NOTE 13 –  THEATRE AND OTHER CLOSURE AND DISPOSITION OF ASSETS

 

The Company has provided reserves for estimated losses from theatres and screens which have been permanently closed and vacant space with no right to future use. As of December 31, 2016, the Company reserved $34,563,000 for lease terminations which have either not been consummated or paid, related primarily to nine theatres and certain vacant restaurant space. The Company is obligated under long-term lease commitments with remaining terms of up to 11 years for theatres which have been closed. As of December 31, 2016, base rents aggregated approximately $9,601,000 annually and $38,600,000 over the remaining terms of the leases.

 

A rollforward of reserves for theatre and other closure is as follows:

 

 

The Company recognized theatre and other closure expense of $5,204,000, $5,028,000,  and $9,346,000, during the years ended December 31, 2016, December 31, 2015, and December 31, 2014, respectively. Theatre and other closure expense included the accretion on previously closed properties with remaining lease obligations. In May 2014, one theatre with 13 screens in Canada was permanently closed.

 

In the accompanying Consolidated Balance Sheets, the current portion of the theatre and other closure ending balance was included with accrued expenses and other liabilities and the long-term portion of the theatre and other closure ending balance was included with other long-term liabilities. See Note 6 - Supplemental Balance Sheet Information for further information.

 

Theatre and other closure reserves for leases that have not been terminated were recorded at the present value of the future contractual commitments for the base rents, taxes and maintenance. As of December 31, 2016, the future lease obligations are discounted at annual rates ranging from 6.0% to 9.0%.