UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2009
Commission File Number 001-33401
CINEMARK HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 20-5490327 | |
(State or other jurisdiction incorporation or organization) | (I.R.S. Employer Identification No.) | |
3900 Dallas Parkway Suite 500 Plano, Texas | 75093 | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (972) 665-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Name of each exchange on which registered | |
Common Stock, par value $0.001 per share | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yesox Noþ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d)15(d) of the Act. Yeso¨ Noþx
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþx Noo¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website,Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesox Noo¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.þx
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,”filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | Smaller reporting company | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yeso¨ Noþx
The aggregate market value of the voting and non-voting common equity owned by non-affiliates of the registrant on June 30, 2009,29, 2012, computed by reference to the closing price for the registrant’s common stock on the New York Stock Exchange on such date was $366,449,138 (32,371,832$2,397,026,127 (104,354,642 shares at a closing price per share of $11.32)$22.97).
As of February 28, 2010, 111,288,31421, 2013, 114,950,411 shares of common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant’s definitive proxy statement, in connection with its 2010 Annual Meeting2013 annual meeting of Stockholders,stockholders, to be filed within 120 days of December 31, 2009,2012, are incorporated by reference into Part III, Items 10-14, of this annual report on Form 10-K.
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PART I | ||||||
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PART II | ||||||
Item 5. | ||||||
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27 | |||||
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Item 8. | 49 | |||||
Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | |||||
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Item 9A. | 49 | |||||
Item 9B. | 50 | |||||
PART III | ||||||
Item 10. | ||||||
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | ||||||
Certain Relationships and Related Transactions, and Director Independence | ||||||
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Item 14. | 52 | |||||
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Item 15. | 52 | |||||
This annual report on Form 10-K includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.amended, or the Exchange Act. The “forward looking statements” include our current expectations, assumptions, estimates and projections about our business and our industry. They include statements relating to:
future revenues, expenses and profitability;
the future development and expected growth of our business;
projected capital expenditures;
attendance at movies generally or in any of the markets in which we operate;
the number or diversity of popular movies released and our ability to successfully license and exhibit popular films;
national and international growth in our industry;
competition from other exhibitors and alternative forms of entertainment; and
determinations in lawsuits in which we are defendants.
You can identify forward-looking statements by the use of words such as “may,” “should,” “will,” “could,” “estimates,” “predicts,” “potential,” “continue,” “anticipates,” “believes,” “plans,” “expects,” “future” and “intends” and similar expressions which are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. In evaluating forward-looking statements, you should carefully consider the risks and uncertainties described in the “Risk Factors” section in Item 1A of this Form 10-K and elsewhere in this Form 10-K. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements and risk factors contained in this Form 10-K. Forward-looking statements contained in this Form 10-K reflect our view only as of the date of this Form 10-K. We undertake no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Certain Definitions
Unless the context otherwise requires, all references to “we,” “our,” “us,” the “issuer” or “Cinemark” relate to Cinemark Holdings, Inc. and its consolidated subsidiaries, including Cinemark, Inc., Cinemark USA, Inc. and Century Theatres, Inc.subsidiaries. Unless otherwise specified, all operating and other statistical data for the U.S. include one theatre in Canada.Canada (that was sold during November 2010). All references to Latin America are to Brazil, Mexico, Argentina, Brazil, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Ecuador, El Salvador, Honduras, Mexico, Nicaragua, Panama Guatemala and Peru.Guatemala. Unless otherwise specified, all operating and other statistical data are as of and for the year ended December 31, 2009.
12012.
Our Company
Cinemark Holdings, Inc. and subsidiaries, or the Company, is a leader in the second largest motion picture exhibitor in the world in terms of both attendance and the number of screens in operation,exhibition industry, with theatres in the United States, or U.S., Canada, Brazil, Mexico, Argentina, Chile, Colombia, Argentina,Peru, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala. We also managed additional theatres in the U.S., Brazil and Colombia during the year ended December 31, 2009.
As of December 31, 2009,2012, we managed our business under two reportable operating segments –segments: U.S. markets and international markets, in accordance with FASB ASC Topic 280,Segment Reporting.markets. See Note 23 to the consolidated financial statements.
Cinemark Holdings, Inc. is a Delaware corporation incorporated on August 2, 2006. Our principal executive offices are at 3900 Dallas Parkway, Suite 500, Plano, Texas 75093. Our telephone number is (972) 665-1000. We maintain a corporate website atwww.cinemark.com.Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, or the Exchange Act, are available on our website free of charge under the heading “Investor Relations – SEC Filings” as soon as practicable after such reports are filed or furnished electronically to the Securities and Exchange Commission.
Description of Business
We are one of the second largestleaders in the motion picture exhibitor in the world in termsexhibition industry. As of both attendance and the number of screens in operation. WeDecember 31, 2012, we operated 424465 theatres and 4,8965,240 screens in the U.S. and Latin America as of December 31, 2009, and approximately 236.7263.7 million patrons attended our theatres worldwide during the year ended December 31, 2009.2012. Our circuit is the third largest in the U.S. with 294298 theatres and 3,8303,916 screens in 39 states and one Canadian province.states. We are the most geographically diverse circuit in Latin America with 130167 theatres and 1,0661,324 screens in 13 countries. Our modern theatre circuit features stadium seating in approximately 84% of our first-run auditoriums.
We selectively build or acquire new theatres in markets where we can establish and maintain a strong market position. We believe our portfolio of modern theatres provides a preferred destination for moviegoers and contributes to our significantsolid cash flows from operating activities. Our significant presence in the U.S. and Latin America has made us an important distribution channel for movie studios, particularly as they look to capitalize on the expanding worldwide box office. Our market leadership is attributable in large part to our senior executives, who average approximately 35whose years of industry experience range from 16 to 54 years and who have successfully navigated us through multiplemany industry and economic cycles.
Revenues, operating income and net income attributable to Cinemark Holdings, Inc. for the year ended December 31, 2009,2012, were $1,976.5$2,473.5 million, $250.5$383.7 million and $97.1$168.9 million, respectively. At December 31, 20092012 we had cash and cash equivalents of $437.9$742.7 million and long-term debt of $1,543.7$1,764.0 million. Approximately $784.6$250.0 million, or 50.8%14%, of our long-term debt accrues interest at variable rates.
Currently, 100% of our first-run domestic theatres are fully digital and we continue to convert our international theatres, which are approximately 42% digital. Digital projection technology gives us greater flexibility in programming and facilitates the exhibition of live and pre-recorded alternative entertainment. We recently developed a large screen digital format, which we callalso continue to roll out our Cinemark XD Extreme Digital Cinema, or XD. We currently have an XD, screen installedwhich offers a premium experience auditorium concept utilizing large screens and the latest in 16 theatresdigital projection and have plans to install 30 to 40 more XD screens during 2010.enhanced custom sound technologies. The XD experience includes wall-to-wall and ceiling-to-floor screens, wrap-around sound, plush seating and a maximum comfort entertainment environment for an intense sensory experience. We charge a premium price for the XD experience. The XD technology does not require special format movie prints, which allows us the flexibility to play any available digital print we choose, including 3-D content, onin the XD screen.
2auditorium. We currently have 109 XD auditoriums in our circuit and have plans to install 40 to 50 more XD auditoriums during 2013.
During 2010, we introduced our NextGen concept, which features wall-to-wall and ceiling-to-floor screens and the latest digital projection and sound technologies in all of the auditoriums of a complex. These theatres generally also have an XD auditorium, which offers the wall-to-wall and ceiling-to-floor screen in a larger auditorium with enhanced custom sound and plush seating. Most of our future domestic theatres will incorporate this NextGen concept. As of December 31, 2012, 109 screens within nine theatres have the NextGen concept. Eight of these nine theatres also has an XD screen.
The motion picture exhibition industry has begun a transitionbegan its conversion to digital projection technology.technology during 2009. Digital projection technology allows filmmakers the ability to showcase imaginative works of art exactly as they were intended, with incredible realism and detail and in a range of up to 35 trillion colors. Because digitalDigital features aren’tare not susceptible to scratching and fading,fading; therefore digital presentations will always remain clear and sharp for every time they are shown.screening. A digitally produced or digitally converted movie can be distributed to theatres via satellite, physical media, or fiber optic networks. The digitized movie is stored on a computer/server which “serves” it to a digital projector for each screening of the movie and due to itsthe format, it enables us to more efficiently move filmstitles between auditoriums within a theatre as demand increases or decreases for each film.
Digital projection also allows for the presentation ofus to present 3-D content and alternative entertainment such as live and pre-recorded sports programs, concert events, the opera and other special live documentaries and sports programs. Fourteenpresentations. Thirty-five films released during 20092011 were available in 3-D format, 33 films were available in 3-D format during 2012 and at least twenty32 3-D films are currently expected to be released during 2010. Current 3-D2013. Three-dimensional technology offers a premium experience with crisp, bright, ultra-realistic images that immersecreate an immersive film experience for the patron into a film.patron. A premium is generally charged for a 3-D presentation.
The motion picture exhibition industry is also developing a distribution network that would allow for distribution of all digital content to theatres via satellite. We are participating in a joint venture with certain exhibitors and distributors called Digital Cinema Distribution Coalition, or DCDC, whose goal is to establish this satellite distribution network.
Domestic Markets
The U.S. motion picture exhibition industry has a track record of long-term growth, with box office revenues growing at an estimated CAGR of 3.4%2.3% from 19982001 to 2008.2011. Against this background of steady long-term growth, the exhibition industry has experienced periodic short-term increases and decreases in attendance, and consequently box office revenues.
The following table represents the results of a survey by Motion Picture Association of America, or MPAA, published during March 2009,2012, outlining the historical trends in U.S. box office revenuesperformance for the ten year period from 19982002 to 2008:
U.S. Box | ||||||||||||
Office Revenues | Attendance | Average Ticket | ||||||||||
Year | ($ in millions) | (in millions) | Price | |||||||||
1998 | $ | 6,760 | 1,438 | $ | 4.69 | |||||||
1999 | $ | 7,314 | 1,440 | $ | 5.08 | |||||||
2000 | $ | 7,468 | 1,383 | $ | 5.39 | |||||||
2001 | $ | 8,125 | 1,438 | $ | 5.66 | |||||||
2002 | $ | 9,272 | 1,599 | $ | 5.81 | |||||||
2003 | $ | 9,165 | 1,521 | $ | 6.03 | |||||||
2004 | $ | 9,215 | 1,484 | $ | 6.21 | |||||||
2005 | $ | 8,832 | 1,376 | $ | 6.41 | |||||||
2006 | $ | 9,138 | 1,395 | $ | 6.55 | |||||||
2007 | $ | 9,629 | 1,400 | $ | 6.88 | |||||||
2008 | $ | 9,791 | 1,364 | $ | 7.18 |
Year | U.S. Box | Attendance | Average Ticket Price | |||
2002 | $ 9.1 | 1.57 | $5.81 | |||
2003 | $ 9.2 | 1.52 | $6.03 | |||
2004 | $ 9.3 | 1.50 | $6.21 | |||
2005 | $ 8.8 | 1.38 | $6.41 | |||
2006 | $ 9.2 | 1.40 | $6.55 | |||
2007 | $ 9.6 | 1.40 | $6.88 | |||
2008 | $ 9.6 | 1.34 | $7.18 | |||
2009 | $10.6 | 1.42 | $7.50 | |||
2010 | $10.6 | 1.34 | $7.89 | |||
2011 | $10.2 | 1.28 | $7.93 |
Films releasedleading the box office during the year ended December 31, 20092012 includedAvatar, Transformers: Revenge of the Fallen, Harry PotterThe Avengers, The Dark Knight Rises, The Hunger Games, Skyfall, The Twilight Saga: Breaking Dawn Part 2, The Hobbit: An Unexpected Journey, Dr. Suess’ The Lorax, Madagascar 3: Europe’s Most Wanted, Men in Black 3, Taken 2, Snow White and the Half-Blood Prince, Up, Twilight Saga: New Moon,Huntsman, Safe House, The Hangover, Star Trek, Monsters vs. Aliens,Vow, Brave, Prometheus,The Amazing Spider-Man, Ice Age: Dawn of the Dinosaurs, The Blind Side, X-Men Origins: Wolverine, Night at the Museum 2: Battle of the Smithsonian, The Proposal, 2012, Fast & Furious, G.I. Joe: The Rise of the Cobra, Paul Blart: Mall Cop, Taken, A Christmas Carol, Angels & Demons, Terminator Salvation, Cloudy with a Chance of Meatballs, Inglorious Basterds, G-Force, District 9, Couples Retreat, Paranormal Activity,Continental DriftandWatchmen.
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International Markets
International growth also continues to be consistent. (As of the date of this report, MPAA had not yet released the 2009 box office information.)revenues continue to grow. According to MPAA, international box office revenues were $18.3$22.4 billion for the year ended December 31, 2008, resulting in a CAGR of 10.9% from 2003 to 20082011, which is a result of increasing acceptance of movie going as a popular form of entertainment throughout the world,strong economies, ticket price increases and new theatre construction.
Growth in Latin America is expected to continue to be fueled by a combination of development of modern theatres,robust economies, growing populations, an emerging middle class, attractive demographics (i.e., a significant teenage population), substantial retail development, and quality product from Hollywood, and the continued emergenceincluding an increasing number of a local film industry.3-D films. In many Latin American countries the local film industry had been dormant because of the lack of sufficient theatres to exhibit the film product. The development of new modern multiplex theatres has helped to sustain the local film industryincluding, Brazil, Argentina, Mexico, Colombia and in Mexico, Brazil and Argentina,Chile, successful local film product often providescan also provide incremental box office growth opportunities.
We believe many international markets for theatrical exhibition have historically been underserved and that certain of these markets, especially those in Latin America, will continue to experience growth as additional modern stadium-styled theatres are introduced.
Drivers of Continued Industry Success
We believe the following market trends will drive the continued growth and strength of our industry:
Importance of Theatrical Success in Establishing Movie Brands and Subsequent Markets.Theatrical exhibition is the primary distribution channel for new motion picture releases. A successful theatrical release
which “brands” a film is one of the major factors in determining its success in “downstream” markets, such as digital downloads, DVDs, network and syndicated television, video on-demand, pay-per-view television and the Internet.
Increased Importance of International Markets for Box Office Success.International markets continue to be an increasingly important component of the overall box office revenues generated by Hollywood films, accounting for $18.3$22.4 billion, or approximately 65%69% of 20082011 total worldwide box office revenues according to MPAA. (As of the date of this report, MPAA had2012 industry data was not yet released the 2009 industry information.available.) With the continued growth of the international motion picture exhibition industry, we believe the relative contribution of markets outside North America will become even more significant. Many of the top U.S. films released during 2009recently also performed exceptionally well in international markets. Such films includeincludedHarry Potter and the Half-Blood PrinceThe Avengers, which grossed approximately $632$892.3 million in international markets, or 59% of its worldwide box office,Ice Age: Dawn of the DinosaurContinental Drift, which grossed approximately $691$716.1 million in international markets, or 82% of its worldwide box office, andAvatarSkyfall, which has grossed approximately $1.9 billion$710.6 million in international markets, to date.
Stable Long-Term Attendance Trends.We believe that long-term trends in motion picture attendance in the U.S. will continue to benefit the industry. Even during the recent recessionary period, attendance levels remained stable as consumers selected the theatre as a preferred value for their discretionary income. Patronage trends in 2009 also reflected increasing demand for products unique to the exhibition industry such as 3D. With the motion picture exhibition industry’s transition to digital projection technology, the products offered by motion picture exhibitors continuescontinue to expand, which allows forattracting a broader base of patrons.
Convenient and Affordable Form of Out-Of-Home Entertainment.Movie going continues to be one of the most convenient and affordable forms of out-of-home entertainment, with an estimated average ticket price in the U.S. of $7.18$7.93 in 2008. (As of the date of this report, MPAA had not yet released the 2009 box office information.)2011. Average prices in 20082011 for other forms of out-of-home entertainment in the U.S., including sporting events and theme parks, range from approximately $23.50$27.00 to $71.00$77.00 per ticket according to MPAA. Movie ticket prices have risen at approximately(As of the ratedate of inflation, while ticket prices for other forms of out-of-home entertainment have increased at higher rates.
Innovation with Digital Technology.The Our industry has begunbegan its conversion to convert to the use of digital projection technology during 2009, which will allowhas allowed exhibitors to expand their product offerings. Digital technology will allowprojection allows the presentation of 3-D
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Competitive Strengths
We believe the following strengths allow us to compete effectively:
Disciplined Operating Philosophy.We generated operating income and net income attributable to Cinemark Holdings, Inc. of $250.5$383.7 million and $97.1$168.9 million, respectively, for the year ended December 31, 2009.2012. Our solid operating performance is a result of our disciplined operating philosophy that centers on building high quality assets, while negotiating favorable theatre level economics, controlling operating costs and controlling theatre operating costs. As a result, we grew our admissionseffectively reacting to economic and concession revenues per patron at the highest CAGR during the last three fiscal years among the three largest U.S. motion picture exhibitors.
Leading Position in Our U.S. Markets.We have a leading market share in the U.S. metropolitan and suburban markets we serve. For the year ended December 31, 2009,2012, we ranked either first or second based on box office revenues in 2024 out of our top 2530 U.S. markets, including the San Francisco Bay Area, Dallas, Houston, and Salt Lake City.
Strategically Located in Heavily Populated Latin American Markets.Since 1993, we have invested throughout Latin America in response to the continued growth of the region. We currently operate 130167 theatres and 1,0661,324 screens in 13 countries. Our international screens generated revenues of $421.8$777.7 million, or 31.4% of our total revenues, for the year ended December 31, 2009.2012. We have successfully established a significant presence in major cities in the region, with theatres in thirteenfourteen of the fifteen largest metropolitan areas. With a geographically diverse circuit, weWe are the largest exhibitor in Brazil and Argentina. Our geographic diversity makes us an important distribution
channel to the movie studios. The projected annual population growth for the Latin American countries in which we operate ranges from 1% to 2% for eachApproximately 87% of the next five years.our international screens offer stadium seating. We are well-positioned with our modern, large-format theatres to take advantage of these factors for further growth and diversification of our revenues.
State-of-the-Art Theatre Circuit.We offer state-of-the-art theatres, which we believe makes our theatres a preferred destination for moviegoers in our markets. We feature stadium seating in approximately 84% of our first run auditoriums. During 2009,2012, we increased the size of our circuit by adding 180129 new state-of-the-art screens worldwide, while closing 41 screens. We currently have commitments to build 137open 287 additional new screens over the next three years. We plan to accelerate the installation ofhave installed digital projection technology in many100% of our U.S. first-run auditoriums and approximately 42% of our international auditoriums, which will allow uswith plans to install digital projection technology in 100% of our international auditoriums. Currently, approximately 51% of our U.S. screens and 40% of our international screens are 3-D compatible. We also present 3-D content. We recently developed a large screenhave eight digital format, which we call our XD Extreme Digital Cinema, or XD.IMAX screens. We currently have an109 XD screen installedauditoriums in 16our theatres and have plans to install 3040 to 40 more50 additional XD screensauditoriums during 2010. The XD2013. Our new NextGen theatre concept provides further credence to our commitment to provide a continuing state-of-the-art movie-viewing experience includes wall-to-wall and ceiling-to-floor screens, wrap-around sound and a maximum comfort entertainment environment for an intense sensory experience. The XD technology does not require special format movie prints, which allows us the flexibility to play any available digital print we choose, including 3-D content, on the XD screen.
Solid Balance Sheet with Significant Cash Flow from Operating Activities.We generate significant cash flow from operating activities as a result of several factors, including a geographically diverse and modern theatre circuit and management’s ability to control costs.costs and effectively react to economic and market changes. Additionally, our ownership ofowning land and buildings for 4341 of our theatres is a strategic advantage that enhances our cash flows. We believe our expected level of cash flow generation will provide us with the financial flexibility to continue to pursue growth opportunities, support our debt payments and continue to make dividend payments to our stockholders. In addition, as of December 31, 2012, we owned approximately 18.1 million shares of National CineMedia and approximately 1.2 million shares of RealD, both of which offer us an additional source of cash flows. As of December 31, 2009,2012, we had cash and cash equivalents of $437.9$742.7 million.
Experienced Management.Led by Chairman and founder Lee Roy Mitchell, Chief Executive Officer Alan Stock,and President, and Chief Operating Officer TimothyTim Warner, and Chief Financial Officer Robert Copple and President-International Valmir Fernandes, our management team has an average of approximately 35many years of theatre operating experience, ranging from 16 to 54 years, executing a focused strategy that has led to consistent operating results. This management team has successfully navigated us through many industry and economic cycles.
Our Strategy
We believe our disciplined operating philosophy and experienced management team will enable us to continue to enhance our leading position in the motion picture exhibition industry. Key components of our strategy include:
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Continue to Focus on Operational Excellence.We will continue to focus on achieving operational excellence by controlling theatre operating costs and adequately training our staff while continuing to provide leading customer service. Our margins reflect our track record of operating efficiency.
Selectively Build in Profitable, Strategic Latin American Markets.Our continued international expansion will remain focused primarily on Latin America through construction of modern, state-of-the-art theatres in growing urban markets. We planhave commitments to continuebuild 13 new theatres with 88 screens during 2013 and three new theatres with 21 screens subsequent to 2013, investing an additional $89 million in our Latin American markets. We also plan to install digital projection technology in manyall of our international auditoriums, which will allowallows us to expand our capabilities to present 3-D and alternative content in these markets. Approximately 40% of our international markets.auditoriums
are 3-D compatible. We have also installed one39 of our proprietyproprietary XD large format screensauditoriums in one of our international theatres and have plans to install approximately 1520 to 25 additional XD screensauditoriums internationally during 2010.
Commitment to Digital Innovation.Our commitment to technological innovation will include an accelerated transition tohas resulted in us being 100% digital projection technology for a majority ofin our U.S. theatres and manyfirst-run auditoriums as of December 31, 2012, approximately 49% of which are 3-D compatible. We also had 553 digital auditoriums in our international theatres,markets as of December 31, 2012, 527 of which will allow for the presentation ofare 3-D content and alternative entertainment such as concert events, the opera, special live documentaries and sports programs.compatible. See further discussion of our domestic digital expansion at “Participation in“Conversion to Digital Cinema Implementation Partners LLC”Projection Technology”. We are planning to convert 100% of our worldwide circuit to digital projection technology, approximately 40-50% of which will be 3-D compatible. We also plan to expand our XD screenauditorium footprint in various markets throughout the U.S. and in select international markets, which offers our patrons a premium movie-viewing experience.
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As of December 31, 2009,2012, we operated 424465 theatres and 4,8965,240 screens in 39 states one Canadian province and 13 Latin American countries. Our theatres in the U.S. are primarily located in mid-sized U.S. markets, including suburbs of major metropolitan areas. We believe these markets are generally less competitive and generate high, stable margins. Our theatres in Latin America are primarily located in major metropolitan markets, which we believe are generally underscreened. The following tables summarize the geographic locations of our theatre circuit as of December 31, 2009.
United States Theatres
�� | ||||||||
Total | Total | |||||||
State | Theatres | Screens | ||||||
Texas | 79 | 1,024 | ||||||
California | 62 | 752 | ||||||
Ohio | 20 | 223 | ||||||
Utah | 13 | 169 | ||||||
Nevada | 10 | 154 | ||||||
Illinois | 9 | 128 | ||||||
Colorado | 8 | 127 | ||||||
Arizona | 7 | 106 | ||||||
Oregon | 7 | 102 | ||||||
Kentucky | 7 | 87 | ||||||
Pennsylvania | 6 | 89 | ||||||
Oklahoma | 6 | 67 | ||||||
Florida | 5 | 98 | ||||||
Louisiana | 5 | 74 | ||||||
Indiana | 5 | 48 | ||||||
New Mexico | 4 | 54 | ||||||
Virginia | 4 | 52 | ||||||
North Carolina | 4 | 41 | ||||||
Mississippi | 3 | 41 | ||||||
Iowa | 3 | 37 | ||||||
Arkansas | 3 | 30 | ||||||
Washington | 2 | 30 | ||||||
Georgia | 2 | 27 | ||||||
New York | 2 | 27 | ||||||
South Carolina | 2 | 22 | ||||||
West Virginia | 2 | 22 | ||||||
Maryland | 1 | 24 | ||||||
Kansas | 1 | 20 | ||||||
Alaska | 1 | 16 | ||||||
Michigan | 1 | 16 | ||||||
New Jersey | 1 | 16 | ||||||
Missouri | 1 | 15 | ||||||
South Dakota | 1 | 14 | ||||||
Tennessee | 1 | 14 | ||||||
Wisconsin | 1 | 14 | ||||||
Massachusetts | 1 | 12 | ||||||
Delaware | 1 | 10 | ||||||
Minnesota | 1 | 8 | ||||||
Montana | 1 | 8 | ||||||
United States | 293 | 3,818 | ||||||
Canada | 1 | 12 | ||||||
Total | 294 | 3,830 | ||||||
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State | Total Theatres | Total Screens | ||||||
Texas | 80 | 1,051 | ||||||
California | 63 | 770 | ||||||
Ohio | 19 | 213 | ||||||
Utah | 16 | 203 | ||||||
Nevada | 10 | 154 | ||||||
Illinois | 9 | 128 | ||||||
Colorado | 8 | 127 | ||||||
Oregon | 7 | 102 | ||||||
Kentucky | 7 | 87 | ||||||
Pennsylvania | 6 | 95 | ||||||
Arizona | 6 | 90 | ||||||
Oklahoma | 6 | 71 | ||||||
Florida | 5 | 98 | ||||||
Louisiana | 5 | 74 | ||||||
Indiana | 5 | 48 | ||||||
New Mexico | 4 | 54 | ||||||
Virginia | 4 | 54 | ||||||
North Carolina | 4 | 41 | ||||||
Mississippi | 3 | 41 | ||||||
Iowa | 3 | 37 | ||||||
Arkansas | 3 | 36 | ||||||
South Carolina | 3 | 34 | ||||||
Washington | 2 | 30 | ||||||
Georgia | 2 | 27 | ||||||
New York | 2 | 27 | ||||||
South Dakota | 2 | 26 | ||||||
West Virginia | 2 | 22 | ||||||
Maryland | 1 | 24 | ||||||
Kansas | 1 | 20 | ||||||
Alaska | 1 | 16 | ||||||
Michigan | 1 | 16 | ||||||
New Jersey | 1 | 16 | ||||||
Missouri | 1 | 15 | ||||||
Massachusetts | 1 | 15 | ||||||
Tennessee | 1 | 14 | ||||||
Wisconsin | 1 | 14 | ||||||
Delaware | 1 | 10 | ||||||
Minnesota | 1 | 8 | ||||||
Montana | 1 | 8 | ||||||
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Total | 298 | 3,916 | ||||||
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Total | Total | |||||||
Country | Theatres | Screens | ||||||
Brazil | 46 | 388 | ||||||
Mexico | 31 | 296 | ||||||
Central America(1) | 12 | 81 | ||||||
Chile | 11 | 87 | ||||||
Colombia | 11 | 64 | ||||||
Argentina | 9 | 74 | ||||||
Peru | 6 | 50 | ||||||
Ecuador | 4 | 26 | ||||||
Total | 130 | 1,066 | ||||||
Country | Total Theatres | Total Screens | ||||||
Brazil | 56 | 454 | ||||||
Mexico | 31 | 290 | ||||||
Argentina | 20 | 176 | ||||||
Colombia | 18 | 99 | ||||||
Central America (1) | 14 | 96 | ||||||
Chile | 13 | 101 | ||||||
Peru | 10 | 76 | ||||||
Ecuador | 5 | 32 | ||||||
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| |||||
Total | 167 | 1,324 | ||||||
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(1) | Includes Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala. |
We first entered Latin America when we began operating movie theatres in Chile in 1993 and Mexico in 1994. Since then, through our focused international strategy, we have developed into the most geographically diverse theatre circuit in the region. We have balanced our risk through a diversified international portfolio, currently operating theatres in thirteenfourteen of the fifteen largest metropolitan areas in Latin America. In addition, we have achieved significant scale in Brazil, and Mexico,where we are the two largest Latin American economies,exhibitor, with 388454 screens in Brazil and 296 screens in Mexico as of December 31, 2009.
We believe that certain markets within Latin America continue to be underserved as penetration of movie screens per capita in Latin American markets is substantially lower than in the U.S. and European markets. We will continueintend to build and expand our presence in underserved international markets, with emphasis on Latin America, and fund our expansion primarily with cash flow generated in those markets. We are able to mitigate cash flow exposure to currency fluctuations by using local currencies to collect a majority of our revenues and fund a majority of the costs of our international operations, including film and facility lease expense.operations. Our geographic diversity throughout Latin America has allowed us to maintain consistent revenue growth, notwithstanding currency and economic fluctuations that may affect any particular market. Our international revenues were approximately $421.8$777.7 million during 2009 versus $385.82012 compared to $696.1 million during 2008.
Film Licensing
In the domestic marketplace, the Company’s film department negotiates with film distributors, which are made up of the traditional major film companies, specialized and art divisions of some of these major film companies, and many other independent film distributors. The film distributors are responsible for determining film release dates, the related marketing campaigns and the expenditures related to marketing materials, television spots and other advertising outlets. The marketing campaign of each movie may include tours of the actors in the movies and coordination of articles and features about each movie. The Company is responsible for booking the films in negotiated film zones, which are either free zones or competitive zones. In free zones, movies can be booked without regard to the location of another exhibitor within that area. In competitive zones, the distributor allocates theirits movies to the exhibitors located in that area generally based on demographics, the conditions, capacity and grossing potential of that particular area.each theatre, and licensing terms. We are the sole exhibitor in approximately 89%91% of the 246253 film zones in which our first run U.S. theatres operate. In film zones where there is no direct competition from other theatres, we select those films that we believe will be the most successful from among those offered to us by film distributors.
Internationally, our local film personnel negotiate with local offices of major film distributors as well as local film distributors to license films for our international theatres. In the international marketplace, films are not allocated to a single theatre in a geographic film zone, but played by competitive theatres simultaneously. Our theatre personnel focus on providing excellent customer service, and we provide a modern facility with the most up-to-date sound systems, comfortable stadium style seating and other amenities typical of modern American-style multiplexes, which we believe gives us a competitive advantage in markets where competing theatres play the same films. Of the 1,0661,324 screens we operate in international markets, approximately 72%80% have no direct competition from other theatres.
Our film rental licensesfees in the U.S. typically specify that rental fees are generally based on the applicablea film’s box office receipts and either the mutually agreed upon firm terms, or a sliding scale formula, which are established prior to the opening of the film, or a mutually agreed upon settlement, which occurs at the conclusion of the film run, subject to the film
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We regularly play art and independent films at many of our U.S. theatres, providing a variety of film choices to our patrons. Bringing art and independent films to our theatres allows us to benefit from the growth in the art and independent market driven by the more mature patron and the increased interest in art, foreign and documentary films. High profile film festivals, such as the Sundance Film Festival, have contributed to growth and interest in this genre. Recent hitsThe performance of films such asCrazy Heart, Up in the Air, Young Victoria,Silver Linings Playbook, The Hurt LockerBest Exotic Marigold HotelandPreciousMoonrise Kingdomhave demonstrated the box office potential of art and independent films.
Food and Beverage
Concession sales are our second largest revenue source, representing approximately 31% of total revenues for each of the years ended December 31, 2007, 2008 and 2009.revenues. Concession sales have a much higher margin than admissions sales. We have devoted considerable management effort to increase concession sales and improve operating margins. These efforts include implementation of the following strategies:
• | Optimization of product mix.We offer concession products that primarily include various sizes and types of popcorn, soft drinks, coffees, juices, candy and quickly-prepared food, such as hot dogs, nachos and |
• | Staff training.Employees are continually trained in |
• | Theatre design.Our theatres are designed to optimize efficiencies at the concession stands, which include multiple service stations throughout a theatre to facilitate serving |
• | Cost control.We negotiate prices for concession supplies directly with concession vendors and manufacturers to obtain volume rates. Concession supplies are distributed through a national distribution network. The concession distributor supplies and distributes inventory to the theatres, who place orders directly with the vendors to replenish stock. We conduct a weekly inventory of all concession products at each theatre to ensure proper stock levels are maintained for business. |
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branded “First Look” pre-feature entertainment program, lobby promotions and displays, live and pre-recorded networked and single-site meetings and events, and
In certain of our international markets, we generally outsource our screen advertising to local companies who have established relationships with local advertisers that provide similar benefits as NCM. The terms of our international screen advertising contracts vary by country. In some of these locations, we earn a percentage of the screen advertising revenues collected by our partners and in other locations we are paid a fixed annual fee for access to our screens.
Conversion to Digital Projection Technology
The motion picture exhibition industry began its conversion to digital projection technology during 2009, the progress of which is discussed below.
Participation in Digital Cinema Implementation Partners
During 2007, we, AMC Entertainment Inc., or AMC, and Regal Entertainment Group, or Regal, entered into a joint venture known as Digital Cinema Implementation Partners LLC, (or DCIP),or DCIP, to facilitate the implementation of digital cinema in our U.S. theatres and to establish agreements with major motion picture studios for the financing of digital cinema. Future digitalDigital cinema developments will beare managed by DCIP, subject to certain approvals by us, AMC and Regal. EachRegal with each of Regal, AMC and Cinemark hasus having an equal voting interest in DCIP. To date, DCIP’s wholly-owned subsidiary Kasima has executed long-term deployment agreements with sixall of the major motion picture studios, under which Kasima will receivereceives a virtual print fee from such studios for each digital presentation. In accordance with these agreements, the digital projection systems deployed by Kasima will comply with the technology and security specifications developed by the Digital Cinema Initiatives studio consortium. In addition, Kasima will leaseleases digital projection systems to us, AMC and Regal under master lease agreements that have an initial term of twelve12 years.
On March 10, 2010, we signed a master lease agreement and other related agreements (collectively the “agreements”) with Kasima. Upon signing these agreements, we contributed cash and the majority of our existing U.S. digital projection systems to DCIP. SubsequentSubsequently during 2010 and 2011, we sold additional U.S. digital projection systems to the contributions,DCIP. As of December 31, 2011, we continue to havehad a 33% voting interest in DCIP and now have a 24.3% economic interest in DCIP. This initial financing is expected to cover the cost of conversion for a large portion of our U.S. circuit’s screens. We ultimately expect to outfit all of our first run screens with digital projection systems, with up to 1,500 screens being digital 3D capable.
International Markets
In our international markets, we operated 399 screens enabled withcontinue to convert our auditoriums to digital 3D projection systems, including 299 in the U.S. As a result of these agreements, we will begin a rollout of 3-D compatibletechnology. The digital projection systems we deploy are generally funded with operating cash flows generated by each international country. As of December 31, 2012, we had 553 digital auditoriums in our international markets, 527 of which are capable of exhibiting 3-D content. Similar to a majority of our first run U.S. theatres. We will incur certain operating and maintenance costs with respectdomestic markets, we expect to theinstall digital projection systems installed in all of our international auditoriums.
Digital Cinema Distribution Coalition
We are participating in a joint venture with Regal, AMC and certain distributors called Digital Cinema Distribution Coalition, or DCDC, whose goal is to seamlessly distribute all digital content to theatres whichvia satellite.
Certain of the related agreements are in negotiation, however, we expectare currently testing equipment to be relatively comparableused for satellite distribution. The new distribution network will not only change how content is delivered to what we currently spend on our conventional film projectors.
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Internationally, we exhibit upcoming and current film previews on screen, weon-screen, partner with film distributors for certain promotions and advertise our new locations through various forms of media and events. We partner with large multi-national corporations in the large metropolitan areas in which we have theatres to promote our brand ourand image and toas well as increase attendance levels at our theatres. Our customers are encouraged to register on our Web sitewebsite to receive weekly information by email for showtime information, invitations to special screenings, sponsored events and promotional information. In addition, our customers can request to receive showtime information on their cell phones. We also have loyalty programs in some of our international markets that allow customers to pay a nominal fee for a membership card that provides them with certain admissions and concession discounts. In addition, the Company is currently developinghas introduced an iPhone application for some of its international markets. Thisin Brazil. The application will allowallows consumers to check showtimes and purchase tickets.
Our domestic and international marketing departmentdepartments also focusesfocus on maximizing ancillary revenue, which includes the sale of our gift cards and our SuperSaver discount tickets. We market these programs to such business representatives as realtors, human resource managers, incentive program managers and hospital and pharmaceutical personnel. Gift cards can be purchased for certain of our locations at our theatres or online through our Web site.website,www.cinemark.com. SuperSavers are also sold online at our Web sitewww.cinemark.com or over thevia phone, fax or email by our local corporate offices and are also available at certain retailers in the U.S.
We recently created a new offering to our patrons called CineMode. CineMode is an exclusive feature we offer with our smart phone and tablet applications that allows patrons the opportunity to earn rewards while being courteous during the show. Our innovative technology was designed to address texting and other cell phone distractions, which is the number one complaint of movie-goers. While in CineMode, the smart phone screen is automatically dimmed and patrons are prompted to silence their volume. If CineMode is enabled for the duration of the movie, patrons are rewarded with exclusive digital rewards and offers that can be used at their next visit to Cinemark. CineMode facilitates contact with our patrons and this initiative provides an opportunity for us to further improve our relationships with the studios and our vendors via couponing and promotions, such as discounted digital downloads. To date, more than two million patrons have already downloaded CineMode.
Online and Mobile Sales
Our patrons may purchase advance tickets for all of our domestic screens and approximately one halfa majority of our international screens by accessing our corporate Web sitewebsite atwww.cinemark.com.Advance tickets may also be purchased for our domestic screens atwww.fandango.com.Our mobile phone and tablet applications also offer patrons the
ability to purchase tickets. Our Internet initiatives help improve customer satisfaction, allowing patrons who purchase tickets over the Internet to often bypass lines at the box office by printing their tickets at home, or picking up their tickets at kiosks located at the theatre.
Point of Sale Systems
We have developed our own proprietary point of sale system to enhance our ability to maximize revenues, control costs and efficiently manage operations. The system is currently installed in all of our U.S. theatres and our one Canadian theatre.theatres. The point of sale system provides corporate management with real-time admissions and concession revenues data and reports to allow for timely changes to movie schedules, including extending film runs, increasing the number of screens on which successful movies are being played, or substituting films when gross receipts do not meet expectations. Real-time seating, as well as reserved seating, and box office information is available to box office personnel, preventing overselling of a particular film and providing faster and more accurate responses to customer inquiries regarding showtimes and available seating. The system tracks concession sales by product, provides in-theatre inventory reports for efficient inventory management and control, offers numerous ticket pricing options, connects with digital concession signage for real-time pricing modifications, integrates Internet ticket sales and processes credit card transactions. Barcode scanners, pole displays, touch screens, credit card readers and other equipment are integrated with the system to enhance its functionsfunctionality and provide print at homeprint-at-home and mobile ticketing. In our international locations, we currently use other point of sale systems that have either been developed internally or by third parties, which have been certified as compliant with applicable governmental regulations and provide generally the same capabilities as our proprietary point of sale system.
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We are the sole exhibitor in approximately 89%91% of the 246253 film zones in which our first run U.S. theatres operate. In film zones where there is no direct competition from other theatres, we select those films that we believe will be the most successful from among those offered to us by film distributors. Where there is competition, the distributor allocates their movies to the exhibitors located in that area generally based on demographics, the conditions, capacity and grossing potential of that particular area.each theatre, and licensing terms. Of the 1,0661,324 screens we operate outside of the U.S., approximately 72%80% of those screens have no direct competition from other theatres. In areas where we face direct competition, our success in attracting patrons depends on location, accessibility andtheatre capacity, of an exhibitor’s theatre, quality of projection and sound equipment, film showtime availability, levels of customer service quality, and ticket prices. The competition for film licensing in the U.S. is dependent upon factors such as the theatre’s location and its demographics, the condition, capacity and revenue potential of each theatre, and licensing terms.
We compete for new theatre sites with other movie theatre exhibitors as well as other entertainment venues, with securingvenues. Securing a potential site being dependentdepends upon factors such as committed investment and resources, theatre design and capacity, revenue and patron potential, and financial stability.
We also face competition from a number of other motion picture exhibition delivery systems, such as digital downloads, DVDs, network and syndicated television, video on-demand, pay-per-view television and the Internet. We also face competition from other forms of entertainment competing for the public’s leisure time and disposable income, such as concerts, theme parks and sporting events.
Seasonality
Our revenues have historically been seasonal, coinciding with the timing of releases of motion pictures by the major distributors. Generally, the most successful motion pictures have been released during the summer, extending from May to mid-August, and during the holiday season, extending from early November through
year-end. The unexpected emergence of a hit film during other periods can alter this seasonality trend. The timing of such film releases can have a significant effect on our results of operations, and the results of one quarter are not necessarily indicative of results for the next quarter or for the same period in the following year.
Corporate Operations
Our corporate headquarters is located in Plano, Texas. Personnel at our corporate headquarters provide oversight for our domestic and international theatres. Domestic personnelPersonnel at our corporate headquarters include our executive team and department heads in charge of film licensing, concessions,food and beverage, theatre operations, support,theatre construction and maintenance, real estate, human resources, marketing, legal, finance and accounting, audit theatre maintenance and construction, information systems support, real estate and marketing.support. Our U.S. operations are divided into sixteen regions, primarily organized geographically, each of which is headed by a region leader.
Employees
We have approximately 14,20013,500 employees in the U.S., approximately 10% of whom are full time employees and 90% of whom are part time employees. We have approximately 6,5009,000 employees in our international markets, approximately 63%58% of whom are full time employees and approximately 37%42% of whom are part time employees. Some of our U.S. employees are represented by unions under collective bargaining agreements, and some of our international locations are subject to union regulations. We regard our relations with our employees to be satisfactory.
Regulations
The distribution of motion pictures is largely regulated by federal and state antitrust laws and has been the subject of numerous antitrust cases. The manner in which we can license films from certain major film distributors is subject to consent decrees resulting from these cases. Consent decrees bind certain major film distributors and require the films of such distributors to be offered and licensed to exhibitors, including us, on a theatre-by-theatre and film-by-film basis.
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We are subject to various general regulations applicable to our operations including the Americans with Disabilities Act of 1990, or the ADA. We develop new theatres to be accessible to the disabled and we believe we are substantially compliant with current regulations relating to accommodating the disabled. Although we believe that our theatres comply with the ADA, we have been a party to lawsuits which claim that our handicapped seating arrangements do not comply with the ADA or that we are required to provide closed captioning for patrons who are deaf or are severely hearing impaired.
Our theatre operations are also subject to federal, state and local laws governing such matters as wages, working conditions, citizenship, health and sanitation requirements and licensing.
Financial Information About Geographic Areas
We currently have operations in the U.S., Canada, Brazil, Mexico, Argentina, Chile, Colombia, Argentina, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala, which are reflected in the consolidated financial statements. See Note 23 to the consolidated financial statements for segment information and financial information by geographic area.
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Our business depends on both the availability of suitable films for exhibition in our theatres and the success of those films in our markets. Poor performance of films, the disruption in the production of films due to events such as a strike by directors, writers or actors, a reduction in financing options for the film distributors, or a reduction in the marketing efforts of the film distributors to promote their films could have an adverse effect on our business by resulting in fewer patrons and reduced revenues.
A deterioration in relationships with film distributors could adversely affect our ability to obtain commercially successful films.
We rely on the film distributors to supply the films shown in our theatres. The film distribution business is highly concentrated, with sixseven major film distributors accounting for approximately 83%85% of U.S. box office revenues and 4447 of the top 50 grossing films during 2009.2012. Numerous antitrust cases and consent decrees resulting from these antitrust cases impact the distribution of films. The consent decrees bind certain major film distributors to license films to exhibitors on a theatre-by-theatre and film-by-film basis. Consequently, we cannot guarantee a supply of films by entering into long-term arrangements with major distributors. We are therefore required to negotiate licenses for each film and for each theatre. A deterioration in our relationship with any of the sixseven major film distributors could adversely affect our ability to obtain commercially successful films and to negotiate favorable licensing terms for such films, both of which could adversely affect our business and operating results.
Our results of operations vary from period to period based upon the quantity and quality of the motion pictures that we show in our theatres.
Our results of operations vary from period to period based upon the quantity and quality of the motion pictures that we show in our theatres. The major film distributors generally release the films they anticipate will be most successful during the summer and holiday seasons. Consequently, we typically generate higher revenues during these periods. Due to the dependency on the success of films released from one period to the next, results of operations for one period may not be indicative of the results for the following period or the same period in the following year.
We face intense competition for patrons and films which may adversely affect our business.
The motion picture industry is highly competitive. We compete against local, regional, national and international exhibitors. We compete for both patrons and licensing of films. The competition for patrons is dependent upon such factors as location, accessibility andtheatre capacity, of an exhibitor’s theatre, the comfort and quality of the theatres,projection and sound equipment, film and showtime availability, levels of customer service quality, and pricing.ticket prices. The principal competitive factors with respect to film licensing include the theatre’s location and its demographics, the condition, capacity and revenuegrossing potential of each theatre, and licensing terms. If we are unable to attract patrons or to license successful films, our business may be adversely affected.
An increase in the use of alternative or “downstream” film distribution channels and other competing forms of entertainment may reduce movie theatre attendance and limit ticket pricerevenue growth.
We face competition for patrons from a number of alternative film distribution channels, such as digital downloads, DVDs, network and syndicated television, video on-demand, pay-per-view television and the Internet. We also compete with other forms of entertainment, such as concerts, amusementtheme parks and sporting events, for our patrons’ leisure time and disposable income. A significant increase in popularity of these alternative film distribution channels andor competing forms of entertainment could have an adverse effect on our business and results of operations.
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Over the last decade, the average video release window, which represents the time that elapses from the date of a film’s theatrical release to the date a film is available on DVD,to consumers at home, an important downstream market, has decreased from approximately six months to approximately three to four months. If patrons choose to wait for a DVDan in-home release rather than attend a theatre for viewingto view the film, it may adversely impact our business and results of operations, financial condition and cash flows. Film studios have started to offer consumers a premium video on-demand option for certain films 60 days following the theatrical release, which caused the release window to shrink further for certain films. We cannot assure you that thisthese release window,windows, which isare determined by the film studios, will not shrink further or be eliminated altogether, which could have an adverse impact on our business and results of operations.
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Our results of operations are dependent on general political, social and economic conditions, and the impact of such conditions on our theatre operating costs and on the willingness of consumers to spend money at movie theatres. If consumers’ discretionary income declines as a result of an economic downturn, our operations could be adversely affected. If theatre operating costs, such as utility costs, increase due to political or economic changes, our results of operations could be adversely affected. Political events, such as terrorist attacks, and health-related epidemics, such as flu outbreaks, could cause people to avoid our theatres or other public places where large crowds are in attendance. In addition, a natural disaster, such as a hurricane or an earthquake, could impact our ability to operate certain of our theatres, which could adversely affect our attendance.
Our foreign operations are subject to adverse regulations, economic instability and currency exchange risk.
We have 130167 theatres with 1,0661,324 screens in thirteen countries in Latin America. Brazil and Mexico represented approximately 11% and 3%13.3% of our consolidated 2009 revenues, respectively.2012 revenues. Governmental regulation of the motion picture industry in foreign markets differs from that in the United States. Changes in regulations affecting prices, quota systems requiring the exhibition of locally-produced films and restrictions on ownership of property may adversely affect our international operations in foreign markets.operations. Our international operations are subject to certain political, economic and other uncertainties not encountered by our domestic operations, including risks of severe economic downturns and high inflation. We also face risks of currency fluctuations, hard currency shortages and controls of foreign currency exchange and transfers abroad, all of which could have an adverse effect on the results of our international operations.
We have substantial long-term lease and debt obligations, which may restrict our ability to fund current and future operations and that restrict our ability to enter into certain transactions.
We have, and will continue to have, significant long-term debt service obligations and long-term lease obligations. As of December 31, 2012, we had $1,764.0 million in long-term debt obligations, $150.2 million in capital lease obligations and $1,889.2 million in long-term operating lease obligations. We incurred interest expense of $123.7 million for the year ended December 31, 2012. We incurred $281.6 million of facility lease expense under operating leases for the year ended December 31, 2012 (the terms under these operating leases, excluding optional renewal periods, range from one to 25 years). Our substantial lease and debt obligations pose risk to you by:
making it more difficult for us to satisfy our obligations;
requiring us to dedicate a substantial portion of our cash flows to payments on our lease and debt obligations, thereby reducing the availability of our cash flows from operations to fund working capital, capital expenditures, acquisitions and other corporate requirements and to pay dividends;
impeding our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions and general corporate purposes;
subjecting us to the risk of increased sensitivity to interest rate increases on our variable rate debt, including our borrowings under our amended senior secured credit facility; and
making us more vulnerable to a downturn in our business and competitive pressures and limiting our flexibility to plan for, or react to, changes in our industry or the economy.
Our ability to make scheduled payments of principal and interest with respect to our indebtedness will depend on our ability to generate positive cash flows and on our future financial results. Our ability to generate positive cash flows is subject to general economic, financial, competitive, regulatory and other factors that are beyond our control. We cannot assure you that we will continue to generate cash flows at current levels, or that future borrowings will be available under our amended senior secured credit facility, in an amount sufficient to enable us to pay our indebtedness. If our cash flows and capital resources are insufficient to fund our lease and debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness. We may not be able to take any of these actions, and these actions may not be successful or permit us to meet our scheduled debt service obligations and these actions may be restricted under the terms of our existing or future debt agreements, including our amended senior secured credit facility.
If we fail to make any required payment under the agreements governing our leases and indebtedness or fail to comply with the financial and operating covenants contained in them, we would be in default, and as a result, our debt holders would have the ability to require that we immediately repay our outstanding indebtedness and the lenders under our amended senior secured credit facility could terminate their commitments to lend us money and foreclose against the assets securing their borrowings. We could be forced into bankruptcy or liquidation, which could result in the loss of your investment. The acceleration of our indebtedness under one agreement may permit acceleration of indebtedness under other agreements that contain cross-default and cross-acceleration provisions. If our indebtedness is accelerated, we may not be able to repay our indebtedness or borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms or on terms that are acceptable to us. If our debt holders require immediate payment, we may not have sufficient assets to satisfy our obligations under our indebtedness.
We may not be able to generate additional revenues or continue to realize value from our investment in NCM.
In 2005, we joined Regal and AMC as founding members of NCM, a provider of digital advertising content and digital non-film event content. As of December 31, 2009,2012, we had an ownership interest in NCM of approximately 15%16%. We receive a monthly theatre access fee under our Exhibitor Services Agreement with NCM and we are entitled to receive mandatory quarterly distributions of excess cash from NCM. During the years ended December 31, 20082011 and 2009,2012, the Company received approximately $1.8$5.9 million and $5.7$7.1 million in other revenues from NCM, respectively, and $18.8$24.2 million and $20.8 million in cash distributions in excess of our investment in NCM, respectively. Cinema advertising is a small component of the U.S. advertising market and therefore, NCM competes with larger, established and well known media platforms such as broadcast radio and television, cable and satellite television, outdoor advertising and Internet portals. NCM also competes with other cinema advertising companies and with hotels, conference centers, arenas, restaurants and convention facilities for its non-film related events to be shown or held in our auditoriums. In-theatre advertising may not continue to attract advertisers or NCM’s in-theatre advertising format may not continue to be received favorably by theatre patrons. If NCM is unable to continue to generate consistent advertising revenues, its results of operations may be adversely affected and our investment in and distributions and revenues from NCM may be adversely impacted.
