Quarterly report pursuant to Section 13 or 15(d)

Other Investments

v3.22.1
Other Investments
3 Months Ended
Mar. 31, 2022
Financial Support for Nonconsolidated Legal Entity [Abstract]  
Other Investments
10.
Other Investments

 

Digital Cinema Implementation Partners LLC (“DCIP”)

On February 12, 2007, the Company, AMC and Regal (the “Exhibitors”) entered into a joint venture known as DCIP to facilitate the implementation of digital cinema in the Company’s theatres and to establish agreements with major motion picture studios for the financing of digital cinema. As of March 31, 2022, the Company had a 33% voting interest in DCIP and a 24.3% economic interest in DCIP. DCIP also entered into long-term Digital Cinema Deployment Agreements (“DCDAs”) with six major motion picture studios pursuant to which Kasima LLC, one of DCIP’s subsidiaries, received a virtual print fee ("VPF") each time the studio booked a film or certain other content on the leased digital projection systems. Other content distributors entered into similar DCDAs that provided for the payment of VPFs for bookings of the distributor's content on a leased digital projection system. The DCDAs expired in October 2021. Pursuant to the operating agreement between the Exhibitors and DCIP, DCIP began to distribute excess cash generated from their operations to the Exhibitors during 2019. As the DCDAs have expired and the MELA between the Company and Kasima has been terminated, as discussed below, DCIP and its subsidiaries no longer have regular operations, and final distributions are expected to be made to the Company during 2022.

Effective November 1, 2020, the Company amended the master equipment lease agreement (“MELA”) with Kasima LLC, which is an indirect subsidiary of DCIP, resulting in the termination of the MELA. Upon termination of the MELA, the Company received a distribution of the digital projection equipment that it previously leased. As the fair value of the distributed projectors was greater than the Company’s investment in DCIP at the time of the distribution, the investment in DCIP was reduced to zero at the time of the distribution. The Company does not recognize undistributed equity in the earnings or loss of its investment in DCIP until such time that future net earnings, less distributions received, surpass the amount of the excess distribution. The investment in DCIP on the condensed consolidated balance sheets as of December 31, 2021 and March 31, 2022 was $0.

Below is summary financial information for DCIP for the periods indicated:

 

 

Three Months Ended

 

 

 

March 31, 2022

 

 

March 31, 2021

 

Gross revenues

 

$

0.5

 

 

$

5.6

 

Operating income (loss)

 

$

(0.5

)

 

$

4.0

 

Net income (loss)

 

$

(0.6

)

 

$

3.9

 

 

 

 

As of

 

 

 

March 31, 2022

 

 

December 31, 2021

 

Current assets

 

$

22.1

 

 

$

22.9

 

Current liabilities

 

$

11.4

 

 

$

11.6

 

Members' equity

 

$

10.7

 

 

$

11.3

 

Other Investment Activity

Below is a summary of activity for each of the Company’s other investees and corresponding changes to the Company's investment balances during the three months ended March 31, 2022:

 

 

AC JV,
LLC

 

DCDC

 

FE Concepts

 

Other

 

Total

 

Balance at January 1, 2022

 

$

3.7

 

$

1.8

 

$

19.3

 

$

0.4

 

$

25.2

 

Cash distributions received

 

 

(0.6

)

 

 

 

 

 

 

 

(0.6

)

Equity income

 

 

1.0

 

 

0.1

 

 

0.2

 

 

 

 

1.3

 

Other

 

 

 

 

 

 

 

 

(0.1

)

 

(0.1

)

Balance at March 31, 2022

 

$

4.1

 

$

1.9

 

$

19.5

 

$

0.3

 

$

25.8

 

 

Transactions with Other Investees

Below is a summary of transactions with each of the Company’s other investees for the three months ended March 31, 2022 and 2021:

 

 

 

Three Months Ended

 

Investee

Transactions

 

March 31, 2022

 

 

March 31, 2021

 

DCIP

Equipment lease payments (1)

 

$

 

 

$

1.0

 

DCIP

Warranty reimbursements (2)

 

$

 

 

$

(0.3

)

AC JV, LLC

Event fees paid (3)

 

$

1.8

 

 

$

0.2

 

DCDC

Content delivery fees paid (3)

 

$

0.2

 

 

$

0.1

 

(1)
As a result of the MELA amendment noted above, the Company recorded a lease termination liability during 2020. Lease termination payments of $1.0 made to DCIP during the three months ended March 31, 2021 reduced the liability outstanding, which was fully paid by October 2021.
(2)
Included in utilities and other costs on the condensed consolidated statements of loss.
(3)
Included in film rentals and advertising costs on the condensed consolidated statements of loss.