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 September 30, 2013, include a 15.44% 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 the Company's non-consolidated equity method investments for the three months ended September 30, 2013, the period June 29, 2012 through August 30, 2012, and the period August 31, 2012 through September 27, 2012 is shown below:

	Three Months Ended September 30, 2013

(In thousands)	NCM		DCIP		ORF		Other		Total
Revenues	$	135,100	$	46,321	$	24,405	$	5,378	$	211,204
Operating costs and expenses		83,300		29,792		21,219		5,257		139,568

Net earnings	$	51,800	$	16,529	$	3,186	$	121	$	71,636

	From Inception August 31, 2012 through September 27, 2012

(In thousands)	NCM		DCIP		ORF			Other			Total
Revenues	$	22,200	$	13,598	$	21,311		$	2,572		$	59,681
Operating costs and expenses		21,200		11,903		29,177			3,043			65,323

Net earnings (loss)	$	1,000	$	1,695	$	(7,866	)	$	(471	)	$	(5,642	)

	June 29, 2012 through August 30, 2012

(In thousands)	NCM		DCIP		ORF			Other		Total
Revenues	$	121,500	$	29,385	$	9,663		$	6,231	$	166,779
Operating costs and expenses		59,600		22,405		30,895			5,605		118,505

Net earnings (loss)	$	61,900	$	6,980	$	(21,232	)	$	626	$	48,274

Condensed financial information of the Company's non-consolidated equity method investments for the nine months ended September 30, 2013, the period December 30, 2011 through August 30, 2012, and the period August 31, 2012 through September 27, 2012 is shown below:

	Nine Months Ended September 30, 2013

(In thousands)	NCM		DCIP		ORF		Other		Total
Revenues	$	340,100	$	134,398	$	125,839	$	12,314	$	612,651
Operating costs and expenses		241,600		103,605		108,553		12,220		465,978

Net earnings	$	98,500	$	30,793	$	17,286	$	94	$	146,673

	From Inception August 31, 2012 through September 27, 2012

(In thousands)	NCM		DCIP		ORF			Other			Total
Revenues	$	22,200	$	13,598	$	21,311		$	2,572		$	59,681
Operating costs and expenses		21,200		11,903		29,177			3,043			65,323

Net earnings (loss)	$	1,000	$	1,695	$	(7,866	)	$	(471	)	$	(5,642	)

	December 30, 2011 through August 30, 2012

(In thousands)	NCM		DCIP		ORF			Other			Total
Revenues	$	310,700	$	109,363	$	78,259		$	22,927		$	521,249
Operating costs and expenses		243,800		86,410		91,611			23,890			445,711

Net earnings (loss)	$	66,900	$	22,953	$	(13,352	)	$	(963	)	$	75,538

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

	Three Months Ended								Nine Months Ended

(In thousands)	Three Months Ended September 30, 2013		From Inception August 31, 2012 through September 27, 2012			June 29, 2012 through August 30, 2012			Nine Months Ended September 30, 2013		From Inception August 31, 2012 through September 27, 2012			December 30, 2011 through August 30, 2012
	(Successor)		(Successor)			(Predecessor)			(Successor)		(Successor)			(Predecessor)
National CineMedia, LLC	$	7,218	$	116		$	7,027		$	15,917	$	116		$	16,560
Digital Cinema Implementation Partners, LLC		5,159		541			2,132			12,986		541			7,079
Open Road Releasing, LLC		1,600		(3,933	)		(10,616	)		8,650		(3,933	)		(6,676	)
Other		346		(102	)		249			590		(102	)		1,277

The Company's recorded equity in earnings (losses)	$	14,323	$	(3,378	)	$	(1,208	)	$	38,143	$	(3,378	)	$	18,240

DCIP Transactions. 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.

The Company recorded the following transactions with DCIP:

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

	(Successor)		(Successor)
Due from DCIP for equipment purchases	$	730	$	736
Deferred rent liability for digital projectors		6,241		1,810

	Three Months Ended						Nine Months Ended

(In thousands)	Three Months Ended September 30, 2013		From Inception August 31, 2012 through September 27, 2012		June 29, 2012 through August 30, 2012		Nine Months Ended September 30, 2013		From Inception August 31, 2012 through September 27, 2012		December 30, 2011 through August 30, 2012
	(Successor)		(Successor)		(Predecessor)		(Successor)		(Successor)		(Predecessor)
Digital equipment rental expense (continuing operations)	$	2,886	$	377	$	1,485	$	8,255	$	377	$	5,489

Open Road Films Transactions. The Company recorded the following transactions with Open Road Films:

