NOTE 4—ACQUISITIONS

Muvico

On November 19, 2013, the Company completed its acquisition of 9 entertainment complexes and 147 screens in three U.S. states pursuant to the terms of the Membership Interest Purchase Agreement with Muvico Entertainment, L.L.C (“Muvico”). The acquisition supports the Company’s growth strategy. In consideration for the acquisition, the Company paid $30,608 in cash and the assumption of lease-related financing obligations of approximately $19,101. The purchase price was paid using cash on hand.

The following table summarizes the preliminary purchase price and purchase price allocation for Muvico based on the fair value of net assets acquired at the acquisition date.


Cash consideration paid less cash amounts received	$	30,608
Leases and financing obligations assumed		19,101

Fair value of total consideration transferred	$	49,709
Inventory	$	541
Other current assets		385
Property and equipment		24,867
Deferred tax assets		3,441
Current liabilities		(2,068	)
Other liabilities		(1,150	)

Net assets acquired		26,016
Goodwill		23,693

Purchase price	$	49,709

The total non-cash consideration representing liabilities assumed in the Muvico transaction was $22,319.

The purchase price allocation is preliminary and certain items are subject to change, including the fair value of property and equipment and working capital assets and liabilities.

The fair value of current assets and current liabilities acquired approximate their net book value at the acquisition date. The goodwill recognized of $23,693 is attributable primarily to expected synergies of achieving cost reductions and eliminating redundant administrative functions. The goodwill is deductible for tax purposes over 15 years. As of December 31, 2013, there were no changes in the recognized amounts of goodwill resulting from the acquisition of Muvico.

The results of Muvico’s operations have been included in the consolidated financial statements since the date of acquisition. Revenue and net income of Muvico included in the Company’s operating results for the year ended December 31, 2013 from the acquisition date were $9,570 and $995, respectively. Acquisition costs related to professional fees incurred as a result of the Muvico acquisition, during the year ended December 31, 2013 were approximately $2,038 and were expensed as incurred and included in general and administrative expenses in the consolidated statements of operations.

Pro Forma Results of Operations (Unaudited)

The following selected comparative unaudited pro forma results of operations information for the years ended December 31, 2013 and 2012 assumes the Muvico acquisition occurred at the beginning of the fiscal year 2012, and reflects the full results of operations for the years presented. The pro forma results have been prepared for comparative purposes only and do not purport to indicate the results of operations which would actually have occurred had the combination been in effect on the dates indicated, or which may occur in the future. These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Muvico to reflect the fair value adjustments to property and equipment and financing obligations. These fair values also represent Level 3 measures within the fair value hierarchy prescribed by ASC 820 Fair Value Measurements.


	Pro Forma Year Ended December 31,
	2013		2012
Revenues	$	699,826	$	603,243
Operating income	$	60,163	$	58,882
Net income (loss)	$	4,692	$	97,595
Income (loss) per share:
Basic	$	0.24	$	6.19
Diluted	$	0.23	$	6.07

Cinemark

On August 16, 2013, the Company completed its acquisition of three theatres and 52 screens from Cinemark USA, Inc., a wholly-owned subsidiary of Cinemark Holdings, Inc. for $10,500 in cash and the assumption of lease-related financing obligations in the amount of $5,431. The results of operations of those theatres were not significant to the Company’s consolidated financial statements of operations and accordingly, the Company has not provided pro forma financial information relating to this acquisition. Acquisition costs associated with this purchase were not material.

Rave

On November 15, 2012, the Company completed its acquisition of 16 entertainment complexes and 251 screens in seven U.S. states pursuant to the terms of the Membership Interest Purchase Agreement with Rave Reviews Cinemas, L.L.C (“Rave”) and Rave Reviews Holdings, LLC (“Acquisition Sub”) dated September 28, 2012. Prior to consummation of the acquisition, Rave transferred to the Acquisition Sub the Rave theatres and certain related assets and certain assumed liabilities, including the leases, related to the Theatres. The Company subsequently acquired all of the ownership interests of the Acquisition Sub. The acquisition supports the Company’s growth strategy. In consideration for the acquisition, the Company paid $22,213 in cash including $3,213 in working capital adjustments. The Company paid $1,349 of the working capital adjustment during the year ended December 31, 2013. In addition, the Company assumed approximately $110,243 of financing obligations, after accounting adjustments, to reflect the acquisition date fair value of such obligations. The purchase price was paid using cash on hand.

The following table summarizes the purchase price and purchase price allocation for Rave based on the fair value of net assets acquired at the acquisition date.