We are subject to uncertainties related to digital cinema, including insufficient financing to obtain digital projectors and insufficient supply of digital projectors.projectors for our international locations.
We along with some of our competitors, have commencedbegan a roll-out of digital projection equipment in our international theatres during 2009 which has been funded by operating cash flows. There is no local financing available to finance the deployment of digital
projectors for exhibiting feature films and plan to continue the roll-out through our joint venture DCIP. However, significant obstacles exist that impact such a roll-out plan includinginternational theatres on commercially reasonable terms. Accordingly, the cost of digital projectors,projection systems and manufacturer limitations may delay our international deployment.
A failure to adapt to future technological innovations could impact our ability to compete effectively and could adversely affect our results of operations.
While we continue to convert our theatres to digital projection technology, new technological innovations continue to impact our industry. If we are unable to respond to or invest in changes in technology and the supplytechnological preferences of projectors by manufacturers. We cannot assure you that DCIP willour customers, we may not be able to obtain sufficient financing to be able to purchase and lease to us the numbercompete with other exhibitors or other entertainment venues, which could adversely affect our results of digital projectors needed for our roll-out or that the manufacturers will be able to supply the volume of projectors needed for our roll-out. As a result, our roll-out of digital equipment could be delayed or not completed at all.
We are subject to uncertainties relating to future expansion plans, including our ability to identify suitable acquisition candidates or site locations, and to obtain financing for such activities on favorable terms or at all.
We have greatly expanded our operations over the last decade through targeted worldwide theatre development and acquisitions. We will continue to pursue a strategy of expansion that will involve the development of new theatres and may involve acquisitions of existing theatres and theatre circuits both in the U.S. and internationally. There is significant competition for new site locations and for existing theatre and theatre circuit acquisition opportunities. As a result of such competition, we may not be able to acquire attractive site locations, existing theatres or theatre circuits on terms we consider acceptable. Acquisitions and expansion opportunities may divert a significant amount of management’s time away from the operation of our business. Growth by acquisition also involves risks relating to difficulties in integrating
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If we do not comply with the Americans with Disabilities Act of 1990 and athe safe harbor framework included in the consent order we entered into with the Department of Justice, or the DOJ, we could be subject to further litigation.
Our theatres must comply with Title III of the ADA and analogous state and local laws. Compliance with the ADA requires among other things that public facilities “reasonably accommodate” individuals with disabilities and that new construction or alterations made to “commercial facilities” conform to accessibility guidelines unless “structurally impracticable” for new construction or technically infeasible for alterations. In March 1999,On November 15, 2004, we and the Department of Justice, or DOJ, filed suit against us in Ohio alleging certain violations of the ADA relating to wheelchair seating arrangements in certain of our stadium-style theatres and seeking remedial action. We and the DOJ have resolved this lawsuit andentered into a consent order, which was entered byfiled with the U.S. District Court for the Northern District of Ohio, Eastern Division, on November 15, 2004.Division. Under the consent order, we were required to make modifications to wheelchair seating locations in fourteen stadium-style movie theatres and spacing and companion seating modifications in 67 auditoriums at other stadium-styled movie theatres. These modifications were completed by November 2009. Upon completion of these modifications, these theatres comply with wheelchair seating requirements, and no further modifications will be required to our other stadium-style movie theatres in the United States existing on the date of the consent order. In addition, under the consent order, the DOJ approved the seating plans for nine stadium-styled movie theatres then under construction and also created a safe harbor framework for us to construct all of our future stadium-style movie theatres. The DOJ has stipulated that all theatres built in compliance with the consent order will comply with the wheelchair seating requirements of the ADA. If we fail to comply with the ADA, remedies could include imposition of injunctive relief, fines, awards for damages to private litigants and additional capital expenditures to remedy non-compliance. Imposition of significant fines, damage awards or capital expenditures to cure non-compliance could adversely affect our business and operating results.
We depend on key personnel for our current and future performance.
Our current and future performance depends to a significant degree upon the continued contributions of our senior management team and other key personnel. The loss or unavailability to us of any member of our senior management team or a key employee could significantly harm us.impair our business. We cannot assure you that we would be able to locate or employ qualified replacements for senior management or key employees on acceptable terms.
We are subject to impairment losses due to potential declines in the fair value of our assets.
We review long-lived assets for impairment indicators on a quarterly basis or whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable. We assess many factors when determining whether to impair individual theatre assets, including actual theatre level cash flows, future years budgeted theatre level cash flows, theatre property and equipment carrying values, amortizing intangible assetsasset carrying values, the age of a recently built theatre, competitive theatres in the marketplace, changes in foreign currency exchange rates, the impact of recent ticket price changes, available lease renewal options and other factors considered relevant in our assessment of impairment of individual theatre assets. Long-lived assets are evaluated for impairment on an individual theatre basis, which we believe is the lowest applicable level for which there are identifiable cash flows. When estimated fair value is determined to be lower than the carrying value of the theatre assets, the theatre assets are written down to their estimated fair value. Fair value is determined based on a multiple of cash flows, which was eight times for the evaluations performed during 2007 and the first, second and third quarters of 2008 and six and a half times for the evaluation performed during the fourth quarter of 2008 and the evaluations performed during 2009.2010, 2011 and 2012. Significant judgment is involved in estimating cash flows and fair value. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 820-10-35, are based on historical and projected operating performance, recent market transactions and current industry trading multiples. Since we evaluate long-lived assets for impairment at the theatre level, if a theatre is directly and individually impacted by increased competition, adverse changes in market demographics or adverse changes in the development or condition of the areas surrounding the theatre, we may record impairment charges to reflect the decline in estimated fair value of that theatre.
We have a significant amount of goodwill as a result of the Century Acquisition and the Cinemark Share Exchange.goodwill. We evaluate goodwill for impairment at the reporting unit level at least annually during the fourth quarter or whenever
17
We also have a significant amount of tradename intangible assets as a result of the Century Acquisition and the Cinemark Share Exchange.assets. Tradename intangible assets are tested for impairment at least annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value may not be fully recoverable. We estimate the fair value of our tradenames by applying an estimated market royalty rate that could be charged for the use of our tradename to forecasted future revenues, with an adjustment for the present value of such royalties. If the estimated fair value is less than the carrying value, the tradename intangible asset is written down to its estimated fair value. Significant judgment is involved in estimating market royalty rates and long-term revenue forecasts. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, are based on historical and projected revenue performance and industry trends. As of December 31, 2012, the estimated fair value.
We recorded asset impairment charges including goodwill impairment charges, of $86.6$12.5 million, $113.5$7.0 million and $11.8$3.0 million for the years ended December 31, 2007, 20082010, 2011 and 2009,2012, respectively. We cannot assure you that additional impairment charges will not be required in the future, and such charges may have an adverse effect on our financial condition and results of operations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 1110 and 1211 to the consolidated financial statements.
The impairment or insolvency of othercertain financial institutions could adversely affect us.
We have exposure to different counterparties with regard to our interest rate swap agreements. These transactions expose us to credit risk in the event of a default by one or more of our counterparties to such agreements. We also have exposure to financial institutions used as depositories of our corporate cash balances. If our counterparties or financial institutions become impaired or insolvent, this could have a materialan adverse impact on our results of operations or impair our ability to access our cash.
A credit market crisis may adversely affect our ability to raise capital and may materially impact our operations.
Severe dislocations and liquidity disruptions in the credit markets could materially impact our ability to obtain debt financing on reasonable terms or at all. The inability to access debt financing on reasonable terms could materially impact our ability to make acquisitions or significantly expand our business in the future.
We may be subject to liability under environmental laws and regulations.
We own and operate a large number of theatres and other properties within the United States and internationally, which may be subject to various foreign, federal, state and local laws and regulations relating to the protection of the environment or human health. Such environmental laws and regulations include those that impose liability for the investigation and remediation of spills or releases of hazardous materials. We may incur such liability, including for any currently or formerly owned, leased or operated property, or for any site, to which we may have disposed, or arranged for the disposal of, hazardous materials or wastes. Certain of these laws and regulations may impose liability, including on a joint and several liability, which can result in a liable party being obliged to pay for greater than its share, regardless of fault or the legality of the original disposal. Environmental conditions relating to our properties or operations could have an adverse effect on our business and results of operations and cash flows.
18
Our ability to pay dividends is limited by our status as a holding company and the terms of our senior notes indentures, our senior subordinated notes indenture, and our amended senior secured credit facility, and certain of our other debt instruments, which restrict our ability to pay dividends and the ability of certain of our subsidiaries to pay dividends, directly or indirectly, to us. Under our debt instruments, we may pay a cash dividend up to a specified amount, provided we have satisfied certain financial covenants in, and are not in default under, our debt instruments. Furthermore, certain of our foreign subsidiaries currently have a deficit in retained earnings which prevents them from declaring and paying dividends from those subsidiaries. The declaration of future dividends on our common stock, par value $0.001 per share, or Common Stock, will be at the discretion of our board of directors and will depend upon many factors, including our results of operations, financial condition, earnings, capital requirements, limitations in our debt agreements and legal requirements.
Provisions in our corporate documents and certain agreements, as well as Delaware law, may hinder a change of control.
Provisions in our amended and restated certificate of incorporation and bylaws, as well as provisions of the Delaware General Corporation Law, could discourage unsolicited proposals to acquire us, even though such proposals may be beneficial to you. These provisions include:
authorization of our board of directors to issue shares of preferred stock without stockholder approval;
a board of directors classified into three classes of directors with the directors of each class subject to shorter initial terms for some directors, having staggered, three-year terms;
provisions regulating the ability of our stockholders to nominate directors for election or to bring matters for action at annual meetings of our stockholders; and
provisions of Delaware law that restrict many business combinations and provide that directors serving on classified boards of directors, such as ours, may be removed only for cause.
Certain provisions of our 8.625% senior notes indenture, our 5.125% senior notes indenture, our 7.375% senior subordinated notes indenture and our amended senior secured credit facility may have the effect of delaying or preventing future transactions involving a “change of control.” A “change of control” would require us to make an offer to the holders of our 8.625% senior notes to repurchase all of the outstanding notes at a purchase price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest to the date of the purchase. A “change of control” would require us to make an offer to the holders of our 5.125% senior notes to repurchase all of the outstanding notes at a purchase price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest to the date of purchase. A “change of control”, as defined in the senior subordinated notes indenture, would require us to make an offer to repurchase the senior subordinated notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, through the date of repurchase. A “change of control” would also be an event of default under our amended senior secured credit facility.
The market price of our common stockCommon Stock may be volatile.
There can be no assurance that an active trading market for our common stockCommon Stock will continue. The securities markets have recently experienced extreme price and volume fluctuations in recent years and the market prices of the securities of companies have been particularly volatile. This market volatility, as well as general economic or political conditions, could reduce the market price of our common stockCommon Stock regardless of our operating performance. In addition, our operating results could be below the expectations of investment analysts and investors and, in response, the market price of our common stockCommon Stock may decrease significantly and prevent investors from reselling their shares of our common stockCommon Stock at or above a market price that is favorable to other stockholders. In the past, companies that have experienced volatility in the market price of their stock have been the subject of securities class action litigation. If we were the subject of securities class action litigation, it could result in substantial costs, liabilities and a diversion of management’s attention and resources.
19
If a large number of shares of our common stockCommon Stock is sold in the open market, or if there is a perception that such sales will occur, the trading price of our common stockCommon Stock could decrease. In addition, the sale of these shares could impair our ability to raise capital through the sale of additional common stock.Common Stock. As of December 31, 2009,2012, we had an aggregate of 173,160,476173,074,817 shares of our common stockCommon Stock authorized but unissued and not reserved for specific purposes. In general, we may issue all of these shares without any action or approval by our stockholders. We may issue shares of our common stockCommon Stock in connection with acquisitions.
As of December 31, 2009,2012, we had 110,917,105114,949,667 shares of our common stockCommon Stock outstanding. Of these shares, approximately 37,392,814103,023,739 shares were freely tradable. The remaining shares of our common stockCommon Stock were “restricted securities” as that term is defined in Rule 144 under the Securities Act. Restricted securities may not be resold in a public distribution except in compliance with the registration requirements of the Securities Act or pursuant to an exemption therefrom, including the exemptions provided by Regulation S and Rule 144 promulgated under the Securities Act.
We cannot predict whether substantial amounts of our common stockCommon Stock will be sold in the open market in anticipation of, or following, any divestiture by any of our existinglarge stockholders, our directors or executive officers of their shares of common stock.
As of December 31, 2009,2012, there were 10,897,4988,422,431 shares of our common stockCommon Stock reserved for issuance under our Amended and Restated 2006 Long Term Incentive Plan, of which 1,231,89222,022 shares of common stockCommon Stock were issuable upon exercise of options outstanding as of December 31, 2009.2012. The sale of shares issued upon the exercise of stock options could further dilute your investment in our common stockCommon Stock and adversely affect our stock price.
Legislative or regulatory initiatives related to global warming/climate change concerns may negatively impact our business.
Recently, there has been an increasing focus and continuous debate on global climate change including increased attention from regulatory agencies and legislative bodies. This increased focus may lead to new initiatives directed at regulating an as yet unspecified array of environmental matters. Legislative, regulatory or other efforts in the United States to combat climate change could result in future increases in the cost of raw materials, taxes, transportation and utilities for our vendors and for us which would result in higher operating costs for the Company. Also, compliance of our theatres and accompanying real estate with new and revised environmental, zoning, land-use or building codes, laws, rules or regulations, could have a material and adverse effect on our business. However, we are unable to predict at this time, the potential effects, if any, that any future environmental initiatives may have on our business.
20
As of December 31, 2009,2012, in the U.S., we operated 251257 theatres with 3,2233,329 screens pursuant to leases and own the land and building for 4341 theatres with 607 screens, in the U.S.587 screens. Our leases are generally entered into on a long-term basis with terms, including optional renewal options,periods, generally ranging from 20 to 45 years. As of December 31, 2009,2012, approximately 7%10% of our theatre leases in the U.S., covering 1925 theatres with 162189 screens, have remaining terms, including optional renewal periods, of less than six years. Approximately 12%10% of our theatre leases in the U.S., covering 2927 theatres with 221228 screens, have remaining terms, including optional renewal periods, of between six and 15 years and approximately 81%80% of our theatre leases in the U.S., covering 203205 theatres with 2,8402,912 screens, have remaining terms, including optional renewal periods, of more than 15 years. The leases generally provide for a fixed monthly minimum rent payment, with certain leases also subject to additional percentage rent if a target annual revenue level is achieved. We lease an office building in Plano, Texas for our corporate headquarters.
International
As of December 31, 2009,2012, internationally, we operated 130167 theatres with 1,0661,324 screens, all of which are leased pursuant to ground or building leases.leased. Our international leases are generally entered into on a long term basis with terms, including optional renewal periods, generally ranging from 105 to 2040 years. The leases generally provide for contingent rental based upon operating results (some of which are subject towith an annual minimum). Generally, these leases include renewal options for various periods at stipulated rates.minimum. As of December 31, 2009,2012, approximately 5%6% of our international theatre leases, or sevencovering 10 theatres with 5487 screens, have a remaining term,terms, including optional renewal periods, of less than six years. Approximately 32%41% of our international theatre leases, covering 4169 theatres and 350560 screens, have remaining terms, including optional renewal periods, of between six and 15 years and approximately 63%53% of our international theatre leases, covering 8288 theatres and 662677 screens, have remaining terms, including optional renewal periods, of more than 15 years. We also lease office space in eight regions in Latin America for our local management.
See Note 2223 to the consolidated financial statements for information regarding our minimum lease commitments. We periodically review the profitability of each of our theatres, particularly those whose lease terms are nearing expiration, to determine whether to continue its operations.
From time to time, we are involved in other various legal proceedings arising from the ordinary course of our business operations, such as personal injury claims, employment matters, landlord-tenant disputes, patent
claims and contractual disputes, some of which are covered by insurance.insurance or by indemnification from vendors. We believe our potential liability, with respect to these types of proceedings currently pending, is not material, individually or in the aggregate, to our financial position, results of operations and cash flows.
21
Market Information and Holders of Our Common Stock
Our common equity consists of common stock, which has traded on the New York Stock Exchange since April 24, 2007 under the symbol “CNK.” The following table sets forth the historical high and low sales prices per share of our common stock as reported by the New York Stock Exchange for the fiscal periodsyears indicated.
Fiscal 2008 | Fiscal 2009 | |||||||||||||||
High | Low | High | Low | |||||||||||||
First Quarter (January 1, 2009 – March 31, 2009) | $ | 17.09 | $ | 12.24 | $ | 10.26 | $ | 6.75 | ||||||||
Second Quarter (April 1, 2009 – June 30, 2009) | $ | 15.73 | $ | 12.05 | $ | 11.49 | $ | 8.63 | ||||||||
Third Quarter (July 1, 2009 – September 30, 2009) | $ | 16.30 | $ | 11.08 | $ | 11.65 | $ | 9.50 | ||||||||
Fourth Quarter (October 1, 2009 – December 31, 2009) | $ | 14.51 | $ | 6.73 | $ | 14.85 | $ | 10.08 |
2011 | 2012 | |||||||||||||||
High | Low | High | Low | |||||||||||||
First Quarter (January 1 – March 31) | $ | 20.56 | $ | 16.70 | $ | 22.85 | $ | 17.93 | ||||||||
Second Quarter (April 1 – June 30) | $ | 22.09 | $ | 18.65 | $ | 24.45 | $ | 20.99 | ||||||||
Third Quarter (July 1 – September 30) | $ | 21.25 | $ | 17.10 | $ | 24.47 | $ | 22.34 | ||||||||
Fourth Quarter (October 1 – December 31) | $ | 21.00 | $ | 17.78 | $ | 27.50 | $ | 22.18 |
Holders of Common Stock
As of December 31, 2012, there were 122 stockholders147 holders of record of ourthe Company’s common stock.
Dividend Policy
In August 2007, we initiated a quarterly dividend policy.policy, which was amended in November 2010. Below is a summary of dividends paid since initiation of this policy:
Amount per | ||||||||||||||||
Date | Date of | Date | Common | Total | ||||||||||||
Declared | Record | Paid | Share (1) | Dividends | ||||||||||||
08/13/07 | 09/04/07 | 09/18/07 | $ | 0.13 | $13.9 million | |||||||||||
11/12/07 | 12/03/07 | 12/18/07 | $ | 0.18 | $19.2 million | |||||||||||
02/26/08 | 03/06/08 | 03/14/08 | $ | 0.18 | $19.3 million | |||||||||||
05/09/08 | 05/30/08 | 06/12/08 | $ | 0.18 | $19.3 million | |||||||||||
08/07/08 | 08/25/08 | 09/12/08 | $ | 0.18 | $19.3 million | |||||||||||
11/06/08 | 11/26/08 | 12/11/08 | $ | 0.18 | $19.6 million | |||||||||||
02/13/09 | 03/05/09 | 03/20/09 | $ | 0.18 | $19.6 million | |||||||||||
05/13/09 | 06/02/09 | 06/18/09 | $ | 0.18 | $19.7 million | |||||||||||
07/29/09 | 08/17/09 | 09/01/09 | $ | 0.18 | $19.7 million | |||||||||||
11/04/09 | 11/25/09 | 12/10/09 | $ | 0.18 | $19.7 million |
Date Declared | Date of Record | Date Paid | Amount per Common Share (1) | Total Dividends (in millions) | ||||
02/24/11 | 03/04/11 | 03/16/11 | $0.21 | $24.0 | ||||
05/12/11 | 06/06/11 | 06/17/11 | $0.21 | 24.1 | ||||
08/04/11 | 08/17/11 | 09/01/11 | $0.21 | 24.2 | ||||
11/03/11 | 11/18/11 | 12/07/11 | $0.21 | 24.2 | ||||
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Total – Year ended December 31, 2011(2) | $96.5 | |||||||
| ||||||||
02/03/12 | 03/02/12 | 03/16/12 | $0.21 | $24.1 | ||||
05/11/12 | 06/04/12 | 06/19/12 | $0.21 | 24.3 | ||||
08/08/12 | 08/21/12 | 09/05/12 | $0.21 | 24.3 | ||||
11/06/12 | 11/21/12 | 12/07/12 | $0.21 | 24.6 | ||||
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Total – Year ended December 31, 2012(2) | $97.3 | |||||||
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(1) | Beginning with the dividend |
(2) | Includes amounts related to restricted stock unit awards that will not be paid until such awards vest. |
We, at the discretion of the board of directors and subject to applicable law, anticipate paying regular quarterly dividends on our common stock. The amount, if any, of the dividends to be paid in the future will depend upon our then available cash, anticipated cash needs, overall financial condition, loan agreement restrictions, future prospects for earnings and cash flows, as well as other relevant factors.
22 See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operation — Liquidity and Capital Resources — Financing Activities for a discussion of dividend restrictions under our debt agreements.
4/24/2007 | 6/29/2007 | 9/28/2007 | 12/31/2007 | 3/31/2008 | 6/30/2008 | 9/30/2008 | 12/31/2008 | 3/31/2009 | 6/30/2009 | 9/30/2009 | 12/31/2009 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cinemark Holdings Inc. | $ | 100 | $ | 94 | $ | 98 | $ | 90 | $ | 68 | $ | 69 | $ | 72 | $ | 40 | $ | 50 | $ | 61 | $ | 56 | $ | 78 | ||||||||||||||||||||||||||||||||||||||
S&P © 500 | 100 | 102 | 103 | 99 | 89 | 86 | 79 | 61 | 54 | 62 | 71 | 75 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Peer Group (2 Stocks)* | 100 | 99 | 91 | 58 | 61 | 49 | 46 | 33 | 38 | 52 | 54 | 53 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Information regarding securities authorized for issuance under the equityCompany’s long-term compensation plans of Cinemark Holdings, Inc. as of December 31, 2009:
Number of | Weighted | Number of Securities | ||||||||||
Securities to be | Average Exercise | Remaining Available for | ||||||||||
Issued upon | Price of | Future Issuance Under | ||||||||||
Exercise of | Outstanding | Equity Compensation Plans | ||||||||||
Outstanding | Options, | (Excluding Securities | ||||||||||
Options, Warrants | Warrants and | Reflected in the First | ||||||||||
Plan Category | and Rights | Rights | Column) | |||||||||
Equity compensation plans approved by security holders | 1,231,892 | $ | 7.63 | 10,897,498 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 1,231,892 | $ | 7.63 | 10,897,498 | ||||||||
23
Aggregate | ||||||||||||
Principal Amount | Repurchase | Accreted | ||||||||||
Date | at Maturity | Price | Interest | |||||||||
July 2007 | $ | 14.5 | million | $ | 13.2 | million | $ | 3.4 | million | |||
August 2007 | $ | 32.5 | million | $ | 29.6 | million | $ | 7.5 | million | |||
November 2007 | $ | 22.2 | million | $ | 20.9 | million | $ | 5.7 | million | |||
March 2008 | $ | 10.0 | million | $ | 9.0 | million | $ | 2.9 | million | |||
October 2008 | $ | 30.0 | million | $ | 27.3 | million | $ | 9.8 | million | |||
November 2008 | $ | 7.0 | million | $ | 5.9 | million | $ | 2.5 | million | |||
Cumulative total with IPO proceeds | $ | 116.2 | million | $ | 105.9 | million | $ | 31.8 | million |
24
Year Ended December 31, | ||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Admissions | $ | 641,240 | $ | 760,275 | $ | 1,087,480 | $ | 1,126,977 | $ | 1,293,378 | ||||||||||
Concession | 320,072 | 375,798 | 516,509 | 534,836 | 602,880 | |||||||||||||||
Other | 59,285 | 84,521 | 78,852 | 80,474 | 80,242 | |||||||||||||||
Total revenues | $ | 1,020,597 | $ | 1,220,594 | $ | 1,682,841 | $ | 1,742,287 | $ | 1,976,500 | ||||||||||
Film rental and advertising | 347,727 | 405,987 | 589,717 | 612,248 | 708,160 | |||||||||||||||
Concession supplies | 52,507 | 59,020 | 81,074 | 86,618 | 91,918 | |||||||||||||||
Salaries and wages | 101,431 | 118,616 | 173,290 | 180,950 | 203,437 | |||||||||||||||
Facility lease expense | 138,477 | 161,374 | 212,730 | 225,595 | 238,779 | |||||||||||||||
Utilities and other | 123,831 | 144,808 | 191,279 | 205,814 | 222,660 | |||||||||||||||
General and administrative expenses | 50,884 | 67,768 | 79,518 | 90,788 | 96,497 | |||||||||||||||
Termination of profit participation agreement | — | — | 6,952 | — | — | |||||||||||||||
Total depreciation and amortization | 86,126 | 99,470 | 151,716 | �� | 158,034 | 149,515 | ||||||||||||||
Impairment of long-lived assets | 51,677 | 28,537 | 86,558 | 113,532 | 11,858 | |||||||||||||||
(Gain) loss on sale of assets and other | 4,436 | 7,645 | (2,953 | ) | 8,488 | 3,202 | ||||||||||||||
Total cost of operations | 957,096 | 1,093,225 | 1,569,881 | 1,682,067 | 1,726,026 | |||||||||||||||
Operating income | $ | 63,501 | $ | 127,369 | $ | 112,960 | $ | 60,220 | $ | 250,474 | ||||||||||
Interest expense | $ | 84,082 | $ | 109,328 | $ | 145,596 | $ | 116,058 | $ | 102,505 | ||||||||||
Net income (loss) | $ | (24,484 | ) | $ | 2,310 | $ | 89,712 | $ | (44,430 | ) | $ | 100,756 | ||||||||
Net income (loss) attributable to Cinemark Holdings, Inc. | $ | (25,408 | ) | $ | 841 | $ | 88,920 | $ | (48,325 | ) | $ | 97,108 | ||||||||
Net income (loss) attributable to Cinemark Holdings, Inc. per share: | ||||||||||||||||||||
Basic | $ | (0.31 | ) | $ | 0.01 | $ | 0.87 | $ | (0.45 | ) | $ | 0.89 | ||||||||
Diluted | $ | (0.31 | ) | $ | 0.01 | $ | 0.85 | $ | (0.45 | ) | $ | 0.87 | ||||||||
25
Year Ended December 31, | ||||||||||||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | ||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Admissions | $ | 1,126,977 | $ | 1,293,378 | $ | 1,405,389 | $ | 1,471,627 | $ | 1,580,401 | ||||||||||
Concession | 534,836 | 602,880 | 642,326 | 696,754 | 771,405 | |||||||||||||||
Other | 80,474 | 80,242 | 93,429 | 111,232 | 121,725 | |||||||||||||||
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Total revenues | $ | 1,742,287 | $ | 1,976,500 | $ | 2,141,144 | $ | 2,279,613 | $ | 2,473,531 | ||||||||||
Film rentals and advertising | 612,248 | 708,160 | 769,698 | 798,606 | 845,107 | |||||||||||||||
Concession supplies | 86,618 | 91,918 | 97,484 | 112,122 | 123,471 | |||||||||||||||
Salaries and wages | 180,950 | 203,437 | 221,246 | 226,475 | 247,468 | |||||||||||||||
Facility lease expense | 225,595 | 238,779 | 255,717 | 276,278 | 281,615 | |||||||||||||||
Utilities and other | 205,814 | 222,660 | 239,470 | 259,703 | 280,670 | |||||||||||||||
General and administrative expenses | 90,788 | 96,497 | 109,045 | 127,621 | 148,624 | |||||||||||||||
Total depreciation and amortization | 158,034 | 149,515 | 143,508 | 154,449 | 147,675 | |||||||||||||||
Impairment of long-lived assets | 113,532 | 11,858 | 12,538 | 7,033 | 3,031 | |||||||||||||||
(Gain) loss on sale of assets and other | 8,488 | 3,202 | (431 | ) | 8,792 | 12,168 | ||||||||||||||
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Total cost of operations | 1,682,067 | 1,726,026 | 1,848,275 | 1,971,079 | $ | 2,089,829 | ||||||||||||||
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Operating income | $ | 60,220 | $ | 250,474 | $ | 292,869 | $ | 308,534 | $ | 383,702 | ||||||||||
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Interest expense | $ | 116,058 | $ | 102,505 | $ | 112,444 | $ | 123,102 | $ | 123,665 | ||||||||||
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Net income (loss) | $ | (44,430 | ) | $ | 100,756 | $ | 149,663 | $ | 132,582 | $ | 171,420 | |||||||||
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Net income (loss) attributable to Cinemark Holdings, Inc. | $ | (48,325 | ) | $ | 97,108 | $ | 146,120 | $ | 130,557 | $ | 168,949 | |||||||||
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Net income (loss) attributable to Cinemark Holdings, Inc. per share: | ||||||||||||||||||||
Basic | $ | (0.45 | ) | $ | 0.89 | $ | 1.30 | $ | 1.15 | $ | 1.47 | |||||||||
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Diluted | $ | (0.45 | ) | $ | 0.87 | $ | 1.29 | $ | 1.14 | $ | 1.47 | |||||||||
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Dividends declared per common share | $ | 0.72 | $ | 0.72 | $ | 0.75 | $ | 0.84 | $ | 0.84 | ||||||||||
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Other Financial Data: Ratio of earnings to fixed charges (1) Cash flow provided by (used for): Operating activities Investing activities Financing activities Capital expenditures Year Ended December 31, 2008 2009 2010 2011 2012 — 1.84 x 2.10 x 2.00 x 2.44 x $ 257,294 $ 176,763 $ 264,751 $ 391,201 $ 395,205 (94,942 ) (183,130 ) (136,067 ) (247,067 ) (234,311 ) (135,091 ) 78,299 (106,650 ) (78,414 ) 63,424 (106,109 ) (124,797 ) (156,102 ) (184,819 ) (220,727 )
As of December 31, | ||||||||||||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Cash and cash equivalents | $ | 349,603 | $ | 437,936 | $ | 464,997 | $ | 521,408 | $ | 742,664 | ||||||||||
Theatre properties and equipment, net | 1,208,283 | 1,219,588 | 1,215,446 | 1,238,850 | 1,304,958 | |||||||||||||||
Total assets | 3,065,708 | 3,276,448 | 3,421,478 | 3,522,408 | 3,863,226 | |||||||||||||||
Total long-term debt and capital lease obligations, including current portion | 1,632,174 | 1,684,073 | 1,672,601 | 1,713,393 | 1,914,181 | |||||||||||||||
Equity | 824,227 | 914,628 | 1,033,152 | 1,023,639 | 1,094,984 |
Year Ended December 31, | ||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||
Other Financial Data: | ||||||||||||||||||||
Ratio of earnings to fixed charges(1) | — | 1.09 | x | 1.96 | x | — | 1.84 | x | ||||||||||||
Cash flow provided by (used for): | ||||||||||||||||||||
Operating activities | $ | 165,270 | $ | 155,662 | $ | 276,036 | $ | 257,294 | $ | 176,763 | ||||||||||
Investing activities(2) | (81,617 | ) | (631,747 | ) | 93,178 | (94,942 | ) | (183,130 | ) | |||||||||||
Financing activities | (3,750 | ) | 439,977 | (183,715 | ) | (135,091 | ) | 78,299 | ||||||||||||
Capital expenditures | (75,605 | ) | (107,081 | ) | (146,304 | ) | (106,109 | ) | (124,797 | ) |
As of December 31, | ||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Cash and cash equivalents | $ | 182,199 | $ | 147,099 | $ | 338,043 | $ | 349,603 | $ | 437,936 | ||||||||||
Theatre properties and equipment, net | 803,269 | 1,324,572 | 1,314,066 | 1,208,283 | 1,219,588 | |||||||||||||||
Total assets | 1,864,852 | 3,171,582 | 3,296,892 | 3,065,708 | 3,276,448 | |||||||||||||||
Total long-term debt and capital lease obligations, including current portion | 1,055,095 | 2,027,480 | 1,644,915 | 1,632,174 | 1,684,073 | |||||||||||||||
Stockholders’ equity | 535,771 | 705,910 | 1,035,385 | 824,227 | 914,628 |
Year Ended December 31, | ||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||
Operating Data: | ||||||||||||||||||||
United States(3) | ||||||||||||||||||||
Theatres operated (at period end) | 200 | 281 | 287 | 293 | 294 | |||||||||||||||
Screens operated (at period end) | 2,417 | 3,523 | 3,654 | 3,742 | 3,830 | |||||||||||||||
Total attendance (in 000s) | 105,573 | 118,714 | 151,712 | 147,897 | 165,112 | |||||||||||||||
International(4) | ||||||||||||||||||||
Theatres operated (at period end) | 108 | 115 | 121 | 127 | 130 | |||||||||||||||
Screens operated (at period end) | 912 | 965 | 1,011 | 1,041 | 1,066 | |||||||||||||||
Total attendance (in 000s) | 60,104 | 59,550 | 60,958 | 63,413 | 71,622 | |||||||||||||||
Worldwide(3)(4) | ||||||||||||||||||||
Theatres operated (at period end) | 308 | 396 | 408 | 420 | 424 | |||||||||||||||
Screens operated (at period end) | 3,329 | 4,488 | 4,665 | 4,783 | 4,896 | |||||||||||||||
Total attendance (in 000s) | 165,677 | 178,264 | 212,670 | 211,310 | 236,734 |
Year Ended December 31, | ||||||||||||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | ||||||||||||||||
Operating Data: | ||||||||||||||||||||
United States (2) | ||||||||||||||||||||
Theatres operated (at period end) | 293 | 294 | 293 | 297 | 298 | |||||||||||||||
Screens operated (at period end) | 3,742 | 3,830 | 3,832 | 3,878 | 3,916 | |||||||||||||||
Total attendance (in 000s) | 147,897 | 165,112 | 161,174 | 158,486 | 163,639 | |||||||||||||||
International (3) | ||||||||||||||||||||
Theatres operated (at period end) | 127 | 130 | 137 | 159 | 167 | |||||||||||||||
Screens operated (at period end) | 1,041 | 1,066 | 1,113 | 1,274 | 1,324 | |||||||||||||||
Total attendance (in 000s) | 63,413 | 71,622 | 80,026 | 88,889 | 100,084 | |||||||||||||||
Worldwide (2)(3) | ||||||||||||||||||||
Theatres operated (at period end) | 420 | 424 | 430 | 456 | 465 | |||||||||||||||
Screens operated (at period end) | 4,783 | 4,896 | 4,945 | 5,152 | 5,240 | |||||||||||||||
Total attendance (in 000s) | 211,310 | 236,734 | 241,200 | 247,375 | 263,723 |
(1) | For the purposes of calculating the ratio of earnings to fixed charges, earnings consist of income (loss) from continuing operations before |
(2) | ||
The data excludes certain theatres operated by us in the U.S. pursuant to management agreements that are not part of our consolidated operations. |
The data excludes certain theatres operated internationally through our affiliates that are not part of our consolidated operations. |
26
Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
We are a leader in the Delaware holding company of Cinemark, Inc. On April 24, 2007, Cinemark Holdings, Inc. completed an initial public offering of its common stock. Effective December 11, 2009, Cinemark, Inc. was merged into Cinemark Holdings, Inc.motion picture exhibition industry, with theatres in the U.S., Brazil, Mexico, Argentina, Chile, Colombia, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Cinemark Holdings, Inc. became the holding company of Cinemark USA, Inc.
Revenues and Expenses
We generate revenues primarily from box office receipts and concession sales with additional revenues from screen advertising sales and other revenue streams, such as vendor marketing programs, pay phones, ATM machinespromotions, meeting rentals and electronic video games located in some of our theatres. Our investment incontracts with NCM hashave assisted us in expanding our offerings to domestic advertisers and broadening ancillary revenue sources such as digital video monitor advertising, third party branding, and the use of our domestic theatres for non-film events. In addition, we are able to use theatres during non-peak hours for concerts, sportingalternative entertainment, such as live and pre-recorded sports programs, concert events, the opera and other cultural events.special presentations. Films releasedleading the box office during the year ended December 31, 20092012 includedAvatar, Transformers: Revenge of the Fallen, Harry PotterThe Avengers, The Dark Knight Rises, The Hunger Games, Skyfall, The Twilight Saga: Breaking Dawn Part 2, The Hobbit: An Unexpected Journey, Dr. Suess’ The Lorax, Madagascar 3: Europe’s Most Wanted, Men in Black 3, Taken 2, Snow White and the Half-Blood Prince, Up, Twilight Saga: New Moon,Huntsman, Safe House, The Hangover, Star Trek, Monsters vs. Aliens,Vow, Brave, Prometheus,The Amazing Spider-Man, Ice Age: Dawn of the Dinosaurs, The Blind Side, X-Men Origins: Wolverine, Night at the Museum 2: Battle of the Smithsonian, The Proposal, 2012, Fast & Furious, G.I. Joe: The Rise of the Cobra, Paul Blart: Mall Cop, Taken, A Christmas Carol, Angels & Demons, Terminator Salvation, Cloudy with a Chance of Meatballs, Inglorious Basterds, G-Force, District 9, Couples Retreat, Paranormal Activity,Continental DriftandWatchmenThe Bourne Legacy,. among other films. Our revenues are affected by changes in attendance and average admissions and concession revenues per patron. Attendance is primarily affected by the quality and quantity of films released by motion picture studios. Films currently scheduled for release in 20102013 include the carryover ofAvatarand new releasessequels such asAlice in Wonderland, How to Train a Dragon, ClashThe Hunger Games: Catching Fire, The Hobbit: The Desolation of the Titans,Smaug, Iron Man 2, Shrek Forever After, Sex and the City 2, Toy Story 3, Little Fockers, The A Team, Tron: Legacy, Robin Hood,Hangover 3, Monsters University, Despicable Me Tangled, Megamind2, Fast & Furious 6andA Good Day to Die Hardand another installmentoriginal titles such asMan of both theTwilightSteel, Oz: The Great and Powerful, Oblivion, Pacific Rim, Lone RangerandHarry Potter World War Z,franchises, among other films.
Film rental costs are variable in nature and fluctuate with our admissions revenues. Film rental costs as a percentage of revenues are generally higher for periods in which more blockbuster films are released. Film rental costs can also vary based on the length of a film’s run. Film rental rates are generally negotiated on a film-by-film and theatre-by-theatre basis. Advertising costs, which are expensed as incurred, are primarily fixed at the theatre level as daily movie directories placed in newspapers represent the largest component of advertising costs. The monthly cost of these advertisements is based on, among other things, the size of the directory and the frequency and size of the newspaper’s circulation.
Concession supplies expense is variable in nature and fluctuates with our concession revenues. We purchase concession supplies to replace units sold. We negotiate prices for concession supplies directly with concession vendors and manufacturers to obtain volume rates.
Although salaries and wages include a fixed cost component (i.e. the minimum staffing costs to operate a theatre facility during non-peak periods), salaries and wages move in relation to revenues as theatre staffing is adjusted to respond to changes in attendance.
Facility lease expense is primarily a fixed cost at the theatre level as most of our facility leases require a fixed monthly minimum rent payment. Certain of our leases are subject to percentage rent only while others are subject to percentage rent in addition to their fixed monthly rent if a target annual revenue level is achieved. Facility lease expense as a percentage of revenues is also affected by the number of theatres under operating leases, the number of theatres under capital leases and the number of fee-owned theatres.
27
Critical Accounting Policies
We prepare our consolidated financial statements in conformity with U.S. GAAP. As such, we are required to make certain estimates and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The significant accounting policies, which we believe are the most critical to aid in fully understanding and evaluating our reported consolidated financial results, include the following:
Revenue and Expense Recognition
Revenues are recognized when admissions and concession sales are received at the box office. Other revenues primarily consist of screen advertising. Screen advertising revenues are recognized over the period that the related advertising is delivered on-screen or in-theatre. We record proceeds from the sale of gift cards and other advanced sale-type certificates in current liabilities and recognize admissions andor concession revenue when a holder redeems the card or certificate. We recognize unredeemed gift cards and other advanced sale-type certificates as revenue only after such a period of time indicates, based on historical experience, the likelihood of redemption is remote, and based on applicable laws and regulations. In evaluating the likelihood of redemption, we consider the period outstanding, the level and frequency of activity, and the period of inactivity.
Film rental costs are accrued based on the applicable box office receipts and either the mutually agreed upon firm terms or a sliding scale formula, which are generally established prior to the opening of the film, or estimates of the final mutually agreed upon settlement, which occurs at the conclusion of the film run, subject to the film licensing arrangement. Under a firm terms formula, we pay the distributor a mutually agreed upon specified percentage of box office receipts, which reflects either a mutually agreed upon aggregate rate for the life of the film or rates that decline over the term of the run. Under thea sliding scale formula, film rental is paid aswe pay a percentage of box office revenues using a pre-determined matrix that is based upon box office performance of the film. The settlement process allows for negotiation of film rental fees upon the conclusion of the film run based upon how the film performs. Estimates are based on the expected success of a film over the length of its run in theatres.film. The success of a film can typically be determined a few weeks after a film is released when initial box office performance of the film is known. Accordingly, final settlements typically approximate estimates since box office receipts are known at the time the estimate is made and the expected success of a film over the length of its run in theatres can typically be estimated early in the film’s run. The final film settlement amount is negotiated at the conclusion of the film’s run based upon how a film actually performs. If actual settlements are different than those estimated,estimates, film rental costs are adjusted at that time. We recognize advertising costs and any cost sharing arrangements with film distributors in the same accounting period. Our advertising costs are expensed as incurred.
Facility lease expense is primarily a fixed cost at the theatre level as most of our facility leases require a fixed monthly minimum rent payment. Certain of our leases are subject to monthly percentage rent only, which is accrued each month based on actual revenues. Certain of our other theatres require payment of percentage rent in addition to fixed monthly rent if aan annual target annual revenue level is achieved. Percentage rent expense is estimated and recorded for these theatres on a monthly basis if the theatre’s historical performance or forecasted performance indicates that the annual target revenue level will be reached. The estimate of percentage rent expense recorded during the year is based on a trailing twelve months of revenues. Once annual revenues are known, which is generally at the end of the year, the percentage rent expense is adjusted basedat that time. We record the fixed minimum rent payments on actual revenues.
Theatre properties and equipment are depreciated using the straight-line method over their estimated useful lives. In estimating the useful lives of our theatre properties and equipment, we have relied upon our experience with such assets and our historical replacement period. We periodically evaluate these estimates and assumptions and adjust them as necessary. Adjustments to the expected lives of assets are accounted for on a prospective basis through depreciation expense.
28 Leasehold improvements for which we pay and to which we have title are amortized over the lesser of useful life or the lease term.
We review long-lived assets for impairment indicators on a quarterly basis or whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable. We assess many factors including the following to determine whether to impair individual theatre assets:
actual theatre level cash flows;
future years budgeted theatre level cash flows;
theatre property and equipment carrying values;
amortizing intangible asset carrying values;
the age of a recently built theatre;
competitive theatres in the marketplace;
the impact of recent ticket price changes;
available lease renewal options; and
other factors considered relevant in our assessment of impairment of individual theatre assets.
Long-lived assets are evaluated for impairment on an individual theatre basis, which we believe is the lowest applicable level for which there are identifiable cash flows. The impairment evaluation is based on the estimated undiscounted cash flows from continuing use through the remainder of the theatre’s useful life. The remainder of the theatre’s useful life correlates with the available remaining lease period, which includes the probability of renewal periods for leased properties and a period of approximately twenty years for fee owned properties. If the estimated undiscounted cash flows are not sufficient to recover a long-lived asset’s carrying value, we then compare the carrying value of the asset group (theatre) with its estimated fair value. When estimated fair value is determined to be lower than the carrying value of the asset group (theatre), the asset group (theatre) is written down to its estimated fair value. Significant judgment is involved in estimating cash flows and fair value. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, are based on historical and projected operating performance, recent market transactions and current industry trading multiples. Fair value is determined based on a multiple of cash flows, which was eight times for the evaluations performed during 2007 and the first, second and third quarters of 2008 and six and a half times for the evaluation performed during the fourth quarter of 2008 and the evaluations performed during 2009. We reduced the multiple we used to determine fair value during the fourth quarter of 2008 due to the dramatic decline in estimated market values that resulted from a significant decrease in our stock price2010, 2011 and the declines in our and our competitors’ market capitalizations that occurred during the fourth quarter of 2008.2012. The long-lived asset impairment charges related to theatre properties recorded during each of the periods presented are specific to theatres that were directly and individually impacted by increased competition, adverse changes in market demographics, or adverse changes in the development or the conditions of the areas surrounding the theatre.
Impairment of Goodwill and Intangible Assets
We evaluate goodwill for impairment annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value of the goodwill might exceed its estimated fair value.may not be fully recoverable. We evaluate goodwill for impairment at the reporting unit level and have allocated goodwill to the reporting unit based on an estimate of its relative fair value. Management considers the reporting unit to be each of our sixteen regions in the U.S. and each of our eight international countries (Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala are considered one reporting unit). The evaluation is a two-step approach requiring us to compute the fair value of a reporting unit and compare it with its carrying value. If the carrying value of the reporting unit exceeds its estimated fair value, a second step is performed to measure the potential goodwill impairment. Significant judgment is involved in estimating cash flows and fair value. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, are based on historical and projected operating performance, recent market transactions and current industry trading multiples. Fair value is determined based on a multiple of cash flows, which was eightsix and a half times for the goodwill impairment evaluationsevaluation performed during 20072010 and sixseven and a half times for the evaluations performed during 20082011 and 2009. We reduced the multiple we used to determine fair value during the fourth quarter of 2008 due to the dramatic decline in estimated market values that resulted from significant decreases in our stock price and our and our competitors’ market capitalizations that occurred during the fourth quarter of 2008. Prior to January 1, 2008, we considered our theatres reporting units for purposes of evaluating goodwill for impairment. Changes in the organization, including changes in the structure of the executive management team, the initial public offering of our common stock, the resulting changes in the level at which the management team evaluates the business on a regular basis, and the Century Acquisition that increased the size of the theatre base by approximately 25%, led management to
29
Tradename intangible assets are tested for impairment at least annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value may not be fully recoverable. We estimate the fair value of our tradenames by applying an estimated market royalty rate that could be charged for the use of our tradename to forecasted future revenues, with an adjustment for the present value of such royalties. If the estimated fair value is less than the carrying value, the tradename intangible asset is written down to its estimated fair value. Significant judgment is involved in estimating market royalty rates and long-term revenue forecasts. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, are based on historical and projected revenue performance and industry trends. As of December 31, 2012, the estimated fair value.
Income Taxes
We use an asset and liability approach to financial accounting and reporting for income taxes. Deferred income taxes are provided when tax laws and financial accounting standards differ with respect to the amount of income for a year and the basis of assets and liabilities. A valuation allowance is recorded to reduce the carrying amount of deferred tax assets unless it is more likely than not that such assets will be realized. Income taxes are provided on unremitted earnings from foreign subsidiaries unless such earnings are expected to be indefinitely reinvested. Income taxes have also been provided for potential tax assessments. The related tax accruals are recorded in accordance with FASB ASC Topic 740,Income Taxes, which clarifies the accounting and reporting for income taxes recognized, and the recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The evaluation of an uncertain tax position is a two-step process. The first step is recognition: We determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, we presume that the position would be examined by the appropriate taxing authority that would have full knowledge of all relevant information. The second step is measurement: A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements result in (1) a change in a liability for income taxes payable or (2) a change in an income tax refund receivable, a deferred tax asset or a deferred tax liability or both (1) and (2). We accrue for interest and penalties on our tax provisions for uncertain tax positions.
30
Pursuant to a Common Unit Adjustment Agreement dated as of February 13, 2007 between NCM, Inc. and Cinemark, AMC and Regal, collectively referred to as its Founding Members, annual adjustments to the common membership units are made primarily based on increases or decreases in the number of theatre screens operated and theatre attendance generated by each Founding Member. To account for the receipt of additional common units under the Common Unit Adjustment Agreement, the Company follows the guidance in ASC 323-10-35-29 (formerly EITF 02-18,Accounting for Subsequent Investments in an Investee after Suspension of Equity Loss Recognition) by analogy, which also refers to AICPA Technical Practice Aid 2220.14, which indicates that if a subsequent investment is made in an equity method investee that has experienced significant losses, the investor must determine if the subsequent investment constitutes funding of prior losses. The Company concluded that the construction or acquisition of new theatres that has led to the common unit adjustments equates to making additional investments in National CineMedia. The Company evaluated the receipt of the additional common units in National CineMedia and the assets exchanged for these additional units and has determined that the right to use its incremental new screens would not be considered funding of prior losses. The Company accounts for these additional common units (referred to herein as its Tranche 2 Investment) as a separate investment than its Tranche 1 Investment. The common units received are recorded at fair value as an increase in the Company’s investment in NCM with an offset to deferred revenue. The deferred revenue is amortized over the remaining term of the ESA. The Tranche 2 Investment is accounted for following the equity method, with undistributed equity earnings related to its Tranche 2 Investment included as a component of equity in income (loss) of affiliates and distributions received related to its Tranche 2 Investment are recorded as a reduction of its investment basis.
Recent Developments
Dividend Declaration
On February 12, 2013, our board of directors declared a cash dividend infor the amountfourth quarter of $0.182012 of $0.21 per common share payable to stockholders of record on March 5, 2010.4, 2013. The dividend will be paid on March 19, 2010.
Disposition of Mexican Subsidiaries
During February 2013, we entered into a stock purchase agreement with Grupo Cinemex, S.A. De C.V. pursuant to which we will sell our Mexican subsidiaries, which consist of 31 theatres and Extension of Senior Secured Credit Facility
312013.
