Quarterly report pursuant to Section 13 or 15(d)

Impairment of Long-Lived Assets

v3.22.2.2
Impairment of Long-Lived Assets
9 Months Ended
Sep. 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 September 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 September 30, 2022.

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

Goodwill – The 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 estimated fair values as compared with its most recent quantitative assessment.
Tradename Intangible Assets – The qualitative assessment considers recent developments that may impact revenue forecasts and other estimates as compared with its most recent quantitative assessment.
Other Long-lived Assets – The qualitative assessment considers relevant market transactions, industry trading multiples and recent developments that would impact the 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 other long-lived assets, namely theatre properties and right-of-use assets, as of September 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. If an impairment indicator was identified for a theatre as a result of the qualitative test, then the Company performed a quantitative test for that theatre.

The 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 carrying value of the asset group (theatre) is compared 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 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.

Below is a summary of impairment charges for the periods presented:

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

U.S. Segment

 

 

 

 

 

 

 

 

 

 

 

 

Theatre properties

 

$

1.1

 

 

$

4.8

 

 

$

3.6

 

 

$

4.8

 

Theatre operating lease right-of-use assets

 

 

2.7

 

 

 

2.6

 

 

 

4.7

 

 

 

2.6

 

Investment in NCM (1)

 

 

11.2

 

 

 

 

 

 

98.0

 

 

 

 

U.S. total

 

 

15.0

 

 

 

7.4

 

 

 

106.3

 

 

 

7.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International segment

 

 

 

 

 

 

 

 

 

 

 

 

Theatre properties

 

 

0.1

 

 

 

0.1

 

 

 

0.8

 

 

 

0.1

 

Theatre operating lease right-of-use assets

 

 

0.1

 

 

 

 

 

 

0.4

 

 

 

 

International total

 

 

0.2

 

 

 

0.1

 

 

 

1.2

 

 

 

0.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total Impairment

 

$

15.2

 

 

$

7.5

 

 

$

107.5

 

 

$

7.5

 

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