Quarterly report pursuant to Section 13 or 15(d)

Other Investments

v3.10.0.1
Other Investments
9 Months Ended
Sep. 30, 2018
Financial Support For Nonconsolidated Legal Entity [Abstract]  
Other Investments

8.

Other Investments

Below is a summary of activity for each of the Company’s other investments for the nine months ended September 30, 2018:

 

 

 

DCIP

 

 

AC JV,

LLC

 

 

DCDC

 

 

FE Concepts

 

 

Other

 

 

Total

 

Balance at January 1, 2018

 

$

106,215

 

 

$

5,916

 

 

$

3,598

 

 

$

104

 

 

$

4,212

 

 

$

120,045

 

Cash contributions made

 

 

1,714

 

 

 

 

 

 

 

 

 

20,000

 

 

 

 

 

 

 

21,714

 

Cash distributions received

 

 

(5,201

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,201

)

Equity in income (loss)

 

 

16,378

 

 

 

648

 

 

 

898

 

 

 

(57

)

 

 

 

 

 

17,867

 

Equity in other comprehensive

   loss

 

 

(43

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(43

)

Other

 

 

 

 

 

 

 

 

(1,168

)

 

 

(104

)

 

 

(9

)

 

 

(1,281

)

Balance at September 30, 2018

 

$

119,063

 

 

$

6,564

 

 

$

3,328

 

 

$

19,943

 

 

$

4,203

 

 

$

153,101

 

 

Digital Cinema Implementation Partners LLC (“DCIP”)

On February 12, 2007, the Company, AMC and Regal 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 September 30, 2018, the Company had a 33% voting interest in DCIP and a 24.3% economic interest in DCIP. The Company accounts for its investment in DCIP and its subsidiaries under the equity method of accounting.

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

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2018

 

 

September 30, 2017

 

 

September 30, 2018

 

 

September 30, 2017

 

Gross revenues

 

$

43,403

 

 

$

39,961

 

 

$

126,957

 

 

$

132,535

 

Operating income

 

$

25,816

 

 

$

22,702

 

 

$

74,310

 

 

$

80,574

 

Net income

 

$

24,311

 

 

$

19,701

 

 

$

68,014

 

 

$

69,458

 

 

 

 

As of

 

 

 

September 30, 2018

 

 

December 31, 2017

 

Current assets

 

$

56,764

 

 

$

56,296

 

Noncurrent assets

 

$

708,470

 

 

$

772,438

 

Current liabilities

 

$

68,313

 

 

$

59,153

 

Noncurrent liabilities

 

$

172,232

 

 

$

296,889

 

Members' equity

 

$

524,689

 

 

$

472,692

 

 

As of September 30, 2018, the Company had 3,832 digital projection systems being leased under the master equipment lease agreement with Kasima LLC, which is an indirect subsidiary of DCIP and a related party to the Company. The Company had the following transactions with DCIP, reflected in utilities and other costs on the condensed consolidated statements of income, during the three and nine months ended September 30, 2018 and 2017:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2018

 

 

September 30, 2017

 

 

September 30, 2018

 

 

September 30, 2017

 

Equipment lease payments

 

$

1,229

 

 

$

1,452

 

 

$

3,689

 

 

$

4,333

 

Warranty reimbursements from DCIP

 

$

(2,791

)

 

$

(2,234

)

 

$

(7,909

)

 

$

(6,141

)

Management service fees

 

$

180

 

 

$

207

 

 

$

558

 

 

$

619

 

 

AC JV, LLC

During December 2013, the Company, Regal, AMC (the “AC Founding Members”) and NCM entered into a series of agreements that resulted in the formation of AC JV, LLC (“AC”), a joint venture that owns “Fathom Events” formerly operated by NCM.  The Fathom Events business focuses on the marketing and distribution of live and pre-recorded entertainment programming to various theatre operators, including concerts, opera and symphony, DVD product releases and marketing events, theatrical premieres, Broadway plays, live sporting events and other special events. The Company paid event fees to AC of $8,516 and $9,448 for the nine months ended September 30, 2018 and 2017, respectively, which are included in film rentals and advertising costs on the condensed consolidated statements of income.  Additionally, the remaining outstanding balance of a note payable from the Company to NCM, related to the formation of AC, was $2,778 as of September 30, 2018.

Digital Cinema Distribution Coalition

Digital Cinema Distribution Coalition (“DCDC”) is a joint venture among the Company, Universal, Warner Bros., AMC and Regal.  DCDC operates a satellite distribution network that distributes all digital content to U.S. theatres via satellite. The Company has an approximate 14.6% ownership in DCDC. The Company paid approximately $657 and $637 to DCDC during the nine months ended September 30, 2018 and 2017, respectively, related to content delivery services provided by DCDC.  These fees are included in film rentals and advertising costs on the condensed consolidated statements of income.

FE Concepts, LLC

During April 2018, the Company, through its wholly-owned indirect subsidiary CNMK Texas Properties, LLC (“CNMK”), formed a joint venture, FE Concepts, LLC (“FE Concepts”) with AWSR Investments, LLC (“AWSR”), an entity owned by Lee Roy Mitchell and Tandy Mitchell.  FE Concepts will develop and operate a family entertainment center that offers bowling, gaming, movies and other amenities.  The Company and AWSR each invested approximately $20,000 and each have a 50% voting interest in FE Concepts.  The Company accounts for its investment in FE Concepts under the equity method of accounting.