The following table sets forth, for the periods indicated, the percentage of revenues represented byamounts for certain items reflected in our consolidated statements of operations:
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Operating data (in millions): | ||||||||||||
Revenues | ||||||||||||
Admissions | $ | 1,087.5 | $ | 1,127.0 | $ | 1,293.4 | ||||||
Concession | 516.5 | 534.8 | 602.9 | |||||||||
Other | 78.8 | 80.5 | 80.2 | |||||||||
Total revenues | $ | 1,682.8 | $ | 1,742.3 | $ | 1,976.5 | ||||||
Cost of operations | ||||||||||||
Film rentals and advertising | $ | 589.7 | $ | 612.2 | $ | 708.2 | ||||||
Concession supplies | 81.1 | 86.6 | 91.9 | |||||||||
Salaries and wages | 173.3 | 181.0 | 203.4 | |||||||||
Facility lease expense | 212.7 | 225.6 | 238.8 | |||||||||
Utilities and other | 191.3 | 205.8 | 222.7 | |||||||||
General and administrative expenses | 86.5 | 90.8 | 96.5 | |||||||||
Depreciation and amortization | 151.7 | 158.1 | 149.5 | |||||||||
Impairment of long-lived assets | 86.6 | 113.5 | 11.8 | |||||||||
(Gain) loss on sale of assets and other | (3.0 | ) | 8.5 | 3.2 | ||||||||
Total cost of operations | $ | 1,569.9 | $ | 1,682.1 | $ | 1,726.0 | ||||||
Operating income | $ | 112.9 | $ | 60.2 | $ | 250.5 | ||||||
Operating data as a percentage of total revenues: | ||||||||||||
Revenues | ||||||||||||
Admissions | 64.6 | % | 64.7 | % | 65.4 | % | ||||||
Concession | 30.7 | % | 30.7 | % | 30.5 | % | ||||||
Other | 4.7 | % | 4.6 | % | 4.1 | % | ||||||
Total revenues | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Cost of operations(1) | ||||||||||||
Film rentals and advertising | 54.2 | % | 54.3 | % | 54.8 | % | ||||||
Concession supplies | 15.7 | % | 16.2 | % | 15.2 | % | ||||||
Salaries and wages | 10.3 | % | 10.4 | % | 10.3 | % | ||||||
Facility lease expense | 12.6 | % | 12.9 | % | 12.1 | % | ||||||
Utilities and other | 11.4 | % | 11.8 | % | 11.3 | % | ||||||
General and administrative expenses | 5.1 | % | 5.2 | % | 4.9 | % | ||||||
Depreciation and amortization | 9.0 | % | 9.1 | % | 7.6 | % | ||||||
Impairment of long-lived assets | 5.2 | % | 6.5 | % | 0.6 | % | ||||||
(Gain) loss on sale of assets and other | (0.1 | )% | 0.5 | % | 0.2 | % | ||||||
Total cost of operations | 93.3 | % | 96.5 | % | 87.3 | % | ||||||
Operating income | 6.7 | % | 3.5 | % | 12.7 | % | ||||||
Average screen count (month end average) | 4,558 | 4,703 | 4,860 | |||||||||
Revenues per average screen (dollars) | $ | 369,200 | $ | 370,469 | $ | 406,681 | ||||||
Year Ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
Operating data (in millions): | ||||||||||||
Revenues | ||||||||||||
Admissions | $ | 1,405.4 | $ | 1,471.6 | $ | 1,580.4 | ||||||
Concession | 642.3 | 696.8 | 771.4 | |||||||||
Other | 93.4 | 111.2 | 121.7 | |||||||||
|
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|
|
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| |||||||
Total revenues | 2,141.1 | 2,279.6 | 2,473.5 | |||||||||
Cost of operations | ||||||||||||
Film rentals and advertising | 769.7 | 798.6 | 845.1 | |||||||||
Concession supplies | 97.5 | 112.1 | 123.5 | |||||||||
Salaries and wages | 221.2 | 226.5 | 247.4 | |||||||||
Facility lease expense | 255.7 | 276.3 | 281.6 | |||||||||
Utilities and other | 239.5 | 259.7 | 280.7 | |||||||||
General and administrative expenses | 109.1 | 127.6 | 148.6 | |||||||||
Depreciation and amortization | 143.5 | 154.4 | 147.7 | |||||||||
Impairment of long-lived assets | 12.5 | 7.0 | 3.0 | |||||||||
(Gain) loss on sale of assets and other | (0.4 | ) | 8.8 | 12.2 | ||||||||
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Total cost of operations | 1,848.3 | 1,971.0 | 2,089.8 | |||||||||
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Operating income | $ | 292.8 | $ | 308.6 | $ | 383.7 | ||||||
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Operating data as a percentage of total revenues: | ||||||||||||
Revenues | ||||||||||||
Admissions | 65.6 | % | 64.6 | % | 63.9 | % | ||||||
Concession | 30.0 | % | 30.6 | % | 31.2 | % | ||||||
Other | 4.4 | % | 4.8 | % | 4.9 | % | ||||||
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Total revenues | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
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Cost of operations(1) | ||||||||||||
Film rentals and advertising | 54.8 | % | 54.3 | % | 53.5 | % | ||||||
Concession supplies | 15.2 | % | 16.1 | % | 16.0 | % | ||||||
Salaries and wages | 10.3 | % | 9.9 | % | 10.0 | % | ||||||
Facility lease expense | 11.9 | % | 12.1 | % | 11.4 | % | ||||||
Utilities and other | 11.2 | % | 11.4 | % | 11.3 | % | ||||||
General and administrative expenses | 5.1 | % | 5.6 | % | 6.0 | % | ||||||
Depreciation and amortization | 6.7 | % | 6.8 | % | 6.0 | % | ||||||
Impairment of long-lived assets | 0.6 | % | 0.3 | % | 0.1 | % | ||||||
(Gain) loss on sale of assets and other | (0.0 | %) | 0.4 | % | 0.5 | % | ||||||
Total cost of operations | 86.3 | % | 86.5 | % | 84.5 | % | ||||||
Operating income | 13.7 | % | 13.5 | % | 15.5 | % | ||||||
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Average screen count (month end average) | 4,909 | 5,021 | 5,198 | |||||||||
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Revenues per average screen (dollars) | $ | 436,181 | $ | 454,051 | $ | 475,897 | ||||||
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(1) | All costs are expressed as a percentage of total revenues, except film rentals and advertising, which are expressed as a percentage of admissions revenues and concession supplies, which are expressed as a percentage of concession revenues. |
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Revenues.Total revenues increased $234.2$193.9 million to $1,976.5$2,473.5 million for 20092012 from $1,742.3$2,279.6 million for 2008,2011, representing a 13.4%an 8.5% increase. The table below, presented by reportable operating segment, summarizes our year-over-year revenue performance and certain key performance indicators that impact our revenues.
International Operating | ||||||||||||||||||||||||||||||||||||
U.S. Operating Segment | Segment | Consolidated | ||||||||||||||||||||||||||||||||||
Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||||||||||||||||||||||||
% | % | % | ||||||||||||||||||||||||||||||||||
2009 | 2008 | Change | 2009 | 2008 | Change | 2009 | 2008 | Change | ||||||||||||||||||||||||||||
Admissions revenues(1) | $ | 1,025.9 | $ | 889.1 | 15.4 | % | $ | 267.5 | $ | 237.9 | 12.4 | % | $ | 1,293.4 | $ | 1,127.0 | 14.8 | % | ||||||||||||||||||
Concession revenues(1) | $ | 485.2 | $ | 426.5 | 13.8 | % | $ | 117.7 | $ | 108.3 | 8.7 | % | $ | 602.9 | $ | 534.8 | 12.7 | % | ||||||||||||||||||
Other revenues(1)(2) | $ | 43.6 | $ | 40.9 | 6.6 | % | $ | 36.6 | $ | 39.6 | (7.6 | )% | $ | 80.2 | $ | 80.5 | (0.4 | )% | ||||||||||||||||||
Total revenues(1)(2) | $ | 1,554.7 | $ | 1,356.5 | 14.6 | % | $ | 421.8 | $ | 385.8 | 9.3 | % | $ | 1,976.5 | $ | 1,742.3 | 13.4 | % | ||||||||||||||||||
Attendance(1) | 165.1 | 147.9 | 11.6 | % | 71.6 | 63.4 | 12.9 | % | 236.7 | 211.3 | 12.0 | % | ||||||||||||||||||||||||
Revenues per average screen(2) | $ | 408,017 | $ | 368,313 | 10.8 | % | $ | 401,828 | $ | 378,252 | 6.2 | % | $ | 406,681 | $ | 370,469 | 9.8 | % |
U.S. Operating Segment | International Operating Segment | Consolidated | ||||||||||||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||||
2012 | 2011 | % Change | 2012 | 2011 | % Change | 2012 | 2011 | % Change | ||||||||||||||||||||||||||||
Admissions revenues (1) | $ | 1,099.6 | $ | 1,033.6 | 6.4 | % | $ | 480.8 | $ | 438.0 | 9.8 | % | $ | 1,580.4 | $ | 1,471.6 | 7.4 | % | ||||||||||||||||||
Concession revenues (1) | $ | 546.2 | $ | 503.4 | 8.5 | % | $ | 225.2 | $ | 193.4 | 16.4 | % | $ | 771.4 | $ | 696.8 | 10.7 | % | ||||||||||||||||||
Other revenues(1)(2) | $ | 50.1 | $ | 46.5 | 7.7 | % | $ | 71.6 | $ | 64.7 | 10.7 | % | $ | 121.7 | $ | 111.2 | 9.4 | % | ||||||||||||||||||
Total revenues(1)(2) | $ | 1,695.9 | $ | 1,583.5 | 7.1 | % | $ | 777.6 | $ | 696.1 | 11.7 | % | $ | 2,473.5 | $ | 2,279.6 | 8.5 | % | ||||||||||||||||||
Attendance(1) | 163.6 | 158.5 | 3.2 | % | 100.1 | 88.9 | 12.6 | % | 263.7 | 247.4 | 6.6 | % |
(1) | Amounts in millions. |
(2) | U.S. operating segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 23 of our consolidated financial statements. |
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International | ||||||||||||||||||||||||
U.S. | Operating | |||||||||||||||||||||||
Operating Segment | Segment | Consolidated | ||||||||||||||||||||||
Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
Film rentals and advertising | $ | 572.3 | $ | 494.6 | $ | 135.9 | $ | 117.6 | $ | 708.2 | $ | 612.2 | ||||||||||||
Concession supplies | 61.9 | 58.5 | 30.0 | 28.1 | 91.9 | 86.6 | ||||||||||||||||||
Salaries and wages | 168.8 | 149.5 | 34.6 | 31.5 | 203.4 | 181.0 | ||||||||||||||||||
Facility lease expense | 178.8 | 166.8 | 60.0 | 58.8 | 238.8 | 225.6 | ||||||||||||||||||
Utilities and other | 163.5 | 151.8 | 59.2 | 54.0 | 222.7 | 205.8 |
U.S. Operating Segment | International Operating Segment | Consolidated | ||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||
Film rentals and advertising | $ | 610.5 | $ | 574.2 | $ | 234.6 | $ | 224.4 | $ | 845.1 | $ | 798.6 | ||||||||||||
Concession supplies | 71.1 | 64.0 | 52.4 | 48.1 | 123.5 | 112.1 | ||||||||||||||||||
Salaries and wages | 174.2 | 167.5 | 73.2 | 59.0 | 247.4 | 226.5 | ||||||||||||||||||
Facility lease expense | 191.1 | 185.8 | 90.5 | 90.5 | 281.6 | 276.3 | ||||||||||||||||||
Utilities and other | 182.9 | 174.5 | 97.8 | 85.2 | 280.7 | 259.7 |
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Salaries and wages increased to $174.2 million for 2012 from $167.5 million for 2011 primarily due to new theatres. Facility lease expense increased to $191.1 million for 2012 from $185.8 million for 2011 primarily due to new theatres. Utilities and other costs increased to $182.9 million for 2012 from $174.5 million for 2011 primarily due to new theatres, increased equipment lease and personal property tax expenses related to digital and 3-D equipment, increased security expense and increased repairs and maintenance expense.
• | International.Film rentals and advertising costs were $234.6 million, or 48.8% of admissions revenues, for 2012 compared to $224.4 million, or 51.2% of admissions revenues, for 2011. The decrease in the film rentals and advertising rate is primarily due to |
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Depreciation and Amortization.Depreciation and amortization expense, including amortization of favorable/ unfavorable leases, was $149.5$147.7 million for 20092012 compared to $158.1$154.4 million for 2008.2011. The decrease was primarily due to a reduction in the depreciable basis of certain of our U.S. assets in 2009 due to a significant amount of the equipment acquired in the Century Acquisition becoming fully depreciated in 2009, the impact on current depreciation from prior impairment charges and the impact of exchange rates in certain countries in which we operate.
Impairment of Long-Lived Assets.We recorded asset impairment charges on assets held and used of $11.8$3.0 million for 20092012 compared to $113.5$7.0 million for 2008.2011. Impairment charges for 2009 consisted of $11.4 million of theatre properties and $0.3 million of intangible assets associated with2012 were related to theatre properties, impacting nineteenfourteen of our twenty-four reporting units, and $0.1 million related to an equity investment that was written down to estimated fair value.units. Impairment charges for 2008 consisted of $34.6 million of theatre properties, $78.6 million of goodwill associated with theatre properties, and $0.3 million of intangible assets associated with2011 were related to theatre properties, impacting twentyfourteen of our twenty-four reporting units. The long-lived asset impairment charges recorded during each of the periods presented were specific to theatres that were directly and individually impacted by increased competition, adverse changes in market demographics, or adverse changes in the development or the conditions of the areas surrounding the theatre. The goodwill impairment charges taken during the year ended December 31, 2008 were primarily a result of our determination that the multiple used to estimate the fair value of our reporting units should be reduced to reflect the dramatic decline in the market value of our stock price and the declines in our and our competitors’ market capitalizations that occurred during the fourth quarter of 2008. We reduced the multiple from eight times cash flows to six and a half times cash flows, which significantly reduced our estimated fair values. See Notes 1110 and 1211 to our consolidated financial statements.
Loss on Sale of Assets and Other.We recorded a loss on sale of assets and other of $3.2$12.2 million during 20092012 compared to $8.5$8.8 million during 2008.2011. The loss recorded during 2009 was primarily related to2012 included a $6.7 million lease termination reserve for a closed theatre and the write-offretirement of theatre equipment that was replaced. The loss recorded during 2008 was primarily related to the write-off ofcertain theatre equipment that was replaced during
the year. The loss recorded during 2011 included a loss of $2.3 million related to a settlement for a previously terminated interest rate swap agreement, a loss of $1.0 million related to the sale of digital projection systems to DCIP and the write-off of prepaid rent for an international theatre properties and damages to certainequipment primarily as a result of our theatres in Texas related to Hurricane Ike.
Interest Expense.Interest costs incurred, including amortization of debt issue costs, were $102.5$123.7 million for 20092012 compared to $116.1$123.1 million for 2008. The decrease was primarily due to decreases in interest rates on our debt.2011. See Note 1413 to our consolidated financial statements for further discussion of our long termlong-term debt. In addition, during the 2008 period, we
Loss on Early Retirement of Debt. We recorded a gainloss on early retirement of approximately $5.4debt of $5.6 million as a component of interest expenseduring 2012 related to the change in fair valueamendment and restatement of oneour senior secured credit facility. We recorded a loss on early retirement of debt of $4.9 million during 2011 related to the prepayment of approximately $157.2 million of the unextended portion of our term loan debt. The loss for the 2011 period included the write-off of $2.2 million of unamortized debt issue costs related to the portion of the term loan debt that was prepaid and the reclassification of $2.7 million from accumulated other comprehensive loss to earnings as a result of our determination that quarterly interest payments hedged by certain of our interest rate swap agreements that was deemed not highly effective.are no longer probable to occur. See Note 1513 to our consolidated financial statements for further discussion of our interest rate swap agreements.
3/4% senior discount notes and the write-off of unamortized debt issue costs associated with these notes. During 2008, we recorded a gain on early retirement of debt of $1.7 million as a result of the repurchase of $47.0 million aggregate principal amount at maturity of Cinemark, Inc.’s 93/4% senior discount notes partially offset by the write-off of unamortized debt issue costs. See Note 14 to our consolidated financial statements.
Loss on Marketable Securities — RealD.We recorded a loss on our investment in RealD of $12.6 million during 2011 due to an other-than-temporary impairment of our investment. The loss recorded represented the cumulative net unrealized holding losses we had previously recorded in accumulated other comprehensive loss. These cumulative net unrealized holding losses were recognized as a loss during 2011 due to the length of time and extent to which RealD’s stock price had been below our basis in the stock. See Note 8 to our consolidated financial statements.
Equity in Income of Affiliates.We recorded equity in income of affiliates of $13.1 million during 2012 and $5.7 million during 2011. The equity in income of affiliates recorded during 2012 primarily included approximately $4.4 million of income related to our equity investment in NCM (see Note 6 to our consolidated financial statements) and approximately $8.9 million of income related to our equity investment in DCIP (see Note 7 to our consolidated financial statements.
Income Taxes.Income tax expense of $44.8$125.4 million was recorded for 20092012 compared to $21.1$73.1 million recorded for 2008.2011. The effective tax rate for 20092012 was 30.8%, which reflects the benefit of a capital loss.42.2%. The effective tax rate of (90.1)% for 2008 reflects the impact of our 2008 goodwill impairment charges, which are not deductible for income tax
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Comparison of Years Ended December 31, 20082011 and December 31, 20072010
Revenues.Total revenues increased $59.5$138.5 million to $1,742.3$2,279.6 million for 20082011 from $1,682.8$2,141.1 million for 2007,2010, representing a 3.5%6.5% increase. The table below, presented by reportable operating segment, summarizes our year-over-year revenue performance and certain key performance indicators that impact our revenues.
International Operating | ||||||||||||||||||||||||||||||||||||
U.S. Operating Segment | Segment | Consolidated | ||||||||||||||||||||||||||||||||||
Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||||||||||||||||||||||||
% | % | % | ||||||||||||||||||||||||||||||||||
2008 | 2007 | Change | 2008 | 2007 | Change | 2008 | 2007 | Change | ||||||||||||||||||||||||||||
Admissions revenues(1) | $ | 889.1 | $ | 879.1 | 1.1 | % | $ | 237.9 | $ | 208.4 | 14.2 | % | $ | 1,127.0 | $ | 1,087.5 | 3.6 | % | ||||||||||||||||||
Concession revenues(1) | $ | 426.5 | $ | 424.4 | 0.5 | % | $ | 108.3 | $ | 92.1 | 17.6 | % | $ | 534.8 | $ | 516.5 | 3.5 | % | ||||||||||||||||||
Other revenues(1)(2) | $ | 40.9 | $ | 45.6 | (10.3 | %) | $ | 39.6 | $ | 33.2 | 19.3 | % | $ | 80.5 | $ | 78.8 | 2.2 | % | ||||||||||||||||||
Total revenues(1)(2) | $ | 1,356.5 | $ | 1,349.1 | 0.5 | % | $ | 385.8 | $ | 333.7 | 15.6 | % | $ | 1,742.3 | $ | 1,682.8 | 3.5 | % | ||||||||||||||||||
Attendance(1) | 147.9 | 151.7 | (2.5 | %) | 63.4 | 61.0 | 3.9 | % | 211.3 | 212.7 | (0.7 | %) | ||||||||||||||||||||||||
Revenues per average screen(2) | $ | 368,313 | $ | 376,771 | (2.2 | %) | $ | 378,252 | $ | 341,451 | 10.8 | % | $ | 370,469 | $ | 369,200 | 0.3 | % |
U.S. Operating Segment | International Operating Segment | Consolidated | ||||||||||||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||||
2011 | 2010 | % Change | 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||||||||||||||||
Admissions revenues(1) | $ | 1,033.6 | $ | 1,044.7 | (1.1 | )% | $ | 438.0 | $ | 360.7 | 21.4 | % | $ | 1,471.6 | $ | 1,405.4 | 4.7 | % | ||||||||||||||||||
Concession revenues(1) | $ | 503.4 | $ | 487.9 | 3.2 | % | $ | 193.4 | $ | 154.4 | 25.3 | % | $ | 696.8 | $ | 642.3 | 8.5 | % | ||||||||||||||||||
Other revenues(1)(2) | $ | 46.5 | $ | 44.3 | 5.0 | % | $ | 64.7 | $ | 49.1 | 31.8 | % | $ | 111.2 | $ | 93.4 | 19.1 | % | ||||||||||||||||||
Total revenues(1)(2) | $ | 1,583.5 | $ | 1,576.9 | 0.4 | % | $ | 696.1 | $ | 564.2 | 23.4 | % | $ | 2,279.6 | $ | 2,141.1 | 6.5 | % | ||||||||||||||||||
Attendance(1) | 158.5 | 161.2 | (1.7 | )% | 88.9 | 80.0 | 11.1 | % | 247.4 | 241.2 | 2.6 | % |
(1) | Amounts in millions. |
(2) | U.S. operating segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 23 of our consolidated financial statements. |
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• | International.The increase in admissions revenues of $77.3 million was primarily attributable to an 11.1% increase in attendance and a 9.3% increase in average ticket price from $4.51 for 2010 to $4.93 for 2011. The increase in concession revenues of $39.0 million was primarily attributable to the 11.1% increase in attendance and a 13.0% increase in concession revenues per patron from $1.93 for 2010 to $2.18 for 2011. The increase in average ticket price was primarily due to incremental 3-D and premium pricing and other price increases and the favorable impact of exchange rates | |
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International | ||||||||||||||||||||||||
U.S. Operating | Operating | |||||||||||||||||||||||
Segment | Segment | Consolidated | ||||||||||||||||||||||
Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||||||||||||
2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |||||||||||||||||||
Film rentals and advertising | $ | 494.6 | $ | 485.2 | $ | 117.6 | $ | 104.5 | $ | 612.2 | $ | 589.7 | ||||||||||||
Concession supplies | $ | 58.5 | $ | 57.8 | $ | 28.1 | $ | 23.3 | $ | 86.6 | $ | 81.1 | ||||||||||||
Salaries and wages | $ | 149.5 | $ | 146.7 | $ | 31.5 | $ | 26.6 | $ | 181.0 | $ | 173.3 | ||||||||||||
Facility lease expense | $ | 166.8 | $ | 161.7 | $ | 58.8 | $ | 51.0 | $ | 225.6 | $ | 212.7 | ||||||||||||
Utilities and other | $ | 151.8 | $ | 149.0 | $ | 54.0 | $ | 42.3 | $ | 205.8 | $ | 191.3 |
U.S. Operating Segment | International Operating Segment | Consolidated | ||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
Film rentals and advertising | $ | 574.2 | $ | 586.6 | $ | 224.4 | $ | 183.1 | $ | 798.6 | $ | 769.7 | ||||||||||||
Concession supplies | 64.0 | 59.1 | 48.1 | 38.4 | 112.1 | 97.5 | ||||||||||||||||||
Salaries and wages | 167.5 | 174.1 | 59.0 | 47.1 | 226.5 | 221.2 | ||||||||||||||||||
Facility lease expense | 185.8 | 181.9 | 90.5 | 73.8 | 276.3 | 255.7 | ||||||||||||||||||
Utilities and other | 174.5 | 161.5 | 85.2 | 78.0 | 259.7 | 239.5 |
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and | ||
Salaries and wages decreased to $167.5 million for 2011 from $174.1 million for 2010 primarily due to the 1.7% decline in attendance and operating efficiencies achieved with reduced staffing levels. Facility lease expense increased to $185.8 million for 2011 from $181.9 million for 2010 primarily due to new theatres. Utilities and other costs increased to $174.5 million for 2011 from $161.5 million for 2010 primarily due to new theatres and increased expenses related to digital and 3-D equipment.
• | International.Film rentals and advertising costs were | |
Salaries and wages increased to $59.0 million for 2011 from $47.1 million for 2010 primarily due to new theatres, increased wage rates, increased staffing levels to support the 11.1% increase in attendance and the impact of exchange rates in certain countries in which we operate. Facility lease expense increased to $90.5 million for 2011 from $73.8 million for 2010 primarily due to new theatres, increased percentage rent due to the 23.4% increase in revenues and the impact of exchange rates in certain countries in which we operate. Utilities and other costs increased to $85.2 million for 2011 from $78.0 million for 2010 primarily due to new theatres, increased expenses related to 3-D equipment and the impact of exchange rates in certain countries in which we operate.
General and Administrative Expenses.General and administrative expenses increased to $90.8$127.6 million for 20082011 from $79.5$109.1 million for 2007.2010. The increase was primarily due to increased salaries and incentive compensation expense of $4.4$5.0 million, increased share based awardawards compensation expense of $2.0$1.3 million, increased professional fees of $2.1 million, increased service charges of $1.7$1.0 million related to increased credit card activity increased professional feesand the impact of $0.5 million, including audit fees related to Sarbanes-Oxley (“SOX”) compliance, and increased legal fees of $2.2 million.
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Impairment of Long-Lived Assets.We recorded asset impairment charges on assets held and used of $113.5$7.0 million for 20082011 compared to $86.6$12.5 million for 2007.2010. Impairment charges for 2008 consisted of $34.6 million of theatre properties, $78.6 million of goodwill associated with theatre properties, and $0.3 million of intangible assets associated with2011 were related to theatre properties, impacting twentyfourteen of our twenty-four reporting units. Impairment charges for 20072010 consisted of $14.2$10.8 million of theatre properties $67.7 million of goodwill associated with theatre properties, and $4.7$1.5 million of intangible assets, associated with theatre properties, impacting twentyeighteen of our twenty-four reporting units.units, and $0.2 million related to an equity investment that was written down to its estimated fair value. The long-lived asset impairment charges recorded during each of the periods presented were specific to theatres that were directly and individually impacted by increased competition, adverse changes in market demographics, or adverse changes in the development or the conditions of the areas surrounding the theatre. The goodwill impairment charges taken during the year ended December 31, 2008 were primarily a result of our determination that the multiple used to estimate the fair value of our reporting units should be reduced to reflect the dramatic decline in the market value of our stock priceSee Notes 10 and the declines in our and our competitors’ market capitalizations that occurred during the fourth quarter of 2008. We reduced the multiple from eight times cash flows to six and a half times cash flows, which significantly reduced our estimated fair values. The goodwill impairment charges taken during the year ended December 31, 2007 were primarily a result of the modification of the Company’s Exhibitor Services Agreement with NCM, which significantly reduced the contractual amounts paid to the Company (see Note 711 to our audited consolidated financial statements). See Notes 11 and 12 to our audited consolidated financial statements.
(Gain) Loss on Sale of Assets and Other.We recorded a loss on sale of assets and other of $8.5$8.8 million during 20082011 compared to a gain on sale of assets and other of $3.0$0.4 million during 2007.2010. The loss recorded during 2008 was primarily2011 included a loss of $2.3 million related to the write-offa settlement for a previously terminated interest rate swap
agreement, a loss of theatre equipment that was replaced, the write-off of prepaid rent for an international theatre, and damages to certain of our theatres in Texas related to Hurricane Ike. The gain recorded during 2007 primarily$1.0 million related to the sale of realdigital projection systems to DCIP and the write-off of theatre properties and equipment primarily as a result of theatre remodels. The gain recorded during 2010 included a gain of $7.0 million related to the sale of a theatre in Canada and a gain of $8.5 million related to the sale of our interest in a profit sharing agreement related to another previously sold property in Canada, which were partially offset by a loss of $5.8 million for the write-off of an intangible asset associated with one theatrea vendor contract in Mexico that was terminated, a loss of $2.3 million for the write-off of intangible assets associated with our original IMAX license agreement that was terminated, a loss of $2.0 million that was recorded upon the contribution and sale of digital projection systems to DCIP and a loss of $0.9 million related to storm damage to a U.S.
Interest Expense.Interest costs incurred, including amortization of debt issue costs, was $116.1were $123.1 million for 20082011 compared to $145.6$112.4 million for 2007.2010. The decreaseincrease was primarily due to increases in interest rates on our variable rate debt related to the repurchase of substantially allamendment and extension of our former senior secured credit facility in March 2010 and the refinancing in June 2011 of the unextended portion of our term loan debt outstanding 9%with 7.375% senior subordinated notes that occurred during March and April 2007, the repurchase of a portion of our 93/4% senior discount notes during the second half of 2007 and 2008, and a reduction in the variable interest rates on a portion of our long-term debt.due 2021. See Note 1413 to our consolidated financial statements for further discussion of our long termlong-term debt. In addition, during the 2008 period, we recorded a gain of approximately $5.4 million as a component of interest expense related to the change in fair value of one of our interest rate swap agreements that was deemed not highly effective. See Note 15 to our consolidated financial statements for further discussion of our interest rate swap agreements.
Interest Income.We recorded interest income of $13.3 million during the 2008 period compared to interest income of $18.3 million during the 2007 period. The decrease in interest income was primarily due to lower interest rates earned on our cash investments.
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Distributions from NCM.We recorded distributions received from NCM of $18.8$24.2 million during 20082011 and $11.5$23.4 million during 2007,2010, which were in excess of the carrying value of our Tranche 1 Investment. See Note 6 to our consolidated financial statements.
Loss on Marketable Securities — RealD.We recorded a loss on our investment in RealD of $12.6 million due to an other-than-temporary impairment of our investment. The loss recorded represented the cumulative net unrealized holding losses we had previously recorded in accumulated other comprehensive loss. These cumulative net unrealized holding losses were recognized as a loss during 2011 due to the length of time and extent to which RealD’s stock price had been below our basis in the stock. See Note 8 to our consolidated financial statements.
Equity in Income (Loss) of Affiliates.We recorded equity in income of affiliates of $5.7 million during 2011 compared to a loss of $3.4 million during 2010. The equity in income of affiliates recorded during 2011 primarily included approximately $5.4 million of income related to our equity investment in NCM (see Note 6 to our consolidated financial statements) and approximately $0.5 million of income related to our equity investment in DCIP (see Note 7 to our consolidated financial statements.
Income Taxes.Income tax expense of $21.1$73.1 million was recorded for 20082011 compared to $112.0$57.8 million recorded for 2007.2010. The effective tax rate of (90.1)% for 2008 reflects the impact of our 2008 goodwill impairment charges, which are not deductible for income tax purposes. The effective tax rate in 2008 net of the impact from the goodwill impairment charges would have been approximately 41.0%2011 was 35.5%. The effective tax rate of 55.5% for 2007 reflects the impact of our 2007 goodwill impairment charges, which are not deductible for income tax purposes. The effective tax rate in 2007 net of the impact from the goodwill impairment charges would have been approximately 41.7%2010 was 27.9%. See Note 21 to our consolidated financial statements.
Liquidity and Capital Resources
Operating Activities
We primarily collect our revenues in cash, mainly through box office receipts and the sale of concessions. In addition, a majority of our theatres provide the patron a choice of using a credit card or debit card in place of cash, which we convert to cash over a range from one to six days.cash. Because our revenues are received in cash prior to the payment of related expenses, we have an operating “float” and historically have not required traditional working capital financing. Cash provided by operating activities amounted to $276.0$264.8 million, $257.3$391.2 million and $176.8$395.2 million for the years ended December 31, 2007, 20082010, 2011 and 2009,2012, respectively. ForCash provided by operating activities for the year ended December 31, 2009, the decrease in cash provided by operating activities2010 is lower primarily due to a higher film rental liability at December 31, 2009 attributable to the repurchasesignificant domestic box office performance during the latter part of approximately $419.4 million aggregate principal amount at maturity of Cinemark, Inc.’s 9December 2009, whenAvatar was released.
3/4% senior discount notes, which included the payment of $158.3 million of interest that had accreted on the senior discount notes since issuance during 2004. The principal portion of the repurchase is reflected as a financing activity.
Our investing activities have been principally related to the development and acquisition of additional theatres. New theatre openings and acquisitions historically have been financed with internally generated cash and by debt financing, including borrowings under our amended senior secured credit facility. Cash provided by (used for)used for investing activities amounted to $93.2$136.1 million, $(94.9)$247.1 million and $(183.1)$234.3 million for the years ended December 31, 2007, 20082010, 2011 and 2009,2012, respectively. ForCash used for investing activities for the year ended December 31, 2007, $214.82011 included the acquisition of ten theatres in Argentina for approximately $67.0 million of(see Note 5 to the cash provided byconsolidated financial statements). Cash used for investing activities related to the proceeds received from NCM for the sale of a portion of our equity investment in NCM in conjunction with NCM Inc.’s initial public offering. See Note 7 to our consolidated financial statements for further discussion of the NCM Transaction. For the year ended December 31, 2009, the increase in cash used for investing activities is primarily due to the acquisition of four theatres in the U.S. for approximately $49.0 million (see Note 6 to the consolidated financial statements),2012 included the acquisition of one theatre in Brazilthe U.S. for approximately $9.1$14.1 million and an increased level of capital expenditures.
Capital expenditures for the years ended December 31, 2007, 20082010, 2011 and 20092012 were as follows (in millions):
New | Existing | |||||||||||
Period | Theatres | Theatres | Total | |||||||||
Year Ended December 31, 2007 | $ | 113.3 | $ | 33.0 | $ | 146.3 | ||||||
Year Ended December 31, 2008 | $ | 69.9 | $ | 36.2 | $ | 106.1 | ||||||
Year Ended December 31, 2009 | $ | 36.5 | $ | 88.3 | $ | 124.8 |
Period | New Theatres | Existing Theatres | Total | |||||||||
Year Ended December 31, 2010 | $ | 54.5 | $ | 101.6 | $ | 156.1 | ||||||
Year Ended December 31, 2011 | $ | 73.5 | $ | 111.3 | $ | 184.8 | ||||||
Year Ended December 31, 2012 | $ | 104.9 | $ | 115.8 | $ | 220.7 |
During November 2012, we entered into an asset purchase agreement with Rave Real Property Holdco, LLC and certain of its subsidiaries, Rave Cinemas, LLC and RC Processing, LLC (collectively “Rave”), pursuant to which we will acquire 32 theatres with 483 screens located in 12 states. The estimated purchase price is approximately $240.0 million. The purchase price, the amount of which is subject to certain closing date adjustments, will consist of cash consideration and the assumption of certain liabilities. The transaction is expected to close during the first quarter of 2013, subject to the satisfaction of customary closing conditions for transactions of this type, including Department of Justice or Federal Trade Commission antitrust approval. We plan to use existing cash to fund the Rave acquisition.
We continue to expandinvest in our U.S. theatre circuit. We built four new theatres and 59 screens, acquired one theatre with 16 screens and closed four theatres with 82 screens, built four theatres with 54 screens, and closed seven theatres with 4837 screens during the year ended December 31, 2009.2012, bringing our total domestic screen count to 3,916. At December 31, 2009,2012, we had signed commitments to open twonine new theatres with 24and 111 screens in domestic markets during 20102013 and open fourfive new theatres with 6067 screens subsequent to 2010.2013. We estimate the remaining capital expenditures for the development of these 84178 domestic screens will be approximately $34$123 million. Actual expenditures for continued theatre development and acquisitions are subject to change based upon the availability of attractive opportunities.
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the remaining capital expenditures for the development of these 53109 international screens will be approximately $24$89 million. Actual expenditures for continued theatre development and acquisitions are subject to change based upon the availability of attractive opportunities.
We plan to fund capital expenditures for our continued development with cash flow from operations, borrowings under our amended senior secured credit facility, and proceeds from debt issuances, proceeds from sale leaseback transactions and/or sales of excess real estate.
Financing Activities
Cash provided by (used for) financing activities was $(183.7)$(106.7) million, $(135.1)$(78.4) million and $78.3$63.4 million during the years ended December 31, 2007, 20082010, 2011 and 2009,2012, respectively. ForSee Note 4 to the consolidated financial statements for a summary of dividends declared and paid during the years ended December 31, 2010, 2011 and 2012. Cash provided by financing activities for the year ended December 31, 2007, cash used for financing activities primarily consisted of the repurchase of $332.1 million aggregate principal amount of Cinemark USA, Inc.’s 9% senior subordinated notes, the repurchase of $69.2 million aggregate principal amount at maturity of Cinemark, Inc.’s 93/4% senior discount notes for approximately $43.1 million, and $33.1 million of dividends paid to our stockholders, which were partially offset by the net proceeds from our initial public offering of approximately $245.9 million. For the year ended December 31, 2008, cash used for financing activities primarily consisted of the repurchase of approximately $47.0 million aggregate principal amount at maturity of Cinemark, Inc.’s 93/4% senior discount notes for approximately $29.6 million, and $77.5 million of dividends paid to our stockholders. For the year ended December 31, 2009, cash provided by financing activities2012 includes the net proceeds of $458.5$700.0 million from the amended senior secured credit facility and proceeds of $400.0 million from the issuance of Cinemark USA, Inc.’s $470 million 8.625%our 5.125% senior notes due 2022, partially offset by $78.6 millionthe use of dividends paid to our stockholders and $261.1 million used for the repurchase of approximately $419.4 million aggregate principal amount at maturity of Cinemark, Inc.’s 93/4% senior discount notes. The accreted interesta portion of these proceeds to pay off the repurchaseremaining $899.0 million term loan outstanding under the former senior secured credit facility. See below for further information regarding these transactions.
We, at the discretion of $158.3 million is reflectedthe board of directors and subject to applicable law, anticipate paying regular quarterly dividends on our common stock. The amount, if any, of the dividends to be paid in the future will depend upon our then available cash, anticipated cash needs, overall financial condition, loan agreement restrictions as an operating activity.
Date | Date of | Date | Amount per | Total | ||||||||||||
Declared | Record | Paid | Common Share (1) | Dividends | ||||||||||||
08/13/07 | 09/04/07 | 09/18/07 | $ | 0.13 | $13.9 million | |||||||||||
11/12/07 | 12/03/07 | 12/18/07 | $ | 0.18 | $19.2 million | |||||||||||
02/26/08 | 03/06/08 | 03/14/08 | $ | 0.18 | $19.3 million | |||||||||||
05/09/08 | 05/30/08 | 06/12/08 | $ | 0.18 | $19.3 million | |||||||||||
08/07/08 | 08/25/08 | 09/12/08 | $ | 0.18 | $19.3 million | |||||||||||
11/06/08 | 11/26/08 | 12/11/08 | $ | 0.18 | $19.6 million | |||||||||||
02/13/09 | 03/05/09 | 03/20/09 | $ | 0.18 | $19.6 million | |||||||||||
05/13/09 | 06/02/09 | 06/18/09 | $ | 0.18 | $19.7 million | |||||||||||
07/29/09 | 08/17/09 | 09/01/09 | $ | 0.18 | $19.7 million | |||||||||||
11/04/09 | 11/25/09 | 12/10/09 | $ | 0.18 | $19.7 million |
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December 31, 2008 | December 31, 2009 | |||||||
Cinemark USA, Inc. term loan | $ | 1,094.8 | $ | 1,083.6 | ||||
Cinemark USA, Inc. 85/8% senior notes due 2019(1) | — | 458.9 | ||||||
Cinemark, Inc. 93/4% senior discount notes due 2014 | 411.3 | — | ||||||
Cinemark USA, Inc. 9% senior subordinated notes due 2013 | 0.2 | 0.2 | ||||||
Other long-term debt | 2.2 | 1.0 | ||||||
Total long-term debt | 1,508.5 | 1,543.7 | ||||||
Less current portion | 12.5 | 12.2 | ||||||
Long-term debt, less current portion | $ | 1,496.0 | $ | 1,531.5 | ||||
December 31, 2011 | December 31, 2012 | |||||||
Cinemark USA, Inc. term loan | $ | 905.9 | $ | 700.0 | ||||
Cinemark USA, Inc. 8.625% senior notes due 2019(1) | 460.5 | 461.5 | ||||||
Cinemark USA, Inc. 5.125% senior notes due 2022 | — | 400.0 | ||||||
Cinemark USA, Inc. 7.375% senior subordinated notes due 2021 | 200.0 | 200.0 | ||||||
Hoyts General Cinema (Argentina) bank loan due 2013(2) | 5.8 | 2.5 | ||||||
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Total long-term debt | $ | 1,572.2 | $ | 1,764.0 | ||||
Less current portion | 12.1 | 9.5 | ||||||
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Long-term debt, less current portion | $ | 1,560.1 | $ | 1,754.5 | ||||
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(1) | Includes the $470.0 million aggregate principal amount of the 8.625% senior notes |
(2) | See Note 5 to our consolidated financial statements. |
As of December 31, 2009,2012, we had borrowings of $1,083.6 million outstanding on the term loan under our senior secured credit facility, $458.9 million accreted principal amount outstanding under our 8.625% senior notes and approximately $0.2 million aggregate principal amount outstanding under the 9% senior subordinated notes, respectively. We had $150.0$100.0 million in available borrowing capacity underon our revolving credit facility.
As of December 31, 2009,2012, our long-term debt obligations, scheduled interest payments on long-term debt, future minimum lease obligations under non-cancelable operating and capital leases, scheduled interest payments under capital leases and other obligations for each period indicated are summarized as follows:
Payments Due by Period | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||
Less Than | After | |||||||||||||||||||
Contractual Obligations | Total | One Year | 1 - 3 Years | 4 - 5 Years | 5 Years | |||||||||||||||
Long-term debt(1) | $ | 1,554.8 | $ | 12.2 | $ | 282.8 | $ | 789.8 | $ | 470.0 | ||||||||||
Scheduled interest payments on long-term debt(2) | 497.5 | 74.1 | 144.9 | 97.8 | 180.7 | |||||||||||||||
Operating lease obligations | 1,865.6 | 192.6 | 375.5 | 358.2 | 939.3 | |||||||||||||||
Capital lease obligations | 140.4 | 7.3 | 15.1 | 19.3 | 98.7 | |||||||||||||||
Scheduled interest payments on capital leases | 108.0 | 14.0 | 25.8 | 22.3 | 45.9 | |||||||||||||||
Employment agreements | 11.1 | 3.7 | 7.4 | — | — | |||||||||||||||
Purchase commitments(3) | 63.0 | 32.9 | 29.5 | 0.5 | 0.1 | |||||||||||||||
Current liability for uncertain tax positions(4) | 13.2 | 13.2 | — | — | — | |||||||||||||||
Total obligations | $ | 4,253.6 | $ | 350.0 | $ | 881.0 | $ | 1,287.9 | $ | 1,734.7 | ||||||||||
Payments Due by Period (in millions) | ||||||||||||||||||||
Contractual Obligations | Total | Less Than One Year | 1 - 3 Years | 3 - 5 Years | After 5 Years | |||||||||||||||
Long-term debt(1) | $ | 1,772.5 | 9.5 | 14.0 | 14.0 | 1,735.0 | ||||||||||||||
Scheduled interest payments on long-term debt (2) | $ | 784.6 | 104.0 | 206.7 | 205.6 | 268.3 | ||||||||||||||
Operating lease obligations | $ | 1,889.2 | 225.8 | 449.7 | 406.5 | 807.2 | ||||||||||||||
Capital lease obligations | $ | 150.2 | 11.1 | 25.7 | 29.4 | 84.0 | ||||||||||||||
Scheduled interest payments on capital leases | $ | 85.1 | 14.2 | 24.8 | 19.2 | 26.9 | ||||||||||||||
Employment agreements | $ | 13.5 | 4.5 | 9.0 | — | — | ||||||||||||||
Purchase commitments (3) | $ | 227.2 | 155.5 | 70.5 | 0.5 | 0.7 | ||||||||||||||
Current liability for uncertain tax positions (4) | $ | 14.9 | 14.9 | — | — | — | ||||||||||||||
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Total obligations | $ | 4,937.2 | $ | 539.5 | $ | 800.4 | $ | 675.2 | $ | 2,922.1 | ||||||||||
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(1) | Includes the 8.625% senior notes due 2019 in the aggregate principal amount of $470.0 million excluding the discount of |
(2) | Amounts include scheduled interest payments on fixed rate and variable rate debt agreements. Estimates for the variable rate interest payments were based on interest rates in effect on December 31, |
(3) | Includes estimated capital expenditures associated with the construction of new theatres to which we were committed as of December 31, |
(4) | The contractual obligations table excludes the long-term portion of our liability for uncertain tax positions of |
Amended Senior Secured Credit Facility
On October 5, 2006, in connection with the Century Acquisition,December 18, 2012, Cinemark USA, Inc., entered into a senior secured credit facility. The amended and restated its senior secured credit facility provides forto include a seven year $700.0 million term loan of $1.12 billion and a $150five year $100.0 million revolving credit line, that matures in six years unlessreferred to herein as the Amended Senior Secured Credit Facility. The proceeds from the Amended Senior Secured Credit Facility, combined with a portion of the proceeds from the 5.125% Senior Notes discussed below, were used to refinance Cinemark USA, Inc.’s 9% senior subordinated notes have not been refinanced by August 1,Former Senior Secured Credit Facility, also discussed below. We incurred debt issue costs of approximately $12.0 million during the year ended December 31, 2012 with indebtedness thatrelated to the amendment and restatement. The term loan under the Amended Senior Secured Credit Facility matures no earlier than seven and one-half years after the closing date of the senior secured credit facility, in which case the maturity date of the revolving credit line becomes August 1, 2012.December 2019. The revolving credit line, is used for general corporate purposes.
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Interest on the term loan principal payments of $2.8 million are due each calendar quarter through September 30, 2012 and increase to $263.2 million each calendar quarter from December 31, 2012 to maturity at October 5, 2013. Prior to the amendment to the senior secured credit facility discussed below, the term loan accrued interest,accrues at Cinemark USA, Inc.’s option at: (A) the base rate equal to the higher of (1) the prime lending rate as set forth on the British Banking Association Telerate page 5, or (2) the federal funds effective rate from time to time plus 0.50%, plus a margin that ranges from 0.75% to 1.00%of 2.0% per annum, or (B) a “eurodollar rate” plus a margin that ranges from 1.75% to 2.00%of 3.0% per annum, in each case as adjusted pursuant to Cinemark USA, Inc.’s corporate credit rating. Borrowings underannum. Interest on the revolving credit line bear interest,accrues, at Cinemark USA, Inc.’s option, at: (A) a base rate equal to the higher of (1) the prime lending rate as set forth on the British Banking Association Telerate page 5 and (2) the federal funds effective rate from time to time plus 0.50%, plus a margin that ranges from 0.50%1.00% to 1.00%1.75% per annum, or (B) a “eurodollar rate” plus a margin that ranges from 1.50%2.00% to 2.00%2.75% per annum, in each case as adjusted pursuant to Cinemark USA, Inc.’sannum. The margin of the revolving credit line is determined by the consolidated net senior secured leverage ratio as defined in the credit agreement. Cinemark USA, Inc. is required to pay a commitment fee calculated at the rate of 0.50% per annum on the average daily unused portion of the new revolving credit line, payable quarterly in arrears, which decreases to 0.375% per annum for any fiscal quarter in which Cinemark USA, Inc.’s consolidated net senior secured leverage ratio on the last day of such fiscal quarter is less than 2.25 to 1.0.
Cinemark USA, Inc.’s obligations under the senior secured credit facilityAmended Senior Secured Credit Facility are guaranteed by Cinemark Holdings, Inc., and certain of Cinemark USA, Inc.’s domestic subsidiaries and are secured by mortgages on certain fee and leasehold properties and security interests in substantially all of Cinemark USA, Inc.’s and the guarantors’ personal property, including, without limitation, pledges of all of Cinemark USA, Inc.’s capital stock, all of the capital stock of certain of Cinemark USA, Inc.’s domestic subsidiaries and 65% of the voting stock of certain of its foreign subsidiaries.
The senior secured credit facilityAmended Senior Secured Credit Facility contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on Cinemark USA, Inc.’s ability, and in certain instances, its subsidiaries’ and Cinemark Holdings, Inc.’s ability, to consolidate or merge or liquidate;liquidate, wind up or dissolve; substantially change the nature of its business; sell, transfer or dispose of assets; create or incur indebtedness; create liens; pay dividends, and repurchase stock; and make capital expenditures and investments. The senior secured credit facility also requiresIf Cinemark USA, Inc. has borrowings outstanding on the revolving credit line, it is required to satisfy a consolidated net senior secured leverage ratio covenant as determined in accordance with the senior secured credit facility.
The dividend restriction contained in the senior secured credit facilityAmended Senior Secured Credit Facility prevents usthe Company and any of ourits subsidiaries from paying a dividend or otherwise distributing cash to its stockholders unless (1) we arethe Company is not in default, and the distribution would not cause usCinemark USA, Inc. to be in default, under the senior secured credit facility;Amended Senior Secured Credit Facility; and (2) the aggregate amount of certain dividends, distributions, investments, redemptions and capital expenditures made since October 5, 2006,December 18, 2012, including dividends declared by the board of directors, is less than the sum of (a) the aggregate amount of cash and cash equivalents received by Cinemark Holdings, Inc. or Cinemark USA, Inc. as common equity since October 5, 2006,December 18, 2012, (b) Cinemark USA, Inc.’s consolidated EBITDA minus 1.75 times its consolidated interest expense, each as defined in the senior secured credit facility, since October 1, 2006,Amended Senior Secured Credit Facility, and (c) $150 million and (d) certain other amounts specified in the senior secured credit facility, subject to certain adjustments specified in the senior secured credit facility. The dividend restriction is subject to certain exceptions specified in the senior secured credit facility.
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At December 31, 2012, there was $700.0 million outstanding under the term loan and no borrowings outstanding under the revolving credit line. Cinemark USA, Inc. had $100.0 million in available borrowing capacity on the revolving credit line. The average interest rate on outstanding term loan borrowings under the Amended Senior Secured Credit Facility at December 31, 2012 was approximately 4.0% per annum.
5/8%5.125% Senior Notes
On June 29, 2009,December 18, 2012, Cinemark USA, Inc. issued $470.0$400.0 million aggregate principal amount of 8.625%5.125% senior notes due 2019 with an original issue discount2022, at par value, referred to herein as the 5.125% Senior Notes. A portion of approximately $11.5 million, resulting in proceeds of approximately $458.5 million. Thethe proceeds were primarilyused to refinance a portion of the Former Senior Secured Credit Facility as discussed above and a portion of the proceeds are expected to be used to fund the repurchase of Cinemark, Inc.’s 93/4% senior discount notes discussed below.purchase price for the Rave Acquisition (see Note 5) and for general corporate purposes. Interest on the 5.125% Senior Notes is payable on June 15 and December 15 of each year, beginning on DecemberJune 15, 2009.2013. The senior notes mature on JuneDecember 15, 2019.
The senior notes5.125% Senior Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of ourCinemark USA, Inc.’s subsidiaries that guarantee, assume or become liable with respect to any of ourCinemark USA, Inc.’s or oura guarantor’s debt. The senior notes5.125% Senior Notes and the guarantees are senior unsecured obligations and rank equally in right of payment with all of ourCinemark USA, Inc.’s and ourits guarantor’s existing and future senior unsecured debt and senior in right of payment to all of ourCinemark USA, Inc.’s and ourits guarantor’s existing and future subordinated debt. The senior notes5.125% Senior Notes and the guarantees are effectively subordinated to all of ourCinemark USA, Inc.’s and ourits guarantor’s existing and future secured debt to the extent of the value of the assets securing such debt, including all borrowings under ourCinemark USA, Inc.’s amended senior
secured credit facility. The senior notes5.125% Senior Notes and the guarantees are structurally subordinated to all existing and future debt and other liabilities of ourCinemark USA, Inc.’s subsidiaries that do not guarantee the senior notes.
The indenture to the 5.125% Senior Notes contains covenants that limit, among other things, the ability of Cinemark USA, Inc. and certain of its subsidiaries to (1) make investments or other restricted payments, including paying dividends, making other distributions or repurchasing subordinated debt or equity, (2) incur additional indebtedness and issue preferred stock, (3) enter into transactions with affiliates, (4) enter new lines of business, (5) merge or consolidate with, or sell all or substantially all of its assets to, another person and (6) create liens. As of December 31, 2012, Cinemark USA, Inc. could have distributed up to approximately $1,118.5 million to its parent company and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the 5.125% Senior Notes, subject to its available cash and other borrowing restrictions outlined in the indenture. Upon a change of control of Cinemark Holdings, Inc. or Cinemark USA, Inc., Cinemark USA, Inc. would be required to make an offer to repurchase the 5.125% Senior Notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, through the date of repurchase. The indenture governing the 5.125% Senior Notes allows Cinemark USA, Inc. to incur additional indebtedness if it satisfies the coverage ratio specified in the indenture, after giving effect to the incurrence of the additional indebtedness, and in certain other circumstances. The required minimum coverage ratio is 2 to 1 and our actual ratio as of December 31, 2012 was 5.6 to 1.