Cash	$	19,000
Financing obligations assumed		110,243

Purchase price		129,243
Working capital adjustment		3,213

Total purchase price	$	132,456

Accounts receivable	$	514
Inventory		464
Other current assets		1,329
Property and equipment		94,523
Deferred tax assets		14,418
Current liabilities		(8,878	)
Other liabilities		(6,580	)

Net assets acquired		95,790
Goodwill		36,666

Purchase Price	$	132,456

The total non-cash consideration representing liabilities assumed in the Rave transaction was $125,701.

The fair value of current assets and current liabilities acquired approximate their net book value at the acquisition date. The goodwill recognized of $36,666 is attributable primarily to expected synergies of achieving cost reductions, eliminating redundant administrative functions and the excess of fair value of financing obligations over the related financing obligation assets. The goodwill is deductible for tax purposes over 15 years. As of December 31, 2013, there were no changes in the recognized amounts of goodwill resulting from the acquisition of Rave.

The results of Rave’s operations have been included in the consolidated financial statements since the date of acquisition. Rave contributed revenue of $88,393 and $13,831 and net income of $155 and $525 for the years ended December 31, 2013 and 2012, respectively. Acquisition costs related to professional fees incurred, primarily as a result of the Rave acquisition, were approximately $4,094 and were expensed as incurred and included in general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2012.

Pro Forma Results of Operations (Unaudited)

The following selected comparative unaudited pro forma results of operations information for the years ended December 31, 2012 and 2011 assumes the Rave acquisition occurred at the beginning of the fiscal year 2011, and reflects the full results of operations for the years presented. The pro forma results have been prepared for comparative purposes only and do not purport to indicate the results of operations which would actually have occurred had the combination been in effect on the dates indicated, or which may occur in the future. These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Rave to reflect the fair value adjustments to property and equipment, financing obligations. These fair values also represent Level 3 measures within the fair value hierarchy prescribed by ASC 820 Fair Value Measurements.


	Pro Forma Year Ended December 31,
	2012		2011
Revenues	$	634,053	$	566,914
Operating income	$	72,300	$	48,902
Net income (loss)	$	95,580	$	(9,674	)
Income (loss) per share:
Basic	$	6.06	$	(0.76	)
Diluted	$	5.94	$	(0.76	)

MNM

On October 21, 2011, the Company completed its purchase of MNM Theatres for $10,820 including an estimate of the fair value of consideration that is contingent upon MNM’s earnings performance over the next three years. The Company estimated the fair value of the contingent consideration to be $1,570 using a probability-weighted discounted cash flow model. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in ASC 820. The acquisition of MNM Theatres consisted of three theatres with forty screens in the Atlanta, Georgia area. The acquisition was accounted for as a business combination, with the purchase price allocated based on estimated fair values of the assets acquired, including identifiable intangible assets and liabilities assumed. Acquisition costs were less than $100 and were charged to expense.

The goodwill recognized is attributable primarily to expected synergies to be realized by achieving cost reductions and eliminating redundant administrative functions. The goodwill is deductible for tax purposes and will be amortized over 15 years.

The following is a summary of the final allocation of the aggregate purchase price to the estimated fair value of the MNM Theatres’ assets acquired and liabilities assumed at the date of acquisition. These fair values also represent Level 3 measures. No changes have been made to the purchase price allocation reported for the year ending December 31, 2011.


Current assets	$	88
Building, leasehold improvements and equipment		2,015
Goodwill		8,087
Other intangible assets		630

Total purchase price	$	10,820

The consolidated financial statements include the assets and operating results for the period from the acquisition date. MNM contributed revenue of $12,525, $11,764 and $2,205 and net income of $2,232, $2,176 and $291 for the years ended December 31, 2013, 2012 and 2011, respectively.

Pro Forma Results of Operations (Unaudited)

The following selected comparative unaudited pro forma results of operations information for the years ended December 31, 2012 and 2011 assumes the MNM Theatres acquisition occurred at the beginning of the fiscal year 2011, and reflects the full results of operations for the years presented. The pro forma results have been prepared for comparative purposes only and do not purport to indicate the results of operations which would actually have occurred had the combination been in effect on the dates indicated, or which may occur in the future.


	Pro Forma Year Ended December 31,
	2011			2010
Revenues	$	491,548		$	500,142
Operating income	$	37,341		$	26,501
Net income (loss)	$	(5,677	)	$	(10,354	)
Income (loss) per share:
Basic	$	(0.44	)	$	(0.81	)
Diluted	$	(0.44	)	$	(0.81	)