NOTE 4—INVESTMENTS

Investments in non-consolidated affiliates and certain other investments accounted for following the equity method generally include all entities in which the Company or its subsidiaries have significant influence, but not more than 50% voting control, and are recorded in the Consolidated Balance Sheets in other long-term assets. Investments in non-consolidated affiliates as of June 30, 2013, include a 15.52% interest in NCM, a 50% interest in two U.S. theatres and one IMAX screen, a 29% interest in Digital Cinema Implementation Partners, LLC ("DCIP"), and a 50% interest in Open Road Releasing, LLC, operator of Open Road Films, LLC ("ORF"). Indebtedness held by equity method investees is non-recourse to the Company.

RealD Inc. Common Stock. The Company holds an investment in RealD Inc. common stock, which is accounted for as an equity security, available for sale, and is recorded in the Consolidated Balance Sheets in other long-term assets at fair value (Level 1).

Equity in Earnings of Non-Consolidated Entities

Condensed financial information of our non-consolidated equity method investments is shown below. Amounts are presented under U.S. GAAP for the periods of ownership by the Company.

	Three Months Ended June 30, 2013

(In thousands)	NCM		DCIP		ORF		Other		Total
Revenues	$	122,800	$	45,022	$	36,257	$	4,070	$	208,149
Operating costs and expenses		81,700		42,566		14,479		3,426		142,171

Net earnings (loss)	$	41,100	$	2,456	$	21,778	$	644	$	65,978

	Thirteen Weeks Ended June 28, 2012

(In thousands)	NCM		DCIP		ORF		Other			Total
Revenues	$	110,100	$	42,175	$	32,900	$	8,449		$	193,624
Operating costs and expenses		108,300		32,973		24,500		9,215			174,988

Net earnings (loss)	$	1,800	$	9,202	$	8,400	$	(766	)	$	18,636

	Six Months Ended June 30, 2013

(In thousands)	NCM		DCIP		ORF		Other			Total
Revenues	$	205,000	$	88,077	$	101,434	$	6,936		$	401,447
Operating costs and expenses		158,300		73,813		87,334		6,963			326,410

Net earnings (loss)	$	46,700	$	14,264	$	14,100	$	(27	)	$	75,037

	Twenty-six Weeks Ended June 28, 2012

(In thousands)	NCM		DCIP		ORF		Other			Total
Revenues	$	189,200	$	79,978	$	68,596	$	16,696		$	354,470
Operating costs and expenses		184,200		64,005		60,716		18,285			327,206

Net earnings (loss)	$	5,000	$	15,973	$	7,880	$	(1,589	)	$	27,264

The components of the Company's recorded equity in earnings of non-consolidated entities are as follows:

(In thousands)	Three Months Ended June 30, 2013		Thirteen Weeks Ended June 28, 2012		Six Months Ended June 30, 2013		Twenty-six Weeks Ended June 28, 2012

	(Successor)		(Predecessor)		(Successor)		(Predecessor)
National CineMedia, LLC	$	8,577	$	446	$	8,699	$	9,533
Digital Cinema Implementation Partners, LLC		4,045		2,809		7,827		4,947
Open Road Releasing, LLC		10,269		4,200		7,050		3,940
Other		383		1,298		244		1,028

The Company's recorded equity in earnings	$	23,274	$	8,753	$	23,820	$	19,448

DCIP Transactions. As of June 30, 2013 and December 31, 2012, the Company had recorded $683,000 and $736,000 respectively, of amounts due from DCIP related to equipment purchases made on behalf of DCIP for the installation of digital projection systems. After the projectors are installed and the Company is reimbursed for its installation costs, the Company will make capital contributions to DCIP for projector and installation costs in excess of an agreed upon cap ($68,000 per system for digital conversions and $44,000 for new build locations). The Company pays equipment rent monthly and records the equipment rental expense on a straight-line basis over 12 years, including scheduled escalations of rent to commence after six and one-half years from the inception of the agreement. The difference between the cash rent and straight-line rent is recorded to deferred rent, a long-term liability account. As of June 30, 2013 and December 31, 2012, the Company had recorded $4,681,000 and $1,810,000 of deferred rent liability, respectively. The Company recorded digital equipment rental expense for continuing operations of $2,662,000 and $2,139,000 during the three months ended June 30, 2013 and the thirteen weeks ended June 28, 2012, respectively. The Company recorded digital equipment rental expense for continuing operations of $5,369,000 and $4,004,000 during the six months ended June 30, 2013 and the twenty-six weeks ended June 28, 2012, respectively.