Prior to December 15, 2017, Cinemark USA, Inc. may redeem all or any part of the 5.125% Senior Notes at its option at 100% of the principal amount plus a make-whole premium. After December 15, 2017, Cinemark USA, Inc. may redeem the 5.125% Senior Notes in whole or in part at redemption prices described in the 5.125% Senior Notes. In addition, Cinemark USA, Inc. may redeem up to 35% of the aggregate principal amount of the 5.125% Senior Notes from the net proceeds of certain equity offerings at the redemption price set forth in the senior notes.
Under a registration rights agreement entered into in conjunction with the issuance of the 5.125% Senior Notes, the Company and its guarantor subsidiaries are obligated to use its commercially reasonable best efforts to file a registration statement with the Securities and Exchange Commission, or the Commission, on or prior to 120 days from the issuance date, pursuant to which the Company will offer to exchange the 5.125% Senior Notes for substantially identical notes registered under the Securities Act of 1933, as amended, that will not contain terms restricting the transfer thereof or providing for registration rights. The Company will use its commercially reasonable best efforts to have the registration statement declared effective by the Commission on or prior to 210 days from the issuance date, or the Effective Date. The Company will use its commercially reasonable best efforts to issue on the earliest practicable date after the Effective Date, but not later than 30 days thereafter, exchange registered 5.125% Senior Notes in exchange for all 5.125% Senior Notes tendered prior thereto in the exchange offer. If the Company is obligated to file a shelf registration statement, the Company will use its commercially reasonable best efforts to file the shelf registration statement with the Commission on or prior to 30 days after such filing obligation arises (and in any event within 240 days after the closing of the 5.125% Senior Notes offering) and to cause the shelf registration statement to be declared effective by the Commission on or prior to 210 days after such obligation arises. The Company will use its commercially reasonable best efforts to keep the shelf registration statement effective for a period of one year after the closing of the 5.125% Senior Notes offering, subject to certain exceptions.
If (a) the Company fails to file the registration statement on or before the date specified, (b) if such registration statement is not declared effective by the Commission on or prior to the date specified for such effectiveness, (c) if the Company fails to consummate the exchange offer within 30 business days of the Effective Date with respect to the exchange offer registration statement or (d) if the date the shelf registration statement is declared effective by the Commission or the exchange offer registration statement thereafter ceases to be effective or usable during the periods specified in the registration rights agreement without being succeeded within two business days by a post-effective amendment to such registration statement that cures such failure and that is itself immediately declared effective (each such event a “Registration Default”), the Company will pay
additional interest to each holder of the 5.125% Senior Notes. Such additional interest, with respect to the first 90-day period immediately following the occurrence of any such Registration Default, shall equal an increase in the annual interest rate on the notes by 0.5% per annum.
The amount of the additional interest will increase by an additional 0.5% per annum with respect to each subsequent 90-day period relating to such Registration Default until all Registration Defaults have been cured, up to a maximum amount of additional interest for all Registration Defaults of 1.0% per annum. The 5.125% Senior Notes will not accrue additional interest from and after the second anniversary of the closing of the 5.125% Senior Notes offering even if the Company is not in compliance with its obligations under the registration rights agreement. The receipt of additional interest shall be the sole remedy available to holders of 5.125% Senior Notes as a result of one or more Registration Defaults. Following the cure of all Registration Defaults, the accrual of additional interest will cease.
7.375% Senior Subordinated Notes
On June 3, 2011, Cinemark USA, Inc. issued $200.0 million aggregate principal amount of 7.375% senior subordinated notes due 2021, at par value, referred to herein as the Senior Subordinated Notes. The proceeds, after payment of fees, were primarily used to fund the prepayment of the remaining $157.2 million of Cinemark USA, Inc.’s unextended portion of term loan debt under its former senior secured credit facility. Interest on the Senior Subordinated Notes is payable on June 15 and December 15 of each year. The Senior Subordinated Notes mature on June 15, 2021. We incurred debt issue costs of approximately $4.5 million during the year ended December 31, 2011 in connection with the issuance.
The Senior Subordinated Notes are fully and unconditionally guaranteed on a joint and several senior subordinated unsecured basis by certain of Cinemark USA, Inc.’s subsidiaries that guarantee, assume or become liable with respect to any of Cinemark USA, Inc.’s or a guarantor’s other debt. The Senior Subordinated Notes and the guarantees are senior subordinated unsecured obligations and rank equally in right of payment with all of Cinemark USA, Inc.’s and a guarantor’s future senior subordinated indebtedness; are subordinate in right of payment to all of Cinemark USA, Inc.’s and a guarantor’s existing and future senior indebtedness, whether secured or unsecured, including Cinemark USA, Inc.’s obligations under its Amended Senior Secured Credit Facility, its 8.625% Senior Notes and its 5.125% Senior Notes; and structurally subordinate to all existing and future indebtedness and other liabilities of Cinemark USA, Inc.’s non-guarantor subsidiaries.
The indenture to the Senior Subordinated Notes contains covenants that limit, among other things, the ability of Cinemark USA, Inc. and certain of its subsidiaries to (1) make investments or other restricted payments, including paying dividends, making other distributions or repurchasing subordinated debt or equity, (2) incur additional indebtedness and issue preferred stock, (3) enter into transactions with affiliates, (4) enter new lines of business, (5) merge or consolidate with, or sell all or substantially all of its assets to, another person and (6) create liens. As of December 31, 2012, Cinemark USA, Inc. could have distributed up to approximately $1,107.4 million to its parent company and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the 7.375% Senior Notes, subject to its available cash and other borrowing restrictions outlined in the indenture. Upon a change of control, as defined in the indenture, Cinemark USA, Inc. would be required to make an offer to repurchase the senior subordinated notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, through the date of repurchase. The indenture governing the Senior Subordinated Notes allows Cinemark USA, Inc. to incur additional indebtedness if it satisfies the coverage ratio specified in the indenture, after giving effect to the incurrence of the additional indebtedness, and in certain other circumstances. The required minimum coverage ratio is 2 to 1, and our actual ratio as of December 31, 2012 was 5.5 to 1.
Prior to June 15, 2016, Cinemark USA, Inc. may redeem all or any part of the Senior Subordinated Notes at its option at 100% of the principal amount plus a make-whole premium plus accrued and unpaid interest on the senior subordinated notes to the date of redemption. After June 15, 2016, Cinemark USA, Inc. may redeem the
Senior Subordinated Notes in whole or in part at redemption prices specified in the indenture. In addition, prior to June 15, 2014, Cinemark USA, Inc. may redeem up to 35% of the aggregate principal amount of the Senior Subordinated Notes from the net proceeds of certain equity offerings at the redemption price set forth in the indenture.
Cinemark USA, Inc. and its guarantor subsidiaries filed a registration statement with the Securities and Exchange Commission (the “Commission”) on July 27, 2011 pursuant to which Cinemark USA, Inc. offered to exchange the Senior Subordinated Notes for substantially similar registered Senior Subordinated Notes. The registration statement became effective August 4, 2011, and approximately $199.5 million of the notes were exchanged on September 7, 2011. The registered Senior Subordinated Notes, issued in the exchange, do not have transfer restrictions. Approximately $0.5 million of the notes were not exchanged as of December 31, 2012.
8.625% Senior Notes
On June 29, 2009, Cinemark USA, Inc. issued $470.0 million aggregate principal amount of 8.625% senior notes due 2019, referred to herein as the 8.625% Senior Notes, with an original issue discount of $11.5 million, resulting in proceeds of approximately $458.5 million. The proceeds were primarily used to fund the repurchase of the then remaining outstanding $419.4 million aggregate principal amount at maturity of Cinemark, Inc.’s 9.75% senior discount notes. Interest on the 8.625% Senior Notes is payable on June 15 and December 15 of each year. The 8.625% Senior Notes mature on June 15, 2019. The original issue discount is being amortized on the effective interest method over the term of the 8.625% Senior Notes. As of December 31, 2012, the carrying value of the 8.625% Senior Notes was $461.5 million.
Cinemark USA, Inc. filed a registration statement with the Securities and Exchange Commission on September 24, 2009 pursuant to which Cinemark USA, Inc. offered to exchange the 8.625% Senior Notes for substantially similar registered 8.625% Senior Notes. The registration statement became effective and the notes were exchanged on December 17, 2009. The registered 8.625% Senior Notes, issued in the exchange, do not have transfer restrictions.
The 8.625% Senior Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of Cinemark USA, Inc.’s subsidiaries that guarantee, assume or become liable with respect to any of Cinemark USA, Inc.’s or a guarantor’s debt. The 8.625% Senior Notes and the guarantees are senior unsecured obligations and rank equally in right of payment with all of Cinemark USA, Inc.’s and its guarantor’s existing and future senior unsecured debt and senior in right of payment to all of Cinemark USA, Inc.’s and its guarantor’s existing and future subordinated debt. The 8.625% Senior Notes and the guarantees are effectively subordinated to all of Cinemark USA, Inc.’s and its guarantor’s existing and future secured debt to the extent of the value of the assets securing such debt, including all borrowings under Cinemark USA, Inc.’s amended senior secured credit facility. The 8.625% Senior Notes and the guarantees are structurally subordinated to all existing and future debt and other liabilities of Cinemark USA, Inc.’s subsidiaries that do not guarantee the 8.625% Senior Notes.
The indenture to the 8.625% Senior Notes contains covenants that limit, among other things, the ability of Cinemark USA, Inc. and certain of its subsidiaries to (1) consummate specified asset sales, (2) make investments or other restricted payments, including paying dividends, making other distributions or repurchasing subordinated debt or equity, (3) incur additional indebtedness and issue preferred stock, (4) enter into transactions with affiliates, (5) enter new lines of business, (6) merge or consolidate with, or sell all or substantially all of its assets to, another person and (7) create liens. As of December 31, 2012, Cinemark USA, Inc. could have distributed up to approximately $1,060.2 million to its parent company and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the 8.625% Senior Notes, subject to its available cash and other borrowing restrictions outlined in the indenture. Upon a change of control of Cinemark Holdings, Inc., or Cinemark USA, Inc., Cinemark USA, Inc. would be required to make an offer to repurchase the senior notes8.625% Senior Notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid
interest, if any, through the date of repurchase. Certain asset dispositions are considered triggering events that may require Cinemark USA, Inc. to use the proceeds from those asset dispositions to make an offer to purchase the notes at 100% of their principal amount, plus accrued and unpaid interest, if any, to the date of repurchase if such proceeds are not otherwise used within 365 days as described in the indenture. The indenture governing the senior notes8.625% Senior Notes allows Cinemark USA, Inc. to incur additional indebtedness if we satisfyit satisfies the coverage ratio specified in the indenture, after giving effect to the incurrence of the additional indebtedness, and in certain other circumstances. The required minimum coverage ratio is 2 to 1 and our actual ratio as of December 31, 20092012 was 5.45.5 to 1.
Prior to June 15, 2014, Cinemark USA, Inc. may redeem all or any part of the senior notes8.625% Senior Notes at its option at 100% of the principal amount plus a make-whole premium. After June 15, 2014, Cinemark USA, Inc. may redeem the senior notes8.625% Senior Notes in whole or in part at redemption prices described in the senior notes. In addition, Cinemark USA, Inc. may redeem up to 35% of the aggregate principal amount of the senior notes8.625% Senior Notes from the net proceeds of certain equity offerings at the redemption price set forth in the senior notes.
Former Senior Secured Credit Facility
On March 31, 2004, Cinemark, Inc. issued $577.2 million aggregate principal amount at maturity of 93/4% senior discount notes due 2014. Interest on the notes accreted until March 15, 2009 up to their aggregate principal amount. Subsequently, cash interest accrued and was payable semi-annuallyOctober 5, 2006, in arrears on March 15 and September 15, commencing on September 15, 2009.
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The prepayment did not impact the interest plus accrued and unpaid interest of $0.8 millionrate applicable to but not including,or the redemption date. We used proceeds from the issuancematurity of Cinemark USA, Inc.’s senior notes to fund the repurchase.
As a result of the prepayment made in June 2011, we wrote-off approximately $2.2 million in unamortized debt issue costs related to the unextended portion of term loan debt that was prepaid. In addition, we determined that a portion of the quarterly interest payments hedged by two of our then current interest rate swap agreements under which such notescash flow hedges and the quarterly interest payments related to our previously terminated interest rate swap agreement were issuedprobable not to remove substantially all restrictive covenantsoccur and certain eventstherefore reclassified approximately $2.7 million of default provisions. our accumulated other comprehensive loss related to these cash flow hedges to earnings, as a component of loss on early retirement of debt. These write-offs, combined with related fees, are reflected in loss on early retirement of debt for the year ended December 31, 2011.
On March 20, 2007,December 18, 2012, the early settlement date, Cinemark USA, Inc. repurchased $332.0remaining outstanding term loan of $899.0 million aggregate principal amountwas paid in full with proceeds from the Amended Senior Secured Credit Facility combined with a portion of 9% senior subordinated notes and executed a supplemental indenture implementing the proposed amendments. Cinemark USA, Inc. used the proceeds from the NCM Transaction and cash on hand to purchase the 9% senior subordinated notes tendered pursuant to the tender offer and consent solicitation. On April 3, 2007, Cinemark USA, Inc. repurchased an additional $0.1 million aggregate principal amount5.125% Senior Notes issuance, both of the 9% senior subordinated notes tendered after the early settlement date.
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Ratings
We are rated by nationally recognized rating agencies. The significance ofrating scales and methodologies used to derive individual ratings variesmay vary from agency to agency. However, companies’ assignedCredit ratings at the top end of the range have, in the opinion of certainare issued by credit rating agencies based on evaluations of our ability to pay back our outstanding debt and the strongest capacitylikelihood that we would default on that debt prior to its maturity. The credit ratings issued by the credit rating agencies represent the credit rating agency’s evaluation of both qualitative and quantitative information for repayment of debt or payment of claims, while companies atour company. The credit ratings that are issued are based on the bottom end of the range have the weakest capability.credit rating agency’s judgment and experience in determining what information should be considered in giving a rating to a particular company. Ratings are always subject to change and there can be no assurance that our current ratings will continue for any given period of time. A downgrade of our debt ratings, depending on the extent, could increase the cost to borrow funds. Below are our latest credit ratings, per category, which were current as of February 28, 2010.
Category | Moody’s | Standard and Poor’s | ||
Cinemark USA, Inc. Amended Senior Secured Credit Facility | ||||
Cinemark USA, Inc. 8.625% Senior Notes | B2 | BB- | ||
Cinemark USA, Inc. 5.125% Senior Notes | B2 | BB- | ||
Cinemark USA, Inc. 7.375% Senior Subordinated Notes | B3 | |||
B |
With respect to the ratings issued by Moody’s as noted above, Moody’s defines these ratings as follows:
‘Ba1’ — Obligations rated Ba are judged to be speculative and are subject to substantial credit risk. The Prime-1 rating indicates the issuer has a superior ability to repay short-term debt.
‘B2’ — Obligations rated B are considered speculative and are subject to high credit risk. The Prime-2 portion of the rating indicates issuer has a strong ability to repay short-term debt.
‘B3’ — Obligations rated B are considered speculative and are subject to high credit risk. The Prime-3 portion of the rating indicates issuer has an acceptable ability to repay short-term debt.
With respect to the ratings issued by Standard and Poor’s as noted above, Standard and Poor’s defines these ratings as follows:
‘B’ — More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.
‘BB+’ — Considered highest speculative grade by market participants.
‘BB-’ — Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.
New Accounting Pronouncements
In September 2006,July 2012, the FinancialFASB issued Accounting Standards BoardUpdate 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, an amendment to FASB ASC Topic 350, Intangibles — Goodwill and Other (“FASB”ASU 2012-02”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157 (FASB Accounting Standards Codification (“ASC”) Topic 820),“Fair Value Measurements.”Among other requirements, this statement defines. The update provides an entity with the option first to assess qualitative factors in determining whether it is more likely than not that the indefinite-lived intangible asset is impaired. After assessing the qualitative factors, if an entity determines that it is not more likely than not that the indefinite-lived intangible asset is impaired, the entity is not required to take further action. If an entity concludes otherwise, then it is required to determine the fair value establishes a framework for using fair value to measure assetsof the indefinite-lived intangible asset and liabilities, and expands disclosures about fair value measurements. The statement applies whenever other statements require or permit assets or liabilities to be measured at fair value. SFAS No. 157 (FASB ASC Topic 820) wasperform the quantitative impairment test. ASU 2012-02 is effective for usannual and interim impairment tests performed for fiscal years beginning January 1, 2008 (January 1, 2009 for nonfinancial assets and liabilities). Adoptionafter September 15, 2012. Early adoption was permitted. We do not expect the adoption of this statement did notASU 2012-02 to have a significant impact on our consolidated financial statements.
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We have exposure to financial market risks, including changes in interest rates and foreign currency exchange rates and other relevant market prices.
Interest Rate Risk
We are currently party to variable rate debt facilities. An increase or decrease in interest rates would affect our interest expense relating to our variable rate debt facilities. At December 31, 2009,2012, there was an aggregate of approximately $784.6$250.0 million of variable rate debt outstanding under these facilities, which excludes $300.0$450.0 million of Cinemark USA, Inc.’s term loan debt that is hedged with the Company’s interest rate swap agreements as discussed below. Based on the interest rates in effect on the variable rate debt outstanding at December 31, 2009,2012, a 100 basis point increase in market interest rates would increase our annual interest expense by approximately $7.8$2.5 million.
All of our current interest rate swap agreements qualify for cash flow hedge accounting. The fair values of the interest rate swaps are recorded on our consolidated balance sheet as an asset or liability with the effective portion of the interest rate swaps’ gains or losses reported as a component of accumulated other comprehensive income (loss)loss and the ineffective portion reported in earnings.
Below is a summary of our interest rate swap agreements with effective datesas of August 13, 2007 and terms of five years each. The interest rate swaps were designated to hedge approximately $500.0 million of our variable rate debt obligations under our senior secured credit facility. Under the terms of the interest rate swap agreements, we pay fixed rates of 4.918% and 4.922% on $375.0 million and $125.0 million, respectively, of variable rate debt and receive interest at a variable rate based on the 3-month LIBOR. The 3-month LIBOR rate on each reset date determines the variable portion of the interest rate-swaps for the three-month period following the reset date. No premium or discount was incurred upon us entering into the interest rate swaps because the pay and receive rates on the interest rate swaps represented prevailing rates for each counterparty at the time the interest rate swaps were consummated.
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Nominal Amount (in millions) | Effective Date | Pay | Receive Rate | Expiration Date | ||||
$175.0 | December 2010 | 1.3975% | 1-month LIBOR | September 2015 | ||||
$175.0 | December 2010 | 1.4000% | 1-month LIBOR | September 2015 | ||||
$100.0 | November 2011 | 1.7150% | 1-month LIBOR | April 2016 | ||||
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$450.0 |
Expected Maturity for the Twelve-Month Periods Ending December 31, | ||||||||||||||||||||||||||||||||||||
(in millions) | Average | |||||||||||||||||||||||||||||||||||
Fair | Interest | |||||||||||||||||||||||||||||||||||
2010 | 2011 | 2012 | 2013 | 2014 | Thereafter | Total | Value | Rate | ||||||||||||||||||||||||||||
Fixed rate(1) | $ | — | $ | — | $ | — | $ | 300.2 | $ | — | $ | 470.0 | $ | 770.2 | $ | 772.4 | 7.6 | % | ||||||||||||||||||
Variable rate | 12.2 | 11.2 | 271.6 | 489.6 | — | $ | — | 784.6 | 741.4 | 2.0 | % | |||||||||||||||||||||||||
Total debt | $ | 12.2 | $ | 11.2 | $ | 271.6 | $ | 789.8 | $ | — | $ | 470.0 | $ | 1,554.8 | $ | 1,513.8 | ||||||||||||||||||||
Expected Maturity for the Twelve-Month Periods Ending December 31, (in millions) | Average Interest Rate | |||||||||||||||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | Thereafter | Total | Fair Value | |||||||||||||||||||||||||||||
Fixed rate(1)(2) | $ | 2.5 | $ | — | $ | — | $ | — | $ | — | $ | 1,520.0 | $ | 1,522.5 | $ | 1,601.2 | 6.3 | % | ||||||||||||||||||
Variable rate | 7.0 | 7.0 | 7.0 | 7.0 | 7.0 | 215.0 | 250.0 | 250.0 | 3.2 | % | ||||||||||||||||||||||||||
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Total debt | $ | 9.5 | $ | 7.0 | $ | 7.0 | $ | 7.0 | $ | 7.0 | $ | 1,735.0 | $ | 1,772.5 | $ | 1,851.2 | ||||||||||||||||||||
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(1) | Includes |
(2) | Includes the 8.625% senior notes in the aggregate principal amount of $470.0 million, excluding the discount of $8.5 million. |
Foreign Currency Exchange Rate Risk
We are also exposed to market risk arising from changes in foreign currency exchange rates as a result of our international operations. Generally, we export from the U.S. certain of the equipment and construction interior finish items and other operating supplies used by our international subsidiaries. A majority of the revenues and operating expenses of our international subsidiaries are transacted in the country’s local currency. Generally accepted accounting principles in the U.S. (“, or U.S. GAAP”)GAAP, require that our subsidiaries use the currency of the primary economic environment in which they operate as their functional currency. If our subsidiaries operate in a highly inflationary economy, U.S. GAAP requires that the U.S. dollar be used as the functional currency for the subsidiary. Currency fluctuations in the countries in which we operate result in us reporting exchange gains (losses) or foreign currency translation adjustments. Based upon our equity ownership in our international subsidiaries as of December 31, 2009,2012, holding everything else constant, a 10% immediate, simultaneous, unfavorable change in all of the foreign currency exchange rates to which we are exposed, would decrease the aggregate net book value of our investments in our international subsidiaries by approximately $39$51 million and would decrease the aggregate net income of our international subsidiaries for the years ended December 31, 20082010, 2011 and 20092012 by approximately $3$8 million, $9 million and $4$9 million, respectively.
The financial statements and supplementary data are listed on the Index on page F-1 of this Form 10-K. Such financial statements and supplementary data are included herein beginning on page F-3.
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Item 9A.Controls and Procedures
As of December 31, 2009, we carried out an evaluation required by the 1934 Act,2012, under the supervision and with the participation of our principal executive officer and principal financial officer, we carried out an evaluation required by the Exchange Act of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the 1934Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2009,2012, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the 1934Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and were effective to provide reasonable assurance that such information is accumulated and communicated to
our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the 1934Exchange Act. The Company’s internal control framework and processes are designed to provide reasonable assurance to management and the board of directors regarding the reliability of financial reporting and the preparation of the Company’s consolidated financial statements in accordance with the accounting principles generally accepted in the United States of America.U.S. Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 20092012 based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, (“COSO”)or COSO, inInternal Control—Control — Integrated Framework. As a result of this assessment, management concluded that, as of December 31, 2009,2012, our internal control over financial reporting was effective.
Certifications of our CEOChief Executive Officer and our CFO,Chief Financial Officer, which are required in accordance with Rule 13a-14 of the Exchange Act, are attached as exhibits to this Annual Report. This “Controls and Procedures” section includes the information concerning the controls evaluation referred to in the certifications, and it should be read in conjunction with the certifications for a more complete understanding of the topics presented.
The Company’s independent auditors,registered public accounting firm, Deloitte & Touche LLP, with direct access to the Company’s board of directors through its Audit Committee, have audited the consolidated financial statements prepared by the Company. Their report on the consolidated financial statements is included in Part II, Item 8. Financial Statements and Supplementary Data. Deloitte & Touche LLP has issued an attestation report on the Company’s internal control over financial reporting. Deloitte & Touche LLP’s report on the Company’s internal control over financial reporting is included herein.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 that occurred during the quarter ended December 31, 20092012 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors or fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
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None.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Cinemark Holdings, Inc.
Plano, Texas
We have audited the internal control over financial reporting of Cinemark Holdings, Inc. and subsidiaries (the “Company”) as of December 31, 2009,2012, based on criteria established inInternal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s report on internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009,2012, based on the criteria established inInternal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 20092012 of the Company and our report dated March 10, 2010February 28, 2013 expressed an unqualified opinion and includes an explanatory paragraph related to the Company changing its method of accounting for noncontrolling interests and retrospectively adjusting all periods presented in the consolidated financial statements on those financial statements and financial statement schedule.
/s/Deloitte & Touche LLP
Dallas, TexasMarch 10, 2010
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Incorporated by reference to the Company’s Proxy Statementproxy statement for its Annual Stockholders Meetingannual stockholders meeting (under the headings “Election of Directors”, “Section 16(a) Beneficial Ownership Reporting Compliance”, “Corporate Governance” and “Executive Officers”) to be held on May 13, 201023, 2013 and to be filed with the Securities and Exchange CommissionSEC within 120 days after December 31, 2009.
Incorporated by reference to the Company’s Proxy Statementproxy statement for its Annual Stockholders Meetingannual stockholders meeting (under the heading “Executive Compensation”) to be held on May 13, 201023, 2013 and to be filed with the Securities and Exchange CommissionSEC within 120 days after December 31, 2009.
Incorporated by reference to the Company’s Proxy Statementproxy statement for its Annual Stockholders Meetingannual stockholders meeting (under the headings “Security Ownership of Certain Beneficial Owners and Management”) to be held on May 13, 201023, 2013 and to be filed with the Securities and Exchange CommissionSEC within 120 days after December 31, 2009.
Incorporated by reference to the Company’s Proxy Statementproxy statement for its Annual Stockholders Meetingannual stockholders meeting (under the heading “Certain Relationships and Related Party Transactions” and “Corporate Governance”) to be held on May 13, 201023, 2013 and to be filed with the Securities and Exchange CommissionSEC within 120 days after December 31, 2009.
Incorporated by reference to the Company’s Proxy Statementproxy statement for its Annual Stockholders Meetingannual stockholders meeting (under the heading “Board Committees — Audit Committee — Fees Paid to Independent Registered Public Accounting Firm”) to be held on May 13, 201023, 2013 and to be filed with the Securities and Exchange CommissionSEC within 120 days after December 31, 2009.
PART IV
(a)Documents Filed as Part of this Report
1. | The financial statement schedules and related data listed in the accompanying Index beginning on page F-1 are filed as a part of this report. |
2. | The exhibits listed in the accompanying Index beginning on page E-1 are filed as a part of this report. |
(b)Exhibits
See the accompanying Index beginning on page E-1.
(c)Financial Statement Schedules
Schedule I –— Condensed Financial Information of Registrant beginning on page F-42.
All schedules not identified above have been omitted because they are not required, are not applicable or the information is included in the consolidated financial statements or notes contained in this report.
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Dated: | CINEMARK HOLDINGS, INC. | ||||
BY: | /s/ Tim Warner | ||||
Tim Warner | |||||
Chief Executive Officer | |||||
BY: | |||||
/s/ Robert Copple | |||||
Robert Copple | |||||
Chief Financial Officer and Principal Accounting Officer | |||||
POWER OF ATTORNEY
Each person whose signature appears below hereby severally constitutes and appoints Alan W. StockTim Warner and Robert Copple his true and lawful attorney-in-fact and agent, each with the power of substitution and resubstitution, for him in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and to file the same, with accompanying exhibits and other related documents, with the Securities and Exchange Commission, and ratify and confirm all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue of said appointment.
Pursuant to the requirements of the Securities Exchange Act, of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name | Title | Date | ||||
/s/ Lee Roy Mitchell Lee Roy Mitchell | Chairman of the Board of Directors and Director | |||||
/s/ Tim Warner Tim Warner | Chief Executive Officer (principal executive officer) | February 28, 2013 | ||||
/s/ Robert Copple Robert Copple | Executive Vice President; Treasurer and Chief Financial Officer (principal financial and accounting officer) | |||||
/s/ Benjamin D. Chereskin Benjamin D. Chereskin | Director | |||||
/s/ Vahe A. Dombalagian Vahe A. Dombalagian | Director | |||||
/s/ Peter R. Ezersky Peter R. Ezersky | Director | |||||
/s/ Enrique F. Senior Enrique F. Senior | Director |
Name | Title | Date | ||||
/s/ Raymond W. Syufy Raymond W. Syufy | Director | |||||
/s/ Carlos M. Sepulveda Carlos M. Sepulveda | Director | |||||
/s/ Roger T. Staubach Roger T. Staubach | Director | |||||
/s/ Donald G. Soderquist Donald G. Soderquist | Director | |||||
/s/ Steven Rosenberg Steven Rosenberg | Director | |||||
February 28, 2013 |
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No annual report or proxy material has been sent to our stockholders. An annual report and proxy material may be sent to our stockholders subsequent to the filing of this Form 10-K. We shall furnish to the Securities and Exchange CommissionSEC copies of any annual report or proxy material that is sent to our stockholders.
Page | |||||||
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS: | |||||||
F-2 | |||||||
F-3 | |||||||
F-4 | |||||||
F-5 | |||||||
Consolidated Statements of Equity for the Years Ended December 31, 2010, 2011 and 2012 | F-6 | ||||||
F-7 | |||||||
F-8 | |||||||
F-1
To the Board of Directors of
Cinemark Holdings, Inc.
Plano, Texas
We have audited the accompanying consolidated balance sheets of Cinemark Holdings, Inc. and subsidiaries (the “Company”) as of December 31, 20082011 and 2009,2012, and the related consolidated statements of operations, stockholders’ equity andincome, comprehensive income, (loss),equity, and cash flows for each of the three years in the period ended December 31, 2009.2012. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Cinemark Holdings, Inc. and subsidiaries as of December 31, 20082011 and 2009,2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009,2012, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2009,2012, based on the criteria established inInternal Control—Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 10, 2010February 28, 2013 expressed an unqualified opinion on the Company’s internal control over financial reporting.
/s/s/ Deloitte & Touche LLP
Dallas, TexasMarch 10, 2010
F-2
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, | December 31, | |||||||
2008 | 2009 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 349,603 | $ | 437,936 | ||||
Inventories | 8,024 | 9,854 | ||||||
Accounts receivable | 24,688 | 33,110 | ||||||
Income tax receivable | 8,948 | 13,025 | ||||||
Deferred tax asset | 2,799 | 3,321 | ||||||
Prepaid expenses and other | 9,319 | 10,051 | ||||||
Total current assets | 403,381 | 507,297 | ||||||
Theatre properties and equipment | ||||||||
Land | 96,718 | 94,879 | ||||||
Buildings | 396,028 | 394,654 | ||||||
Property under capital lease | 184,248 | 204,881 | ||||||
Theatre furniture and equipment | 546,466 | 639,538 | ||||||
Leasehold interests and improvements | 541,140 | 602,583 | ||||||
Total | 1,764,600 | 1,936,535 | ||||||
Less accumulated depreciation and amortization | 556,317 | 716,947 | ||||||
Theatre properties and equipment, net | 1,208,283 | 1,219,588 | ||||||
Other assets | ||||||||
Goodwill | 1,039,818 | 1,116,302 | ||||||
Intangible assets — net | 341,768 | 342,998 | ||||||
Investment in NCM | 19,141 | 34,232 | ||||||
Investments in and advances to affiliates | 4,284 | 3,529 | ||||||
Deferred charges and other assets — net | 49,033 | 52,502 | ||||||
Total other assets | 1,454,044 | 1,549,563 | ||||||
Total assets | $ | 3,065,708 | $ | 3,276,448 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities | ||||||||
Current portion of long-term debt | $ | 12,450 | $ | 12,227 | ||||
Current portion of capital lease obligations | 5,532 | 7,340 | ||||||
Current liability for uncertain tax positions | 10,775 | 13,229 | ||||||
Accounts payable | 54,596 | 53,709 | ||||||
Accrued film rentals | 43,750 | 69,216 | ||||||
Accrued interest | 4,343 | 6,411 | ||||||
Accrued payroll | 23,995 | 29,928 | ||||||
Accrued property taxes | 23,486 | 22,913 | ||||||
Accrued other current liabilities | 52,243 | 65,859 | ||||||
Total current liabilities | 231,170 | 280,832 | ||||||
Long-term liabilities | ||||||||
Long-term debt, less current portion | 1,496,012 | 1,531,478 | ||||||
Capital lease obligations, less current portion | 118,180 | 133,028 | ||||||
Deferred tax liability | 135,417 | 124,823 | ||||||
Liability for uncertain tax positions | 6,748 | 18,432 | ||||||
Deferred lease expenses | 23,371 | 27,698 | ||||||
Deferred revenue — NCM | 189,847 | 203,006 | ||||||
Other long-term liabilities | 40,736 | 42,523 | ||||||
Total long-term liabilities | 2,010,311 | 2,080,988 | ||||||
Commitments and contingencies (see Note 22) | ||||||||
Stockholders’ equity | ||||||||
Cinemark Holdings, Inc.’s stockholders’ equity | ||||||||
Common stock, $0.001 par value: 300,000,000 shares authorized, 108,835,365 shares issued and outstanding at December 31, 2008; and 114,222,523 shares issued and 110,917,105 shares outstanding at December 31, 2009 | 109 | 114 | ||||||
Additional paid-in-capital | 962,353 | 1,011,667 | ||||||
Treasury stock, 3,305,418 common shares at cost | — | (43,895 | ) | |||||
Retained deficit | (78,859 | ) | (60,595 | ) | ||||
Accumulated other comprehensive loss | (72,347 | ) | (7,459 | ) | ||||
Total Cinemark Holdings, Inc.’s stockholders’ equity | 811,256 | 899,832 | ||||||
Noncontrolling interests | 12,971 | 14,796 | ||||||
Total stockholders’ equity | 824,227 | 914,628 | ||||||
Total liabilities and stockholders’ equity | $ | 3,065,708 | $ | 3,276,448 | ||||
December 31, 2011 | December 31, 2012 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 521,408 | $ | 742,664 | ||||
Inventories | 11,284 | 12,571 | ||||||
Accounts receivable | 54,757 | 57,122 | ||||||
Income tax receivable | 17,786 | 7,129 | ||||||
Deferred tax asset | 10,583 | 14,397 | ||||||
Prepaid expenses and other | 11,300 | 11,278 | ||||||
|
|
|
| |||||
Total current assets | 627,118 | 845,161 | ||||||
Theatre properties and equipment | ||||||||
Land | 97,244 | 102,490 | ||||||
Buildings | 397,857 | 398,151 | ||||||
Property under capital lease | 226,522 | 244,022 | ||||||
Theatre furniture and equipment | 677,422 | 748,756 | ||||||
Leasehold interests and improvements | 704,882 | 790,710 | ||||||
|
|
|
| |||||
Total | 2,103,927 | 2,284,129 | ||||||
Less accumulated depreciation and amortization | 865,077 | 979,171 | ||||||
|
|
|
| |||||
Theatre properties and equipment, net | 1,238,850 | 1,304,958 | ||||||
Other assets | ||||||||
Goodwill | 1,150,637 | 1,150,811 | ||||||
Intangible assets — net | 336,907 | 330,741 | ||||||
Investment in NCM | 72,040 | 78,123 | ||||||
Investment in DCIP | 12,798 | 23,012 | ||||||
Investment in marketable securities — RealD | 9,709 | 13,707 | ||||||
Investments in and advances to affiliates | 1,543 | 1,482 | ||||||
Long-term deferred tax asset | 8,826 | 13,187 | ||||||
Deferred charges and other assets — net | 63,980 | 102,044 | ||||||
|
|
|
| |||||
Total other assets | 1,656,440 | 1,713,107 | ||||||
|
|
|
| |||||
Total assets | $ | 3,522,408 | $ | 3,863,226 | ||||
|
|
|
| |||||
Liabilities and equity | ||||||||
Current liabilities | ||||||||
Current portion of long-term debt | $ | 12,145 | $ | 9,546 | ||||
Current portion of capital lease obligations | 9,639 | 11,064 | ||||||
Income tax payable | 6,506 | 8,891 | ||||||
Current liability for uncertain tax positions | — | 14,900 | ||||||
Accounts payable | 65,861 | 70,833 | ||||||
Accrued film rentals | 64,373 | 65,059 | ||||||
Accrued interest | 6,147 | 4,694 | ||||||
Accrued payroll | 34,270 | 39,443 | ||||||
Accrued property taxes | 24,086 | 24,599 | ||||||
Accrued other current liabilities | 82,000 | 89,175 | ||||||
|
|
|
| |||||
Total current liabilities | 305,027 | 338,204 | ||||||
Long-term liabilities | ||||||||
Long-term debt, less current portion | 1,560,076 | 1,754,464 | ||||||
Capital lease obligations, less current portion | 131,533 | 139,107 | ||||||
Deferred tax liability | 162,449 | 177,960 | ||||||
Liability for uncertain tax positions | 22,411 | 19,575 | ||||||
Deferred lease expenses | 34,466 | 38,297 | ||||||
Deferred revenue — NCM | 236,310 | 241,305 | ||||||
Other long-term liabilities | 46,497 | 59,330 | ||||||
|
|
|
| |||||
Total long-term liabilities | 2,193,742 | 2,430,038 | ||||||
Commitments and contingencies (see Note 22) | ||||||||
Equity | ||||||||
Cinemark Holdings, Inc.’s stockholders’ equity | ||||||||
Common stock, $0.001 par value: 300,000,000 shares authorized; | ||||||||
117,593,329 shares issued and 114,201,737 shares outstanding at December 31, 2011 and 118,502,752 shares issued and 114,949,667 shares outstanding at December 31, 2012 | 118 | 118 | ||||||
Additional paid-in-capital | 1,047,237 | 1,064,016 | ||||||
Treasury stock, 3,391,592 and 3,553,085 common shares at cost at December 31, 2011 and December 31, 2012, respectively | (45,219 | ) | (48,482 | ) | ||||
Retained earnings | 34,423 | 106,111 | ||||||
Accumulated other comprehensive loss | (23,682 | ) | (37,698 | ) | ||||
|
|
|
| |||||
Total Cinemark Holdings, Inc.’s stockholders’ equity | 1,012,877 | 1,084,065 | ||||||
Noncontrolling interests | 10,762 | 10,919 | ||||||
|
|
|
| |||||
Total equity | 1,023,639 | 1,094,984 | ||||||
|
|
|
| |||||
Total liabilities and equity | $ | 3,522,408 | $ | 3,863,226 | ||||
|
|
|
|
The accompanying notes are an integral part of the consolidated financial statements.
F-3
CONSOLIDATED STATEMENTS OF OPERATIONS
INCOME
YEARS ENDED DECEMBER 31, 2007, 20082010, 2011 AND 2009
2012
(In thousands, except per share data)
December 31, | December 31, | December 31, | ||||||||||
2007 | 2008 | 2009 | ||||||||||
Revenues | ||||||||||||
Admissions | $ | 1,087,480 | $ | 1,126,977 | $ | 1,293,378 | ||||||
Concession | 516,509 | 534,836 | 602,880 | |||||||||
Other | 78,852 | 80,474 | 80,242 | |||||||||
Total revenues | 1,682,841 | 1,742,287 | 1,976,500 | |||||||||
Cost of operations | ||||||||||||
Film rentals and advertising | 589,717 | 612,248 | 708,160 | |||||||||
Concession supplies | 81,074 | 86,618 | 91,918 | |||||||||
Salaries and wages | 173,290 | 180,950 | 203,437 | |||||||||
Facility lease expense | 212,730 | 225,595 | 238,779 | |||||||||
Utilities and other | 191,279 | 205,814 | 222,660 | |||||||||
General and administrative expenses | 79,518 | 90,788 | 96,497 | |||||||||
Termination of profit participation agreement | 6,952 | — | — | |||||||||
Depreciation and amortization | 148,781 | 155,326 | 148,264 | |||||||||
Amortization of favorable/unfavorable leases | 2,935 | 2,708 | 1,251 | |||||||||
Impairment of long-lived assets | 86,558 | 113,532 | 11,858 | |||||||||
(Gain) loss on sale of assets and other | (2,953 | ) | 8,488 | 3,202 | ||||||||
Total cost of operations | 1,569,881 | 1,682,067 | 1,726,026 | |||||||||
Operating income | 112,960 | 60,220 | 250,474 | |||||||||
Other income (expense) | ||||||||||||
Interest expense | (145,596 | ) | (116,058 | ) | (102,505 | ) | ||||||
Interest income | 18,263 | 13,265 | 4,909 | |||||||||
Gain on NCM transaction | 210,773 | — | — | |||||||||
Gain on Fandango transaction | 9,205 | — | — | |||||||||
Foreign currency exchange gain | 438 | 986 | 635 | |||||||||
Gain (loss) on early retirement of debt | (13,456 | ) | 1,698 | (27,878 | ) | |||||||
Distributions from NCM | 11,499 | 18,838 | 20,822 | |||||||||
Dividend income | 50 | 49 | 51 | |||||||||
Equity in loss of affiliates | (2,462 | ) | (2,373 | ) | (907 | ) | ||||||
Total other income (expense) | 88,714 | (83,595 | ) | (104,873 | ) | |||||||
Income (loss) before income taxes | 201,674 | (23,375 | ) | 145,601 | ||||||||
Income taxes | 111,962 | 21,055 | 44,845 | |||||||||
Net income (loss) | 89,712 | (44,430 | ) | 100,756 | ||||||||
Less: Net income attributable to noncontrolling interests | 792 | 3,895 | 3,648 | |||||||||
Net income (loss) attributable to Cinemark Holdings, Inc. | $ | 88,920 | $ | (48,325 | ) | $ | 97,108 | |||||
Weighted average shares outstanding | ||||||||||||
Basic | 102,177 | 107,341 | 108,563 | |||||||||
Diluted | 104,720 | 107,341 | 110,255 | |||||||||
Earnings (loss) per share attributable to Cinemark Holdings, Inc.’s common stockholders: | ||||||||||||
Basic | $ | 0.87 | $ | (0.45 | ) | $ | 0.89 | |||||
Diluted | $ | 0.85 | $ | (0.45 | ) | $ | 0.87 | |||||
2010 | 2011 | 2012 | ||||||||||
Revenues | ||||||||||||
Admissions | $ | 1,405,389 | $ | 1,471,627 | $ | 1,580,401 | ||||||
Concession | 642,326 | 696,754 | 771,405 | |||||||||
Other | 93,429 | 111,232 | 121,725 | |||||||||
|
|
|
|
|
| |||||||
Total revenues | 2,141,144 | 2,279,613 | 2,473,531 | |||||||||
Cost of operations | ||||||||||||
Film rentals and advertising | 769,698 | 798,606 | 845,107 | |||||||||
Concession supplies | 97,484 | 112,122 | 123,471 | |||||||||
Salaries and wages | 221,246 | 226,475 | 247,468 | |||||||||
Facility lease expense | 255,717 | 276,278 | 281,615 | |||||||||
Utilities and other | 239,470 | 259,703 | 280,670 | |||||||||
General and administrative expenses | 109,045 | 127,621 | 148,624 | |||||||||
Depreciation and amortization | 143,508 | 154,449 | 147,675 | |||||||||
Impairment of long-lived assets | 12,538 | 7,033 | 3,031 | |||||||||
(Gain) loss on sale of assets and other | (431 | ) | 8,792 | 12,168 | ||||||||
|
|
|
|
|
| |||||||
Total cost of operations | 1,848,275 | 1,971,079 | 2,089,829 | |||||||||
|
|
|
|
|
| |||||||
Operating income | 292,869 | 308,534 | 383,702 | |||||||||
Other income (expense) | ||||||||||||
Interest expense | (112,444 | ) | (123,102 | ) | (123,665 | ) | ||||||
Interest income | 6,105 | 8,108 | 6,373 | |||||||||
Foreign currency exchange gain (loss) | 1,054 | (219 | ) | 2,086 | ||||||||
Loss on early retirement of debt | (3 | ) | (4,945 | ) | (5,599 | ) | ||||||
Distributions from NCM | 23,358 | 24,161 | 20,812 | |||||||||
Dividend income | — | 54 | — | |||||||||
Loss on marketable securities — RealD | — | (12,610 | ) | — | ||||||||
Equity in income (loss) of affiliates | (3,438 | ) | 5,651 | 13,109 | ||||||||
|
|
|
|
|
| |||||||
Total other expense | (85,368 | ) | (102,902 | ) | (86,884 | ) | ||||||
|
|
|
|
|
| |||||||
Income before income taxes | 207,501 | 205,632 | 296,818 | |||||||||
Income taxes | 57,838 | 73,050 | 125,398 | |||||||||
|
|
|
|
|
| |||||||
Net income | 149,663 | 132,582 | 171,420 | |||||||||
Less: Net income attributable to noncontrolling interests | 3,543 | 2,025 | 2,471 | |||||||||
|
|
|
|
|
| |||||||
Net income attributable to Cinemark Holdings, Inc. | $ | 146,120 | $ | 130,557 | $ | 168,949 | ||||||
|
|
|
|
|
| |||||||
Weighted average shares outstanding | ||||||||||||
Basic | 111,565 | 112,736 | 113,216 | |||||||||
|
|
|
|
|
| |||||||
Diluted | 112,151 | 113,224 | 113,824 | |||||||||
|
|
|
|
|
| |||||||
Earnings per share attributable to Cinemark Holdings, Inc.’s common stockholders: | ||||||||||||
Basic | $ | 1.30 | $ | 1.15 | $ | 1.47 | ||||||
|
|
|
|
|
| |||||||
Diluted | $ | 1.29 | $ | 1.14 | $ | 1.47 | ||||||
|
|
|
|
|
|
The accompanying notes are an integral part of the consolidated financial statements.
F-4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 2007, 20082010, 2011 AND 2009
2012
(In thousands)
Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated | Cinemark | Comprehensive Income (Loss) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional | Retained | Other | Holdings, Inc. | Total | Attributable to: | |||||||||||||||||||||||||||||||||||||||||||||
Shares | Shares | Paid-in- | Earnings | Comprehensive | Stockholders’ | Noncontrolling | Stockholders’ | Cinemark | Noncontrolling | |||||||||||||||||||||||||||||||||||||||||||
Issued | Amount | Issued | Amount | Capital | (Deficit) | Income (Loss) | Equity | Interests | Equity | Holdings, Inc. | Interests | Total | ||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2007 | 92,561 | $ | 93 | — | $ | — | $ | 685,433 | $ | (7,692 | ) | $ | 11,463 | $ | 689,297 | $ | 16,613 | $ | 705,910 | |||||||||||||||||||||||||||||||||
Tax adjustment related to the adoption of paragraph 10 of FASB ASC Topic 740 (formerly FIN 48) related to uncertain tax positions | (1,093 | ) | (1,093 | ) | (1,093 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock for initial public offering, net of fees | 13,889 | 14 | 245,835 | 245,849 | 245,849 | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock | 22 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options, net of equity award repurchase | 512 | — | 3,625 | 3,625 | 3,625 | |||||||||||||||||||||||||||||||||||||||||||||||
Share based awards compensation expense | 3,081 | 3,081 | 3,081 | |||||||||||||||||||||||||||||||||||||||||||||||||
Tax benefit related to stock option exercises | 1,353 | 1,353 | 1,353 | |||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid to stockholders | (33,061 | ) | (33,061 | ) | (33,061 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid to noncontrolling interests | — | (1,730 | ) | (1,730 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 88,920 | 88,920 | 792 | 89,712 | 88,920 | 792 | 89,712 | |||||||||||||||||||||||||||||||||||||||||||||
Fair value adjustments on interest rate swap agreements, net of taxes of $7,074 | (11,348 | ) | (11,348 | ) | — | (11,348 | ) | (11,348 | ) | — | (11,348 | ) | ||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | 32,580 | 32,580 | 507 | 33,087 | 32,580 | 507 | 33,087 | |||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2007 | 106,984 | $ | 107 | — | $ | — | $ | 939,327 | $ | 47,074 | $ | 32,695 | $ | 1,019,203 | $ | 16,182 | $ | 1,035,385 | $ | 110,152 | $ | 1,299 | $ | 111,451 | ||||||||||||||||||||||||||||
Issuance of restricted stock, net of restricted stock forfeitures | 385 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | 169 | — | 1,292 | 1,292 | 1,292 | |||||||||||||||||||||||||||||||||||||||||||||||
Share based awards compensation expense | 5,113 | 5,113 | 5,113 | |||||||||||||||||||||||||||||||||||||||||||||||||
Tax benefit related to stock option exercises | 474 | 474 | 474 | |||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares as a result of Central America share exchange | 903 | 1 | 12,948 | 12,949 | (3,245 | ) | 9,704 | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares as a result of Ecuador share exchange | 394 | 1 | 3,199 | 3,200 | (1,574 | ) | 1,626 | |||||||||||||||||||||||||||||||||||||||||||||
Dividends paid to stockholders | (77,534 | ) | (77,534 | ) | (77,534 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Dividends accrued on unvested restricted stock awards | (74 | ) | (74 | ) | (74 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Contribution by noncontrolling interest | — | 585 | 585 | |||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid to noncontrolling interests | — | (1,353 | ) | (1,353 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | (48,325 | ) | (48,325 | ) | 3,895 | (44,430 | ) | (48,325 | ) | 3,895 | (44,430 | ) | ||||||||||||||||||||||||||||||||||||||||
Fair value adjustments on interest rate swap agreements, net of taxes of $2,442 | (22,063 | ) | (22,063 | ) | — | (22,063 | ) | (22,063 | ) | — | (22,063 | ) | ||||||||||||||||||||||||||||||||||||||||
Amortization of accumulated other comprehensive loss on terminated swap agreement | 1,351 | 1,351 | — | 1,351 | 1,351 | — | 1,351 | |||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | (84,330 | ) | (84,330 | ) | (1,519 | ) | (85,849 | ) | (84,330 | ) | (1,519 | ) | (85,849 | ) | ||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2008 | 108,835 | $ | 109 | — | $ | — | $ | 962,353 | $ | (78,859 | ) | $ | (72,347 | ) | $ | 811,256 | $ | 12,971 | $ | 824,227 | $ | (153,367 | ) | $ | 2,376 | $ | (150,991 | ) | ||||||||||||||||||||||||
Issuance of restricted stock, net of restricted stock forfeitures | 479 | — | (30 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Exercise of stock options, net of stock withholdings | 4,908 | 5 | (3,275 | ) | (43,895 | ) | 37,442 | — | — | (6,448 | ) | — | (6,448 | ) | ||||||||||||||||||||||||||||||||||||||
Share based awards compensation expense | — | — | — | — | 4,304 | — | — | 4,304 | — | 4,304 | ||||||||||||||||||||||||||||||||||||||||||
Tax benefit related to stock option exercises | — | — | — | — | 7,545 | — | — | 7,545 | — | 7,545 | ||||||||||||||||||||||||||||||||||||||||||
Dividends paid to stockholders | — | — | — | — | — | (78,643 | ) | — | (78,643 | ) | — | (78,643 | ) | |||||||||||||||||||||||||||||||||||||||
Dividends accrued on unvested restricted stock awards | — | — | — | — | — | (201 | ) | — | (201 | ) | — | (201 | ) | |||||||||||||||||||||||||||||||||||||||
Purchase of noncontrolling interest share of an Argentina subsidiary | — | — | — | — | 23 | — | — | 23 | (117 | ) | (94 | ) | ||||||||||||||||||||||||||||||||||||||||
Dividends paid to noncontrolling interests | — | — | — | — | — | — | — | — | (2,322 | ) | (2,322 | ) | ||||||||||||||||||||||||||||||||||||||||
Comprehensive income: | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 97,108 | 97,108 | 3,648 | 100,756 | 97,108 | 3,648 | 100,756 | ||||||||||||||||||||||||||||||||||||||||
Fair value adjustments on interest rate swap agreements, net of taxes of $2,359 | — | — | — | — | — | — | 3,898 | 3,898 | — | 3,898 | 3,898 | — | 3,898 | |||||||||||||||||||||||||||||||||||||||
Amortization of accumulated other comprehensive loss on terminated swap agreement | — | — | — | — | — | — | 4,633 | 4,633 | — | 4,633 | 4,633 | — | 4,633 | |||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | 56,357 | 56,357 | 616 | 56,973 | 56,357 | 616 | 56,973 | |||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2009 | 114,222 | $ | 114 | (3,305 | ) | $ | (43,895 | ) | $ | 1,011,667 | $ | (60,595 | ) | $ | (7,459 | ) | $ | 899,832 | $ | 14,796 | $ | 914,628 | $ | 161,996 | $ | 4,264 | $ | 166,260 | ||||||||||||||||||||||||
2010 | 2011 | 2012 | ||||||||||
Net income | $ | 149,663 | $ | 132,582 | $ | 171,420 | ||||||
Other comprehensive income (loss), net of tax | ||||||||||||
Unrealized gain (loss) due to fair value adjustments on interest rate swap agreements, net of taxes of $4,339, $3,786 and $557 | 7,170 | (2,830 | ) | 1,020 | ||||||||
Unrealized gain (loss) due to fair value adjustments on available-for-sale securities, net of taxes of $3,425, $8,128 and $1,499 | 5,659 | (13,566 | ) | 2,499 | ||||||||
Amortization of accumulated other comprehensive loss on terminated swap agreement | 4,633 | 4,236 | 2,470 | |||||||||
Foreign currency translation adjustment | 19,432 | (46,280 | ) | (20,232 | ) | |||||||
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Total other comprehensive income (loss), net of tax | 36,894 | (58,440 | ) | (14,243 | ) | |||||||
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Total comprehensive income, net of tax | 186,557 | 74,142 | 157,177 | |||||||||
Comprehensive income attributable to noncontrolling interests | (3,711 | ) | (1,803 | ) | (2,244 | ) | ||||||
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Comprehensive income attributable to Cinemark Holdings, Inc. | $ | 182,846 | $ | 72,339 | $ | 154,933 | ||||||
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The accompanying notes are an integral part of the consolidated financial statements.
