Quarterly report pursuant to Section 13 or 15(d)

Impairment of Long-Lived Assets

v3.22.2
Impairment of Long-Lived Assets
6 Months Ended
Jun. 30, 2022
Impairment or Disposal of Tangible Assets Disclosure [Abstract]  
Impairment of Long-Lived Assets
12.
Impairment of Long-Lived Assets

The Company performed a qualitative impairment analysis on its goodwill and tradename intangible assets as of June 30, 2022. As a result of the qualitative assessment, the Company noted no impairment indicators related to its goodwill and tradename intangible assets as of June 30, 2022.

The Company's qualitative impairment analysis, by asset class, is described below:

Goodwill – The Company’s qualitative assessment of goodwill for each reporting unit considers economic and market conditions, industry trading multiples and the impact of recent developments and events on the Company's estimated fair values as compared with its most recent quantitative assessment.
Tradename Intangible Assets – The Company’s qualitative assessment considers recent developments that may impact the Company's revenue forecasts and other estimates as compared with its most recent quantitative assessment.
Other Long-lived Assets – The Company’s qualitative assessment considers relevant market transactions, industry trading multiples and recent developments that would impact the Company's estimates of future cash flows, which are the primary measure of estimated fair value, as compared with its most recent quantitative impairment assessment.

The Company performed a qualitative impairment analysis on its other long-lived assets, including theatre properties and right-of-use assets, as of June 30, 2022 to determine whether indicators of potential impairment existed at the theatre level, which is the level at which the Company tests its other long-lived assets. The Company then performed a quantitative impairment analysis for those theatres for which indicators of potential impairment were identified.

The Company’s quantitative evaluation at the theatre level uses estimated undiscounted cash flows from continuing use through the remainder of the theatre’s useful life. The remainder of the theatre’s useful life correlates with the remaining lease period, which includes the probability of the exercise of available renewal periods for leased properties, and the lesser of twenty years or the building’s remaining useful life for owned properties. If the estimated undiscounted cash flows are not sufficient to recover a long-lived asset’s carrying value, the Company then compares the carrying value of the asset group (theatre) with its estimated fair value. Significant judgment is involved in estimating fair value, including management’s estimate of future theatre level cash flows for each of the Company's theatres based on projected box office. Fair value is estimated based on a multiple of cash flows. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy, as defined by FASB ASC Topic 820-10-35, are based on projected operating performance, market transactions and industry trading multiples.

The Company's impairment charges were as follows for the six months ended June 30, 2022:

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2022

 

U.S. Segment

 

 

 

Theatre properties

 

$

2.5

 

Theatre operating lease right-of-use assets

 

 

2.0

 

Investment in NCM (1)

 

 

86.8

 

U.S. total

 

 

91.3

 

 

 

 

 

International segment

 

 

 

Theatre properties

 

 

0.7

 

Theatre operating lease right-of-use assets

 

 

0.3

 

International total

 

 

1.0

 

 

 

 

 

 Total Impairment

 

$

92.3

 

(1)
See discussion at Impairment of NCM Investment in Note 8.