Cinemark Holdings, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2018

Provision for Federal and Foreign Income Tax Expense for Continuing Operations

The Company’s provision for federal and foreign income tax expense for continuing operations consisted of the following:

	Year Ended December 31,
	2016		2017		2018
Income before income taxes:
U.S.	$	274,756	$	280,535	$	289,727
Foreign		85,890		64,842		21,007
Total	$	360,646	$	345,377	$	310,734

Current and Deferred Income Taxes

Current and deferred income taxes were as follows:

	Year Ended December 31,
	2016			2017			2018
Current:
Federal	$	65,303		$	54,435		$	46,826
Foreign		32,047			29,306			11,822
State		11,936			10,632			13,594
Total current expense	$	109,286		$	94,373		$	72,242
Deferred:
Federal	$	(13,667	)	$	(14,046	)	$	27,055
Foreign		1,674			(4,270	)		(6,166	)
State		6,526			3,301			2,298
Total deferred taxes	$	(5,467	)	$	(15,015	)	$	23,187
Income taxes	$	103,819		$	79,358		$	95,429

Reconciliation Between Income Tax Expense and Taxes Computed

A reconciliation between income tax expense and taxes computed by applying the applicable statutory federal income tax rate to income before income taxes follows:

	Year Ended December 31,
	2016			2017			2018
Computed statutory tax expense	$	126,226		$	120,882		$	65,254
Foreign inflation adjustments		(281	)	—			—
State and local income taxes, net of federal income tax impact		11,999			12,786			12,611
Foreign losses not benefited and changes in valuation allowance		(34,757	)		249			822
Foreign tax rate differential		(942	)		(245	)		2,235
Foreign dividends		68,684			13,662			-
Foreign tax credits		(62,815	)		(21,647	)		3,927
Impacts related to 2017 Tax Act ⁽¹⁾⁽²⁾	—				(44,889	)		19,180
Changes in uncertain tax positions		921			983			(6,139	)
Other — net		(5,216	)		(2,423	)		(2,461	)
Income taxes	$	103,819		$	79,358		$	95,429

⁽¹⁾	The amount for the year ended December 31, 2018 includes a one-time charge to true-up deferred taxes of $1,913 and a reduction in deferred tax assets with regard to foreign tax credit carryforwards of $17,267.

⁽²⁾

The amount for the year ended December 31, 2017 includes a one-time benefit due to re-measurement of net deferred tax liabilities using a lower U.S. corporate tax rate and a reassessment of permanently reinvested earnings of ($79,834), a deemed repatriation tax of $14,512, and a reduction in deferred tax assets with regard to foreign tax credit carryforwards of $20,433.

Tax Effects of Significant Temporary Differences and Tax Loss and Tax Credit Carryforwards

The tax effects of significant temporary differences and tax loss and tax credit carryforwards comprising the net long-term deferred income tax liabilities as of December 31, 2017 and 2018 consisted of the following:

	December 31,
	2017		2018
Deferred liabilities:
Theatre properties and equipment	$	147,208	$	158,797
Intangible asset — other		30,770		33,561
Intangible asset — tradenames		72,967		73,261
Investment in partnerships		67,449		63,217
Total deferred liabilities		318,394		328,836
Deferred assets:
Deferred lease expenses		14,714		13,464
Exchange loss		220		1,306
Deferred revenue - NCM		85,816		70,688
Capital lease obligations		67,369		63,895
Tax impact of items in accumulated other comprehensive income		—		2,237
Other tax loss carryforwards		15,564		15,608
Other tax credit carryforwards		38,436		42,989
Other expenses, not currently deductible for tax purposes		13,801		26,776
Total deferred assets		235,920		236,963
Net deferred income tax liability before valuation allowance		82,474		91,873
Valuation allowance against deferred assets – non-current		35,246		54,725
Net deferred income tax liability	$	117,720	$	146,598
Net deferred tax (asset) liability — Foreign	$	3,073	$	(5,449	)
Net deferred tax liability — U.S.		114,647		152,047
Total	$	117,720	$	146,598

Reconciliation of Total Amounts of Unrecognized Tax Benefits Excluding Interest and Penalties

The following is a reconciliation of the total amounts of unrecognized tax benefits excluding interest and penalties, for the years ended December 31, 2016, 2017 and 2018:

	Year Ended December 31,
	2016			2017			2018
Balance at January 1,	$	17,133		$	17,403		$	18,266
Gross increases - tax positions in prior periods		13			92		—
Gross decreases - tax positions in prior periods	—				(12	)		(143	)
Gross increases - current period tax positions		923			265			424
Settlements		(924	)		(177	)		(7,191	)
Foreign currency translation adjustments		258			695			(795	)
Balance at December 31,	$	17,403		$	18,266		$	10,561