F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS
EQUITY
YEARS ENDED DECEMBER 31, 2007, 20082010, 2011 AND 2009
2012
(In thousands)
2007 | 2008 | 2009 | ||||||||||
Operating activities | ||||||||||||
Net income (loss) | $ | 89,712 | $ | (44,430 | ) | $ | 100,756 | |||||
Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||||||||||||
Depreciation | 144,629 | 151,425 | 144,055 | |||||||||
Amortization of intangible and other assets and unfavorable leases | 7,087 | 6,609 | 5,460 | |||||||||
Amortization of long-term prepaid rents | 1,146 | 1,717 | 1,389 | |||||||||
Amortization of debt issue costs | 4,727 | 4,696 | 4,775 | |||||||||
Amortization of deferred revenues, deferred lease incentives and other | (2,508 | ) | (3,735 | ) | (4,810 | ) | ||||||
Amortization of debt (premium) discount | (678 | ) | — | 365 | ||||||||
Amortization of accumulated other comprehensive loss related to interest rate swap agreement | — | 1,351 | 4,633 | |||||||||
Impairment of long-lived assets | 86,558 | 113,532 | 11,858 | |||||||||
Share based awards compensation expense | 3,081 | 5,113 | 4,304 | |||||||||
Gain on NCM transaction | (210,773 | ) | — | — | ||||||||
Gain on Fandango transaction | (9,205 | ) | — | — | ||||||||
(Gain) loss on sale of assets and other | (2,953 | ) | 8,488 | 3,202 | ||||||||
Gain on change in fair value of interest rate swap agreement | — | (5,422 | ) | — | ||||||||
Write-off unamortized debt issue costs and debt premium related to the early retirement of debt | (15,661 | ) | 839 | 6,337 | ||||||||
Accretion of interest on senior discount notes | 41,423 | 40,294 | 8,085 | |||||||||
Deferred lease expenses | 5,979 | 4,350 | 3,960 | |||||||||
Deferred income taxes | (34,614 | ) | (25,975 | ) | (12,614 | ) | ||||||
Equity in loss of affiliates | 2,462 | 2,373 | 907 | |||||||||
Tax benefit related to stock option exercises | 1,353 | 474 | 7,545 | |||||||||
Interest paid on repurchased senior discount notes | (16,592 | ) | (15,186 | ) | (158,349 | ) | ||||||
Increase in deferred revenue related to NCM transaction | 174,001 | — | — | |||||||||
Increase in deferred revenue related to Fandango transaction | 5,000 | — | — | |||||||||
Increase in deferred revenue related to new U.S. beverage agreement | — | — | 6,550 | |||||||||
Distributions from equity investees | — | 644 | 2,699 | |||||||||
Changes in other assets and liabilities | 1,862 | 10,137 | 35,656 | |||||||||
Net cash provided by operating activities | 276,036 | 257,294 | 176,763 | |||||||||
Investing activities | ||||||||||||
Additions to theatre properties and equipment | (146,304 | ) | (106,109 | ) | (124,797 | ) | ||||||
Proceeds from sale of theatre properties and equipment | 37,532 | 2,539 | 2,178 | |||||||||
Increase in escrow deposit due to like-kind exchange | (22,739 | ) | (2,089 | ) | — | |||||||
Return of escrow deposits | — | 24,828 | — | |||||||||
Acquisition of theatres in the U.S. | — | (5,011 | ) | (48,950 | ) | |||||||
Acquisition of theatres in Brazil | — | (5,100 | ) | (9,061 | ) | |||||||
Net proceeds from sale of NCM stock | 214,842 | — | — | |||||||||
Net proceeds from sale of Fandango stock | 11,347 | — | — | |||||||||
Investment in joint venture — DCIP | (1,500 | ) | (4,000 | ) | (2,500 | ) | ||||||
Net cash provided by (used for) investing activities | 93,178 | (94,942 | ) | (183,130 | ) | |||||||
Financing activities | ||||||||||||
Net proceeds from initial public offering | 245,849 | — | — | |||||||||
Proceeds from stock option exercises | 3,625 | 1,292 | 2,524 | |||||||||
Payroll taxes paid as a result of immaculate option exercises | — | — | (8,972 | ) | ||||||||
Dividends paid to stockholders | (33,061 | ) | (77,534 | ) | (78,643 | ) | ||||||
Retirement of senior discount notes | (43,136 | ) | (29,559 | ) | (261,054 | ) | ||||||
Retirement of senior subordinated notes | (332,066 | ) | (3 | ) | — | |||||||
Proceeds from issuance of senior notes | — | — | 458,532 | |||||||||
Repayments of other long-term debt | (19,438 | ) | (10,430 | ) | (12,605 | ) | ||||||
Payments on capital leases | (3,759 | ) | (4,901 | ) | (6,064 | ) | ||||||
Payment of debt issue costs | — | — | (13,003 | ) | ||||||||
Termination of interest rate swap agreement | — | (12,725 | ) | — | ||||||||
Other | (1,729 | ) | (1,231 | ) | (2,416 | ) | ||||||
Net cash provided by (used for) financing activities | (183,715 | ) | (135,091 | ) | 78,299 | |||||||
Effect of exchange rates on cash and cash equivalents | 5,445 | (15,701 | ) | 16,401 | ||||||||
Increase in cash and cash equivalents | 190,944 | 11,560 | 88,333 | |||||||||
Cash and cash equivalents: | ||||||||||||
Beginning of year | 147,099 | 338,043 | 349,603 | |||||||||
End of year | $ | 338,043 | $ | 349,603 | $ | 437,936 | ||||||
Supplemental information (see Note 20) |
Common Stock | Treasury Stock | Additional Paid-in- Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) | Total Cinemark Holdings, Inc.’s Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||
Shares Issued | Amount | Shares Acquired | Amount | |||||||||||||||||||||||||||||||||||||
Balance at January 1, 2010 | 114,222 | $ | 114 | (3,305 | ) | $ | (43,895 | ) | $ | 1,011,667 | $ | (60,595 | ) | $ | (7,459 | ) | $ | 899,832 | $ | 14,796 | $ | 914,628 | ||||||||||||||||||
Issuance of restricted stock | 684 | 1 | — | — | — | — | — | 1 | — | 1 | ||||||||||||||||||||||||||||||
Exercise of stock options, net of stock withholdings | 1,092 | 1 | (35 | ) | (531 | ) | 8,327 | — | — | 7,797 | — | 7,797 | ||||||||||||||||||||||||||||
Restricted stock forfeitures and stock withholdings related to restricted stock that vested during the year ended December 31, 2010 | — | — | (20 | ) | (299 | ) | — | — | — | (299 | ) | — | (299 | ) | ||||||||||||||||||||||||||
Share based awards compensation expense | — | — | — | — | 8,352 | — | — | 8,352 | — | 8,352 | ||||||||||||||||||||||||||||||
Tax benefit related to stock option exercises and share based award vestings | — | — | — | — | 2,680 | — | — | 2,680 | — | 2,680 | ||||||||||||||||||||||||||||||
Dividends paid to stockholders, $0.75 per share | — | — | — | — | — | (84,502 | ) | — | (84,502 | ) | — | (84,502 | ) | |||||||||||||||||||||||||||
Dividends accrued on unvested restricted stock unit awards | — | — | — | — | — | (635 | ) | — | (635 | ) | — | (635 | ) | |||||||||||||||||||||||||||
Dividends paid to noncontrolling interests | — | — | — | — | — | — | — | — | (539 | ) | (539 | ) | ||||||||||||||||||||||||||||
Purchase of noncontrolling interest share of Panama subsidiary | — | — | — | — | (390 | ) | — | — | (390 | ) | (498 | ) | (888 | ) | ||||||||||||||||||||||||||
Colombia share exchange (see Note 9) | 1,113 | 1 | — | — | 6,950 | — | (1,086 | ) | 5,865 | (5,865 | ) | — | ||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 146,120 | — | 146,120 | 3,543 | 149,663 | ||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 36,726 | 36,726 | 168 | 36,894 | ||||||||||||||||||||||||||||||
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Balance at December 31, 2010 | 117,111 | $ | 117 | (3,360 | ) | $ | (44,725 | ) | $ | 1,037,586 | $ | 388 | $ | 28,181 | $ | 1,021,547 | $ | 11,605 | $ | 1,033,152 | ||||||||||||||||||||
Issuance of restricted stock | 424 | 1 | — | — | — | — | — | 1 | — | 1 | ||||||||||||||||||||||||||||||
Exercise of stock options | 58 | — | — | — | 444 | — | — | 444 | — | 444 | ||||||||||||||||||||||||||||||
Restricted stock forfeitures and stock withholdings related to restricted stock that vested during the year ended December 31, 2011 | — | — | (32 | ) | (494 | ) | — | — | — | (494 | ) | — | (494 | ) | ||||||||||||||||||||||||||
Share based awards compensation expense | — | — | — | — | 9,692 | — | — | 9,692 | — | 9,692 | ||||||||||||||||||||||||||||||
Tax benefit related to stock option exercises and share based award vestings | — | — | — | — | 917 | — | — | 917 | — | 917 | ||||||||||||||||||||||||||||||
Dividends paid to stockholders, $0.84 per share | — | — | — | — | — | (95,838 | ) | — | (95,838 | ) | — | (95,838 | ) | |||||||||||||||||||||||||||
Dividends accrued on unvested restricted stock unit awards | — | — | — | — | — | (684 | ) | — | (684 | ) | — | (684 | ) | |||||||||||||||||||||||||||
Dividends paid to noncontrolling interests | — | — | — | — | — | — | — | — | (2,120 | ) | (2,120 | ) | ||||||||||||||||||||||||||||
Purchase of noncontrolling interests’ share of Chile subsidiary | — | — | — | — | (1,402 | ) | — | 485 | (917 | ) | (526 | ) | (1,443 | ) | ||||||||||||||||||||||||||
Write-off of accumulated other comprehensive loss related to cash flow hedges, net of taxes of $723 | — | — | — | — | — | — | (2,037 | ) | (2,037 | ) | — | (2,037 | ) | |||||||||||||||||||||||||||
Reclassification of cumulative unrealized holding losses on marketable securities to earnings due to other-than-temporary impairment, net of taxes of $4,703 | — | — | — | — | — | — | 7,907 | 7,907 | — | 7,907 | ||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 130,557 | — | 130,557 | 2,025 | 132,582 | ||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (58,218 | ) | (58,218 | ) | (222 | ) | (58,440 | ) | ||||||||||||||||||||||||||
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Balance at December 31, 2011 | 117,593 | $ | 118 | (3,392 | ) | $ | (45,219 | ) | $ | 1,047,237 | $ | 34,423 | $ | (23,682 | ) | $ | 1,012,877 | $ | 10,762 | $ | 1,023,639 | |||||||||||||||||||
Issuance of restricted stock, net of restricted stock forfeitures | 654 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Issuance of stock upon vesting of restricted stock units | 196 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Exercise of stock options | 60 | — | — | — | 459 | — | — | 459 | — | 459 | ||||||||||||||||||||||||||||||
Restricted stock forfeitures and stock withholdings related to restricted stock and restricted stock units that vested during the year ended December 31, 2012 | — | — | (161 | ) | (3,263 | ) | — | — | — | (3,263 | ) | — | (3,263 | ) | ||||||||||||||||||||||||||
Share based awards compensation expense | — | — | — | — | 15,070 | — | — | 15,070 | — | 15,070 | ||||||||||||||||||||||||||||||
Tax benefit related to stock option exercises and share based award vestings | — | — | — | — | 1,250 | — | — | 1,250 | — | 1,250 | ||||||||||||||||||||||||||||||
Dividends paid to stockholders, $0.84 per share | — | — | — | — | — | (96,367 | ) | — | (96,367 | ) | — | (96,367 | ) | |||||||||||||||||||||||||||
Dividends accrued on unvested restricted stock unit awards | — | — | — | — | — | (894 | ) | — | (894 | ) | — | (894 | ) | |||||||||||||||||||||||||||
Dividends paid to noncontrolling interests | — | — | — | — | — | — | — | — | (2,087 | ) | (2,087 | ) | ||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 168,949 | — | 168,949 | 2,471 | 171,420 | ||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (14,016 | ) | (14,016 | ) | (227 | ) | (14,243 | ) | ||||||||||||||||||||||||||
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Balance at December 31, 2012 | 118,503 | $ | 118 | (3,553 | ) | $ | (48,482 | ) | $ | 1,064,016 | $ | 106,111 | $ | (37,698 | ) | $ | 1,084,065 | $ | 10,919 | $ | 1,094,984 | |||||||||||||||||||
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The accompanying notes are an integral part of the consolidated financial statements.
F-6
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2010, 2011 AND 2012
(In thousands)
2010 | 2011 | 2012 | ||||||||||
Operating activities | ||||||||||||
Net income | $ | 149,663 | $ | 132,582 | $ | 171,420 | ||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||||
Depreciation | 138,637 | 150,149 | 143,394 | |||||||||
Amortization of intangible and other assets and unfavorable leases | 4,871 | 4,300 | 4,281 | |||||||||
Amortization of long-term prepaid rents | 1,786 | 2,657 | 2,673 | |||||||||
Amortization of debt issue costs | 4,716 | 4,744 | 4,792 | |||||||||
Amortization of deferred revenues, deferred lease incentives and other | (6,968 | ) | (9,629 | ) | (9,343 | ) | ||||||
Amortization of bond discount | 780 | 853 | 933 | |||||||||
Amortization of accumulated other comprehensive loss related to terminated interest rate swap agreement | 4,633 | 4,236 | 2,470 | |||||||||
Fair value change in interest rate swap agreements not designated as hedges | — | (1,130 | ) | (808 | ) | |||||||
Impairment of long-lived assets | 12,538 | 7,033 | 3,031 | |||||||||
Share based awards compensation expense | 8,352 | 9,692 | 15,070 | |||||||||
(Gain) loss on sale of assets and other | (2,464 | ) | 7,754 | 12,168 | ||||||||
Loss on contribution and sale of digital projection systems to DCIP | 2,033 | 1,038 | — | |||||||||
Loss on marketable securities — RealD | — | 12,610 | — | |||||||||
Write-off of unamortized debt issue costs and accumulated other comprehensive loss related to early retirement of debt | — | 4,945 | — | |||||||||
Deferred lease expenses | 3,940 | 4,155 | 4,104 | |||||||||
Deferred income tax expenses | (8,603 | ) | 21,676 | 5,280 | ||||||||
Equity in (income) loss of affiliates | 3,438 | (5,651 | ) | (13,109 | ) | |||||||
Tax benefit related to stock option exercises and restricted stock vestings | 2,680 | 917 | — | |||||||||
Distributions from equity investees | 5,486 | 7,125 | 7,470 | |||||||||
Changes in other assets and liabilities | (60,767 | ) | 31,145 | 41,379 | ||||||||
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Net cash provided by operating activities | 264,751 | 391,201 | 395,205 | |||||||||
Investing activities | ||||||||||||
Additions to theatre properties and equipment | (156,102 | ) | (184,819 | ) | (220,727 | ) | ||||||
Proceeds from sale of theatre properties and equipment and other | 21,791 | 6,230 | 1,976 | |||||||||
Acquisition of theatres in the U.S. | — | — | (14,080 | ) | ||||||||
Acquisition of theatres in Argentina | — | (66,958 | ) | — | ||||||||
Investment in DCIP and other | (1,756 | ) | (1,520 | ) | (1,480 | ) | ||||||
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Net cash used for investing activities | (136,067 | ) | (247,067 | ) | (234,311 | ) | ||||||
Financing activities | ||||||||||||
Proceeds from stock option exercises | 7,914 | 444 | 459 | |||||||||
Payroll taxes paid as a result of noncash stock option exercises and restricted stock withholdings | (416 | ) | (494 | ) | (3,263 | ) | ||||||
Dividends paid to stockholders | (84,502 | ) | (95,838 | ) | (96,367 | ) | ||||||
Retirement of senior subordinated notes | (181 | ) | — | — | ||||||||
Proceeds from issuance of notes | — | 200,000 | 400,000 | |||||||||
Payment of debt issue costs | (8,858 | ) | (4,539 | ) | (18,453 | ) | ||||||
Proceeds from amended senior secured credit facility | — | — | 700,000 | |||||||||
Repayment of former senior secured credit facility | — | — | (898,955 | ) | ||||||||
Repayments of other long-term debt | (11,853 | ) | (166,898 | ) | (9,711 | ) | ||||||
Payments on capital leases | (7,327 | ) | (7,526 | ) | (9,451 | ) | ||||||
Purchases of non-controlling interests | (888 | ) | (1,443 | ) | — | |||||||
Other | (539 | ) | (2,120 | ) | (835 | ) | ||||||
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Net cash provided by (used for) financing activities | (106,650 | ) | (78,414 | ) | 63,424 | |||||||
Effect of exchange rates on cash and cash equivalents | 5,027 | (9,309 | ) | (3,062 | ) | |||||||
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Increase in cash and cash equivalents | 27,061 | 56,411 | 221,256 | |||||||||
Cash and cash equivalents: | ||||||||||||
Beginning of year | 437,936 | 464,997 | 521,408 | |||||||||
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End of year | $ | 464,997 | $ | 521,408 | $ | 742,664 | ||||||
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Supplemental information (see Note 20)
The accompanying notes are an integral part of the consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Business— Cinemark Holdings, Inc. and subsidiaries (the “Company”) is a leader in the second largest motion picture exhibitor in the world in terms of both attendance and the number of screens in operation,exhibition industry, with theatres in the United States (“U.S.”), Canada, Brazil, Mexico, Argentina, Chile, Colombia, Argentina,Peru, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala. The Company also managed additional theatres in the U.S., Brazil, and Colombia during the year ended December 31, 2009.
Principles of Consolidation— The consolidated financial statements include the accounts of Cinemark Holdings, Inc., its subsidiaries and its affiliates. Majority-owned subsidiaries that the Company has control of are consolidated while those affiliates of which the Company owns between 20% and 50% and does not control are accounted for under the equity method. Those affiliates of which the Company owns less than 20% are generally accounted for under the cost method, unless the Company is deemed to have the ability to exercise significant influence over the affiliate, in which case the Company would account for its investment under the equity method. The results of these subsidiaries and affiliates are included in the consolidated financial statements effective with their formation or from their dates of acquisition. Intercompany balances and transactions are eliminated in consolidation.
Cash and Cash Equivalents— Cash and cash equivalents consist of operating funds held in financial institutions, petty cash held by the theatres and highly liquid investments with remainingoriginal maturities of three months or less when purchased. At December 31, 2009, cashCash investments were primarily in money market funds or other similar funds.
Accounts Receivable— Accounts receivable, which are recorded at net realizable value, consists primarily of receivables related to screen advertising, receivables related to discounted tickets sold to retail locations, rebates earned from the Company’s beverage and other concession vendors and value-added and other tax receivables.
Inventories— Concession and theatre supplies inventories are stated at the lower of cost (first-in, first-out method) or market.
Theatre Properties and Equipment— Theatre properties and equipment are stated at cost less accumulated depreciation and amortization. Additions to theatre properties and equipment include the capitalization of $618, $270 and $0 of interest incurred during the development and construction of theatres during the years ended December 31, 2007, 2008 and 2009, respectively. Depreciation is provided using the straight-line method over the estimated useful lives of the assets as follows:
Category | Useful Life | |
Buildings on owned land | 40 years | |
Buildings on leased land | Lesser of lease term or useful life | |
Land and buildings under capital lease | Lesser of lease term or useful life | |
Theatre furniture and equipment | 5 to 15 years | |
Leasehold improvements | Lesser of lease term or useful life |
The Company reviews long-lived assets for impairment indicators on a quarterly basis or whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable.
The Company considers actual theatre level cash flows, future years budgeted theatre level cash flows, theatre property and equipment carrying values, amortizing intangible asset carrying values, the age of a recently built theatre, competitive theatres in the marketplace, changes in foreign currency exchange rates, the impact of recent ticket price changes, available lease renewal options and other factors considered relevant in its assessment of impairment of individual theatre assets. Long-lived assets are evaluated for impairment on an individual theatre basis, which the Company believes is the lowest applicable level for which there are identifiable cash flows. The impairment evaluation is based on the
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
estimated undiscounted cash flows from continuing use through the remainder of the theatre’s useful life. The remainder of the theatre’s useful life correlates with the available remaining lease period, which includes the probability of renewal periods for leased properties and a periodfor fee owned properties, the lesser of twenty years for fee owned properties.or the building’s remaining useful life. If the estimated undiscounted cash flows are not sufficient to recover a long-lived asset’s carrying value, the Company then compares the carrying value of the asset group (theatre) with its estimated fair value. When estimated fair value is determined to be lower than the carrying value of the asset group (theatre), the asset group (theatre) is written down to its estimated fair value. Significant judgment is involved in estimating cash flows and fair value. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820-10-35, are based on historical and projected operating performance, recent market transactions and current industry trading
F-7
Goodwill and Other Intangible Assets— Goodwill is the excess of cost over fair value of theatre businesses acquired. Goodwill is evaluated for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying value of goodwill might exceed its estimated fair value.may not be fully recoverable. The Company evaluates goodwill for impairment at the reporting unit level and has allocated goodwill to the reporting unit based on an estimate of its relative fair value. Management considers the reporting unit to be each of its sixteen regions in the U.S. and each of its eight international countries (Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala are considered one reporting unit). Goodwill impairment is evaluated using a two-step approach requiring the Company to compute the fair value of a reporting unit and compare it with its carrying value. If the carrying value of the reporting unit exceeds its estimated fair value, a second step is performed to measure the potential goodwill impairment. Significant judgment is involved in estimating cash flows and fair value. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, are based on historical and projected operating performance, recent market transactions, and current industry trading multiples. Fair value is determined based on a multiple of cash flows, which was eightsix and a half times for the goodwill impairment evaluationsevaluation performed during 20072010 and sixseven and a half times for the evaluations performed during 20082011 and 2009. The Company reduced the multiple it used to determine fair value during the fourth quarter of 2008 due to the dramatic decline in estimated market values that resulted from a significant decrease in its stock price and the declines in the market capitalizations of the Company and its competitors that occurred during the fourth quarter of 2008. Prior to January 1, 2008, the Company considered its theatres reporting units for purposes of evaluating goodwill for impairment. Changes in the organization, including changes in the structure of the Company’s executive management team, the Company’s initial public offering of common stock, the resulting changes in the level at which the Company’s management team evaluates the business on a regular basis, and the Century Acquisition that increased the size of the Company’s theatre base by approximately 25%, led the Company to conclude that its U.S. regions and international countries are now more reflective of how it manages and operates its business. Accordingly, the Company’s U.S. regions and international countries represent the appropriate reporting units for purposes of evaluating goodwill for impairment. Consequently, effective January 1, 2008, the Company changed the reporting unit to sixteen regions in the U.S. and each of its eight countries internationally (Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala are considered one reporting unit) from approximately four hundred theatres. The goodwill impairment test performed during December 2007 that resulted in the recording of impairment charges during the year ended December 31, 2007 reflected the final calculation utilizing theatres as reporting units. See Notes 11 and 12.
Indefinite-lived tradename intangible assets are tested for impairment at least annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value may not be fully recoverable. The Company estimates the fair value of its tradenames by applying an estimated market royalty rate that could be charged for the use of the Company’s tradename to forecasted future revenues, with an adjustment for the present value of such royalties. If the estimated fair value is less than the carrying value, the tradename intangible asset is written down to theits estimated fair value.
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
The table below summarizes the Company’s intangible assets and the amortization method used for each type of intangible asset:
Intangible Asset | Amortization Method | |
Goodwill | Indefinite-lived | |
Tradename | Indefinite-lived | |
Vendor contracts | Straight-line method over the terms of the underlying contracts. The remaining terms of the underlying contracts range from | |
Favorable/unfavorable leases | Based on the pattern in which the economic benefits are realized over the terms of the lease agreements. The remaining terms of the lease agreements range from 1 to | |
Other intangible assets | Straight-line method over the terms of the underlying |
F-8
Lease Accounting— The Company evaluates each lease for classification as either a capital lease or an operating lease. If substantially all of the benefits and risks of ownership have been transferred to the lessee, the Company records the lease as a capital lease at its inception. The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. If the lease agreement calls for a scheduled rent increase during the lease term, the Company recognizes the lease expense on a straight-line basis over the lease term as deferred lease expense.term. The Company determines the straight-line rent expense impact of an operating lease upon inception of the lease. The landlord is typically responsible for constructing a theatre using guidelines and specifications agreed to by the Company and assumes substantially all of the risk of construction. If the Company concludes that it has substantially all of the construction period risks, it records a construction asset and related liability for the amount of total project costs incurred during the construction period. At the end of the construction period, the Company determines if the transaction qualifies for sale-leaseback accounting treatment in regards to lease classification.
Deferred Revenues— Advances collected on long-term screen advertising, concession and other contracts are recorded as deferred revenues. In accordance with the terms of the agreements, the advances collected on such contracts are recognized during the period in which the advances are earned, which may differ from the period in which the advances are collected. Revenues related to these advances are recognized on either a straight-line basis over the term of the contracts or as such revenues are earned in accordance with the terms of the contracts.
Casualty Insurance Reserves —The Company is self-insured for general liability claims upsubject to an annual cap. For the year ended December 31, 2012, claims were capped at $250 per occurrence with an annual cap of approximately $2,650 per policy year and$2,650. The Company is also self-insured for medical claims up to $100$125 per occurrence. The
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Company is fully insured for workers compensation claims. As of December 31, 20082011 and 2009,2012, the Company maintainedCompany’s insurance reserves of $8,116were $7,600 and $8,022, respectively.
Revenue and Expense Recognition— Revenues are recognized when admissions and concession sales are received at the box office. Other revenues primarily consist of screen advertising. Screen advertising revenues are recognized over the period that the related advertising is delivered on-screen or in-theatre. The Company records proceeds from the sale of gift cards and other advanced sale-type certificates in current liabilities and recognizes admissions andor concession revenue when a holder redeems the card or certificate. The Company recognizes unredeemed gift cards and other advanced sale-type certificates as revenue only after such a period of time indicates, based on historical experience, the likelihood of redemption is remote, and based on applicable laws and regulations. In evaluating the likelihood of redemption, the Company considers the period outstanding, the level and frequency of activity, and the period of inactivity. As of December 31, 2011 and 2012, the Company’s liabilities for advanced sale-type certificates were approximately $41,611 and $46,063, respectively, and are reflected in accrued other current liabilities on the consolidated balance sheets. The Company recognized unredeemed gift cards and other advanceadvanced sale-type certificates as revenues in the amount of $5,516, $7,629$7,073, $7,846 and $7,162$9,093 during the years ended December 31, 2007, 20082010, 2011 and 2009,2012, respectively.
Film rental costs are accrued based on the applicable box office receipts and either the mutually agreed upon firm terms or a sliding scale formula, which are generally established prior to the opening of the film, or estimates of the final mutually agreed upon settlement, which occurs at the conclusion of the film run, subject to the film licensing arrangement. Under a firm terms formula, the Company pays the distributor a mutually agreed upon specified percentage of box office receipts, which reflects either a mutually agreed upon aggregate rate for the life of the film or rates that decline over the term of the run. Under thea sliding scale formula, film rental is paid as a percentage of box office revenues using a pre-determined matrix based upon box office performance of the film. The settlement process allows for negotiation of film rental fees upon the conclusion of the film run based upon how the film performs. Estimates are based on the expected success of a film. The success of a film can typically be determined a few weeks after a film is released when initial box office performance of the film is known. Accordingly, final settlements typically approximate estimates since box office receipts are known at the time the estimate is made and the expected success of a film can typically be estimated early in the film’s run. If actual settlements are different than those estimates, film rental costs are adjusted at that time. Advertising costs are expensed as incurred and we expensed $17,252, $16,839 and $15,104, respectively for the years ended December 31, 2007, 2008 and 2009.
Accounting for Share Based Awards— The Company measures the cost of employee services received in exchange for an award of equity instruments based on the fair value of the award on the date of the grant. The grant date fair value
F-9
Income Taxes —The Company uses an asset and liability approach to financial accounting and reporting for income taxes. Deferred income taxes are provided when tax laws and financial accounting standards differ with respect to the amount of income for a year and the basis of assets and liabilities. A valuation allowance is recorded to reduce the carrying amount of deferred tax assets unless it is more likely than not that such assets will be realized. Income taxes are provided on unremitted earnings from foreign subsidiaries unless such earnings are expected to be indefinitely reinvested. Income taxes have also been provided for potential tax assessments. The related tax accruals are recorded in accordance with FASB Interpretation No. 48,“Accounting for Uncertainty in Income Taxes — an interpretation of SFAS No. 109”(“FIN 48” or FASB ASC Topic 740,Income Taxes[“FASB ASC Topic 740"]), which the Company adopted on January 1, 2007. FIN 48 (FASB ASC Topic 740) clarifies the accounting and reporting for income taxes recognized in accordance with SFAS No. 109,“Accounting for Income Taxes”(FASB ASC Topic 740), and the recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The evaluation of aan uncertain tax position is a two-step process. The first step is recognition: The Company determines whether it is more likely than not that a tax position will be sustained upon examination, including
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the Company should presume that the position would be examined by the appropriate taxing authority that would have full knowledge of all relevant information. The second step is measurement: A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements result in (1) a change in a liability for income taxes payable or (2) a change in an income tax refund receivable, a deferred tax asset or a deferred tax liability or both (1) and (2). The Company accrues interest and penalties on its uncertain tax positions.
Segments— As ofFor the years ended December 31, 2009,2010, 2011 and 2012, the Company managed its business under two reportable operating segments, U.S. markets and international markets, in accordance with FASB ASC Topic 280,Segment Reporting.markets. See Note 23.
Use of Estimates— The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The Company’s consolidated financial statements include amounts that are based on management’s best estimates and judgments. Actual results could differ from those estimates.
Foreign Currency Translations— The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at current exchange rates as of the balance sheet date, and revenues and expenses are translated at average monthly exchange rates. The resulting translation adjustments are recorded in the consolidated balance sheetsheets in accumulated other comprehensive income (loss).loss. The Company recognizes foreign currency transaction gains and losses when changes in exchange rates impact transactions, other than intercompany transactions of a long-term investment nature, that have been denominated in a currency other than the functional currency.
F-10
Beginning balance — January 1, 2008 | $ | (18,422 | ) | |
Total gains (losses): | ||||
Included in earnings (as a component of interest expense) | 5,422 | |||
Included in accumulated other comprehensive loss | (24,506 | ) | ||
Settlements | 12,725 | |||
Ending balance — December 31, 2008 | $ | (24,781 | ) | |
Total gains (losses): | ||||
Included in accumulated other comprehensive loss | 6,257 | |||
Ending balance — December 31, 2009 | $ | (18,524 | ) | |
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Acquisitions— The Company accounts for acquisitions under the acquisition method of accounting. The acquisition method requires that the acquired assets and liabilities, including contingencies, be recorded at fair value determined on the acquisition date and changes thereafter reflected in income. For significant acquisitions, the Company obtains independent third party valuation studies for certain of the assets acquired and liabilities assumed to assist the Company in determining fair value. The estimation of the fair values of the assets acquired and liabilities assumed involves a number of estimates and assumptions that could differ materially from the actual amounts recorded.realized. The Company provides the assumptions, including both quantitative and qualitative information, about the specified asset or liability to the third party valuation firms. The Company primarily utilizes the third parties to accumulate comparative data from multiple sources and assemble a report that summarizes the information obtained. The Company then uses the information to determinerecord estimated fair value. The third party valuation firms are supervised by Company personnel who are knowledgeable about valuations and fair value. The Company evaluates the appropriateness of the assumptions and valuation methodologymethodologies utilized by the third party valuation firm.
2. | NEW ACCOUNTING PRONOUNCEMENTS |
In September 2006,July 2012, the FASB issued SFAS No. 157 (FASB Accounting Standards Codification [“ASC”]Update 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment, an amendment to FASB ASC Topic 820),“Fair Value Measurements.”350, Intangibles — Goodwill and OtherAmong other requirements, this statement defines (“ASU 2012-02”). The update provides an entity with the option first to assess qualitative factors in determining whether it is more likely than not that the indefinite-lived intangible asset is impaired. After assessing the qualitative factors, if an entity determines that it is not more likely than not that the indefinite-lived intangible asset is impaired, the entity is not required to take further action. If an entity concludes otherwise, then it is required to determine the fair value establishes a framework for using fair value to measure assetsof the indefinite-lived intangible asset and liabilities, and expands disclosures about fair value measurements. The statement applies whenever other statements require or permit assets or liabilities to be measured at fair value. SFAS No. 157 (FASB ASC Topic 820) wasperform the quantitative impairment test. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The Company does not expect the Company beginning January 1, 2008 (January 1, 2009 for nonfinancial assets and liabilities). Adoptionadoption of this statement did notASU 2012-02 to have a significant impact on the Company’sits consolidated financial statements.
F-11
3. | EARNINGS PER SHARE |
F-12
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and 2009, basic earnings (loss) per share was the same under both the two class method and the treasury stock method. For years ended December 31, 2007 and December 31, 2008, diluted earnings (loss) per share was the same under both the two class method and the treasury stock method. For the year ended December 31, 2009, diluted earnings per share under the two class method was $0.87 and under the treasury stock method was $0.88. data
The following table presents computations of basic and diluted earnings (loss) per share under the two class method:
F-13
Year ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
Numerator: | ||||||||||||
Net income attributable to Cinemark Holdings, Inc. | $ | 146,120 | $ | 130,557 | $ | 168,949 | ||||||
Earnings allocated to participating share-based awards(1) | (1,399 | ) | (1,458 | ) | (2,061 | ) | ||||||
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Net income attributable to common stockholders | $ | 144,721 | $ | 129,099 | $ | 166,888 | ||||||
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Denominator (shares in thousands): | ||||||||||||
Basic weighted average common stock outstanding | 111,565 | 112,736 | 113,216 | |||||||||
Common equivalent shares for stock options | 213 | 41 | 36 | |||||||||
Common equivalent shares for restricted stock units | 373 | 447 | 572 | |||||||||
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Diluted | 112,151 | 113,224 | 113,824 | |||||||||
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Basic earnings per share attributable to common stockholders | $ | 1.30 | $ | 1.15 | $ | 1.47 | ||||||
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Diluted earnings per share attributable to common stockholders | $ | 1.29 | $ | 1.14 | $ | 1.47 | ||||||
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Year ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Numerator: | ||||||||||||
Net income (loss) attributable to Cinemark Holdings, Inc. | $ | 88,920 | $ | (48,325 | ) | $ | 97,108 | |||||
(Earnings) loss allocated to participating share-based awards(1) | (3 | ) | 129 | (635 | ) | |||||||
Net income (loss) attributable to common stockholders | $ | 88,917 | $ | (48,196 | ) | $ | 96,473 | |||||
Denominator(shares in thousands): | ||||||||||||
Basic weighted average common stock outstanding | 102,177 | 107,341 | 108,563 | |||||||||
Common equivalent shares for stock options(2) | 2,543 | — | 1,594 | |||||||||
Common equivalent shares for restricted stock units(2) | — | — | 98 | |||||||||
Diluted | 104,720 | 107,341 | 110,255 | |||||||||
Basic earnings (loss) per share attributable to common stockholders | $ | 0.87 | $ | (0.45 | ) | $ | 0.89 | |||||
Diluted earnings (loss) per share attributable to common stockholders | $ | 0.85 | $ | (0.45 | ) | $ | 0.87 | |||||
(1) | For the years ended December 31, | |
4. | DIVIDENDS |
In August 2007, the Company initiated a quarterly dividend policy.policy, which was amended in November 2010. Below is a summary of dividends declared for the Company’s dividend history since initiation of this policy:
Amount per | ||||||||||||||||
Date | Date of | Date | Common | Total | ||||||||||||
Declared | Record | Paid | Share (1) | Dividends (2) | ||||||||||||
08/13/07 | 09/04/07 | 09/18/07 | $ | 0.13 | $ | 13,840 | ||||||||||
11/12/07 | 12/03/07 | 12/18/07 | $ | 0.18 | $ | 19,221 | ||||||||||
Total - 2007 | $ | 33,061 | ||||||||||||||
02/26/08 | 03/06/08 | 03/14/08 | $ | 0.18 | $ | 19,270 | ||||||||||
05/09/08 | 05/30/08 | 06/12/08 | $ | 0.18 | $ | 19,353 | ||||||||||
08/07/08 | 08/25/08 | 09/12/08 | $ | 0.18 | $ | 19,370 | ||||||||||
11/06/08 | 11/26/08 | 12/11/08 | $ | 0.18 | $ | 19,615 | ||||||||||
Total - 2008 | $ | 77,608 | ||||||||||||||
02/13/09 | 03/05/09 | 03/20/09 | $ | 0.18 | $ | 19,619 | ||||||||||
05/13/09 | 06/02/09 | 06/18/09 | $ | 0.18 | $ | 19,734 | ||||||||||
07/29/09 | 08/17/09 | 09/01/09 | $ | 0.18 | $ | 19,739 | ||||||||||
11/04/09 | 11/25/09 | 12/10/09 | $ | 0.18 | $ | 19,752 | ||||||||||
Total - 2009 | $ | 78,844 | ||||||||||||||
Date Declared | Date of Record | Date Paid | Amount per Common | Total Dividends (1) | ||||
02/25/10 | 03/05/10 | 03/19/10 | $0.18 | $20,104 | ||||
05/13/10 | 06/04/10 | 06/18/10 | $0.18 | 20,313 | ||||
07/29/10 | 08/17/10 | 09/01/10 | $0.18 | 20,519 | ||||
11/02/10 | 11/22/10 | 12/07/10 | $0.21 | 24,201 | ||||
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Total — Year ended December 31, 2010 | $85,137 | |||||||
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02/24/11 | 03/04/11 | 03/16/11 | $0.21 | $24,056 | ||||
05/12/11 | 06/06/11 | 06/17/11 | $0.21 | 24,152 | ||||
08/04/11 | 08/17/11 | 09/01/11 | $0.21 | 24,157 | ||||
11/03/11 | 11/18/11 | 12/07/11 | $0.21 | 24,157 | ||||
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Total — Year ended December 31, 2011 | $96,522 | |||||||
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02/03/12 | 03/02/12 | 03/16/12 | $0.21 | $24,141 | ||||
05/11/12 | 06/04/12 | 06/19/12 | $0.21 | 24,274 | ||||
08/08/12 | 08/21/12 | 09/05/12 | $0.21 | 24,281 | ||||
11/06/12 | 11/21/12 | 12/07/12 | $0.21 | 24,565 | ||||
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Total — Year ended December 31, 2012 | $97,261 | |||||||
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CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
(1) | ||
| Of the dividends recorded during |
(2) | Beginning with the dividend declared on November 2, 2010, the Company’s board of directors raised the quarterly dividend to $0.21 per common share. |
5. | ACQUISITIONS AND DISPOSITIONS |
Acquisition of Rave Theatres
During November 2012, the Company entered into an asset purchase agreement with Rave Real Property Holdco, LLC and certain of its subsidiaries, Rave Cinemas, LLC and RC Processing, LLC (collectively “Rave”), pursuant to which the Company will acquire 32 theatres with 483 screens located in 12 states. The estimated purchase price is approximately $240,000. The purchase price, the amount of which is subject to certain closing date adjustments, will consist of cash consideration and the assumption of certain liabilities. The transaction is expected to close during the first quarter of 2013, subject to the satisfaction of customary closing conditions for transactions of this type, including Department of Justice or Federal Trade Commission antitrust approval.
Acquisition of Argentina Theatres
During August 2011, the Company acquired fourten theatres with 8295 screens from Muvico Entertainment L.L.C.Hoyts General Cinema South America, Inc. in an asseta stock purchase for $48,950approximately $66,958 in cash. The acquisition resulted in an expansion of the Company’s U.S.international theatre base, as three of the theatres are located in Florida and one theatre is located in Maryland.base. The Company incurred approximately $113$200 in transaction costs, which are reflected in general and administrative expenses on the consolidated statement of operationsincome for the year ended December 31, 2009.
F-14
The following table represents the fair value of the identifiable assets acquired and liabilities assumed that have been recognized by the Company in its consolidated balance sheet as of December 31, 2009:
Theatre properties and equipment | $ | 25,575 | ||
Brandname | 3,500 | |||
Noncompete agreement | 1,630 | |||
Goodwill | 44,565 | |||
Unfavorable lease | (3,600 | ) | ||
Capital lease liability (for one theatre) | (22,720 | ) | ||
Total | $ | 48,950 | ||
Theatre properties and equipment | $ | 24,098 | ||
Tradename | 10,032 | |||
Favorable leases | 3,919 | |||
Other intangible assets | 884 | |||
Goodwill | 43,018 | |||
Long-term debt | (5,993 | ) | ||
Deferred tax liability | (7,240 | ) | ||
Other liabilities, net of other assets | (1,760 | ) | ||
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Total | $ | 66,958 | ||
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The weighted average amortization period for thesethe intangible assets and the unfavorable lease are 9.6acquired was approximately seven years and 10.0 years, respectively. Goodwill represents excessas of the costsacquisition date. The acquisition is subject to review by the Argentina Comisión Nacional de Defensa de la Competencia (“CNDC”).
Canada Dispositions
During November 2010, the Company sold its one theatre in Canada for approximately $6,320 in cash proceeds and recorded a gain on sale of acquiring these theatres over amounts assigned to assets acquired, including intangible assets and liabilities assumed.other of approximately $7,025, which also reflected the write-off of a deferred rent liability related to the theatre.
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
During November 2010, the Company also sold its interest in a profit sharing agreement related to a previously sold Canadian property. The goodwillCompany received proceeds of approximately $8,493 and recorded is fully deductible for tax purposes.
6. | INVESTMENT IN NATIONAL CINEMEDIA LLC |
The Company has an investment in National CineMedia, LLC or “NCM”, and on July 15, 2005, the Company joined NCM, as one of the founding members.(“NCM”). NCM operates a digital in-theatre network in the U.S. for providing cinema advertising and non-film events. Upon joining NCM, the Company and NCM entered into an Exhibitor Services Agreement, or the ESA, with NCM, pursuant to which NCM provides advertising, promotion and event services to the Company’sour theatres. On February 13, 2007, National CineMedia, Inc. (“NCMI”), or “NCM Inc.”, a newly formedan entity that serves as a member and the sole manager of NCM, completed an initial public offeringIPO of its common stock. In connection with the NCM Inc.NCMI initial public offering, the Company amended its operating agreement with NCM and the Exhibitor Services Agreement. In connectionESA with NCM Inc.’s initial public offering and the transactions described below (the “NCM Transaction”), the Company received an aggregate of $389,003.
F-15
As a result of the offeringapplication of a portion of the Company held a 14% interest in NCM. Subsequent to NCM Inc.’sproceeds it received from the NCMI initial public offering, the Company continues to account forhad a negative basis in its investmentoriginal membership units in NCM, underwhich is referred to herein as the Company’s Tranche 1 Investment. Following the NCM, Inc. IPO, the Company does not recognize undistributed equity methodin the earnings on its Tranche 1 Investment until NCM’s future net earnings, less distributions received, surpass the amount of accounting duethe excess distribution. The Company recognizes equity in earnings on its Tranche 1 Investment only to its ability to exercise significant influence overthe extent it receives cash distributions from NCM. The Company has substantial rightsrecognizes cash distributions it receives from NCM on its Tranche 1 Investment as a founding member, includingcomponent of earnings as Distributions from NCM. The Company believes that the right to designate a totalaccounting model provided by ASC 323-10-35-22 for recognition of two nomineesequity investee losses in excess of an investor’s basis is analogous to the ten-member board of directors of NCM Inc., the sole manager. So long as the Company owns at least 5% of NCM’s membership interests, approval of at least 90% (80% if the board has less than 10 directors) will be required before NCM Inc. may take certain actions including but not limitedaccounting for equity income subsequent to mergers and acquisitions, issuance of common or preferred shares, approval of NCM Inc.’s budget, incurrence of indebtedness, entering into or terminating material agreements, and modificationsrecognizing an excess distribution.
Common Unit Adjustments
Pursuant to its articles of incorporation or bylaws. Additionally, if any of the Company’s director designees are not appointed to the board of directors of NCM Inc., nominated by NCM Inc. or elected by NCM Inc.’s stockholders, then the Company (so long as the Company continues to own at least 5% of NCM’s membership interest) will be entitled to approve certain actions of NCM including without limitation, approval of the budget, incurrence of indebtedness, consummating or amending material agreements, approving dividends, amending the NCM operating agreement, hiring or termination of the chief executive officer, chief financial officer, chief technology officer or chief marketing officer of NCM and the dissolution or liquidation of NCM.
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and AMC.per share data
operated and theatre attendance generated by each Founding Member. To account for the receipt of additional common units under the Common Unit Adjustment Agreement, we follow the guidance in FASB ASC 323-10-35-29 (formerly EITF 02-18, “Accounting for Subsequent Investments in an Investee after Suspension of Equity Loss Recognition”) by analogy, which also refers to AICPA Technical Practice Aid 2220.14, which indicates that if a subsequent investment is made in an equity method investee that has experienced significant losses, the investor must determine if the subsequent investment constitutes funding of prior losses. We concluded that the construction or acquisition of new theatres that has led to the common unit adjustments equates to making additional investments in NCM. We evaluated the receipt of the additional common units in NCM and the assets exchanged for these additional units and have determined that the right to use our incremental new screens would not be considered funding of prior losses. We account for these additional common units, which we refer to herein as our Tranche 2 Investment, as a separate investment than our Tranche 1 Investment. The common units received are recorded at fair value as an increase in our investment in NCM with an offset to deferred revenue. The deferred revenue is amortized over the remaining term of the ESA. Our Tranche 2 Investment is accounted for following the equity method, with undistributed equity earnings related to our Tranche 2 Investment included as a component of earnings in equity in income (loss) of affiliates and distributions received related to our Tranche 2 Investment are recorded as a reduction of our investment basis. In the event that a common unit adjustment is determined to be a negative number, the Founding Member can elect to either transfer and surrender to NCM the number of common units equal to all or part of such Founding Member’s common unit adjustment or to pay to NCM an amount equal to such Founding Member’s common unit adjustment calculated in accordance with the Common Unit Adjustment Agreement. If the Company then elects to surrender common units as part of a negative common unit adjustment, the Company would record a reduction to deferred revenue at the then fair value of the common units surrendered and a reduction of the Company’s Tranche 2 Investment at an amount equal to the weighted average cost for Tranche 2 common units, with the difference between the two values recorded as a gain or loss on sale of assets and other.
During March 2010, NCM performed its annual common unit adjustment is based oncalculation under the change in the number of screens operated by and attendance of the Company, AMC and Regal.Common Unit Adjustment Agreement. As a result of the calculation, the Company received an additional 846,3031,757,548 common units of NCM, each of which is convertible into one share of NCM, Inc. common stock. The Company recorded the additional common units received at fair value as an investmentpart of its Tranche 2 Investment with a corresponding adjustment to deferred revenue of $19,020. The common unit adjustment resulted in an increase in the Company’s ownership percentage in NCM from approximately 14.0% to approximately 14.5%.$30,683. Subsequent to the annual common unit adjustment discussed above, in May 2008, Regal2010, one of NCM’s other founding members completed an acquisition of another theatre circuit that required an extraordinary common unit adjustment calculation by NCM in accordance with the Common Unit Adjustment Agreement. As a result of this extraordinary common unit adjustment, Regalthe founding member was granted additional common units of NCM, which resulted in dilution of the Company’s ownership interest in NCM from 14.5% to 14.1%.NCM. The Company recognized a change of interest lossgain of approximately $75$271 during the year ended December 31, 20082010 as a result of this extraordinary common unit adjustment, which is reflected in (gain) loss on sale of assets and other on the consolidated statement of operations.
During March 2009,2011, NCM performed its annual common unit adjustment calculation under the Common Unit Adjustment Agreement. As a result of the calculation, the Company received an additional 1,197,303549,417 common units of NCM, each of which is convertible into one share of NCM, Inc. common stock. The Company recorded the additional common units received at fair value as an investmentpart of its Tranche 2 Investment with a corresponding adjustment to deferred revenue of $15,536.
F-16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
As of December 31, 2009,2012, the Company owned a total of 15,188,95518,094,644 common units of NCM.