Open Road Films Transactions. As of June 30, 2013 and December 31, 2012, the Company had recorded $1,831,000 and $1,950,000 of amounts due from Open Road Films and has recorded $61,000 and $326,000 of amounts payable for film rentals, respectively. The Company has incurred approximately $1,600,000 and $1,100,000 in gross film exhibition costs on titles distributed by Open Road Films during the three months ended June 30, 2013 and the thirteen weeks ended June 28, 2012, respectively. The Company has incurred approximately $8,700,000 and $6,100,000 in gross film exhibition costs on titles distributed by Open Road Films during the six months ended June 30, 2013 and the twenty-six weeks ended June 28, 2012, respectively.

NCM Transactions. Effective June 7, 2013, NCM issued 5,315,837 common membership units to another founding member due to an acquisition, which caused a decrease in the Company's ownership share from 16.29% to 15.59%. As of June 30, 2013, the Company owns 19,052,770 common membership units, or a 15.52% interest, in NCM. As a founding member, the Company has the ability to exercise significant influence over the governance of NCM, and, accordingly accounts for its investment following the equity method. The estimated fair market value of the units in NCM was approximately $321,801,000, based on the publically quoted price per share of NCM, Inc. on June 28, 2013 of $16.89 per share.

The Company recorded the following transactions with NCM:

(In thousands)	June 30, 2013		December 31, 2012

	(Successor)		(Successor)
Due from NCM for on-screen advertising revenue	$	2,887	$	1,978
Due to NCM for Exhibitor Services Agreement		2,908		2,021

(In thousands)	Three Months Ended June 30, 2013		Thirteen Weeks Ended June 28, 2012		Six Months Ended June 30, 2013		Twenty-six Weeks Ended June 28, 2012

	(Successor)		(Predecessor)		(Successor)		(Predecessor)
Net NCM screen advertising revenues	$	8,495	$	6,643	$	16,572	$	13,064
NCM beverage advertising expense		3,773		3,483		6,721		6,837

The Company recorded the following changes in the carrying amount of its investment in NCM and equity in earnings of NCM during the six months ended June 30, 2013:

(In thousands)	Investment in NCM(1)			Deferred Revenue(2)			Other Comprehensive (Income)			Cash Received		Equity in (Earnings)			Advertising (Revenue)

Ending balance December 31, 2012	$	245,047		$	(318,154	)	$	(797	)
Receipt of common units		26,315			(26,315	)		—
Receipt of excess cash distributions		(8,749	)		—			—		$	8,749	$	—		$	—
Amortization of deferred revenue		—			7,136			—			—		—			(7,136	)
Unrealized gain from cash flow hedge		700			—			(700	)		—		—			—
Change in interest gain(3)		2,716			—			—			—		(2,716	)		—
Equity in earnings(4)		7,365			—			—			—		(7,365	)		—
Equity in loss from amortization of basis difference(5)		(1,382	)		—			—			—		1,382			—

For the period ended or balance as of June 30, 2013	$	272,012		$	(337,333	)	$	(1,497	)	$	8,749	$	(8,699	)	$	(7,136	)

(1): As of the date of the Merger, August 30, 2012, the Company's investment in NCM consisted of a single investment tranche (Tranche 1 Investment) consisting of 17,323,782 membership units recorded at fair value (Level 1). As a result of the Rave theatre acquisitions in December of 2012, and as provided under the Common Unit Adjustment Agreement dated as of February 13, 2007, the Company received 1,728,988 additional NCM common membership units in calendar 2013 valued at $26,315,000 and is recorded in a new tranche, (Tranche 2 Investment).
(2): Represents the unamortized portion of the Exhibitor Services Agreement ("ESA") modifications payment received from NCM. Such amounts are being amortized to revenues over the remainder of the 30 year term of the ESA ending in 2036, using a units-of-revenue method, as described in ASC 470-10-35 (formerly EITF 88-18, Sales of Future Revenues). In connection with the Merger on August 30, 2012, the deferred revenue amounts related to the ESA were adjusted to estimated fair value.
(3): A non-cash gain was recorded to adjust our investment balance due to NCM's issuance of 5,315,837 common membership units to another founding member, at a price per share in excess of the Company's average carrying amount per share.
(4): Represents percentage of ownership equity in earnings on both Tranche 1 and Tranche 2 Investments.
(5): Certain differences between the Company's carrying value and the Company's share of NCM's membership equity have been identified and are amortized to equity in earnings over the respective lives of the assets and liabilities.