NOTE 19 – BUSINESS COMBINATIONS

Devonport, Tasmania, Australia

On January 30, 2019, we purchased the tenant’s interest and other operating assets of an established four-screen cinema in Devonport, Tasmania, Australia, for $1.4 million (AU$1.95 million). We commenced trading from this new cinema site on January 30, 2019.

The total purchase price was allocated to the identifiable assets acquired based on our estimates of their fair values on the acquisition date. The identified assets included fixtures and equipment and immaterial working capital balances. Goodwill consists of intangible assets than cannot be separately identified. There were immaterial liabilities assumed.

Our final purchase price allocation is as follows:


(Dollars in thousands)	Preliminary Purchase Price Allocation(1)		Measurement Period Adjustments(2)		Final Purchase Price Allocation(1)
Tangible Assets
Operating property:
Fixtures and equipment	$	153	$	—	$	153
Intangible Assets
Goodwill		1,248		(23)		1,225
Total assets acquired		1,401		(23)		1,378

Net assets acquired	$	1,401	$	(23)	$	1,378

(1)

The balances were translated into U.S. Dollars based on the applicable exchange rate as of the date of acquisition, January 30, 2019.

(2)

The measurement period adjustments relate to finalization of immaterial employee obligations.

State Cinema Hobart, Tasmania, Australia

On December 3, 2019, we purchased the tenant’s interest and other operating assets of an established ten-screen cinema in Hobart, Tasmania, Australia, for $6.2m (AU$9.0m). We commenced trading from this new cinema site on December 5, 2019.

The total purchase price will be allocated to the identifiable assets acquired based on our estimates of their fair values on the acquisition date. The identified assets include fixtures and equipment, the State Cinema brand, inventory and immaterial working capital balances. There were immaterial liabilities assumed, including certain gift card obligations.

As of March 16, 2020, the Company is still finalizing its allocation and this may result in potential adjustments within the one-year measurement period from acquisition date. We expect the finalization of our acquisition accounting to occur in the first part of 2020. These adjustments will include the fair valuation of the fixtures and equipment acquired, and the assessment of the value of any identifiable intangible assets. The determination of the fair values of the acquired assets (and the related determination of their estimated lives where depreciation is permitted) requires significant judgment.

Our preliminary purchase price allocation is as follows:


(Dollars in thousands)	Preliminary Purchase Price Allocation(1)
Tangible Assets
Operating property:
Fixtures and equipment	$	481
Deferred tax		5
Current assets:
Inventory		333

Intangible Assets
Goodwill		5,617
Total assets acquired		6,436

Liabilities
Employee liabilities		(20)
Deferred revenue balances		(236)
Total liabilities acquired		(256)

Net assets acquired	$	6,180

(1)

The balances were translated into U.S. Dollars based on the applicable exchange rate as of the date of acquisition, December 3, 2019.