Summary of Activity with NCM
Below is a summary of activity with NCM included in the Company’s consolidated financial statements:
Gain | Equity in | |||||||||||||||||||||||||||
Investment | Deferred | on NCM | Distributions | (Earnings) | Other | Cash | ||||||||||||||||||||||
in NCM | Revenue | Transaction(2) | from NCM | Losses | Revenue | Received | ||||||||||||||||||||||
Beginning balance on January 1, 2007 | $ | 5,353 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Equity in losses | (1,284 | ) | — | — | — | 1,284 | — | — | ||||||||||||||||||||
Preferred and common unit redemption | (4,069 | ) | — | (210,773 | ) | — | — | — | 215,002 | |||||||||||||||||||
ESA modification payment | — | (174,001 | ) | — | — | — | — | 174,001 | ||||||||||||||||||||
Revenues earned under ESA(1) | — | — | — | — | — | (5,664 | ) | 5,664 | ||||||||||||||||||||
Amortization of deferred revenue | — | 1,305 | — | — | — | (1,305 | ) | — | ||||||||||||||||||||
Receipt of excess cash distributions | — | — | — | (11,499 | ) | — | — | 11,499 | ||||||||||||||||||||
Balance as of and for the period ended December 31, 2007 | $ | — | $ | (172,696 | ) | $ | (210,773 | ) | $ | (11,499 | ) | $ | 1,284 | $ | (6,969 | ) | $ | 406,166 | ||||||||||
Receipt of common units due to 2008 common unit adjustment | $ | 19,020 | $ | (19,020 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Change of interest loss due to extraordinary common unit adjustment(3) | (75 | ) | — | — | — | — | — | — | ||||||||||||||||||||
Revenues earned under ESA(1) | — | — | — | — | — | (1,764 | ) | 1,764 | ||||||||||||||||||||
Receipt of excess cash distributions | (644 | ) | — | — | (16,005 | ) | — | — | 16,649 | |||||||||||||||||||
Receipt under tax receivable agreement | — | — | — | (2,833 | ) | — | — | 2,833 | ||||||||||||||||||||
Equity in earnings | 840 | — | — | — | (840 | ) | — | — | ||||||||||||||||||||
Amortization of deferred revenue | — | 1,869 | — | — | — | (1,869 | ) | — | ||||||||||||||||||||
Balance as of and for the period ended December 31, 2008 | $ | 19,141 | $ | (189,847 | ) | $ | — | $ | (18,838 | ) | $ | (840 | ) | $ | (3,633 | ) | $ | 21,246 | ||||||||||
Receipt of common units due to 2009 common unit adjustment | $ | 15,536 | $ | (15,536 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Revenues earned under ESA(1) | — | — | — | — | — | (5,711 | ) | 5,711 | ||||||||||||||||||||
Receipt of excess cash distributions | (2,358 | ) | — | — | (17,738 | ) | — | — | 20,096 | |||||||||||||||||||
Receipt under tax receivable agreement | — | — | — | (3,084 | ) | — | — | 3,084 | ||||||||||||||||||||
Equity in earnings | 1,913 | — | — | — | (1,913 | ) | — | — | ||||||||||||||||||||
Amortization of deferred revenue | — | 2,377 | — | — | — | (2,377 | ) | — | ||||||||||||||||||||
Balance as of and for the period ended December 31, 2009 | $ | 34,232 | $ | (203,006 | ) | $ | — | $ | (20,822 | ) | $ | (1,913 | ) | $ | (8,088 | ) | $ | 28,891 | ||||||||||
Investment in NCM | Deferred Revenue | Distributions from NCM | Equity in Earnings | Other Revenue | Cash Received | |||||||||||||||||||
Balance as of January 1, 2010 | $ | 34,232 | $ | (203,006 | ) | |||||||||||||||||||
Receipt of common units due to annual common unit adjustment | $ | 30,683 | $ | (30,683 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
Change of interest gain due to extraordinary common unit adjustment(2) | 271 | — | — | — | — | — | ||||||||||||||||||
Revenues earned under ESA(1) | — | — | — | — | (5,033 | ) | 5,033 | |||||||||||||||||
Receipt of excess cash distributions | (4,753 | ) | — | (19,616 | ) | — | — | 24,369 | ||||||||||||||||
Receipt under tax receivable agreement | (520 | ) | — | (3,742 | ) | — | — | 4,262 | ||||||||||||||||
Equity in earnings | 4,463 | — | — | (4,463 | ) | — | — | |||||||||||||||||
Amortization of deferred revenue | — | 3,116 | — | — | (3,116 | ) | — | |||||||||||||||||
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Balance as of and for the period ended December 31, 2010 | $ | 64,376 | $ | (230,573 | ) | $ | (23,358 | ) | $ | (4,463 | ) | $ | (8,149 | ) | $ | 33,664 | ||||||||
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Receipt of common units due to annual common unit adjustment | $ | 9,302 | $ | (9,302 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
Revenues earned under ESA(1) | — | — | — | — | (5,890 | ) | 5,890 | |||||||||||||||||
Receipt of excess cash distributions | (6,322 | ) | — | (20,023 | ) | — | — | 26,345 | ||||||||||||||||
Receipt under tax receivable agreement | (729 | ) | — | (4,138 | ) | — | — | 4,867 | ||||||||||||||||
Equity in earnings | 5,413 | — | — | (5,413 | ) | — | — | |||||||||||||||||
Amortization of deferred revenue | — | 3,565 | — | — | (3,565 | ) | — | |||||||||||||||||
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Balance as of and for the period ended December 31, 2011 | $ | 72,040 | $ | (236,310 | ) | $ | (24,161 | ) | $ | (5,413 | ) | $ | (9,455 | ) | $ | 37,102 | ||||||||
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Receipt of common units due to annual common unit adjustment | $ | 9,137 | $ | (9,137 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
Revenues earned under ESA(1) | — | — | — | — | (7,112 | ) | 7,112 | |||||||||||||||||
Receipt of excess cash distributions | (6,503 | ) | — | (17,889 | ) | — | — | 24,392 | ||||||||||||||||
Receipt under tax receivable agreement | (967 | ) | — | (2,923 | ) | — | — | 3,890 | ||||||||||||||||
Equity in earnings | 4,416 | — | — | (4,416 | ) | — | — | |||||||||||||||||
Amortization of deferred revenue | — | 4,142 | — | — | (4,142 | ) | — | |||||||||||||||||
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Balance as of and for the period ended December 31, 2012 | $ | 78,123 | $ | (241,305 | ) | $ | (20,812 | ) | $ | (4,416 | ) | $ | (11,254 | ) | $ | 35,394 | ||||||||
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(1) | Amounts include the per patron and per digital screen theatre access fees due to the Company, net of amounts due to NCM for on-screen advertising time provided to the Company’s beverage concessionaire. The amounts due to NCM for on-screen advertising time provided to the Company’s beverage concessionaire were approximately |
(2) | Change in interest gain is | |
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
The tables below present summary financial information for NCM for the periods indicated (information for the year ended December 28, 2012 was not yet available):
Year Ended | ||||||||||||
December 31, 2009 | December 30, 2010 | December 29, 2011 | ||||||||||
Gross revenues | $ | 380,667 | $ | 427,475 | $ | 435,434 | ||||||
Operating income | $ | 168,146 | $ | 190,559 | $ | 193,716 | ||||||
Net income | $ | 128,531 | $ | 139,541 | $ | 134,524 |
As of | ||||||||
December 30, 2010 | December 29, 2011 | |||||||
Total assets | $ | 425,972 | $ | 421,442 | ||||
Total liabilities | $ | 932,549 | $ | 948,938 |
7. | INVESTMENT IN DIGITAL CINEMA IMPLEMENTATION PARTNERS |
On February 12, 2007, the Company, AMC and Regal entered into a joint venture known as Digital Cinema Implementation Partners LLC (“DCIP”) to facilitate the implementation of digital cinema in the Company’s theatres and to establish agreements with major motion picture studios for the financing of digital cinema. Future digital cinema developments will be managed by
On March 10, 2010, the Company signed a master equipment lease agreement and other related agreements (collectively the “Agreements”) with Kasima LLC (“Kasima”), which is an indirect subsidiary of DCIP subjectand a related party to the Company’s approval along withCompany. Upon signing the Company’s partners, AMCAgreements, the Company contributed the majority of its U.S. digital projection systems at a fair value of $16,380 to DCIP, which DCIP then contributed to Kasima. The net book value of the contributed equipment was approximately $18,090, and Regal. Duringas a result, the Company recorded a loss of approximately $1,710, which is reflected in (gain) loss on sale of assets and other on the consolidated statement of income for the year ended December 31, 2007,2010. During April 2010, the Company invested an initial $1,500sold additional U.S. digital projection systems with a net book value of approximately $1,520 to Kasima for a one-third ownership interestapproximately $1,197, resulting in DCIP. The Company, AMC and Regal each invested an additional $4,000loss of approximately $323, which is reflected in (gain) loss on sale of assets and $2,500 duringother on the yearsconsolidated statement of income for the year ended December 31, 20082010. During 2011, the Company sold additional U.S. digital projection systems with a net book value of approximately $3,777 to DCIP for approximately $2,739, resulting in a loss of approximately $1,038, which is reflected in (gain) loss on sale of assets and 2009, respectively, in DCIP. The Company is accountingother on the consolidated statement of income for its investment in DCIP under the equity method of accounting.
The Company has a variable interest in Kasima through the terms of its master equipment lease agreement; however, the Company recorded equity losses in DCIPhas determined that it is not the primary beneficiary of approximately $1,240, $3,243 and $2,877, respectively, relatingKasima, as the Company does not have the ability to this investment. The Company’s investment basis in DCIP was $1,017 and $640 at December 31, 2008 and 2009, respectively, which is included in investments in and advances to affiliates ondirect the consolidated balance sheets.
F-17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
As of December 31, 2012, the Company sellinghad a 33% voting interest in DCIP and a 24.3% economic interest in DCIP. The Company accounts for its investment in stockDCIP and its subsidiaries under the equity method of Fandango, Inc. for approximately $14,147accounting. Below is a rollforward of consideration (the “Fandango Transaction”). The Company paid $2,800 of the consideration to Syufy Enterprises, LP in accordance with the terms of agreements entered into as part of the Century Acquisition. The carrying value of the Company’sour investment in stockDCIP from January 1, 2010 through December 31, 2012:
Balance as of January 1, 2010 | $ | 640 | ||
Cash contributions | 2,813 | |||
Equipment contributions, at fair value | 16,380 | |||
Distributions received | (1,068 | ) | ||
Equity in losses | (7,927 | ) | ||
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Balance as of December 31, 2010 | $ | 10,838 | ||
Cash contributions | 1,471 | |||
Equity in income | 489 | |||
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Balance as of December 31, 2011 | $ | 12,798 | ||
Cash contributions | 1,325 | |||
Equity in income | 8,889 | |||
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Balance as of December 31, 2012 | $ | 23,012 | ||
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Below is summary financial information for DCIP as of Fandango, Inc. was $2,142. As a result ofand for the sale of its investment, the Company recorded a gain of $9,205 in the consolidated statement of operationsyears ended December 31, 2010 and 2011. (Financial information for the year ended December 31, 2007.
Year ended December31, | ||||||||
2010 | 2011 | |||||||
Net operating revenue | $ | 32,396 | $ | 113,424 | ||||
Operating income | $ | 12,817 | $ | 70,508 | ||||
Net loss | $ | (24,461 | ) | $ | (2,510 | ) |
As of | ||||||||
December 31, 2010 | December 31, 2011 | |||||||
Total assets | $ | 532,133 | $ | 1,087,782 | ||||
Total liabilities | $ | 468,191 | $ | 997,735 |
As parta result of the saleAgreements, the Company has installed digital projection systems to a majority of its first run U.S. theatres. The digital projection systems are being leased from Kasima under an operating lease with an initial term of twelve years that contains ten one-year fair value renewal options. The equipment lease agreement also contains a fair value purchase option. Under the equipment lease agreement, the Company pays minimum annual rent of one thousand dollars per digital projection system for the first six and a half years from the effective date of the agreement and minimum annual rent of three thousand dollars per digital projection system beginning at six and a half years from the effective date through the end of the lease term. The Company may also be subject to various types of other rent if such digital projection systems do not meet minimum performance requirements as outlined in the agreements. Certain of the other rent payments are subject to either a monthly or an annual maximum. As of December 31, 2012, the Company had 3,515 digital projection systems being leased under the master equipment lease agreement with Kasima. The Company recorded equipment lease expense of approximately $1,354, $5,332 and $7,802 during the years ended December 31, 2010, 2011 and 2012, respectively, which is included in utilities and other costs on the consolidated statements of income.
The digital projection systems leased from Kasima replaced a majority of the Company’s existing 35 millimeter projection systems in its U.S. theatres. Therefore, upon signing the agreements, the Company began
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
accelerating the depreciation of these existing 35 millimeter projection systems. The Company recorded depreciation expense of approximately $9,423 and $10,604 on its domestic 35 millimeter projection systems during the years ended December 31, 2010 and 2011. The Company’s domestic 35 millimeter projection systems were fully depreciated as of December 31, 2011.
8. | INVESTMENT IN REALD |
The Company licenses 3-D systems from RealD. Under its license agreement with RealD, the Company earned options to purchase shares of RealD common stock as it installed a certain number of 3-D systems as outlined in the license agreement. During 2010, the Company earned a total of 1,085,828 options to purchase shares of common stock in RealD. Upon vesting in these options, the Company recorded a total investment in RealD of approximately $18,909, which represented the estimated aggregate fair value of the options, with an offset to deferred lease incentive liability. The fair value of the RealD options in which the company vested during the year ended December 31, 2010, as discussed above, was determined using the quoted market price of RealD’s stock adjusted for the lock-up period to which the Company was subject until January 2011, which fell under Level 2 of the U.S. GAAP fair value hierarchy as defined by ASC Topic 820-10-35.
During January, February and March 2011, the Company vested in an additional 136,952 RealD options in the aggregate by reaching additional target levels, as outlined in the license agreement. Upon vesting in these additional options, the Company recorded an increase in its investment in RealD and its deferred lease incentive liability of approximately $3,402, which represented the estimated fair value of the RealD options. The fair value measurements were based upon RealD’s quoted stock prices on the dates of Fandango, Inc.,vesting. These fair value measurements fall under Level 1 of the U.S. GAAP fair value hierarchy as defined by ASC Topic 820-10-35.
During March 2011, the Company amendedexercised all of its exclusive ticketingoptions to purchase shares of common stock in RealD for $0.00667 per share. The Company accounts for its investment in RealD as a marketable security. The Company has determined that its RealD shares are available-for-sale securities in accordance with ASC Topic 320-10-35-1, therefore unrealized holding gains and distribution agreement with Fandango, Inc. and received proceedslosses are reported as a component of $5,000.accumulated other comprehensive loss until realized. The proceeds weredeferred lease incentive liability recorded as deferred revenuea result of the option vesting events discussed above is reflected in other long-term liabilities on the Company’s consolidated balance sheetsheets and areis being amortized straight-line over the term of the amended ticketing and distributionlicense agreement, which expiresis approximately seven and one-half years. The license agreement has a remaining term of approximately six years.
During the year ended December 2011.
As of December 31, 2012, the Company owned 1,222,780 shares in RealD, with an estimated fair value of $13,707. The paymentfair value of the RealD shares was madedetermined based upon the quoted price of RealD’s common stock on August 10, 2007December 31, 2012, which falls under Level 1 of the U.S. GAAP fair value hierarchy as defined by ASC Topic 820-10-35. During the years ended December 31, 2010, 2011 and was applied against2012, the current portionCompany recorded a pre-tax unrealized holding gain (loss) of long-term debt.
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Below is a rollforward of the Company’s investment in RealD from January 2010 through December 31, 2012:
Balance as of January 1, 2010 | $ | — | ||
Fair value of options earned | 18,909 | |||
Unrealized holding gain | 9,084 | |||
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Balance as of December 31, 2010 | $ | 27,993 | ||
Fair value of options earned | 3,402 | |||
Exercise of options at $0.00667 per share | 8 | |||
Unrealized holding loss | (21,694 | ) | ||
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Balance as of December 31, 2011 | $ | 9,709 | ||
Unrealized holding gain | 3,998 | |||
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Balance as of December 31, 2012 | $ | 13,707 | ||
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9. | SHARE EXCHANGES WITH AND PURCHASES OF NONCONTROLLING INTERESTS |
During May 2008,April 2010, the Company’s partners in Central AmericaColombia (the “Central American“Colombian Partners”) exercised an option available to them under an Exchange Option Agreement dated February 7,April 9, 2007 between the Company and the Central AmericanColombian Partners. Under this option, which was contingent upon completion of an initial public offering of common stock by the Company, the Central AmericanColombian Partners were entitled to exchange their shares in Cinemark Equity Holdings Corporation, which is the Company’s Central American holding company,Colombia S.A. for shares of the Company’s common stock.stock (the “Colombia Share Exchange”). The number of shares to be exchanged was determined based on the Company’s equity value and the equity value of the Central American Partner’sColombian Partners’ interest in Cinemark Equity Holdings Corporation,Colombia S.A., both of which are defined in the Exchange Option Agreement. As a result of this exchangethe Colombia Share Exchange, on October 1, 2008,June 14, 2010, the Company issued 902,9811,112,723 shares of its common stock to the Colombian Partners. The increase in the Company’s ownership interest in its Central American Partners (the “Central America Share Exchange”).Colombian subsidiary was accounted for as an equity transaction. The Company recorded an increase in additional-paid-in-capital of approximately $6,951, which represented the book value of the Colombian partners’ noncontrolling interest account of approximately $5,865 plus the Colombian partners’ share of accumulated other comprehensive loss of approximately $1,086. As a result of this transaction, the Company owns 100% of the shares in Cinemark Equity Holdings Corporation.
During November 2010, the Company purchased its noncontrolling interests’ 20% share of Cinemark Panama S.A. (“Cinemark Panama”) for approximately $888 in cash. The Companytransaction was accounted for as an equity transaction in accordance with ASC Topic 810-10-45-23. The book value of Cinemark Panama’s noncontrolling interest was approximately $498, therefore the Company recorded an adjustment to additional paid-in-capital of approximately $390. As a result of the transaction, as a step acquisition. The purchase pricethe Company owns 100% of the shares in Cinemark Equity Holdings CorporationPanama.
During May 2011, the Company purchased its Chilean partners’ 2.6% share of Cinemark Chile S.A. (“Cinemark Chile”) for approximately $1,443 in cash. The increase in the Company’s ownership interest in its Chilean subsidiary was accounted for as an equity transaction in accordance with ASC Topic 810-10-45-23. The Company recorded based ona decrease in additional paid-in-capital of approximately $1,402, which represented the fairdifference between the cash paid and the book value of the shares issued byChilean partners’ noncontrolling interest account of approximately $917, plus the CompanyChilean partners’ share of $12,949 plus related transaction costsaccumulated other comprehensive loss of $2, which totaled approximately $12,951. The following table represents the allocation of purchase price to the assets acquired and liabilities assumed:
Net unfavorable leases | $ | (443 | ) | |
Vendor contract | 1,034 | |||
Tradename | 892 | |||
Goodwill | 8,222 | |||
Reduction of noncontrolling interest | 3,246 | |||
$ | 12,951 | |||
F-18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Net unfavorable leases | $ | (161 | ) | |
Tradename | 313 | |||
Goodwill | 1,473 | |||
Reduction of noncontrolling interest | 1,575 | |||
$ | 3,200 | |||
10. | GOODWILL AND OTHER INTANGIBLE ASSETS — NET |
The Company’s goodwill was as follows:
U.S. | International | |||||||||||
Operating | Operating | |||||||||||
Segment | Segment | Total | ||||||||||
Balance at January 1, 2008(1) | $ | 979,148 | $ | 155,541 | $ | 1,134,689 | ||||||
Impairment charges | (78,579 | ) | — | (78,579 | ) | |||||||
Acquisition of one U.S. theatre(2) | 2,892 | — | 2,892 | |||||||||
Acquisition of two Brazil theatres(3) | — | 2,247 | 2,247 | |||||||||
Central America share exchange(4) | — | 8,222 | 8,222 | |||||||||
Ecuador share exchange(4) | — | 1,473 | 1,473 | |||||||||
Foreign currency translation adjustments | — | (31,126 | ) | (31,126 | ) | |||||||
Balance at December 31, 2008(7) | $ | 903,461 | $ | 136,357 | $ | 1,039,818 | ||||||
Acquisition of four U.S. theatres(5) | 44,565 | — | 44,565 | |||||||||
Acquisition of one Brazil theatre(6) | — | 6,270 | 6,270 | |||||||||
Foreign currency translation adjustments and other | — | 25,649 | 25,649 | |||||||||
Balance at December 31, 2009(7) | $ | 948,026 | $ | 168,276 | $ | 1,116,302 | ||||||
U.S. Operating Segment | International Operating Segment | Total | ||||||||||
Balance at January 1, 2011(1) | $ | 948,026 | $ | 174,945 | $ | 1,122,971 | ||||||
Acquisition of ten theatres in Argentina (see Note 5) | — | 43,018 | 43,018 | |||||||||
Foreign currency translation adjustments | — | (15,352 | ) | (15,352 | ) | |||||||
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Balance at December 31, 2011(1) | $ | 948,026 | $ | 202,611 | $ | 1,150,637 | ||||||
Acquisition of U.S. theatre | 8,971 | — | 8,971 | |||||||||
Foreign currency translation adjustments | — | (8,797 | ) | (8,797 | ) | |||||||
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Balance at December 31, 2012(1) | $ | 956,997 | $ | 193,814 | $ | 1,150,811 | ||||||
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(1) | ||
Balances are presented net of accumulated impairment losses of $214,031 for the U.S. operating segment and $27,622 for the international operating segment. |
F-19
December 31, | December 31, | |||||||||||||||||||
2007 | Additions(1) | Amortization | Other(3) | 2008 | ||||||||||||||||
Intangible assets with finite lives: | ||||||||||||||||||||
Vendor contracts: | ||||||||||||||||||||
Gross carrying amount | $ | 56,973 | $ | 1,519 | $ | — | $ | (2,652 | ) | $ | 55,840 | |||||||||
Accumulated amortization | (23,342 | ) | — | (3,322 | ) | — | (26,664 | ) | ||||||||||||
Net carrying amount | 33,631 | 1,519 | (3,322 | ) | (2,652 | ) | 29,176 | |||||||||||||
Other intangible assets: | ||||||||||||||||||||
Gross carrying amount | 25,898 | (604 | ) | — | (2,438 | ) | 22,856 | |||||||||||||
Accumulated amortization | (17,166 | ) | — | (3,138 | ) | 938 | (19,366 | ) | ||||||||||||
Net carrying amount | 8,732 | (604 | ) | (3,138 | ) | (1,500 | ) | 3,490 | ||||||||||||
Total net intangible assets with finite lives | 42,363 | 915 | (6,460 | ) | (4,152 | ) | 32,666 | |||||||||||||
Intangible assets with indefinite lives: | ||||||||||||||||||||
Tradename and other | 310,684 | 1,205 | — | (2,787 | ) | 309,102 | ||||||||||||||
Total intangible assets — net | $ | 353,047 | $ | 2,120 | $ | (6,460 | ) | $ | (6,939 | ) | $ | 341,768 | ||||||||
December 31, | December 31, | |||||||||||||||||||
2008 | Additions(2) | Amortization | Other(3) | 2009 | ||||||||||||||||
Intangible assets with finite lives: | ||||||||||||||||||||
Vendor contracts: | ||||||||||||||||||||
Gross carrying amount | $ | 55,840 | $ | (375 | ) | $ | — | $ | 1,009 | $ | 56,474 | |||||||||
Accumulated amortization | (26,664 | ) | — | (3,206 | ) | — | (29,870 | ) | ||||||||||||
Net carrying amount | 29,176 | (375 | ) | (3,206 | ) | 1,009 | 26,604 | |||||||||||||
Other intangible assets: | ||||||||||||||||||||
Gross carrying amount | 22,856 | 5,130 | — | (1,476 | ) | 26,510 | ||||||||||||||
Accumulated amortization | (19,366 | ) | — | (2,434 | ) | 1,204 | (20,596 | ) | ||||||||||||
Net carrying amount | 3,490 | 5,130 | (2,434 | ) | (272 | ) | 5,914 | |||||||||||||
Total net intangible assets with finite lives | 32,666 | 4,755 | (5,640 | ) | 737 | 32,518 | ||||||||||||||
Intangible assets with indefinite lives: | ||||||||||||||||||||
Tradename | 309,102 | — | — | 1,378 | 310,480 | |||||||||||||||
Total intangible assets — net | $ | 341,768 | $ | 4,755 | $ | (5,640 | ) | $ | 2,115 | $ | 342,998 | |||||||||
January 1, 2011 | Additions (2) | Amortization | Other(1) | December 31, 2011 | ||||||||||||||||
Intangible assets with finite lives: | ||||||||||||||||||||
Gross carrying amount | $ | 64,319 | $ | 14,835 | $ | — | $ | (4,773 | ) | $ | 74,381 | |||||||||
Accumulated amortization | (46,185 | ) | — | (4,579 | ) | 3,451 | (47,313 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total net intangible assets with finite lives | 18,134 | 14,835 | (4,579 | ) | (1,322 | ) | 27,068 | |||||||||||||
Intangible assets with indefinite lives: | ||||||||||||||||||||
Tradename | 311,070 | — | — | (1,231 | ) | 309,839 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total intangible assets — net | $ | 329,204 | $ | 14,835 | $ | (4,579 | ) | $ | (2,553 | ) | $ | 336,907 | ||||||||
|
|
|
|
|
|
|
|
|
|
December 31, 2011 | Amortization | Other(1) | December 31, 2012 | |||||||||||||
Intangible assets with finite lives: | ||||||||||||||||
Gross carrying amount | $ | 74,381 | $ | — | $ | (2,460 | ) | $ | 71,921 | |||||||
Accumulated amortization | (47,313 | ) | (4,611 | ) | 570 | (51,354 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Total net intangible assets with finite lives | 27,068 | (4,611 | ) | (1,890 | ) | 20,567 | ||||||||||
Intangible assets with indefinite lives: | ||||||||||||||||
Tradename | 309,839 | — | 335 | 310,174 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total intangible assets — net | $ | 336,907 | $ | (4,611 | ) | $ | (1,555 | ) | $ | 330,741 | ||||||
|
|
|
|
|
|
|
|
(1) | Activity for 2011 includes the write-off of approximately | |
(2) | See Note |
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Estimated aggregate future amortization expense for intangible assets is as follows:
For the year ended December 31, 2010 | $ | 5,519 | ||
For the year ended December 31, 2011 | 5,279 | |||
For the year ended December 31, 2012 | 5,123 | |||
For the year ended December 31, 2013 | 4,377 | |||
For the year ended December 31, 2014 | 3,831 | |||
Thereafter | 8,389 | |||
Total | $ | 32,518 | ||
For the year ended December 31, 2013 | $ | 4,199 | ||
For the year ended December 31, 2014 | 3,644 | |||
For the year ended December 31, 2015 | 3,351 | |||
For the year ended December 31, 2016 | 3,128 | |||
For the year ended December 31, 2017 | 2,498 | |||
Thereafter | 3,747 | |||
|
| |||
Total | $ | 20,567 | ||
|
|
11. | IMPAIRMENT OF LONG-LIVED ASSETS |
The Company reviews long-lived assets for impairment indicators on a quarterly basis or whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable. See Note 1 for discussion of the Company’s impairment evaluation.
F-20
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
United States theatre properties | $ | 12,423 | $ | 27,761 | $ | 10,013 | ||||||
International theatre properties | 1,799 | 6,869 | 1,340 | |||||||||
Subtotal | $ | 14,222 | $ | 34,630 | $ | 11,353 | ||||||
Intangible assets (see Note 11) | 4,611 | 323 | 358 | |||||||||
Goodwill (see Note 11) | 67,725 | 78,579 | — | |||||||||
Equity investment | — | — | 147 | |||||||||
Impairment of long-lived assets | $ | 86,558 | $ | 113,532 | $ | 11,858 | ||||||
Year Ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
United States theatre properties | $ | 5,166 | $ | 3,635 | $ | 2,693 | ||||||
International theatre properties | 5,668 | 3,398 | 338 | |||||||||
|
|
|
|
|
| |||||||
Subtotal | $ | 10,834 | $ | 7,033 | $ | 3,031 | ||||||
Intangible assets (see Note 10) | 1,527 | — | — | |||||||||
Equity investment | 177 | — | — | |||||||||
|
|
|
|
|
| |||||||
Impairment of long-lived assets | $ | 12,538 | $ | 7,033 | $ | 3,031 | ||||||
|
|
|
|
|
|
The long-lived asset impairment charges recorded during each of the years presented are specific to theatres that were directly and individually impacted by increased competition, adverse changes in market demographics, or adverse changes in the development or the conditions of the areas surrounding the theatre.
12. | DEFERRED CHARGES AND OTHER ASSETS — NET |
As of December 31, deferred charges and other assets — net consisted of the following:
December 31, | ||||||||
2008 | 2009 | |||||||
Debt issue costs | $ | 37,422 | $ | 37,334 | ||||
Less: Accumulated amortization | (14,218 | ) | (12,210 | ) | ||||
Subtotal | 23,204 | 25,124 | ||||||
Long-term prepaid rents | 16,833 | 15,426 | ||||||
Construction advances and other deposits | 1,677 | 3,171 | ||||||
Equipment to be placed in service | 5,413 | 6,454 | ||||||
Other | 1,906 | 2,327 | ||||||
Total | $ | 49,033 | $ | 52,502 | ||||
December 31, | ||||||||
2011 | 2012 | |||||||
Debt issue costs, net of accumulated amortization | $ | 26,870 | $ | 40,520 | ||||
Long-term prepaid rents | 15,778 | 14,958 | ||||||
Construction related deposits | 6,463 | 11,427 | ||||||
Lease deposits | 2,208 | 4,039 | ||||||
Equipment to be placed in service | 10,495 | 22,767 | ||||||
Other | 2,166 | 8,333 | ||||||
|
|
|
| |||||
Total | $ | 63,980 | $ | 102,044 | ||||
|
|
|
|
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
During the year ended December 31, 2009,2012, the Company paid debt issue costs of $12,722$18,453 primarily related to the issuance of the 85/8%its 5.125% senior notes and $281 related tothe amendment and restatement of its senior secured credit facility and wrote off approximately $6,337 of unamortized debt issue costs ($13,120 gross debt issue costs less $6,783 of accumulated amortization) related to the repurchase of its 93/4% senior discount notes.facility. See Note 14.
13. | LONG-TERM DEBT |
As of December 31, long-term debt consisted of the following:
December 31, | ||||||||
2008 | 2009 | |||||||
Cinemark USA, Inc. term loan | $ | 1,094,800 | $ | 1,083,600 | ||||
Cinemark USA, Inc. 85/8% senior notes due 2019(1) | — | 458,897 | ||||||
Cinemark, Inc. 93/4% senior discount notes due 2014 | 411,318 | — | ||||||
Cinemark USA, Inc. 9% senior subordinated notes due 2013 | 181 | 181 | ||||||
Other long-term debt | 2,163 | 1,027 | ||||||
Total long-term debt | 1,508,462 | 1,543,705 | ||||||
Less current portion | 12,450 | 12,227 | ||||||
Long-term debt, less current portion | $ | 1,496,012 | $ | 1,531,478 | ||||
December 31, | ||||||||
2011 | 2012 | |||||||
Cinemark USA, Inc. term loan | $ | 905,887 | $ | 700,000 | ||||
Cinemark USA, Inc. 8.625% senior notes due 2019(1) | 460,530 | 461,464 | ||||||
Cinemark USA, Inc. 5.125% senior notes due 2022 | — | 400,000 | ||||||
Cinemark USA, Inc. 7.375% senior subordinated notes due 2021 | 200,000 | 200,000 | ||||||
Hoyts General Cinema (Argentina) bank loan due 2013 | 5,804 | 2,546 | ||||||
|
|
|
| |||||
Total long-term debt | 1,572,221 | 1,764,010 | ||||||
Less current portion | 12,145 | 9,546 | ||||||
|
|
|
| |||||
Long-term debt, less current portion | $ | 1,560,076 | $ | 1,754,464 | ||||
|
|
|
|
(1) | Includes the $470,000 aggregate principal amount of the |
F-21
On October 5, 2006, in connection with the Century Acquisition,December 18, 2012, Cinemark USA, Inc., entered into a senior secured credit facility. The amended and restated its senior secured credit facility provides forto include a seven year $700,000 term loan of $1,120,000 and a $150,000five year $100,000 revolving credit line, thatreferred to herein as the Amended Senior Secured Credit Facility. The proceeds from the Amended Senior Secured Credit Facility, combined with a portion of the proceeds from the 5.125% Senior Notes discussed below, were used to refinance the Company’s Former Senior Secured Credit Facility, also discussed below. The Company incurred debt issue costs of approximately $12,000 during the year ended December 31, 2012 related to the amendment and restatement. The term loan under the Amended Senior Secured Credit Facility matures in six years unless Cinemark USA, Inc.’s 9% senior subordinated notes have not been refinanced by August 1, 2012 with indebtedness that matures no earlier than seven and one-half years after the closing date of the senior secured credit facility, in which case the maturity date of the revolving credit line becomes August 1, 2012.December 2019. The revolving credit line, is used for general corporate purposes.
Interest on the term loan principal payments of $2,800 are due each calendar quarter through September 30, 2012 and increase to $263,200 each calendar quarter from December 31, 2012 to maturity at October 5, 2013. Prior to the amendment to the senior secured credit facility discussed below, the term loan accrued interest,accrues at Cinemark USA, Inc.’s option at: (A) the base rate equal to the higher of (1) the prime lending rate as set forth on the British Banking Association Telerate page 5, or (2) the federal funds effective rate from time to time plus 0.50%, plus a margin that ranges from 0.75% to 1.00%of 2.0% per annum, or (B) a “eurodollar rate” plus a margin that ranges from 1.75% to 2.00%of 3.0% per annum, in each case as adjusted pursuant to Cinemark USA, Inc.’s corporate credit rating. Borrowings underannum. Interest on the revolving credit line bear interest,accrues, at Cinemark USA, Inc.’s option, at: (A) a base rate equal to the higher of (1) the prime lending rate as set forth on the British Banking Association Telerate page 5 and (2) the federal funds effective rate from time to time plus 0.50%, plus a margin that ranges from 0.50%1.00% to 1.00%1.75% per annum, or (B) a “eurodollar rate” plus a margin that ranges from 1.50%2.00% to 2.00%2.75% per annum, in each case as adjusted pursuant to Cinemark USA, Inc.’sannum. The margin of the revolving credit line is determined by the consolidated net senior secured leverage ratio as defined in the credit agreement. Cinemark USA, Inc. is required to pay a commitment fee calculated at the rate of 0.50% per annum on the average daily unused portion of the revolving credit line, payable quarterly in arrears, which rate decreases to 0.375% per annum for any fiscal quarter in which Cinemark USA, Inc.’s consolidated net senior secured leverage ratio on the last day of such fiscal quarter is less than 2.25 to 1.0.
Cinemark USA, Inc.’s obligations under the senior secured credit facilityAmended Senior Secured Credit Facility are guaranteed by Cinemark Holdings, Inc. and certain of Cinemark USA, Inc.’s domestic subsidiaries and are secured by
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
mortgages on certain fee and leasehold properties and security interests in substantially all of Cinemark USA, Inc.’s and the guarantors’ personal property, including, without limitation, pledges of all of Cinemark USA, Inc.’s capital stock, all of the capital stock of certain of Cinemark USA, Inc.’s domestic subsidiaries and 65% of the voting stock of certain of its foreign subsidiaries.
The senior secured credit facilityAmended Senior Secured Credit Facility contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on Cinemark USA, Inc.’s ability, and in certain instances, its subsidiaries’ and Cinemark Holdings, Inc.’s ability, to consolidate or merge or liquidate, wind up or dissolve; substantially change the nature of its business; sell, transfer or dispose of assets; create or incur indebtedness; create liens; pay dividends, and repurchase stock; and make capital expenditures and investments. The senior secured credit facility also requiresIf Cinemark USA, Inc. has borrowings outstanding on the revolving credit line, it is required to satisfy a consolidated net senior secured leverage ratio covenant as determined in accordance with the senior secured credit facility.
The dividend restriction contained in the senior secured credit facilityAmended Senior Secured Credit Facility prevents the Company and any of its subsidiaries from paying a dividend or otherwise distributing cash to its stockholders unless (1) the Company is not in default, and the distribution would not cause the Company to be in default, under the senior secured credit facility;Amended Senior Secured Credit Facility; and
F-22
At December 31, 2012, there was $700,000 outstanding under the senior secured credit facility may be terminatedterm loan and all obligationsno borrowings outstanding under the senior securedrevolving credit facility could be accelerated byline. Cinemark USA, Inc. had $100,000 in available borrowing capacity on the lenders, causing all loans outstanding (including accrued interest and fees payable thereunder) to be declared immediately due and payable.
5.125% Senior Notes
On June 29, 2009,December 18, 2012, Cinemark USA, Inc. issued $470,000$400,000 aggregate principal amount of 8.625%5.125% senior notes due 2019 with an original issue discount2022, at par value, referred to herein as the 5.125% Senior Notes. A portion of $11,468, resulting in proceeds of approximately $458,532. Thethe proceeds were primarilyused to refinance a portion of the Former Senior Secured Credit Facility and a portion of the proceeds are expected to be used to fund the repurchase of Cinemark, Inc.’s 93/4% senior discount notes discussed below.purchase price for the Rave Acquisition (see Note 5) and for general corporate purposes. Interest on the 5.125% Senior Notes is payable on June 15 and December 15 of each year, beginning DecemberJune 15, 2009.2013. The senior notes mature on JuneDecember 15, 2019.2022. The Company incurred debt issue costs of $12,722approximately $6,400 in connection with the issuance which will be amortized onduring the straight-line method over the term of the senior notes. year ended December 31, 2012.
The original issue discount is being amortized on the effective interest method over the term of the senior notes.
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
subordinated to all of Cinemark USA, Inc.’s and its guarantor’s existing and future secured debt to the extent of the value of the assets securing such debt, including all borrowings under Cinemark USA, Inc.’s amended senior secured credit facility. The 5.125% Senior Notes and the guarantees are structurally subordinated to all existing and future debt and other liabilities of Cinemark USA, Inc.’s subsidiaries that do not guarantee the senior notes.
The indenture to the 5.125% Senior Notes contains covenants that limit, among other things, the ability of Cinemark USA, Inc. and certain of its subsidiaries to (1) make investments or other restricted payments, including paying dividends, making other distributions or repurchasing subordinated debt or equity, (2) incur additional indebtedness and issue preferred stock, (3) enter into transactions with affiliates, (4) enter new lines of business, (5) merge or consolidate with, or sell all or substantially all of its assets to, another person and (6) create liens. As of December 31, 2012, Cinemark USA, Inc. could have distributed up to approximately $1,118,500 to its parent company and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the 5.125% Senior Notes, subject to its available cash and other borrowing restrictions outlined in the indenture. Upon a change of control of Cinemark Holdings, Inc. or Cinemark USA, Inc., Cinemark USA, Inc. would be required to make an offer to repurchase the 5.125% Senior Notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, through the date of repurchase. The indenture governing the 5.125% Senior Notes allows Cinemark USA, Inc. to incur additional indebtedness if it satisfies the coverage ratio specified in the indenture, after giving effect to the incurrence of the additional indebtedness, and in certain other circumstances. The required minimum coverage ratio is 2 to 1 and our actual ratio as of December 31, 2012 was 5.6 to 1.
Prior to December 15, 2017, Cinemark USA, Inc. may redeem all or any part of the 5.125% Senior Notes at its option at 100% of the principal amount plus a make-whole premium. After December 15, 2017, Cinemark USA, Inc. may redeem the 5.125% Senior Notes in whole or in part at redemption prices described in the 5.125% Senior Notes. In addition, Cinemark USA, Inc. may redeem up to 35% of the aggregate principal amount of the 5.125% Senior Notes from the net proceeds of certain equity offerings at the redemption price set forth in the senior notes.
Under a registration rights agreement entered into in conjunction with the issuance of the 5.125% Senior Notes, the Company and its guarantor subsidiaries are obligated to use its commercially reasonable best efforts to file a registration statement with the Securities and Exchange Commission, or the Commission, on or prior to 120 days from the issuance date, pursuant to which the Company will offer to exchange the 5.125% Senior Notes for substantially identical notes registered under the Securities Act of 1933, as amended, that will not contain terms restricting the transfer thereof or providing for registration rights. The Company will use its commercially reasonable best efforts to have the registration statement declared effective by the Commission on or prior to 210 days from the issuance date, or the Effective Date. The Company will use its commercially reasonable best efforts to issue on the earliest practicable date after the Effective Date, but not later than 30 days thereafter, exchange registered 5.125% Senior Notes in exchange for all 5.125% Senior Notes tendered prior thereto in the exchange offer. If the Company is obligated to file a shelf registration statement, the Company will use its commercially reasonable best efforts to file the shelf registration statement with the Commission on or prior to 30 days after such filing obligation arises (and in any event within 240 days after the closing of the 5.125% Senior Notes offering) and to cause the shelf registration statement to be declared effective by the Commission on or prior to 210 days after such obligation arises. The Company will use its commercially reasonable best efforts to keep the shelf registration statement effective for a period of one year after the closing of the 5.125% Senior Notes offering, subject to certain exceptions.
If (a) the Company fails to file the registration statement on or before the date specified, (b) if such registration statement is not declared effective by the Commission on or prior to the date specified for such
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
effectiveness, (c) if the Company fails to consummate the exchange offer within 30 business days of the Effective Date with respect to the exchange offer registration statement or (d) if the date the shelf registration statement is declared effective by the Commission or the exchange offer registration statement thereafter ceases to be effective or usable during the periods specified in the registration rights agreement without being succeeded within two business days by a post-effective amendment to such registration statement that cures such failure and that is itself immediately declared effective (each such event a “Registration Default”), the Company will pay additional interest to each holder of the 5.125% Senior Notes. Such additional interest, with respect to the first 90-day period immediately following the occurrence of any such Registration Default, shall equal an increase in the annual interest rate on the notes by 0.5% per annum.
The amount of the additional interest will increase by an additional 0.5% per annum with respect to each subsequent 90-day period relating to such Registration Default until all Registration Defaults have been cured, up to a maximum amount of additional interest for all Registration Defaults of 1.0% per annum. The 5.125% Senior Notes will not accrue additional interest from and after the second anniversary of the closing of the 5.125% Senior Notes offering even if the Company is not in compliance with its obligations under the registration rights agreement. The receipt of additional interest shall be the sole remedy available to holders of 5.125% Senior Notes as a result of one or more Registration Defaults. Following the cure of all Registration Defaults, the accrual of additional interest will cease.
7.375% Senior Subordinated Notes
On June 3, 2011, Cinemark USA, Inc. issued $200,000 aggregate principal amount of 7.375% senior subordinated notes due 2021, at par value, referred to herein as the Senior Subordinated Notes. The proceeds, after payment of fees, were primarily used to fund the prepayment of the remaining $157,235 of the Company’s unextended portion of term loan debt under its former senior secured credit facility. Interest on the Senior Subordinated Notes is payable on June 15 and December 15 of each year. The Senior Subordinated Notes mature on June 15, 2021. The Company incurred debt issue costs of approximately $4,500 during the year ended December 31, 2011 in connection with the issuance.
The Senior Subordinated Notes are fully and unconditionally guaranteed on a joint and several senior subordinated unsecured basis by certain of the Company’s subsidiaries that guarantee, assume or become liable with respect to any of the Company’s or a guarantor’s other debt. The Senior Subordinated Notes and the guarantees are senior subordinated unsecured obligations and rank equally in right of payment with all of the Company’s and a guarantor’s future senior subordinated indebtedness; are subordinate in right of payment to all of the Company’s and a guarantor’s existing and future senior indebtedness, whether secured or unsecured, including the Company’s obligations under its Amended Senior Secured Credit Facility, its 8.625% Senior Notes and its 5.125% Senior Notes; and structurally subordinate to all existing and future indebtedness and other liabilities of the Company’s non-guarantor subsidiaries.
The indenture to the Senior Subordinated Notes contains covenants that limit, among other things, the ability of Cinemark USA, Inc. and certain of its subsidiaries to (1) make investments or other restricted payments, including paying dividends, making other distributions or repurchasing subordinated debt or equity, (2) incur additional indebtedness and issue preferred stock, (3) enter into transactions with affiliates, (4) enter new lines of business, (5) merge or consolidate with, or sell all or substantially all of its assets to, another person and (6) create liens. As of December 31, 2012, Cinemark USA, Inc. could have distributed up to approximately $1,107,400 to its parent company and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the 7.375% Senior Notes, subject to its available cash and other borrowing restrictions outlined in the indenture. Upon a change of control, as defined in the indenture, the Company would be required to make an
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
offer to repurchase the senior subordinated notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, through the date of repurchase. The indenture governing the Senior Subordinated Notes allows Cinemark USA, Inc. to incur additional indebtedness if it satisfies the coverage ratio specified in the indenture, after giving effect to the incurrence of the additional indebtedness, and in certain other circumstances. The required minimum coverage ratio is 2 to 1, and our actual ratio as of December 31, 2012 was 5.5 to 1.
Prior to June 15, 2016, Cinemark USA, Inc. may redeem all or any part of the Senior Subordinated Notes at its option at 100% of the principal amount plus a make-whole premium plus accrued and unpaid interest on the senior subordinated notes to the date of redemption. After June 15, 2016, Cinemark USA, Inc. may redeem the Senior Subordinated Notes in whole or in part at redemption prices specified in the indenture. In addition, prior to June 15, 2014, Cinemark USA, Inc. may redeem up to 35% of the aggregate principal amount of the Senior Subordinated Notes from the net proceeds of certain equity offerings at the redemption price set forth in the indenture.
Cinemark USA, Inc. and its guarantor subsidiaries filed a registration statement with the Securities and Exchange Commission (the “Commission”) on July 27, 2011 pursuant to which Cinemark USA, Inc. offered to exchange the Senior Subordinated Notes for substantially similar registered Senior Subordinated Notes. The registration statement became effective August 4, 2011, and approximately $199,500 of the notes were exchanged on September 7, 2011. The registered Senior Subordinated Notes, issued in the exchange, do not have transfer restrictions. Approximately $500 of the notes were not exchanged as of December 31, 2012.
8.625% Senior Notes
On June 29, 2009, Cinemark USA, Inc. issued $470,000 aggregate principal amount of 8.625% senior notes due 2019, referred to herein as the 8.625% Senior Notes, with an original issue discount of $11,468, resulting in proceeds of approximately $458,532. The proceeds were primarily used to fund the repurchase of the then remaining outstanding $419,403 aggregate principal amount at maturity of Cinemark, Inc.’s 9.75% senior discount notes. Interest on the 8.625% Senior Notes is payable on June 15 and December 15 of each year. The 8.625% Senior Notes mature on June 15, 2019. The original issue discount is being amortized on the effective interest method over the term of the 8.625% Senior Notes. As of December 31, 2012, the carrying value of the 8.625% Senior Notes was $461,464.
Cinemark USA, Inc. filed a registration statement with the Securities and Exchange Commission on September 24, 2009 pursuant to which Cinemark USA, Inc. offered to exchange the 8.625% Senior Notes for substantially similar registered 8.625% Senior Notes. The registration statement became effective and the notes were exchanged on December 17, 2009. The registered 8.625% Senior Notes, issued in the exchange, do not have transfer restrictions.
The 8.625% Senior Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of Cinemark USA, Inc.’s subsidiaries that guarantee, assume or become liable with respect to any of Cinemark USA, Inc.’s or a guarantor’s debt. The 8.625% Senior Notes and the guarantees are senior unsecured obligations and rank equally in right of payment with all of Cinemark USA, Inc.’s and its guarantor’s existing and future senior unsecured debt and senior in right of payment to all of Cinemark USA, Inc.’s and its guarantor’s existing and future subordinated debt. The 8.625% Senior Notes and the guarantees are effectively subordinated to all of Cinemark USA, Inc.’s and its guarantor’s existing and future secured debt to the extent of the value of the assets securing such debt, including all borrowings under Cinemark USA, Inc.’s amended senior secured credit facility. The senior notes8.625% Senior Notes and the guarantees are structurally subordinated to all existing and future debt and other liabilities of Cinemark USA, Inc.’s subsidiaries that do not guarantee the senior notes.
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
The indenture to the senior notes8.625% Senior Notes contains covenants that limit, among other things, the ability of Cinemark USA, Inc. and certain of its subsidiaries to (1) consummate specified asset sales, (2) make investments or other restricted payments, including paying dividends, making other distributions or repurchasing subordinated debt or equity, (3) incur additional indebtedness and issue preferred stock, (4) enter into transactions with affiliates, (5) enter new lines of business, (6) merge or consolidate with, or sell all or substantially all of its assets to, another person and (7) create liens. As of December 31, 2012, Cinemark USA, Inc. could have distributed up to approximately $1,060,200 to its parent company and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the 8.625% Senior Notes, subject to its available cash and other borrowing restrictions outlined in the indenture. Upon a change of control of Cinemark Holdings, Inc. or Cinemark USA, Inc., Cinemark USA, Inc. would be required to make an offer to repurchase the senior notes8.625% Senior Notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, through the date of repurchase. Certain asset dispositions are considered triggering events that may require Cinemark USA, Inc. to use the proceeds from those asset dispositions to make an offer to purchase the notes at 100% of their principal amount, plus accrued and unpaid interest, if any, to the date of repurchase if such proceeds are not otherwise used within 365 days as described in the indenture. The indenture governing the senior notes8.625% Senior Notes allows Cinemark USA, Inc. to incur additional indebtedness if it satisfies the coverage ratio specified in the indenture, after giving effect to the incurrence of the additional indebtedness, and in certain other circumstances. The required minimum coverage ratio is 2 to 1 and our actual ratio as of December 31, 20092012 was 5.45.5 to 1.
Prior to June 15, 2014, Cinemark USA, Inc. may redeem all or any part of the senior notes8.625% Senior Notes at its option at 100% of the principal amount plus a make-whole premium. After June 15, 2014, Cinemark USA, Inc. may redeem the senior notes8.625% Senior Notes in whole or in part at redemption prices described in the senior notes. In addition, Cinemark USA, Inc. may redeem up to 35% of the aggregate principal amount of the senior notes8.625% Senior Notes from the net proceeds of certain equity offerings at the redemption price set forth in the 8.625% Senior Notes.
Former Senior Secured Credit Facility
On October 5, 2006, in connection with the Century Acquisition, Cinemark USA, Inc. entered into its former senior notes.
F-23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
extended from October 2012 to March 2015. The maturity date of the remaining $76,500 of Cinemark USA, Inc.’s revolving credit line did not change and its guarantor subsidiaries filed a registration statement withremained October 2012. The interest rate on the Securities and Exchange Commission (the “Commission”) on September 24, 2009 pursuant to whichoriginal revolving credit line accrued interest, at Cinemark USA, Inc. offered’s option, at: (A) a base rate equal to exchange the higher of (1) the prime lending rate as set forth on the British Banking Association Telerate page 5 and (2) the federal funds effective rate from time to time plus 0.50%, plus a margin that ranges from 0.50% to 1.00% per annum, or (B) a “eurodollar rate” plus a margin that ranged from 1.50% to 2.00% per annum. The interest rate on the extended revolving credit line accrued interest, at Cinemark USA, Inc.’s option at: (A) the base rate equal to the higher of (1) the prime lending rate as set forth on the British Banking Association Telerate page 5, or (2) the federal funds effective rate from time to time plus 0.50%, plus a margin that ranges from 1.75% to 2.0% per annum, or (B) a “eurodollar rate” plus a margin that ranged from 2.75% to 3.0% per annum. The margin of the revolving credit line was determined by the consolidated net senior notes for substantially similar registered senior notes. The registration statement became effectivesecured leverage ratio as defined in the Former Senior Secured Credit Facility.