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

	(Successor)		(Successor)
Due from Open Road Films	$	2,322	$	1,950
Film rent payable to Open Road Films		373		326

	Three Months Ended						Nine Months Ended

(In thousands)	Three Months Ended September 30, 2013		From Inception August 31, 2012 through September 27, 2012		June 29, 2012 through August 30, 2012		Nine Months Ended September 30, 2013		From Inception August 31, 2012 through September 27, 2012		December 30, 2011 through August 30, 2012
	(Successor)		(Successor)		(Predecessor)		(Successor)		(Successor)		(Predecessor)
Gross film exhibition cost on Open Road Films	$	1,800	$	2,223	$	448	$	10,500	$	2,223	$	6,550

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 September 30, 2013, the Company owns 19,052,770 common membership units, or a 15.44% 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 $359,335,000, based on the publically quoted price per share of NCM, Inc. on September 30, 2013 of $18.86 per share.

The Company recorded the following transactions with NCM:

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

	(Successor)		(Successor)
Due from NCM for on-screen advertising revenue	$	1,479	$	1,978
Due to NCM for Exhibitor Services Agreement		2,161		2,021

	Three Months Ended						Nine Months Ended

(In thousands)	Three Months Ended September 30, 2013		From Inception August 31, 2012 through September 27, 2012		June 29, 2012 through August 30, 2012		Nine Months Ended September 30, 2013		From Inception August 31, 2012 through September 27, 2012		December 30, 2011 through August 30, 2012
	(Successor)		(Successor)		(Predecessor)		(Successor)		(Successor)		(Predecessor)
Net NCM screen advertising revenues	$	8,435	$	2,201	$	5,088	$	25,007	$	2,201	$	18,152
NCM beverage advertising expense		3,604		577		2,843		10,325		577		9,680

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

(In thousands)	Investment in NCM(1)			Exhibitor Services Agreement(2)			Other Comprehensive (Income)			Cash Received		Equity in (Earnings) Loss			Advertising (Revenue)

	(Successor)			(Successor)			(Successor)			(Successor)		(Successor)			(Successor)
Ending balance December 31, 2012	$	245,047		$	(318,154	)	$	(797	)
Receipt of common units		26,315			(26,315	)		—
Receipt of excess cash distributions		(16,896	)		—			—		$	16,896	$	—		$	—
Amortization of deferred revenue		—			10,846			—			—		—			(10,846	)
Unrealized gain from cash flow hedge		1,101			—			(1,101	)		—		—			—
Change in interest gain(3)		2,716			—			—			—		(2,716	)		—
Equity in earnings(4)		15,383			—			—			—		(15,383	)		—
Equity in loss from amortization of basis difference(5)		(2,182	)		—			—			—		2,182			—

For the period ended or balance as of September 30, 2013	$	271,484		$	(333,623	)	$	(1,898	)	$	16,896	$	(15,917	)	$	(10,846	)

(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 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") with NCM. Such amounts are being amortized to other theatre 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 amounts related to the ESA were adjusted to estimated fair value.
(3): A non-cash gain was recorded to adjust the Company's 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.

During the nine month successor period ended September 30, 2013, payments received of $3,677,000 related to the NCM tax receivable agreement are recorded in investment income net of related amortization for the NCM tax receivable agreement intangible asset. Amounts related to the NCM tax receivable agreement of $3,949,000 were recorded in equity in earnings of non-consolidated entities during the period December 30, 2011 through August 30, 2012. Prior to the Merger, the Company did not have any carrying value related to the NCM tax receivable agreement. In connection with push down accounting as required by the Merger, the Company recorded an amortizable intangible asset in the amount of $20,900,000 related to the NCM tax receivable agreement. Because the Company has established a separate asset apart from its equity method investment in NCM that derives all of its fair value from the expected future payments under the NCM tax receivable agreement, the Company will account for the cash receipts under the NCM tax receivable agreement separately from its equity method investment in NCM. Prior to the Merger, the majority of the Company's investment in NCM (Tranche 1) was recorded at a carrying value of $0 and the remainder of the Company's investment in NCM (Tranche 2) was recorded at a carrying value of $72,323,000. Subsequent to the Merger, the Company increased the carrying value of its Tranche 1 and Tranche 2 investments in NCM from $72,323,000 to a fair value of $250,155,000. As both the NCM tax receivable agreement and investment in NCM were separately recorded at fair value as a result of the Merger, the Company will account for the NCM tax receivable agreement intangible amortization and NCM tax receivable agreement cash receipts separately as components of investment income, and the Company will account for its share of earnings in NCM and distributions of its earnings following the equity method.