:

	Common Membership Units
	Tranche 1		Tranche 2(a)
Beginning balance at December 31, 2012		17,323,782		—
Additional units received in March 2013		—		1,728,988
Additional units received in March 2014		—		141,731
Additional units received in March 2015		—		469,163
Additional units received in December 2015		—		4,399,324
Units exchanged for NCM, Inc. shares in December 2015		—		(200,000	)

Ending balance at December 31, 2015		17,323,782		6,539,206


(a)	The additional units received in March 2013, March 2014, March 2015, and December 2015 were measured at fair value (Level 1) using NCM, Inc.'s stock price of $15.22, $15.08, $14.52, and $15.75 respectively.

(2)		Represents the unamortized portion of the 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).
(3)		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.
(4)		Non-cash gains were recorded in 2013 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)		Represents equity in earnings on both Tranche 1 and Tranche 2 Investments.
(6)		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) losses in non-consolidated entities over the respective lives of the assets and liabilities.