As a result of the prepayment made in June 2011, the Company wrote-off approximately $2,183 in unamortized debt issue costs related to the unextended portion of term loan debt that was prepaid. In addition, the Company determined that a portion of the quarterly interest payments hedged by two of its current interest rate swap agreements under cash flow hedges and the notesquarterly interest payments related to its previously terminated interest rate swap agreement were exchanged on December 17, 2009. The exchanged registered senior notes doprobable not have transfer restrictions.
On December 18, 2012, the remaining outstanding term loan of premiums$898,955 was paid other fees and the write-off of unamortized debt issue costs.
F-24
Fair Value of Long Term Debt
The Company estimates the fair value of its long termlong-term debt primarily using quoted market prices, which fall under Level 2.2 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35. The carrying value of the Company’s long term debt was $1,543,705$1,764,010 and $1,508,462$1,572,221 as of December 31, 20092012 and 2008,2011, respectively. The fair value of the Company’s long term debt was $1,513,838$1,851,246 and $1,449,147$1,622,286 as of December 31, 20092012 and 2008,2011, respectively. The estimated fair value does not include prepayment penalties that would be incurred upon the early extinguishment of certain debt issues.
Covenant Compliance and Debt Maturity
As of December 31, 2009,2012, the Company believes it was in full compliance with all agreements, including related covenants, governing its outstanding debt. The Company’s long-term debt at December 31, 20092012 matures as follows:
2010 | $ | 12,227 | ||
2011 | 11,200 | |||
2012 | 271,600 | |||
2013 | 789,781 | |||
2014 | — | |||
Thereafter | 470,000 | (1) | ||
Total | $ | 1,554,808 | ||
2013 | 9,546 | |||
2014 | 7,000 | |||
2015 | 7,000 | |||
2016 | 7,000 | |||
2017 | 7,000 | |||
Thereafter | 1,735,000 | (1) | ||
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Total | 1,772,546 | |||
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(1) | Reflects the aggregate principal amount at maturity of the |
F-25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
14. | INTEREST RATE SWAP AGREEMENTS |
The Company entered intois currently a party to three interest rate swap agreements. The interest rate swap agreements that qualify for cash flow hedge accounting. No premium or discount was incurred upon the Company entering into any of its interest rate swap agreements because the pay rates and receive rates on the interest rate swap agreements represented prevailing rates for each counterparty at the time each of the interest rate swap agreements was consummated. The fair values of the interest rate swaps are recorded on the Company’s consolidated balance sheet as an asset or liability with the effective portion of the interest rate swaps’ gains or losses reported as a component of accumulated other comprehensive income (loss)loss and the ineffective portion reported in earnings. The changes in fair values are reclassified from accumulated other comprehensive loss into earnings in the same period that the hedged items affect earnings. For the years ended December 31, 2010, 2011 and 2012, the Company reclassified $11,771, $15,929 and $12,979, respectively, from accumulated other comprehensive loss into earnings.
The valuation technique used to determine fair value is the income approach and under this approach, the Company uses projected future interest rates as provided by counterparties to the interest rate swap agreements and the fixed rates that the Company is obligated to pay under these agreements. Therefore, the Company’s measurements use significant unobservable inputs, which fall in Level 3 of the U.S. GAAP hierarchy as defined by FASB ASC Topic 820-10-35.
Below is a summary of the Company entered into twoCompany’s interest rate swap agreements, with effective datesall of August 13, 2007 and termswhich are designated as cash flow hedges, as of five years each. December 31, 2012:
Nominal Amount | Effective Date | Pay Rate | Receive Rate | Expiration Date | Current Liability (1) | Long-Term Liability(2) | Estimated Total Fair Value at December 31, 2012 | |||||||||||||||||||||
$175,000 | December 2010 | 1.3975 | % | 1-Month LIBOR | September 2015 | $ | 1,959 | $ | 2,991 | $ | 4,950 | |||||||||||||||||
$175,000 | December 2010 | 1.4000 | % | 1-Month LIBOR | September 2015 | 1,978 | 3,004 | 4,982 | ||||||||||||||||||||
$100,000 | November 2011 | 1.7150 | % | 1-Month LIBOR | April 2016 | 1,566 | 2,694 | 4,260 | ||||||||||||||||||||
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$450,000 | $ | 5,503 | $ | 8,689 | $ | 14,192 | ||||||||||||||||||||||
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(1) | Included in accrued other current liabilities on the consolidated balance sheet as of December 31, 2012. |
(2) | Included in other long-term liabilities on the consolidated balance sheet as of December 31, 2012. |
The interest rate swaps were designatedCompany was previously a party to hedge approximately $500,000 of the Company’s variable rate debt obligations under its senior secured credit facility. Under the terms of the interest rate swap agreements, the Company pays fixed rates of 4.918% and 4.922% on $375,000 and $125,000, respectively, of variable rate debt and receives interest at a variable rate based on the 3-month LIBOR. The 3-month LIBOR rate on each reset date determines the variable portion of the interest rate swaps for the three-month period following the reset date. No premium or discount was incurred upon the Company entering into the interest rate swaps because the pay and receive rates on the interest rate swaps represented prevailing rates for each counterparty at the time the interest rate swaps were consummated.
See Note 15 for additional information about the Company’s fair value measurements related to interest expense over the next twelve months.
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
15. | FAIR VALUE MEASUREMENTS |
The Company determines fair value measurements in accordance with FASB ASC Topic 820, which establishes a fair value hierarchy under which an effective date of November 14, 2008 and a term of four years. The interest rate swap was designated to hedge approximately $100,000 of the Company’s variable rate debt obligations under its senior secured credit facility for three years and $75,000 of the Company’s variable rate debt obligations under its senior secured credit facility for four years. Under the terms of the interest rate swap agreement, the Company pays a fixed rate of 3.63% on $175,000 of variable rate debt and receives interest at a variable rateasset or liability is categorized based on the 1-month LIBOR.lowest level of input significant to its fair value measurement. The 1-month LIBOR ratelevels of input defined by FASB ASC Topic 820 are as follows:
Level 1 | — | quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date; | ||
Level 2 | — | other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and | ||
Level 3 | — | unobservable and should be used to measure fair value to the extent that observable inputs are not available. |
Below is a summary of assets and liabilities measured at fair value on each reset date determines the variable portion of the interest rate swap for the one-month period following the reset date. No premium or discount was incurred upona recurring basis by the Company entering into the interest rate swap because the pay and receive rates on the interest rate swap represented prevailing rates for the counterparty at the time the interest rate swap was consummated.
Carrying Value | Fair Value | |||||||||||||||
Description | Level 1 | Level 2 | Level 3 | |||||||||||||
Interest rate swap liabilities — current (see Note 14) | $ | (5,503 | ) | $ | — | $ | — | $ | (5,503 | ) | ||||||
Interest rate swap liabilities — long term (see Note 14) | $ | (8,689 | ) | $ | — | $ | — | $ | (8,689 | ) | ||||||
Investment in RealD (see Note 8) | $ | 13,707 | $ | 13,707 | $ | — | $ | — |
Below is a summary of assets and liabilities measured at fair value on a recurring basis by the Company under FASB ASC Topic 820 as of December 31, 2011:
Carrying Value | Fair Value | |||||||||||||||
Description | Level 1 | Level 2 | Level 3 | |||||||||||||
Interest rate swap liabilities — current (see Note 14) | $ | (9,979 | ) | $ | — | $ | — | $ | (9,979 | ) | ||||||
Interest rate swap liabilities — long term (see Note 14) | $ | (6,597 | ) | $ | — | $ | — | $ | (6,597 | ) | ||||||
Investment in RealD (see Note 8) | $ | 9,709 | $ | 9,709 | $ | — | $ | — |
Below is a reconciliation of the beginning and ending balance for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
Liabilities | Assets | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Beginning balances — January 1 | $ | 16,576 | $ | 15,970 | $ | — | $ | 8,955 | ||||||||
Total gain (loss) included in accumulated other comprehensive loss | (1,576 | ) | 1,736 | — | (8,955 | ) | ||||||||||
Total gain included in earnings | (808 | ) | (1,130 | ) | — | — | ||||||||||
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Ending balances — December 31 | $ | 14,192 | $ | 16,576 | $ | — | $ | — | ||||||||
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The Company also uses fair value measurements on a nonrecurring basis in the impairment evaluations of its long-lived assets (see Note 1 and Note 11 for further discussions). There were no ineffectivenesschanges in valuation techniques during the yearsperiod. The fair value measurement for the Company’s investment in RealD transferred from Level 2 to Level 1 during the year ended December 31, 20082011. Previous fair value estimates for the investment were based on RealD’s quoted stock price, discounted to reflect the impact of a lock-up period to which the Company was subject. The lock-up period expired during January 2011; therefore, the fair value
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and 2009.
estimates for the investment subsequent to January 2011 were based on RealD’s stock price with no adjustments. See Note 8 for more information on the Company’s investment in RealD. There were no transfers in or out of Level 3 during the year ended December 31, 2012.
16. | FOREIGN CURRENCY TRANSLATION |
The accumulated other comprehensive loss account in stockholders’ equity of $72,347$23,682 and $7,459$37,698 at December 31, 20082011 and December 31, 2009,2012, respectively, includes the cumulative foreign currency adjustmentslosses of $(40,287)$11,325 and $16,070,$31,330, respectively, from translating the financial statements of the Company’s international subsidiaries.
F-26
Below is a summary of the exchange rate for the Brazilian real was 1.75 reais to the U.S. dollar (the exchange rate was 2.36 reais to the U.S. dollar at December 31, 2008). As a result, the effectimpact of translating the December 31, 2009 Brazilian2012 financial statements into U.S. dollars is reflected as a cumulative foreign currency translation adjustment to the accumulated other comprehensive loss account as an increase in stockholders’ equity of $48,500. At December 31, 2009, the total assetscertain of the Company’s Brazilian subsidiaries were U.S. $261,892.
Country | Exchange Rate as of | Total Assets at December 31, 2012 | Other Comprehensive Income (Loss) For Year Ended December 31, 2012 | |||||||||||||
December 31, 2012 | December 31, 2011 | |||||||||||||||
Brazil | 2.05 | 1.87 | $ | 348,405 | $ | (21,690 | ) | |||||||||
Mexico | 13.02 | 14.00 | $ | 137,705 | 6,601 | |||||||||||
Argentina | 4.91 | 4.31 | $ | 133,152 | (12,926 | ) | ||||||||||
Colombia | 1,768.23 | 1,950.0 | $ | 46,898 | 2,790 | |||||||||||
Chile | 479.8 | 520.7 | $ | 49,749 | 2,958 | |||||||||||
All other | 2,262 | |||||||||||||||
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$ | (20,005 | ) | ||||||||||||||
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Below is a summary of the exchange rate for the Mexican peso was 13.04 pesos to the U.S. dollar (the exchange rate was 13.78 pesos to the U.S. dollar at December 31, 2008). As a result, the effectimpact of translating the December 31, 2009 Mexican2011 financial statements into U.S. dollars is reflectedof certain of the Company’s international subsidiaries:
Exchange Rate as of | Total Assets at December 31, 2011 | Other Comprehensive Income (Loss) For Year Ended December 31, 2011 | ||||||||||||||
Country | December 31, 2011 | December 31, 2010 | ||||||||||||||
Brazil | 1.87 | 1.67 | $ | 327,679 | $ | (28,000 | ) | |||||||||
Mexico | 14.00 | 12.39 | $ | 121,935 | (11,818 | ) | ||||||||||
Argentina | 4.31 | 3.98 | $ | 128,524 | (4,196 | ) | ||||||||||
Colombia | 1,950.0 | 1,950.0 | $ | 34,568 | 153 | |||||||||||
Chile | 520.7 | 473.2 | $ | 40,084 | (3,324 | ) | ||||||||||
All other | 1,127 | |||||||||||||||
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$ | (46,058 | ) | ||||||||||||||
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CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
During May 2011, the Company’s ownership in its Chilean subsidiary increased from 97.4% to 100% as a cumulative foreign currency translation adjustment toresult of the Company’s purchase of the noncontrolling interests’ shares of Cinemark Chile. As part of this transaction, the Company recorded the amount of accumulated other comprehensive loss account as an increase in stockholders’ equity of $3,570. At December 31, 2009, the total assets of the Company’s Mexican subsidiaries were U.S. $128,263.
17. | INVESTMENTS IN AND ADVANCES TO AFFILIATES |
The Company had the following investments in and advances to affiliates at December 31:
December 31, | ||||||||
2008 | 2009 | |||||||
Investment in DCIP — investment, at equity— 33% interest | $ | 1,017 | $ | 640 | ||||
Cinemark — Core Pacific, Ltd. (Taiwan) — investment, at cost — 14% interest | 1,383 | 1,383 | ||||||
Other | 1,884 | 1,506 | ||||||
Total | $ | 4,284 | $ | 3,529 | ||||
December 31, | ||||||||
2011 | 2012 | |||||||
Cinemark — Core Pacific, Ltd. (Taiwan) — investment, at cost — 14% interest | $ | 1,383 | $ | 1,383 | ||||
Other | 160 | 99 | ||||||
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Total | $ | 1,543 | $ | 1,482 | ||||
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18. | NONCONTROLLING INTERESTS IN SUBSIDIARIES |
Noncontrolling interests in subsidiaries of the Company were as follows at December 31:
December 31, | ||||||||
2008 | 2009 | |||||||
Cinemark Partners II — 49.2% interest | $ | 8,114 | $ | 7,961 | ||||
Cinemark Colombia, S.A. — 49.0% interest | 3,105 | 4,465 | ||||||
Greeley Ltd. — 49.0% interest | 1,015 | 982 | ||||||
Cinemark Panama S.A. — 20% interest | 181 | 369 | ||||||
Others | 556 | 1,019 | ||||||
Total | $ | 12,971 | $ | 14,796 | ||||
F-27
December 31, | ||||||||
2011 | 2012 | |||||||
Cinemark Partners II — 49.2% interest (in one theatre) | $ | 7,864 | $ | 7,701 | ||||
Laredo Theatres — 25% interest (in two theatres) | 372 | 913 | ||||||
Greeley Ltd. — 49.0% interest (in one theatre) | 695 | 622 | ||||||
Others | 1,831 | 1,683 | ||||||
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Total | $ | 10,762 | $ | 10,919 | ||||
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Years ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Net income (loss) attributable to Cinemark Holdings, Inc. | $ | 88,920 | $ | (48,325 | ) | $ | 97,108 | |||||
Transfers from noncontrolling interests | ||||||||||||
Increase in Cinemark Holdings, Inc. additional paid-in-capital for Central America Share Exchange | — | 12,949 | — | |||||||||
Increase in Cinemark Holdings, Inc. additional paid-in-capital for Ecuador Share Exchange | — | 3,200 | — | |||||||||
Increase in Cinemark Holdings, Inc. additional paid-in-capital for buyout of Argentina noncontrolling interests | — | — | 23 | |||||||||
Net transfers from non-controlling interests | — | 16,149 | 23 | |||||||||
Change from net income (loss) attributable to Cinemark Holdings, Inc. and transfers from noncontrolling interests | $ | 88,920 | $ | (32,176 | ) | $ | 97,131 | |||||
Years ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
Net income attributable to Cinemark Holdings, Inc. | $ | 146,120 | $ | 130,557 | $ | 168,949 | ||||||
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Increase in Cinemark Holdings, Inc. common stock and additional paid-in-capital for the Colombia Share Exchange (see Note 9) | $ | 6,951 | $ | — | $ | — | ||||||
Decrease in Cinemark Holdings, Inc. additional paid-in-capital for the buyout of Panama noncontrolling interests (see Note 9) | (390 | ) | — | — | ||||||||
Decrease in Cinemark Holdings, Inc. additional paid-in-capital for the buyout of Chile noncontrolling interests (see Note 9) | — | (1,402 | ) | — | ||||||||
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Net transfers from non-controlling interests | 6,561 | (1,402 | ) | — | ||||||||
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Change from net income attributable to Cinemark Holdings, Inc. and transfers from noncontrolling interests | $ | 152,681 | $ | 129,155 | $ | 168,949 | ||||||
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CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
19. | CAPITAL STOCK |
Common Stock —Common stockholders are entitled to vote on all matters submitted to a vote of the Company’s stockholders. Subject to the rights of holders of any then outstanding shares of the Company’s preferred stock, the Company’s common stockholders are entitled to any dividends that may be declared by the board of directors. The shares of the Company’s common stock are not subject to any redemption provisions. The Company has no issued and outstanding shares of preferred stock.
The Company’s ability to pay dividends is effectively limited by its status as a holding company and the terms of its indentureindentures and its subsidiary’s amended senior secured credit facility, which also significantly restrictrestricts the ability of certain of the Company’s subsidiaries to pay dividends directly or indirectly to the Company. See Note 13. Furthermore, certain of the Company’s foreign subsidiaries currently have a deficit in retained earnings which prevents the Company from declaring and paying dividends from those subsidiaries.
During April 9, 2007.
F-28
Treasury Stock —Treasury stock represents shares of common stock repurchased by the Company and not yet retired. The Company has applied the cost method in recording its treasury shares. During
Below is a summary of the yearCompany’s treasury stock activity for the years ended December 31, 2008, the Company repurchased 6,4992011 and 2012:
Number of Treasury Shares | Cost | |||||||
Balance at January 1, 2011 | 3,359,859 | $ | 44,725 | |||||
Restricted stock forfeitures(1) | 1,920 | — | ||||||
Restricted stock withholdings(2) | 25,200 | 494 | ||||||
Restricted stock awards canceled(1) | 4,613 | — | ||||||
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Balance at December 31, 2011 | 3,391,592 | $ | 45,219 | |||||
Restricted stock forfeitures(1) | 14,423 | — | ||||||
Restricted stock withholdings(2) | 147,070 | 3,263 | ||||||
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Balance at December 31, 2012 | 3,553,085 | $ | 48,482 | |||||
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(1) | The Company repurchased forfeited and canceled restricted shares |
(2) | The Company withheld restricted shares as a result of the election by certain employees to satisfy their tax liabilities upon vesting in restricted stock. The Company determined the number of shares to be withheld based upon market values that ranged from $19.60 to $22.50 per share. |
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share as a result of restricted stock forfeitures. During the year ended December 31, 2009, the Company repurchased 23,976 shares of treasury stock at a cost of $0.001 per share as a result of restricted stock forfeitures and repurchased 3,274,943 shares at an aggregate cost of $43,895, as a result of the noncash exercises of stock options by employees, both of which were done in accordance with the Amended and Restated 2006 Long Term Incentive Plan. In a noncash exercise, the exercise price for the shares to be held by employees and the related tax withholdings are satisfied with stock withholdings. Employees exercised a total of 4,577,025 options and of this amount, 3,274,943 shares were repurchased by the Company to satisfy the exercise price and tax liabilities. The remaining 1,302,082 shares were issued to employees. The Company repurchased the 3,274,943 shares at current market value, which ranged from $13.40 to $13.46 based on the day on which the stock options were exercised. data
As of December 31, 2009,2012, the Company had no plans to retire any shares of treasury stock.
Stock Options— Below is a summary of stock option activity and related information for the years ended December 31, 2007, 20082010, 2011 and 2009:
F-29
Year Ended December 31, 2010 | Year Ended December 31, 2011 | Year Ended December 31, 2012 | ||||||||||||||||||||||||||
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||||||||||||||
Outstanding at January 1 | 1,231,892 | $ | 7.63 | 140,356 | $ | 7.63 | 82,166 | $ | 7.63 | |||||||||||||||||||
Exercised | (1,091,536 | ) | $ | 7.63 | (58,190 | ) | $ | 7.63 | (60,144 | ) | $ | 7.63 | ||||||||||||||||
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Outstanding at December 31 | 140,356 | $ | 7.63 | 82,166 | $ | 7.63 | 22,022 | $ | 7.63 | $ | 404 | |||||||||||||||||
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Vested options at December 31 | 140,356 | $ | 7.63 | 82,166 | $ | 7.63 | 22,022 | $ | 7.63 | $ | 404 | |||||||||||||||||
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|
Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||||||
December 31, 2007 | December 31, 2008 | December 31, 2009 | ||||||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||||||
Average | Average | Average | Aggregate | |||||||||||||||||||||||||
Exercise | Exercise | Exercise | Intrinsic | |||||||||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | Value | ||||||||||||||||||||||
Outstanding at January 1 | 6,980,593 | $ | 7.63 | 6,323,429 | $ | 7.63 | 6,139,670 | $ | 7.63 | |||||||||||||||||||
Granted | — | — | — | — | — | — | ||||||||||||||||||||||
Forfeited | (112,416 | ) | $ | 7.63 | (14,492 | ) | $ | 7.63 | — | — | ||||||||||||||||||
Exercised | (544,748 | ) | $ | 7.63 | (169,267 | ) | $ | 7.63 | (4,907,778 | ) | $ | 7.63 | ||||||||||||||||
Outstanding at December 31 | 6,323,429 | $ | 7.63 | 6,139,670 | $ | 7.63 | 1,231,892 | $ | 7.63 | $ | 8,303 | |||||||||||||||||
Vested options at December 31 | 4,647,460 | $ | 7.63 | 5,809,343 | $ | 7.63 | 1,231,892 | $ | 7.63 | $ | 8,303 | |||||||||||||||||
Options outstanding at December 31, 20092012 have an average remaining contractual life of approximately 4.75two years.
Restricted Stock— During the year ended December 31, 2009, the Company granted 472,881 shares of restricted stock to independent directors and employees of the Company. The fair value of the shares of restricted stock was determined based on the market value of the Company’s stock on the dates of grant, which ranged from $9.50 to $11.32 per share. The Company assumed forfeiture rates ranging from zero to 5% for the restricted stock awards. The restricted stock vests over periods ranging from one year to four years based on continued service by the directors and employees.
Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||
December 31, 2007 | December 31, 2008 | December 31, 2009 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||
Outstanding at January 1 | — | — | 21,880 | $ | 18.28 | 385,666 | $ | 13.32 | ||||||||||||||||
Granted | 21,880 | $ | 18.28 | 392,317 | $ | 13.32 | 472,881 | $ | 9.69 | |||||||||||||||
Vested | — | — | (22,032 | ) | $ | 18.24 | (70,493 | ) | $ | 13.77 | ||||||||||||||
Forfeited | — | — | (6,499 | ) | $ | 13.14 | (23,976 | ) | $ | 11.15 | ||||||||||||||
Outstanding at December 31 | 21,880 | $ | 18.28 | 385,666 | $ | 13.32 | 764,078 | $ | 11.10 | |||||||||||||||
Year Ended December 31, 2010 | Year Ended December 31, 2011 | Year Ended December 31, 2012 | ||||||||||||||||||||||
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | |||||||||||||||||||
Outstanding at January 1 | 764,078 | $ | 11.10 | 1,254,691 | $ | 14.60 | 1,384,390 | $ | 16.85 | |||||||||||||||
Granted | 683,921 | $ | 17.94 | 424,436 | $ | 19.45 | 653,229 | $ | 21.70 | |||||||||||||||
Vested | (190,589 | ) | $ | 12.63 | (288,204 | ) | $ | 10.84 | (489,033 | ) | $ | 17.00 | ||||||||||||
Canceled | — | $ | — | (4,613 | ) | $ | 18.35 | — | $ | — | ||||||||||||||
Forfeited | (2,719 | ) | $ | 11.03 | (1,920 | ) | $ | 14.34 | (14,423 | ) | $ | 18.58 | ||||||||||||
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| |||||||||||||
Outstanding at December 31 | 1,254,691 | $ | 14.60 | 1,384,390 | $ | 16.85 | 1,534,163 | $ | 18.85 | |||||||||||||||
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During 2008, the Company changed its estimated forfeiture rate on certain of these grants from 2% to 5%, based on actual cumulative restricted stock forfeitures. The cumulative impact of the increased forfeiture rate was approximately $14 and was recorded as a reduction in compensation expense during the year ended December 31, 2008.
F-30
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
The Company recorded total compensation expense of $4,928, $6,591 and $10,637 related to restricted stock awards during the years ended December 31, 2010, 2011 and 2012, respectively. Upon vesting, the Company receives an income tax deduction. The total fair value of shares vested during the years ended December 31, 2010, 2011 and 2012 was $3,272, $5,658 and $9,702, respectively. The Company recognized tax benefits of approximately $1,087, $2,188 and $4,075 related to shares that vested during the years ended December 2010, 2011 and 2012, respectively.
As of December 31, 2012, the remaining unrecognized compensation expense related to these restricted stock awards was approximately $18,341. The weighted average period over which this remaining compensation expense will be recognized is approximately two years.
Restricted Stock Units— During the years ended December 31, 20082010, 2011 and 2009,2012, the Company granted restricted stock units representing 204,361396,429, 153,727 and 303,168152,955 hypothetical shares of common stock, respectively, under the Restated Incentive Plan. The restricted stock units vest based on a combination of financial performance factors and continued service. The financial performance factors are based on an implied equity value concept that determines an internal rate of return (“IRR”) during a three fiscal year period based on a formula utilizing a multiple of Adjusted EBITDA subject to certain specified adjustments (as defined in the restricted stock unit award agreement). The financial performance factors for the restricted stock units have a threshold, target and maximum level of payment opportunity. If the IRR for the three year period is at least 8.5%, which is the threshold, one-third of the restricted stock units vest. If the IRR for the three year period is at least 10.5%, which is the target, two-thirds of the restricted stock units vest. If the IRR for the three year period is at least 12.5%, which is the maximum, 100% of the restricted stock units vest. All payouts of restricted stock units that vest arewill be subject to an additional one year service requirement and will be paid in the form of common stock if the participant continues to provide services through the fourth anniversary of the grant date. At the time of each of the 2010, 2011 and 2012 restricted stock unit grants, the Company was not able to determine which IRR level would be reached for the respective three year performance period, therefore the Company assumed the mid-point IRR level for these grants in determining the amount of compensation expense to record for such grants. The fair values of the restricted stock unit awards granted were determined based on the market values of the Company’s common stock on the dates of grant, which ranged from $18.34 to $21.63 per share. The Company assumed forfeiture rates ranging from 0% to 5% for the restricted stock unit awards. Restricted stock unit award participants are eligible to receive dividend equivalent payments if and at the time the restricted stock unit awards become vested.
Below is a table summarizing the potential number of shares that could vest under restricted stock unit awards granted during the years ended December 31, 20082010, 2011 and 20092012 at each of the three levels of financial performance (excluding forfeiture assumptions)forfeitures):
Granted During the Year Ended December 31, | ||||||||||||||||
2008 | 2009 | |||||||||||||||
Number of | Number of | |||||||||||||||
Shares | Value at | Shares | Value at | |||||||||||||
Vesting | Grant | Vesting | Grant | |||||||||||||
at IRR of at least 8.5% | 68,116 | $ | 885 | 101,051 | $ | 963 | ||||||||||
at IRR of at least 10.5% | 136,239 | $ | 1,771 | 202,117 | $ | 1,927 | ||||||||||
at IRR of at least 12.5% | 204,361 | $ | 2,656 | 303,168 | $ | 2,891 |
Granted During the Year Ended December 31, | ||||||||||||||||||||||||
2010 | 2011 | 2012 | ||||||||||||||||||||||
Number of Shares Vesting | Value at Grant | Number of Shares Vesting | Value at Grant | Number of Shares Vesting | Value at Grant | |||||||||||||||||||
at IRR of at least 8.5% | 132,144 | $ | 2,423 | 51,239 | $ | 991 | 50,981 | $ | 1,103 | |||||||||||||||
at IRR of at least 10.5% | 264,288 | $ | 4,847 | 102,488 | $ | 1,983 | 101,974 | $ | 2,206 | |||||||||||||||
at IRR of at least 12.5% | 396,429 | $ | 7,271 | 153,727 | $ | 2,975 | 152,955 | $ | 3,308 |
During the fact thatyear ended December 31, 2010, the IRR for the three year performance period could not be determined at the time of each grant, the Company estimated that the most likely outcome is the achievementCompensation Committee of the mid-point IRR level. The Company assumed forfeiture rates ranging from zero to 5% for the restricted stock unit awards. If during the service periods, additional information becomes available to lead the Company to believeCompany’s board of directors approved a different IRR level will be achieved for the three year performance periods, the Company will reassess the numbermodification of units that will vest for the respective grant and adjust its compensation expense accordingly on a prospective basis over the remaining service period.
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
to the Company’s top five executive officers during 2008. Both the modification and the cancellation and replacement were forfeitedaccounted for as modifications of share based awards. As a result of these modifications, the Company recorded incremental compensation expense of approximately $435 during the year ended December 31, 2010, which represented the difference between the grant date fair value and the modification date fair value of these awards for the portion of the service period that had been satisfied at the time of the modification. The service period for the modified awards did not change.
During the year ended December 31, 2010, based upon additional information, the Company determined that the 12.5% IRR level would be reached for the 2008 grant and recorded incremental compensation expense of approximately $823. During the year ended December 31, 2010, based upon additional information, the Company also determined that the 12.5% IRR level was expected to be reached for the 2009 which was withingrant and recorded incremental compensation expense of $377 during the Company’s original forfeiture rate estimates. Noyear ended December 31, 2010.
During the year ended December 31, 2012, 196,051 restricted stock unit awards have vested. Upon vesting, each restricted stock unit was converted into one share of the Company’s common stock. In addition, the Company paid approximately $600 in dividends on the vested restricted stock units, which represented dividends that had accumulated on the awards since they were granted in 2008. The fair value of the restricted stock unit awards that vested during the year ended December 31, 2012 was approximately $4,400. The Company recognized a tax benefit of approximately $1,848 during the year ended December 31, 2012 related to these vested awards. There were no forfeitures of restricted stock unit awards during the year ended December 31, 2012.
During the year ended December 31, 2012, based upon additional information, the Company determined that the 12.5% IRR level was reached for the 2010 grant and recorded incremental compensation expense of approximately $1,609.
The Company recorded total compensation expense of $0, $326$3,424, $3,101 and $759$4,433 related to these restricted stock unit awards during the years ended December 31, 2007, 20082010, 2011 and 2009,2012, respectively. As of December 31, 2009,2012, the Company had restricted stock units outstanding that represented a total of 994,671 hypothetical shares of common stock, net of actual cumulative forfeitures of 11,608 units, assuming the maximum IRR of at least 12.5% is achieved for all of the outstanding restricted stock unit awards. As of December 31, 2012, the remaining unrecognized compensation expense related to thesethe outstanding restricted stock unit awards was $2,442$4,890, which assumes the high-point IRR level will be achieved for the 2009 and 2010 grants and the mid-point IRR level will be achieved for the 2011 and 2012 grants. The weighted average period over which this remaining compensation expense will be recognized is approximately threetwo years.
F-31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
20. | SUPPLEMENTAL CASH FLOW INFORMATION |
The following is provided as supplemental information to the consolidated statements of cash flows:
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Cash paid for interest(1) | $ | 132,029 | $ | 94,533 | $ | 239,376 | ||||||
Cash paid for income taxes, net of refunds received | $ | 139,443 | $ | 36,203 | $ | 46,213 | ||||||
Noncash investing and financing activities: | ||||||||||||
Change in construction lease obligations related to construction of theatres | $ | (2,546 | ) | $ | — | $ | — | |||||
Changes in accounts payable and accrued expenses for the acquisition of theatre properties and equipment(2) | $ | (9,754 | ) | $ | 3,723 | $ | (6,166 | ) | ||||
Theatre properties and equipment acquired under capital lease(3) | $ | 9,102 | $ | 7,911 | $ | 20,400 | ||||||
Change in fair market values of interest rate swap agreements (See Note 15) | $ | (11,348 | ) | $ | (22,063 | ) | $ | 3,898 | ||||
Issuance of common stock as a result of the Central America Share Exchange (See Note 10) | $ | — | $ | 12,949 | $ | — | ||||||
Issuance of common stock as a result of the Ecuador Share Exchange (See Note 10) | $ | — | $ | 3,200 | $ | — | ||||||
Investment in NCM (See Note 7) | $ | — | $ | 19,020 | $ | 15,536 | ||||||
Dividends accrued on unvested restricted stock unit awards (See Note 19) | $ | — | $ | (74 | ) | $ | (201 | ) | ||||
Shares issued upon immaculate stock option exercises (See Note 19) | $ | — | $ | — | $ | 34,923 |
Year Ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
Cash paid for interest | $ | 103,047 | $ | 113,084 | $ | 117,172 | ||||||
Cash paid for income taxes, net of refunds received | $ | 93,435 | $ | 29,106 | $ | 89,034 | ||||||
Noncash investing and financing activities: | ||||||||||||
Change in accounts payable and accrued expenses for the acquisition of theatre properties and equipment(1) | $ | 3,339 | $ | 7,349 | $ | (13,827 | ) | |||||
Theatre properties and equipment acquired under capital lease | $ | 6,934 | $ | 6,696 | $ | 18,754 | ||||||
Change in fair market values of interest rate swap agreements, net of taxes | $ | 7,170 | $ | 4,867 | $ | 1,827 | ||||||
Investment in NCM — receipt of common units (See Note 6) | $ | 30,683 | $ | 9,302 | $ | 9,137 | ||||||
Investment in NCM — change of interest gain (See Note 6) | $ | 271 | $ | — | $ | — | ||||||
Net book value of equipment contributed to DCIP (See Note 7) | $ | 18,090 | $ | — | $ | — | ||||||
Dividends accrued on unvested restricted stock unit awards | $ | (635 | ) | $ | (684 | ) | $ | (894 | ) | |||
Shares issued upon non-cash stock option exercises, at exercise price of $7.63 per share | $ | 413 | $ | — | $ | — | ||||||
Investment in RealD (See Note 8) | $ | 18,909 | $ | 3,402 | $ | — | ||||||
Change in fair market value of available-for-sale securities, net of taxes (See Note 8) | $ | 5,659 | $ | (13,566 | ) | $ | 2,499 | |||||
Issuance of common stock as a result of the Colombia Share Exchange (See Note 9) | $ | 6,951 | $ | — | $ | — |
(1) | ||
Additions to theatre properties and equipment included in accounts payable as of December 31, | ||
21. | INCOME TAXES |
Income (loss) before income taxes consisted of the following:
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Income (loss) before income taxes: | ||||||||||||
U.S. | $ | 188,773 | $ | (53,452 | ) | $ | 98,908 | |||||
Foreign | 12,901 | 30,077 | 46,693 | |||||||||
Total | $ | 201,674 | $ | (23,375 | ) | $ | 145,601 | |||||
Current: | ||||||||||||
Federal | $ | 123,754 | $ | 37,681 | $ | 35,303 | ||||||
Foreign | 5,519 | 4,620 | 13,706 | |||||||||
State | 17,304 | 4,729 | 8,450 | |||||||||
Total current expense | 146,577 | 47,030 | 57,459 | |||||||||
Deferred: | ||||||||||||
Federal | (33,103 | ) | (28,138 | ) | (9,527 | ) | ||||||
Foreign | 286 | 7,330 | (2,405 | ) | ||||||||
State | (1,798 | ) | (5,167 | ) | (682 | ) | ||||||
Total deferred taxes | (34,615 | ) | (25,975 | ) | (12,614 | ) | ||||||
Income tax expense | $ | 111,962 | $ | 21,055 | $ | 44,845 | ||||||
F-32
Year Ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
Income before income taxes: | ||||||||||||
U.S. | $ | 124,335 | $ | 114,692 | $ | 183,207 | ||||||
Foreign | 83,166 | 90,940 | 113,611 | |||||||||
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Total | $ | 207,501 | $ | 205,632 | $ | 296,818 | ||||||
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Current: | ||||||||||||
Federal | $ | 35,172 | $ | 17,070 | $ | 55,399 | ||||||
Foreign | 21,933 | 26,830 | 53,964 | |||||||||
State | 9,336 | 7,099 | 8,494 | |||||||||
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Total current expense | 66,441 | 50,999 | 117,857 | |||||||||
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| |||||||
Deferred: | ||||||||||||
Federal | (143 | ) | 22,100 | 12,096 | ||||||||
Foreign | (7,188 | ) | (2,332 | ) | (6,007 | ) | ||||||
State | (1,272 | ) | 2,283 | 1,452 | ||||||||
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Total deferred taxes | (8,603 | ) | 22,051 | 7,541 | ||||||||
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Income taxes | $ | 57,838 | $ | 73,050 | $ | 125,398 | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
A reconciliation between income tax expense and taxes computed by applying the applicable statutory federal income tax rate to income (loss) before income taxes follows:
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Computed normal tax expense (benefit) | $ | 70,309 | $ | (9,544 | ) | $ | 50,960 | |||||
Goodwill | 23,050 | 27,503 | — | |||||||||
Foreign inflation adjustments | (620 | ) | 464 | 1,614 | ||||||||
State and local income taxes, net of federal income tax impact | 10,078 | (2,506 | ) | 5,215 | ||||||||
Foreign losses not benefited and other changes in valuation allowance | (536 | ) | 1,459 | (552 | ) | |||||||
Foreign tax rate differential | 3,721 | 1,537 | (1,464 | ) | ||||||||
Foreign dividends, including Section 965 | 1,405 | 2,084 | 2,141 | |||||||||
Capital loss benefit | — | — | (12,913 | ) | ||||||||
Changes in uncertain tax positions | 1,980 | — | 6,957 | |||||||||
True up to deferred tax items | — | — | (6,453 | ) | ||||||||
Other — net | 2,575 | 58 | (660 | ) | ||||||||
Income taxes | $ | 111,962 | $ | 21,055 | $ | 44,845 | ||||||
Year Ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
Computed normal tax expense | $ | 72,625 | $ | 71,972 | $ | 103,886 | ||||||
Foreign inflation adjustments | 47 | (1,587 | ) | (33 | ) | |||||||
State and local income taxes, net of federal income tax impact | 5,195 | 7,310 | 7,456 | |||||||||
Foreign losses not benefited and other changes in valuation allowance | (5,685 | ) | (676 | ) | (711 | ) | ||||||
Foreign tax rate differential | (4,798 | ) | (3,321 | ) | (1,545 | ) | ||||||
Foreign dividends | 3,952 | 4,173 | 10,576 | |||||||||
Changes in uncertain tax positions | (8,080 | ) | 396 | 13,729 | ||||||||
Other — net | (5,418 | ) | (5,217 | ) | (7,960 | ) | ||||||
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Income taxes | $ | 57,838 | $ | 73,050 | $ | 125,398 | ||||||
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The Company reinvests the undistributed earnings of its foreign subsidiaries, with the exception of its subsidiary in Ecuador. Accordingly, deferred U.S. federal and state income taxes are provided only on the undistributed earnings of the Company’s Ecuador subsidiary. As of December 31, 2009,2012, the cumulative amount of undistributed earnings of the foreign subsidiaries on which the Company has not recognized income taxes was approximately $170,000.
F-33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Deferred Income Taxes
The tax effects of significant temporary differences and tax loss and tax credit carryforwards comprising the net long-term deferred income tax liabilities as of December 31, 20082011 and 20092012 consisted of the following:
December 31, | ||||||||
2008 | 2009 | |||||||
Deferred liabilities: | ||||||||
Theatre properties and equipment | $ | 105,079 | $ | 102,464 | ||||
Deferred intercompany sales | 14,543 | 8,650 | ||||||
Intangible asset — contracts | 9,545 | 8,873 | ||||||
Intangible asset — tradenames | 114,379 | 116,054 | ||||||
Intangible asset — net favorable leases | 354 | (1,596 | ) | |||||
Investment in partnerships | 36,364 | 38,405 | ||||||
Total deferred liabilities | 280,264 | 272,850 | ||||||
Deferred assets: | ||||||||
Deferred lease expenses | 11,923 | 13,493 | ||||||
Theatre properties and equipment | 9,693 | 11,672 | ||||||
Deferred revenue — NCM and Fandango | 65,613 | 64,313 | ||||||
Capital lease obligations | 46,098 | 52,645 | ||||||
Interest rate swaps agreements | 9,515 | 7,157 | ||||||
Tax loss carryforwards | 12,342 | 12,747 | ||||||
Alternative minimum tax and other credit carryforwards | 3,606 | 5,634 | ||||||
Other expenses, not currently deductible for tax purposes | 2,319 | 1,915 | ||||||
Total deferred assets | 161,109 | 169,576 | ||||||
Net deferred income tax liability before valuation allowance | �� | 119,155 | 103,274 | |||||
Valuation allowance against deferred assets | 13,463 | 18,228 | ||||||
Net deferred income tax liability | $ | 132,618 | $ | 121,502 | ||||
Net deferred tax liability — Foreign | $ | 16,645 | $ | 13,381 | ||||
Net deferred tax liability — U.S. | 115,973 | 108,121 | ||||||
Total | $ | 132,618 | $ | 121,502 | ||||
December 31, | ||||||||
2011 | 2012 | |||||||
Deferred liabilities: | ||||||||
Theatre properties and equipment | $ | 92,466 | $ | 96,733 | ||||
Deferred intercompany sales | 12,051 | 14,551 | ||||||
Intangible asset — other | 24,749 | 23,944 | ||||||
Intangible asset — tradenames | 116,333 | 115,939 | ||||||
Investment in partnerships | 98,742 | 113,199 | ||||||
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Total deferred liabilities | 344,341 | 364,366 | ||||||
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| |||||
Deferred assets: | ||||||||
Deferred lease expenses | 23,225 | 27,255 | ||||||
Theatre properties and equipment | 5,910 | 5,884 | ||||||
Deferred revenue — NCM and Fandango | 88,616 | 90,972 | ||||||
Capital lease obligations | 51,211 | 54,551 | ||||||
Interest rate swap agreements | 5,882 | 3,825 | ||||||
Tax loss carryforwards | 10,602 | 7,700 | ||||||
Alternative minimum tax and other credit carryforwards | 7,548 | 6,405 | ||||||
Other expenses, not currently deductible for tax purposes | 23,750 | 30,724 | ||||||
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| |||||
Total deferred assets | 216,744 | 227,316 | ||||||
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| |||||
Net deferred income tax liability before valuation allowance | 127,597 | 137,050 | ||||||
Valuation allowance against deferred assets | 15,443 | 13,326 | ||||||
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| |||||
Net deferred income tax liability | $ | 143,040 | $ | 150,376 | ||||
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Net deferred tax liability — Foreign | $ | 10,757 | $ | 2,488 | ||||
Net deferred tax liability — U.S. | 132,283 | 147,888 | ||||||
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| |||||
Total | $ | 143,040 | $ | 150,376 | ||||
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The Company’s foreign tax credit carryforwards begin expiring in 2015. Some foreign net operating losses will expire in the next reporting period; however, some losses may be carried forward indefinitely. State net operating losses may be carried forward for periods of between five and twenty years with the last expiring year being 2029.
F-34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Uncertain Tax Positions
The following is a reconciliation of the total amounts of unrecognized tax benefits excluding interest and penalties, for the years ended December 31, 2007, 20082010, 2011 and 2009:
Balance at January 1, 2007 | $ | 10,512 | ||
Gross increases — tax positions in prior period | 1,432 | |||
Gross increases — current-period tax positions | 549 | |||
Balance at December 31, 2007 | $ | 12,493 | ||
Gross increases — tax positions in prior period | 37 | |||
Gross decreases — tax positions in prior period | (166 | ) | ||
Gross increases — current-period tax positions | 2,397 | |||
Gross decreases — current-period tax positions | (752 | ) | ||
Reductions due to lapse in statute of limitations | (33 | ) | ||
Balance at December 31, 2008 | $ | 13,976 | ||
Gross increases — tax positions in prior period | 2,274 | |||
Gross increases — current-period tax positions | 7,607 | |||
Balance at December 31, 2009 | $ | 23,857 | ||
Year Ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
Balance at January 1, | $ | 23,857 | $ | 15,197 | $ | 18,660 | ||||||
Gross increases — tax positions in prior periods | — | 3,153 | 14,462 | |||||||||
Gross decreases — tax positions in prior periods | (1,392 | ) | — | (3,321 | ) | |||||||
Gross increases — current period tax positions | 3,551 | 3,729 | 3,672 | |||||||||
Gross decreases — current period tax positions | (613 | ) | (633 | ) | — | |||||||
Settlements | (10,383 | ) | (2,467 | ) | — | |||||||
Foreign currency translation adjustments | 177 | (319 | ) | (251 | ) | |||||||
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| |||||||
Balance at December 31, | $ | 15,197 | $ | 18,660 | $ | 33,222 | ||||||
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|
|
The Company had $17,523$22,411 and $31,661$34,475 of gross unrecognized tax benefits, including interest and penalties, as of December 31, 20082011 and December 31, 2009,2012, respectively. Of these amounts, $13,851$16,274 and $23,212$30,085 represent the amount of unrecognized tax benefits that if recognized would impact the effective income tax rate for the years ended December 31, 20082011 and 2009,2012, respectively. The Company had $3,547$3,751 and $7,804$4,576 accrued for interest and/orand penalties as of December 31, 20082011 and 2009,2012, respectively.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and multiplein certain state and foreign jurisdictions and the Company is routinely under audit by many different tax authorities. The Company believes that its accrual for tax liabilities is adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. The Company is no longer subject to income tax audits from the Internal Revenue Service for years before 2002.2007. The Company is no longer subject to state income tax examinations by tax authorities in its major state jurisdictions for years before 2002.2007. Certain state returns were amended as a result of the Internal Revenue Service examination closures for 2002 through 2006, and the statutes remain open for those amendments. The Company is no longer subject to non-U.S. income tax examinations by tax authorities in its major non-U.S. tax jurisdictions for years before 2004.
The Company is currently under audit in the non-U.S. tax jurisdictions of Brazil, Chile and Mexico. The Company is currently under examination by the Internal Revenue Service for the 2002 through 2007, 2008 and 2009 tax years. It is reasonably possibleThe Company believes that the 2002-2004U.S. Internal Revenue Service and the Mexico audits couldwill be completed within the next twelve months. These events could result in a decrease in the Company’s total unrecognized benefits of approximately $13,000 which includes approximately $4,000 of accrued interest.
22. | COMMITMENTS AND CONTINGENCIES |
Leases— The Company conducts a significant part of its theatre operations in leased properties under noncancelable operating and capital leases with terms generally ranging from 10 to 25 years. In addition to the minimum annual lease payments, some of the leases provide for contingent rentals based on operating results of the theatre and most require the payment of taxes, insurance and other costs applicable to the property. The Company can renew, at its option, a substantial portion of the leases at defined or then market rental rates for various periods. Some leases also provide for escalating rent payments throughout the lease term. A liability for deferred lease expenses of $23,371$34,466 and $27,698$38,297 at December 31, 20082011 and 2009,2012, respectively, has been provided
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
to account for lease expenses on a straight-line basis, where lease payments are not made on such a basis. RentTheatre rent expense was as follows:
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Fixed rent expense | $ | 164,915 | $ | 175,368 | $ | 181,075 | ||||||
Contingent rent expense | 47,815 | 50,227 | 57,704 | |||||||||
Total facility lease expense | $ | 212,730 | $ | 225,595 | $ | 238,779 | ||||||
F-35
Year Ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
Fixed rent expense | $ | 186,893 | $ | 200,006 | $ | 205,770 | ||||||
Contingent rent and other facility lease expenses | 68,824 | 76,272 | 75,845 | |||||||||
|
|
|
|
|
| |||||||
Total facility lease expense | $ | 255,717 | $ | 276,278 | $ | 281,615 | ||||||
|
|
|
|
|
|
Operating | Capital | |||||||
Leases | Leases | |||||||
2010 | $ | 192,606 | $ | 21,329 | ||||
2011 | 189,798 | 20,389 | ||||||
2012 | 185,663 | 20,528 | ||||||
2013 | 181,536 | 20,666 | ||||||
2014 | 176,684 | 20,943 | ||||||
Thereafter | 939,268 | 144,554 | ||||||
Total | $ | 1,865,555 | $ | 248,409 | ||||
Amounts representing interest payments | 108,041 | |||||||
Present value of future minimum payments | $ | 140,368 | ||||||
Current portion of capital lease obligations | 7,340 | |||||||
Capital lease obligations, less current portion | $ | 133,028 | ||||||
Operating Leases | Capital Leases | |||||||
2013 | $ | 225,814 | $ | 25,304 | ||||
2014 | 227,238 | 25,117 | ||||||
2015 | 222,469 | 25,299 | ||||||
2016 | 212,861 | 25,158 | ||||||
2017 | 193,672 | 23,436 | ||||||
Thereafter | 807,121 | 110,934 | ||||||
|
|
|
| |||||
Total | $ | 1,889,175 | $ | 235,248 | ||||
|
| |||||||
Amounts representing interest payments | 85,077 | |||||||
|
| |||||||
Present value of future minimum payments | $ | 150,171 | ||||||
Current portion of capital lease obligations | 11,064 | |||||||
|
| |||||||
Capital lease obligations, less current portion | $ | 139,107 | ||||||
|
|
Employment Agreements— Effective June 16, 2008, theThe Company entered into new employment agreements with Alan W. Stock, Timothy Warner, Robert Copple and Michael Cavalier and effective December 15, 2008, the Company entered into newhas three-year employment agreements with Lee Roy Mitchell, Timothy Warner, Robert Copple, Michael Cavalier, and Rob Carmony and John Lundin. Collectively these new employment agreementsthat are herein referred to as the “Employment Agreements”. The Employment Agreements have an initial term of three years subject to an automatic extensionextensions for a one-year period, unless the employment agreements are terminated. Effective June 3, 2009, the Company terminated its employment agreement with John Lundin. Effective May 25, 2009, the Company entered into a newan employment agreement with Steve Bunnell that has an initial term of two years subject to an extension for a one year period, unless the agreement is terminated. Effective February 15, 2010, the Company entered into an employment agreement with Valmir Fernandes that has an initial term of three years. The base salaries stipulated in the employment agreements are subject to review during the term of the agreements for increase (but not decrease) each year by the Company’s Compensation Committee. Management personnel subject to these employment agreements are eligible to receive annual cash incentive bonuses upon the Company meeting certain performance targets established by its Compensation Committee.
On February 15, 2012, the Company’s Chief Executive Officer (“CEO”), Alan Stock, announced his retirement. As a result of the retirement, the Company’s employment agreement with Mr. Stock was effectively terminated. Mr. Stock served in a transitional role until May 1, 2012 and then became a consultant for the Company for a two-year period that ends April 30, 2014. Mr. Stock has retained his share based awards under their original vesting terms.
Upon Mr. Stock’s retirement, the Company appointed Tim Warner as its CEO. Mr. Warner previously served as the Company’s President and Chief Operating Officer. In connection with his appointment as the CEO, the Company and Mr. Warner entered into an Amended and Restated Employment Agreement dated as of
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
March 30, 2012 (the “Amended and Restated Agreement”). The Amended and Restated Agreement amends and restates the Employment Agreement dated June 16, 2008 by and between the Company and Mr. Warner. The term of the Amended and Restated Agreement goes through April 1, 2014 and may be extended at the Company’s election for an additional one-year period upon six months prior written notice by the Company to Mr. Warner. The base salary stipulated in the Amended and Restated Agreement is subject to review during the term of the agreement for increase (but not decrease) each year by the Company’s Compensation Committee. Mr. Warner is eligible to receive annual cash incentive bonuses upon the Company meeting certain performance targets established by its Compensation Committee and will continue to be eligible to participate in and receive grants of equity incentive awards under the Company’s long-term incentive plan.
Retirement Savings Plan— The Company has a 401(k) retirement savings plan for the benefit of all employees and makes contributions as determined annually by the board of directors. Contribution payments of $1,795$2,311 and $1,834$2,410 were made in 20082011 (for plan year 2007)2010) and 20092012 (for plan year 2008)2011), respectively. A liability of approximately $2,083$2,500 has been recorded at December 31, 20092012 for contribution payments to be made in 20102013 (for plan year 2009)2012).
Litigation and Litigation Settlements— DOJ Litigation — In March 1999, the Department of Justice (“DOJ”) filed suit in the U.S. District Court, Northern District of Ohio, Eastern Division, against the Company alleging certain violations of the Americans with Disabilities Act of 1990 (the “ADA”) relating to the Company’s wheelchair seating arrangements and seeking remedial action. An order granting summary judgment to the Company was issued in November 2001. The Department of Justice appealed the district court’s ruling with the Sixth Circuit Court of Appeals. On November 7, 2003, the Sixth Circuit Court of Appeals reversed the summary judgment and sent the case back to the district court for further review without deciding whether wheelchair seating at the Company’s theatres comply with the ADA. The Sixth Circuit Court of Appeals also stated that if the district court found that the theatres did not comply with the ADA, any remedial action should be prospective only. The Company and the United States have resolved this lawsuit. A consent order was entered by the U.S. District Court for the Northern District of Ohio, Eastern Division, on November 15, 2004. This consent order fully and finally resolves theUnited States v. Cinemark USA, Inc. lawsuit, and all claims asserted against the Company in that lawsuit have been dismissed with prejudice. Under the consent order, the Company made modifications to wheelchair seating locations in fourteen stadium-style movie theatres, and spacing and companion seating modifications at 67 auditoriums at other stadium-styled movie theatres. These modifications were completed by November 2009. Upon completion of these modifications, such theatres complied with all existing and pending ADA wheelchair seating requirements, and no further modifications will be required to the Company’s other stadium-style movie theatres in the United States existing on the date of the consent order. Under the consent order, the DOJ approved the seating plans for nine stadium-styled movie theatres under construction. The Company and the DOJ have also created a safe harbor framework for the Company to construct all of its future stadium-style movie theatres. The DOJ has stipulated that all theatres built in compliance with the consent order will comply with the wheelchair seating requirements of the ADA. The Company believes that its obligations under the consent order are not material in the aggregate to its financial position, results of operations and cash flows.
F-36
23. | SEGMENTS |
The Company manages its international market and its U.S. market as separate reportable operating segments. The international segment consists of operations in Brazil, Mexico, Argentina, Chile, Colombia, Argentina,Peru, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala. The U.S. segment includes U.S. and Canada operations. (Note that the Company’s only Canadian theatre was sold during November 2010.) Each segment’s revenue is derived from admissions and concession sales and other ancillary revenues, primarily screen advertising. The measure of segment profit and loss the Company uses to evaluate performance and allocate its resources is Adjusted EBITDA, as defined in the reconciliation table below. The Company does not report asset information by segment because that information is not used to evaluate the performance or allocate resources.
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Below is a breakdown of select financial information by reportable operating segment:
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Revenues: | ||||||||||||
U.S. | $ | 1,352,042 | $ | 1,360,176 | $ | 1,558,736 | ||||||
International | 333,624 | 385,817 | 421,765 | |||||||||
Eliminations | (2,825 | ) | (3,706 | ) | (4,001 | ) | ||||||
Total revenues | $ | 1,682,841 | $ | 1,742,287 | $ | 1,976,500 | ||||||
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Adjusted EBITDA: | ||||||||||||
U.S. | $ | 309,800 | $ | 291,487 | $ | 361,685 | ||||||
International | 67,138 | 78,805 | 83,839 | |||||||||
Total Adjusted EBITDA | $ | 376,938 | $ | 370,292 | $ | 445,524 | ||||||
Year Ended December 31, | ||||||||
2008 | 2009 | |||||||
Capital Expenditures: | ||||||||
U.S. | $ | 77,193 | $ | 81,695 | ||||
International | 28,916 | 43,102 | ||||||
Total capital expenditures | $ | 106,109 | $ | 124,797 | ||||
F-37
Year Ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
Revenues: | ||||||||||||
U.S. | $ | 1,584,281 | $ | 1,593,667 | $ | 1,706,511 | ||||||
International | 564,240 | 696,119 | 777,663 | |||||||||
Eliminations | (7,377 | ) | (10,173 | ) | (10,643 | ) | ||||||
|
|
|
|
|
| |||||||
Total revenues | $ | 2,141,144 | $ | 2,279,613 | $ | 2,473,531 | ||||||
|
|
|
|
|
|
Year Ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
Adjusted EBITDA: | ||||||||||||
U.S. | $ | 363,345 | $ | 371,212 | $ | 409,860 | ||||||
International | 122,575 | 148,261 | 179,375 | |||||||||
|
|
|
|
|
| |||||||
Total Adjusted EBITDA | $ | 485,920 | $ | 519,473 | $ | 589,235 | ||||||
|
|
|
|
|
|
Year Ended December 31, | ||||||||
2011 | 2012 | |||||||
Capital Expenditures: | ||||||||
U.S. | $ | 79,510 | $ | 107,323 | ||||
International | 105,309 | 113,404 | ||||||
|
|
|
| |||||
Total capital expenditures | $ | 184,819 | $ | 220,727 | ||||
|
|
|
|
The following table sets forth a reconciliation of net income (loss) to Adjusted EBITDA:
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Net income (loss) | $ | 89,712 | $ | (44,430 | ) | $ | 100,756 | |||||
Add (deduct): | ||||||||||||
Income taxes | 111,962 | 21,055 | 44,845 | |||||||||
Interest expense(1) | 145,596 | 116,058 | 102,505 | |||||||||
Gain on NCM transaction | (210,773 | ) | — | — | ||||||||
Gain on Fandango transaction | (9,205 | ) | — | — | ||||||||
(Gain) loss on early retirement of debt | 13,456 | (1,698 | ) | 27,878 | ||||||||
Other income(2) | (16,289 | ) | (11,927 | ) | (4,688 | ) | ||||||
Termination of profit participation agreement | 6,952 | — | — | |||||||||
Depreciation and amortization | 148,781 | 155,326 | 148,264 | |||||||||
Amortization of favorable/unfavorable leases | 2,935 | 2,708 | 1,251 | |||||||||
Impairment of long-lived assets | 86,558 | 113,532 | 11,858 | |||||||||
(Gain) loss on sale of assets and other | (2,953 | ) | 8,488 | 3,202 | ||||||||
Deferred lease expenses | 5,979 | 4,350 | 3,960 | |||||||||
Amortization of long-term prepaid rents | 1,146 | 1,717 | 1,389 | |||||||||
Share based awards compensation expense | 3,081 | 5,113 | 4,304 | |||||||||
Adjusted EBITDA | $ | 376,938 | $ | 370,292 | $ | 445,524 | ||||||
Year Ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
Net income | $ | 149,663 | $ | 132,582 | $ | 171,420 | ||||||
Add (deduct): | ||||||||||||
Income taxes | 57,838 | 73,050 | 125,398 | |||||||||
Interest expense(1) | 112,444 | 123,102 | 123,665 | |||||||||
Loss on early retirement of debt | 3 | 4,945 | 5,599 | |||||||||
Loss on marketable securities — RealD | — | 12,610 | — | |||||||||
Other income(2) | (3,721 | ) | (13,594 | ) | (21,568 | ) | ||||||
Depreciation and amortization(3) | 143,508 | 154,449 | 147,675 | |||||||||
Impairment of long-lived assets | 12,538 | 7,033 | 3,031 | |||||||||
(Gain) loss on sale of assets and other | (431 | ) | 8,792 | 12,168 | ||||||||
Deferred lease expenses | 3,940 | 4,155 | 4,104 | |||||||||
Amortization of long-term prepaid rents | 1,786 | 2,657 | 2,673 | |||||||||
Share based awards compensation expense | 8,352 | 9,692 | 15,070 | |||||||||
|
|
|
|
|
| |||||||
Adjusted EBITDA | $ | 485,920 | $ | 519,473 | $ | 589,235 | ||||||
|
|
|
|
|
|
(1) | Includes amortization of debt issue costs. |
(2) | Includes interest income, foreign currency exchange gain |
(3) | Includes amortization of favorable/unfavorable leases. |
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Financial Information About Geographic Areas
Below is a breakdown of select financial information by geographic area:
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Revenues | ||||||||||||
U.S. and Canada | $ | 1,352,042 | $ | 1,360,176 | $ | 1,558,736 | ||||||
Brazil | 157,158 | 186,159 | 218,236 | |||||||||
Mexico | 74,983 | 78,292 | 65,206 | |||||||||
Other foreign countries | 101,483 | 121,366 | 138,323 | |||||||||
Eliminations | (2,825 | ) | (3,706 | ) | (4,001 | ) | ||||||
Total | $ | 1,682,841 | $ | 1,742,287 | $ | 1,976,500 | ||||||
December 31, | ||||||||
2008 | 2009 | |||||||
Theatres properties and equipment, net | ||||||||
U.S. and Canada | $ | 1,073,551 | $ | 1,040,395 | ||||
Brazil | 58,641 | 91,996 | ||||||
Mexico | 38,290 | 39,371 | ||||||
Other foreign countries | 37,801 | 47,826 | ||||||
Total | $ | 1,208,283 | $ | 1,219,588 | ||||
F-38
Year Ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
Revenues | ||||||||||||
U.S. | $ | 1,584,281 | $ | 1,593,667 | $ | 1,706,511 | ||||||
Brazil | 315,884 | 358,820 | 328,136 | |||||||||
Other foreign countries | 248,356 | 337,299 | 449,527 | |||||||||
Eliminations | (7,377 | ) | (10,173 | ) | (10,643 | ) | ||||||
|
|
|
|
|
| |||||||
Total | $ | 2,141,144 | $ | 2,279,613 | $ | 2,473,531 | ||||||
|
|
|
|
|
|
December 31, | ||||||||
2011 | 2012 | |||||||
Theatres properties and equipment, net | ||||||||
U.S. | $ | 934,279 | $ | 940,922 | ||||
Brazil | 149,294 | 190,990 | ||||||
Other foreign countries | 155,277 | 173,046 | ||||||
|
|
|
| |||||
Total | $ | 1,238,850 | $ | 1,304,958 | ||||
|
|
|
|
24. | RELATED PARTY TRANSACTIONS |
Prior to March 2010, the Company leasesleased one theatre from Plitt Plaza Joint Venture (“Plitt Plaza”) on a month-to-month basis. Plitt Plaza is indirectly owned by Lee Roy Mitchell, the Company’s Chairman of the Board, who directly and indirectly owns approximately 12%9% of the Company’s issued and outstanding shares of common stock. Annual rent is approximately $118 plus certain taxes, maintenance expenses and insurance.The Company closed this theatre during March 2010. The Company recorded $120, $127 and $118$30 of facility lease and other operating expenses payable to Plitt Plaza joint venture during the yearsyear ended December 31, 2007, 20082010. During the year ended December 31, 2010, the Company recorded approximately $111 related to the termination of the lease, which is reflected in (gain) loss on sale of assets and 2009, respectively.
The Company manages one theatretheatres for Laredo Theatre, Ltd. (“Laredo”). The Company is the sole general partner and owns 75% of the limited partnership interests of Laredo. Lone Star Theatres, Inc. owns the remaining 25% of the limited partnership interests in Laredo and is 100% owned by Mr. David Roberts, Lee Roy Mitchell’s son-in-law. Lee Roy Mitchell is the Company’s Chairman of the Board and directly and indirectly owns approximately 9% of the Company’s common stock. Under the agreement, management fees are paid by Laredo to the Company at a rate of 5% of annual theatre revenues up to $50,000 and 3% of annual theatre revenues in excess of $50,000. The Company recorded $82, $92$105, $476 and $102$522 of management fee revenues during the years ended December 31, 2007, 20082010, 2011 and 2009,2012, respectively. All such amounts are included in the Company’s consolidated financial statements with the intercompany amounts eliminated in consolidation.
The Company has an Aircraft Time Sharing Agreement with Copper Beech Capital, LLC to use, on occasion, a private aircraft owned by Copper Beech Capital, LLC. Copper Beech Capital, LLC is owned by Mr. Mitchell and his wife, Tandy Mitchell. The private aircraft is used by Mr. Mitchell and other executives who accompany Mr. Mitchell to business meetings for the Company. The Company reimburses Copper Beech Capital, LLC the actual costs of fuel usage and the expenses of the pilots, landing fees, storage fees and similar expenses incurred during the trip. For the years ended December 31, 20082010, 2011 and 2009,2012, the aggregate amounts paid to Copper Beech Capital, LLC for the use of the aircraft was approximately $136$73, $86 and $64,$82, respectively.
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
The Company currently leases 2319 theatres and twoone parking facilitiesfacility from Syufy Enterprises, LP (“Syufy”) or affiliates of Syufy, which owns approximately 6% of the Company’s issued and outstanding shares of common stock.Syufy. Raymond Syufy is one of the Company’s directors and is an officer of the general partner of Syufy. Of these 2320 leases, 2017 have fixed minimum annual rent in an aggregate amount of approximately $21,791.rent. The three leases without minimum annual rent have rent based upon a specified percentage of gross sales as defined in the lease with no minimum annual rent. For the years ended December 31, 2007, 20082010, 2011 and 2009,2012, the Company paid approximately $1,185, $1,078 and $1,087, respectively, in percentagetotal rent for these leases.
F-39
25. | VALUATION AND QUALIFYING ACCOUNTS |
Valuation | ||||
Allowance | ||||
for Deferred | ||||
Tax Assets | ||||
Balance at January 1, 2007 | $ | 8,862 | ||
Additions | 2,370 | |||
Deductions | (1,360 | ) | ||
Balance at December 31, 2007 | $ | 9,872 | ||
Additions | 4,200 | |||
Deductions | (609 | ) | ||
Balance at December 31, 2008 | $ | 13,463 | ||
Additions | 5,163 | |||
Deductions | (398 | ) | ||
Balance at December 31, 2009 | $ | 18,228 | ||
Valuation Allowance for Deferred Tax Assets | ||||
Balance at January 1, 2010 | $ | 18,228 | ||
Additions | 3,398 | |||
Deductions | (6,201 | ) | ||
|
| |||
Balance at December 31, 2010 | $ | 15,425 | ||
Additions | 2,338 | |||
Deductions | (2,320 | ) | ||
|
| |||
Balance at December 31, 2011 | $ | 15,443 | ||
Additions | 6,298 | |||
Deductions | (8,415 | ) | ||
|
| |||
Balance at December 31, 2012 | $ | 13,326 | ||
|
|
26. | QUARTERLY FINANCIAL INFORMATION (UNAUDITED) |
2011 | ||||||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Full Year | ||||||||||||||||
Revenues | $ | 483,136 | $ | 620,593 | $ | 640,013 | $ | 535,871 | $ | 2,279,613 | ||||||||||
Operating income | $ | 48,756 | $ | 97,001 | $ | 101,310 | $ | 61,467 | $ | 308,534 | ||||||||||
Net income attributable to Cinemark Holdings, Inc. | $ | 24,963 | $ | 40,411 | $ | 46,920 | $ | 18,263 | $ | 130,557 | ||||||||||
Net income per share attributable to Cinemark Holdings, Inc.’s common stockholders: | ||||||||||||||||||||
Basic | $ | 0.22 | $ | 0.35 | $ | 0.41 | $ | 0.16 | $ | 1.15 | ||||||||||
Diluted | $ | 0.22 | $ | 0.35 | $ | 0.41 | $ | 0.16 | $ | 1.14 |
2012 | ||||||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Full Year | ||||||||||||||||
Revenues | $ | 578,818 | $ | 649,606 | $ | 633,573 | $ | 611,534 | $ | 2,473,531 | ||||||||||
Operating income | $ | 89,488 | $ | 113,909 | $ | 94,153 | $ | 86,152 | $ | 383,702 | ||||||||||
Net income attributable to Cinemark Holdings, Inc. | $ | 42,104 | $ | 51,638 | $ | 47,385 | $ | 27,822 | $ | 168,949 | ||||||||||
Net income per share attributable to Cinemark Holdings, Inc.’s common stockholders: | ||||||||||||||||||||
Basic | $ | 0.37 | $ | 0.45 | $ | 0.41 | $ | 0.24 | $ | 1.47 | ||||||||||
Diluted | $ | 0.37 | $ | 0.45 | $ | 0.41 | $ | 0.24 | $ | 1.47 |
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
2008 | ||||||||||||||||||||
First | Second | Third | Fourth | |||||||||||||||||
Quarter | Quarter | Quarter | Quarter (1)(2) | Full Year (3) | ||||||||||||||||
Revenues | $ | 401,016 | $ | 457,234 | $ | 476,223 | $ | 407,814 | $ | 1,742,287 | ||||||||||
Operating income (loss) | $ | 34,082 | $ | 52,889 | $ | 52,678 | $ | (79,429 | ) | $ | 60,220 | |||||||||
Net income (loss) attributable to Cinemark Holdings, Inc. | $ | 5,251 | $ | 15,523 | $ | 20,448 | $ | (89,547 | ) | $ | (48,325 | ) | ||||||||
Net income (loss) per share attributable to Cinemark Holdings, Inc.’s common stockholders: | ||||||||||||||||||||
Basic | $ | 0.05 | $ | 0.14 | $ | 0.19 | $ | (0.83 | ) | $ | (0.45 | ) | ||||||||
Diluted | $ | 0.05 | $ | 0.14 | $ | 0.19 | $ | (0.83 | ) | $ | (0.45 | ) |
2009 | ||||||||||||||||||||
First | Second | Third | Fourth | |||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Full Year | ||||||||||||||||
Revenues | $ | 425,800 | $ | 517,508 | $ | 496,825 | $ | 536,367 | $ | 1,976,500 | ||||||||||
Operating income | $ | 50,586 | $ | 70,550 | $ | 55,671 | $ | 73,667 | $ | 250,474 | ||||||||||
Net income attributable to Cinemark Holdings, Inc. | $ | 17,565 | $ | 18,670 | $ | 21,011 | $ | 39,862 | $ | 97,108 | ||||||||||
Net income per share attributable to Cinemark Holdings, Inc.’s common stockholders: | ||||||||||||||||||||
Basic | $ | 0.16 | $ | 0.17 | $ | 0.19 | $ | 0.36 | $ | 0.89 | ||||||||||
Diluted | $ | 0.16 | $ | 0.17 | $ | 0.19 | $ | 0.36 | $ | 0.87 |
In thousands, except share and per share data
27. | ||
On February 25, 2010,12, 2013, the Company’s board of directors declared a cash dividend for the fourth quarter of 20092012 of $0.18$0.21 per share of common stock payable to stockholders of record on March 5, 2010.4, 2013. The dividend will be paid on March 19, 2010.
F-40
28. | SUBSEQUENT EVENT — DISPOSITION OF MEXICAN SUBSIDIARIES |
F-41
CINEMARK HOLDINGS, INC.
PARENT COMPANY BALANCE SHEETS
(In thousands, except share data)
December 31, | December 31, | |||||||
2008 | 2009 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 35,917 | $ | 199 | ||||
Income tax receivable | 2,259 | — | ||||||
Accounts receivable | 59 | 317 | ||||||
Investment in subsidiaries | 773,678 | 907,344 | ||||||
Total assets | $ | 811,913 | $ | 907,860 | ||||
Liabilities and stockholders’ equity | ||||||||
Liabilities | ||||||||
Accounts payable to subsidiaries | $ | 526 | $ | 7,656 | ||||
Accrued other current liabilities | 131 | 98 | ||||||
Other long-term liabilities | — | 274 | ||||||
Total liabilities | 657 | 8,028 | ||||||
Stockholders’ equity | ||||||||
Common stock, $0.001 par value: 300,000,000 shares authorized, 108,835,365 shares issued and outstanding at December 31, 2008; and 114,222,523 shares issued and 110,917,105 shares outstanding at December 31, 2009 | 109 | 114 | ||||||
Additional paid-in-capital | 962,353 | 1,011,667 | ||||||
Treasury stock, 3,305,418 common shares at cost | — | (43,895 | ) | |||||
Retained deficit | (78,859 | ) | (60,595 | ) | ||||
Accumulated other comprehensive loss | (72,347 | ) | (7,459 | ) | ||||
Total stockholders’ equity | 811,256 | 899,832 | ||||||
Total liabilities and stockholders’ equity | $ | 811,913 | $ | 907,860 | ||||
December 31, 2011 | December 31, 2012 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 156 | $ | 569 | ||||
Investment in subsidiaries | 1,014,532 | 1,085,783 | ||||||
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Total assets | $ | 1,014,688 | $ | 1,086,352 | ||||
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Liabilities and equity | ||||||||
Liabilities | ||||||||
Accrued other current liabilities | $ | 780 | $ | 1,258 | ||||
Other long-term liabilities | 1,031 | 1,029 | ||||||
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Total liabilities | 1,811 | 2,287 | ||||||
Commitments and contingencies | ||||||||
Equity | ||||||||
Common stock, $0.001 par value: 300,000,000 shares authorized; | ||||||||
117,593,329 shares issued and 114,201,737 shares outstanding at December 31, 2011 and 118,502,752 shares issued and 114,949,667 shares outstanding at December 31, 2012 | 118 | 118 | ||||||
Additional paid-in-capital | 1,047,237 | 1,064,016 | ||||||
Treasury stock, 3,391,592 and 3,553,085 common shares at cost at December 31, 2011 and 2012, respectively | (45,219 | ) | (48,482 | ) | ||||
Retained earnings | 34,423 | 106,111 | ||||||
Accumulated other comprehensive loss | (23,682 | ) | (37,698 | ) | ||||
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Total equity | 1,012,877 | 1,084,065 | ||||||
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Total liabilities and equity | $ | 1,014,688 | $ | 1,086,352 | ||||
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The accompanying notes are an integral part of the consolidated financial statements.
F-42
PARENT COMPANY STATEMENTS OF OPERATIONS
INCOME
YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
2010, 2011 and 2012
(in thousands)
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Revenues | $ | — | $ | — | $ | — | ||||||
Cost of operations | 601 | 988 | 1,536 | |||||||||
Operating loss | (601 | ) | (988 | ) | (1,536 | ) | ||||||
Other income | 6,992 | 1,940 | 94 | |||||||||
Income (loss) before income taxes and equity in income (loss) of subsidiaries | 6,391 | 952 | (1,442 | ) | ||||||||
Income taxes | (2,454 | ) | (365 | ) | 519 | |||||||
Equity in income (loss) of subsidiaries, net of taxes | 84,983 | (48,912 | ) | 98,031 | ||||||||
Net income (loss) | $ | 88,920 | $ | (48,325 | ) | $ | 97,108 | |||||
Year Ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
Revenues | $ | — | $ | — | $ | — | ||||||
Cost of operations | 2,030 | 2,193 | 2,182 | |||||||||
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Operating loss | (2,030 | ) | (2,193 | ) | (2,182 | ) | ||||||
Other income | 1 | — | — | |||||||||
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Loss before income taxes and equity in income of subsidiaries | (2,029 | ) | (2,193 | ) | (2,182 | ) | ||||||
Income taxes | 762 | 823 | 818 | |||||||||
Equity in income of subsidiaries, net of taxes | 147,387 | 131,927 | 170,313 | |||||||||
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Net income | $ | 146,120 | $ | 130,557 | $ | 168,949 | ||||||
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The accompanying notes are an integral part of the consolidated financial statements.
F-43
PARENT COMPANY STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 2007, 20082010, 2011 AND 2009
2012
(In thousands)
Total | ||||||||||||||||||||||||||||||||||||
Accumulated | Cinemark | |||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional | Retained | Other | Holdings, Inc. | |||||||||||||||||||||||||||||||
Shares | Shares | Paid-in- | Earnings | Comprehensive | Stockholders’ | Comprehensive | ||||||||||||||||||||||||||||||
Issued | Amount | Issued | Amount | Capital | (Deficit) | Income (Loss) | Equity | Income (Loss) | ||||||||||||||||||||||||||||
Balance at January 1, 2007 | 92,561 | $ | 93 | — | $ | — | $ | 685,433 | $ | (7,692 | ) | $ | 11,463 | $ | 689,297 | |||||||||||||||||||||
Tax adjustment related to the adoption of paragraph 10 of ASC Topic 740 (formerly FIN 48) related to uncertain tax positions | (1,093 | ) | (1,093 | ) | ||||||||||||||||||||||||||||||||
Issuance of stock for initial public offering, net of fees | 13,889 | 14 | 245,835 | 245,849 | ||||||||||||||||||||||||||||||||
Issuance of restricted stock | 22 | — | — | — | ||||||||||||||||||||||||||||||||
Exercise of stock options, net of equity award repurchase | 512 | — | 3,625 | 3,625 | ||||||||||||||||||||||||||||||||
Share based awards compensation expense | 200 | 200 | ||||||||||||||||||||||||||||||||||
Subsidiaries’ share based awards activity | 4,234 | 4,234 | ||||||||||||||||||||||||||||||||||
Dividends paid to stockholders | (33,061 | ) | (33,061 | ) | ||||||||||||||||||||||||||||||||
Dividends paid to noncontrolling interests | — | |||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||
Net income | 88,920 | 88,920 | 88,920 | |||||||||||||||||||||||||||||||||
Fair value adjustments on interest rate swap agreements, net of taxes of $7,074 | (11,348 | ) | (11,348 | ) | (11,348 | ) | ||||||||||||||||||||||||||||||
Foreign currency translation adjustment | 32,580 | 32,580 | 32,580 | |||||||||||||||||||||||||||||||||
Balance at December 31, 2007 | 106,984 | $ | 107 | — | $ | — | $ | 939,327 | $ | 47,074 | $ | 32,695 | $ | 1,019,203 | $ | 110,152 | ||||||||||||||||||||
Issuance of restricted stock, net of restricted stock forfeitures | 385 | — | — | |||||||||||||||||||||||||||||||||
Exercise of stock options | 169 | — | 1,292 | 1,292 | ||||||||||||||||||||||||||||||||
Share based awards compensation expense | 474 | 474 | ||||||||||||||||||||||||||||||||||
Subsidiaries’ share based awards activity | 5,113 | 5,113 | ||||||||||||||||||||||||||||||||||
Issuance of shares as a result of Central America share exchange | 903 | 1 | 12,948 | 12,949 | ||||||||||||||||||||||||||||||||
Issuance of shares as a result of Ecuador share exchange | 394 | 1 | 3,199 | 3,200 | ||||||||||||||||||||||||||||||||
Dividends paid to stockholders | (77,534 | ) | (77,534 | ) | ||||||||||||||||||||||||||||||||
Dividends accrued on unvested restricted stock awards | (74 | ) | (74 | ) | ||||||||||||||||||||||||||||||||
Contribution by noncontrolling interest | — | |||||||||||||||||||||||||||||||||||
Dividends paid to noncontrolling interests | — | |||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||
Net income (loss) | (48,325 | ) | (48,325 | ) | (48,325 | ) | ||||||||||||||||||||||||||||||
Fair value adjustments on interest rate swap agreements, net of taxes of $2,442 | (22,063 | ) | (22,063 | ) | (22,063 | ) | ||||||||||||||||||||||||||||||
Amortization of accumulated other comprehensive loss on terminated swap agreement | 1,351 | 1,351 | 1,351 | |||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | (84,330 | ) | (84,330 | ) | (84,330 | ) | ||||||||||||||||||||||||||||||
Balance at December 31, 2008 | 108,835 | $ | 109 | — | $ | — | $ | 962,353 | $ | (78,859 | ) | $ | (72,347 | ) | $ | 811,256 | $ | (153,367 | ) | |||||||||||||||||
Issuance of restricted stock, net of restricted stock forfeitures | 479 | — | (30 | ) | — | — | — | — | — | |||||||||||||||||||||||||||
Exercise of stock options, net of stock withholdings | 4,908 | 5 | (3,275 | ) | (43,895 | ) | 37,442 | — | — | (6,448 | ) | |||||||||||||||||||||||||
Share based awards compensation expense | — | — | — | — | 500 | — | — | 500 | ||||||||||||||||||||||||||||
Subsidiaries’ share based awards activity | — | — | — | — | 11,349 | — | — | 11,349 | ||||||||||||||||||||||||||||
Dividends paid to stockholders | — | — | — | — | — | (78,643 | ) | — | (78,643 | ) | ||||||||||||||||||||||||||
Dividends accrued on unvested restricted stock awards | — | — | — | — | — | (201 | ) | — | (201 | ) | ||||||||||||||||||||||||||
Purchase of noncontrolling interest share of an Argentina subsidiary | — | — | — | — | 23 | — | — | 23 | ||||||||||||||||||||||||||||
Dividends paid to noncontrolling interests | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Comprehensive income: | — | |||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 97,108 | 97,108 | 97,108 | ||||||||||||||||||||||||||||
Fair value adjustments on interest rate swap agreements, net of taxes of $2,359 | — | — | — | — | — | — | 3,898 | 3,898 | 3,898 | |||||||||||||||||||||||||||
Amortization of accumulated other comprehensive loss on terminated swap agreement | — | — | — | — | — | — | 4,633 | 4,633 | 4,633 | |||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | 56,357 | 56,357 | 56,357 | |||||||||||||||||||||||||||
Balance at December 31, 2009 | 114,222 | $ | 114 | (3,305 | ) | $ | (43,895 | ) | $ | 1,011,667 | $ | (60,595 | ) | $ | (7,459 | ) | $ | 899,832 | $ | 161,996 | ||||||||||||||||
2010 | 2011 | 2012 | ||||||||||
Net income | $ | 146,120 | $ | 130,557 | $ | 168,949 | ||||||
Other comprehensive income (loss), net of tax | ||||||||||||
Unrealized gain (loss) due to fair value adjustments on interest rate swap agreements, net of taxes of $4,339, $3,786 and $557 | 7,170 | (2,830 | ) | 1,020 | ||||||||
Unrealized gain (loss) due to fair value adjustments on available-for-sale securities, net of taxes of $3,425, $8,128 and $1,499 | 5,659 | (13,566 | ) | 2,499 | ||||||||
Amortization of accumulated other comprehensive loss on terminated swap agreement | 4,633 | 4,236 | 2,470 | |||||||||
Foreign currency translation adjustment | 19,432 | (46,280 | ) | (20,232 | ) | |||||||
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Total other comprehensive income (loss), net of tax | 36,894 | (58,440 | ) | (14,243 | ) | |||||||
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Total comprehensive income, net of tax | 183,014 | 72,117 | 154,706 | |||||||||
Comprehensive income attributable to noncontrolling interests | (3,711 | ) | (1,803 | ) | (2,244 | ) | ||||||
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Comprehensive income attributable to Cinemark Holdings, Inc. | $ | 179,303 | $ | 70,314 | $ | 152,462 | ||||||
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The accompanying notes are an integral part of the consolidated financial statements.
F-44
PARENT COMPANY STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
2010, 2011 and 2012
(in thousands)
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Operating Activities | ||||||||||||
Net income (loss) | $ | 88,920 | $ | (48,325 | ) | $ | 97,108 | |||||
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities: | ||||||||||||
Share based awards compensation expense | 200 | 474 | 500 | |||||||||
Equity in (income) loss of subsidiaries | (84,983 | ) | 48,912 | (98,031 | ) | |||||||
Changes in other assets and liabilities | 1,137 | (2,837 | ) | 9,171 | ||||||||
Net cash provided by (used for) operating activities | 5,274 | (1,776 | ) | 8,748 | ||||||||
Investing Activities | ||||||||||||
Investments in subsidiaries; Cinemark, Inc. and Cinemark USA, Inc. | (117,045 | ) | (42,207 | ) | (18,000 | ) | ||||||
Dividends received from subsidiaries; Cinemark, Inc. and Cinemark USA, Inc. | — | 51,500 | 58,625 | |||||||||
Net cash provided by (used for) investing activities | (117,045 | ) | 9,293 | 40,625 | ||||||||
Financing Activities | ||||||||||||
Net proceeds from initial public offering | 245,849 | — | — | |||||||||
Proceeds from stock option exercises | 3,625 | 1,292 | 2,524 | |||||||||
Payroll taxes paid as a result of immaculate option exercises | — | — | (8,972 | ) | ||||||||
Dividends paid to stockholders | (33,061 | ) | (77,534 | ) | (78,643 | ) | ||||||
Net cash provided by (used for) financing activities | 216,413 | (76,242 | ) | (85,091 | ) | |||||||
Increase (decrease) in cash and cash equivalents | 104,642 | (68,725 | ) | (35,718 | ) | |||||||
Cash and cash equivalents: | ||||||||||||
Beginning of period | — | 104,642 | 35,917 | |||||||||
End of period | $ | 104,642 | $ | 35,917 | $ | 199 | ||||||
Year Ended December 31, | ||||||||||||
2010 | 2011 | 2012 | ||||||||||
Operating Activities | ||||||||||||
Net income | $ | 146,120 | $ | 130,557 | $ | 168,949 | ||||||
Adjustments to reconcile net income to cash provided by (used for) operating activities: | ||||||||||||
Share based awards compensation expense | 765 | 666 | 750 | |||||||||
Equity in income of subsidiaries | (147,387 | ) | (131,927 | ) | (170,313 | ) | ||||||
Changes in other assets and liabilities | (561 | ) | 1,516 | 4,448 | ||||||||
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Net cash provided by (used for) operating activities | (1,063 | ) | 812 | 3,834 | ||||||||
Investing Activities | ||||||||||||
Dividends received from subsidiaries | 78,100 | 95,000 | 95,750 | |||||||||
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Net cash provided by investing activities | 78,100 | 95,000 | 95,750 | |||||||||
Financing Activities | ||||||||||||
Proceeds from stock option exercises | 7,914 | 444 | 459 | |||||||||
Payroll taxes paid as a result of noncash stock option exercises and restricted stock withholdings | (416 | ) | (494 | ) | (3,263 | ) | ||||||
Dividends paid to stockholders | (84,502 | ) | (95,838 | ) | (96,367 | ) | ||||||
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Net cash used for financing activities | (77,004 | ) | (95,888 | ) | (99,171 | ) | ||||||
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Increase (decrease) in cash and cash equivalents | 33 | (76 | ) | 413 | ||||||||
Cash and cash equivalents: | ||||||||||||
Beginning of period | 199 | 232 | 156 | |||||||||
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End of period | $ | 232 | $ | 156 | $ | 569 | ||||||
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The accompanying notes are an integral part of the consolidated financial statements.
F-45
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS(
In thousands, except share data)
1. | BASIS OF PRESENTATION |
Cinemark Holdings, Inc. conducts substantially all of its operations through its subsidiaries. These statements should be read in conjunction with the Company’s consolidated statements and notes included elsewhere in this annual report on Form 10-K. There are significant restrictions over Cinemark Holdings, Inc.’s ability to obtain funds from its subsidiaries through dividends, loans or advances. Accordingly, theseadvances as contained in Cinemark USA, Inc.’s senior secured credit facility and the indentures to each of the 8.625% Senior Notes, the 5.125% Senior Notes and the 7.375% Senior Subordinated Notes (collectively referred to herein as the “Notes”). These condensed parent company financial statements have been presented on a “parent-only” basis.
2. | DIVIDEND PAYMENTS |
In August 2007, Cinemark Holdings, Inc. initiated a quarterly dividend policy.policy, which was amended in November 2010. Below is a summary of Cinemark Holdings, Inc.’s dividend history sincedividends declared for the initiation of this policy:
Amount per | ||||||||||||||||
Date | Date of | Date | Common | Total | ||||||||||||
Declared | Record | Paid | Share(1) | Dividends(2) | ||||||||||||
08/13/07 | 09/04/07 | 09/18/07 | $ | 0.13 | $ | 13,840 | ||||||||||
11/12/07 | 12/03/07 | 12/18/07 | $ | 0.18 | $ | 19,221 | ||||||||||
Total – 2007 | $ | 33,061 | ||||||||||||||
02/26/08 | 03/06/08 | 03/14/08 | $ | 0.18 | $ | 19,270 | ||||||||||
05/09/08 | 05/30/08 | 06/12/08 | $ | 0.18 | $ | 19,353 | ||||||||||
08/07/08 | 08/25/08 | 09/12/08 | $ | 0.18 | $ | 19,370 | ||||||||||
11/06/08 | 11/26/08 | 12/11/08 | $ | 0.18 | $ | 19,615 | ||||||||||
Total – 2008 | $ | 77,608 | ||||||||||||||
02/13/09 | 03/05/09 | 03/20/09 | $ | 0.18 | $ | 19,619 | ||||||||||
05/13/09 | 06/02/09 | 06/18/09 | $ | 0.18 | $ | 19,734 | ||||||||||
07/29/09 | 08/17/09 | 09/01/09 | $ | 0.18 | $ | 19,739 | ||||||||||
11/04/09 | 11/25/09 | 12/10/09 | $ | 0.18 | $ | 19,752 | ||||||||||
Total – 2009 | $ | 78,844 | ||||||||||||||
Date Declared | Date of Record | Date Paid | Amount per Common Share(2) | Total Dividends(1) | ||||
02/25/10 | 03/05/10 | 03/19/10 | $0.18 | $20,104 | ||||
05/13/10 | 06/04/10 | 06/18/10 | $0.18 | 20,313 | ||||
07/29/10 | 08/17/10 | 09/01/10 | $0.18 | 20,519 | ||||
11/02/10 | 11/22/10 | 12/07/10 | $0.21 | 24,201 | ||||
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Total — Year ended December 31, 2010 | $85,137 | |||||||
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02/24/11 | 03/04/11 | 03/16/11 | $0.21 | $24,056 | ||||
05/12/11 | 06/06/11 | 06/17/11 | $0.21 | 24,152 | ||||
08/04/11 | 08/17/11 | 09/01/11 | $0.21 | 24,157 | ||||
11/03/11 | 11/18/11 | 12/07/11 | $0.21 | 24,157 | ||||
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Total — Year ended December 31, 2011 | $96,522 | |||||||
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02/03/12 | 03/02/12 | 03/16/12 | $0.21 | $24,141 | ||||
05/11/12 | 06/04/12 | 06/19/12 | $0.21 | 24,274 | ||||
08/08/12 | 08/21/12 | 09/05/12 | $0.21 | 24,281 | ||||
11/06/12 | 11/21/12 | 12/07/12 | $0.21 | 24,565 | ||||
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Total — Year ended December 31, 2012 | $97,261 | |||||||
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(1) | ||
Of the dividends recorded during |
F-46
(2) | Beginning with the dividend declared on November 2, 2010, the Company’s board of directors raised the quarterly dividend to $0.21 per common share. |
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS(
In thousands, except share data)
3. | DIVIDENDS RECEIVED FROM SUBSIDIARIES |
During the years ended December 31, 20082010, 2011 and 2009,2012, Cinemark Holdings, Inc. received cash dividends of $51,500$78,100, $95,000 and $58,625,$95,750, respectively, from its subsidiaries, Cinemark, Inc. andsubsidiary, Cinemark USA, Inc.
4. | LONG-TERM DEBT |
Cinemark Holdings, Inc. has no direct outstanding debt obligations, but its subsidiaries do. For a discussion of the debt obligations of Cinemark Holdings, Inc.’s subsidiaries, see Note 1413 to the Company’s consolidated financial statements included elsewhere in this annual report on Form 10-K.
5. | CAPITAL STOCK |
Cinemark Holdings, Inc.’s capital stock along with its 2006 long-term incentive plan and related activity are discussed in Note 19 of the Company’s consolidated financial statements included elsewhere in this annual report on Form 10-K.
6. | COMMITMENTS AND CONTINGENCIES |
Cinemark Holdings, Inc. has no direct commitments and contingencies, but its subsidiaries do. See Note 22 of the Company’s consolidated financial statements included elsewhere in this annual report on Form 10-K.
F-47
EXHIBITS
TO
F-48
December 31, 2009 | January 1, 2009 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 37.8 | $ | 34.1 | ||||
Receivables, net of allowance of $3.6 and $2.6 million, respectively | 89.0 | 92.0 | ||||||
Prepaid expenses | 1.5 | 1.6 | ||||||
Prepaid management fees to managing member | 0.6 | 0.5 | ||||||
Total current assets | 128.9 | 128.2 | ||||||
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $39.3 and $27.0 million, respectively | 23.7 | 28.0 | ||||||
INTANGIBLE ASSETS, net of accumulated amortization of $4.4 and $1.5 million, respectively | 134.2 | 111.8 | ||||||
OTHER ASSETS: | ||||||||
Debt issuance costs, net | 9.2 | 11.1 | ||||||
Equity method investment | 7.4 | — | ||||||
Other long-term assets | 1.0 | 0.8 | ||||||
Total other assets | 17.6 | 11.9 | ||||||
TOTAL | $ | 304.4 | $ | 279.9 | ||||
LIABILITIES AND MEMBERS’ EQUITY/(DEFICIT) | ||||||||
CURRENT LIABILITIES: | ||||||||
Amounts due to founding members | 29.8 | 25.6 | ||||||
Amounts due to managing member | 22.9 | 22.1 | ||||||
Accrued expenses | 12.4 | 6.3 | ||||||
Current portion of long-term debt | 4.3 | — | ||||||
Accrued payroll and related expenses | 6.6 | 5.7 | ||||||
Accounts payable | 11.3 | 11.2 | ||||||
Deferred revenue and other current liabilities | 2.8 | 3.4 | ||||||
Total current liabilities | 90.1 | 74.3 | ||||||
OTHER LIABILITIES: | ||||||||
Borrowings | 799.0 | 799.0 | ||||||
Interest rate swap agreements | 54.6 | 87.7 | ||||||
Other long-term liabilities | 0.3 | 4.5 | ||||||
Total other liabilities | 853.9 | 891.2 | ||||||
Total liabilities | 944.0 | 965.5 | ||||||
COMMITMENTS AND CONTINGENCIES (NOTE 9) | ||||||||
MEMBERS’ EQUITY/(DEFICIT) | (639.6 | ) | (685.6 | ) | ||||
TOTAL | $ | 304.4 | $ | 279.9 | ||||
F-49
Period | Period | |||||||||||||||
February 13, | December 29, | |||||||||||||||
Year Ended | Year Ended | 2007 through | 2006 through | |||||||||||||
December 31, | January 1, | December 27, | February 12, | |||||||||||||
2009 | 2009 | 2007 | 2007 | |||||||||||||
REVENUE: | ||||||||||||||||
Advertising (including revenue from founding members of $36.3, $43.3, $40.9 and $0 million, respectively) | $ | 335.1 | $ | 330.3 | $ | 282.7 | $ | 20.6 | ||||||||
Administrative fees—founding members | — | — | — | 0.1 | ||||||||||||
Fathom Events | 45.5 | 38.9 | 25.4 | 2.9 | ||||||||||||
Other | 0.1 | 0.3 | 0.2 | — | ||||||||||||
Total | 380.7 | 369.5 | 308.3 | 23.6 | ||||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Advertising operating costs | 20.0 | 18.7 | 9.1 | 1.1 | ||||||||||||
Fathom Events operating costs | 29.1 | 25.1 | 15.4 | 1.4 | ||||||||||||
Network costs | 18.6 | 17.0 | 13.3 | 1.7 | ||||||||||||
Theatre access fees/circuit share costs—founding members | 52.7 | 49.8 | 41.5 | 14.4 | ||||||||||||
Selling and marketing costs | 50.2 | 47.9 | 40.9 | 5.2 | ||||||||||||
Administrative costs | 14.8 | 14.5 | 10.0 | 2.8 | ||||||||||||
Administrative fee — managing member | 10.8 | 9.7 | 9.2 | — | ||||||||||||
Severance plan costs | — | 0.5 | 1.5 | 0.4 | ||||||||||||
Depreciation and amortization | 15.6 | 12.4 | 5.0 | 0.7 | ||||||||||||
Other costs | 0.7 | 0.7 | 0.9 | — | ||||||||||||
Total | 212.5 | 196.3 | 146.8 | 27.7 | ||||||||||||
OPERATING INCOME (LOSS) | 168.2 | 173.2 | 161.5 | (4.1 | ) | |||||||||||
Interest Expense, Net: | ||||||||||||||||
Borrowings | 47.1 | 51.8 | 48.0 | 0.1 | ||||||||||||
Change in derivative fair value | (7.0 | ) | 14.2 | — | — | |||||||||||
Interest income and other | (2.0 | ) | (0.2 | ) | (0.2 | ) | — | |||||||||
Total | 38.1 | 65.8 | 47.8 | 0.1 | ||||||||||||
Impairment and related loss | — | 11.5 | — | — | ||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 130.1 | 95.9 | 113.7 | (4.2 | ) | |||||||||||
Provision for Income Taxes | 0.8 | 0.6 | — | — | ||||||||||||
Equity loss from investment, net | 0.8 | — | — | — | ||||||||||||
NET INCOME (LOSS) | $ | 128.5 | $ | 95.3 | $ | 113.7 | $ | (4.2 | ) | |||||||
F-50
Total | ||||
Balance—December 28, 2006 | $ | 3.5 | ||
Contribution of severance plan payments | 0.4 | |||
Net loss | (4.2 | ) | ||
Balance—February 12, 2007 | $ | (0.3 | ) | |
Balance—February 13, 2007 | $ | (0.3 | ) | |
Contribution of severance plan payments | 1.5 | |||
Capital contribution from managing member | 746.1 | |||
Capital contribution from founding member | 11.2 | |||
Distribution to managing member | (53.3 | ) | ||
Distribution to founding members | (1,521.6 | ) | ||
Reclassification of unit option plan | 2.3 | |||
Comprehensive Income: | ||||
Unrealized (loss) on cash flow hedge | (14.4 | ) | ||
Net income | 113.7 | |||
Total Comprehensive Income | 99.3 | |||
Share-based compensation expense | 1.0 | |||
Balance—December 27, 2007 | $ | (713.8 | ) | |
Contribution of severance plan payments | 0.5 | |||
Capital contribution from managing member | 0.6 | |||
Capital contribution from founding members | 4.7 | |||
Distribution to managing member | (55.5 | ) | ||
Distribution to founding members | (75.5 | ) | ||
Units issued for purchase of intangible asset | 116.1 | |||
Comprehensive Income: | ||||
Unrealized (loss) on cash flow hedge | (59.1 | ) | ||
Net income | 95.3 | |||
Total Comprehensive Income | 36.2 | |||
Share-based compensation expense | 1.1 | |||
Balance—January 1, 2009 | $ | (685.6 | ) | |
Capital contribution from founding members | 0.1 | |||
Distribution to managing member | (57.8 | ) | ||
Distribution to founding members | (81.5 | ) | ||
Units issued for purchase of intangible asset | 28.5 | |||
Comprehensive Income: | ||||
Unrealized (loss) on cash flow hedge | 26.1 | |||
Net income | 128.5 | |||
Total Comprehensive Income | 154.6 | |||
Share-based compensation expense | 2.1 | |||
Balance—December 31, 2009 | $ | (639.6 | ) | |
F-51
Period | Period | ||||||||||||||||
February 13, | December 29, | ||||||||||||||||
Year Ended | Year Ended | 2007 through | 2006 through | ||||||||||||||
December 31, | January 1, | December 27, | February 12, | ||||||||||||||
2009 | 2009 | 2007 | 2007 | ||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||
Net income (loss) | $ | 128.5 | $ | 95.3 | $ | 113.7 | $ | (4.2 | ) | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||||
Depreciation and amortization | 15.6 | 12.4 | 5.0 | 0.7 | |||||||||||||
Non-cash severance plan and share-based compensation | 2.0 | 1.5 | 2.5 | 0.7 | |||||||||||||
Non-cash impairment and related loss | — | 11.5 | — | — | |||||||||||||
Net unrealized hedging transactions | (7.0 | ) | 14.2 | — | — | ||||||||||||
Equity in losses from investment | 0.8 | — | — | — | |||||||||||||
Amortization of debt issuance costs | 1.9 | 1.9 | 1.7 | — | |||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||
Receivables—net | 3.0 | (0.4 | ) | (40.3 | ) | 12.6 | |||||||||||
Accounts payable and accrued expenses | 6.9 | (0.7 | ) | 10.4 | (4.4 | ) | |||||||||||
Amounts due to founding members and managing member | 1.2 | 0.4 | (51.1 | ) | (3.7 | ) | |||||||||||
Other | (3.5 | ) | 0.1 | (1.3 | ) | 0.5 | |||||||||||
Net cash provided by operating activities | 149.4 | 136.2 | 40.6 | 2.2 | |||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||
Purchases of property and equipment | (8.4 | ) | (16.6 | ) | (13.8 | ) | (0.5 | ) | |||||||||
Increase in investment in affiliate | (2.0 | ) | — | (7.0 | ) | — | |||||||||||
Other | — | — | (0.3 | ) | — | ||||||||||||
Net cash (used in) investing activities | (10.4 | ) | (16.6 | ) | (21.1 | ) | (0.5 | ) | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||
Reimbursement (payment) of offering costs and fees | — | — | 4.7 | (0.1 | ) | ||||||||||||
Proceeds from borrowings | — | 139.0 | 924.0 | 13.0 | |||||||||||||
Repayments of borrowings | (3.0 | ) | (124.0 | ) | (150.0 | ) | (13.0 | ) | |||||||||
Proceeds from managing member contributions | — | 0.6 | 746.1 | — | |||||||||||||
Proceeds from founding member contributions | 3.6 | 9.7 | 7.5 | — | |||||||||||||
Distribution to founding members and managing member | (135.9 | ) | (118.3 | ) | (1,538.0 | ) | — | ||||||||||
Payment of debt issuance costs | — | — | (14.6 | ) | — | ||||||||||||
Net cash (used in) financing activities. | (135.3 | ) | (93.0 | ) | (20.3 | ) | (0.1 | ) | |||||||||
CHANGE IN CASH AND CASH EQUIVALENTS | 3.7 | 26.6 | (0.8 | ) | 1.6 | ||||||||||||
CASH AND CASH EQUIVALENTS: | |||||||||||||||||
Beginning of period | 34.1 | 7.5 | 8.3 | 6.7 | |||||||||||||
End of period | $ | 37.8 | $ | 34.1 | $ | 7.5 | $ | 8.3 | |||||||||
F-52
Period | Period | ||||||||||||||||
February 13, | December 29, | ||||||||||||||||
Year Ended | Year Ended | 2007 through | 2006 through | ||||||||||||||
December 31, | January 1, | December 27, | February 12, | ||||||||||||||
2009 | 2009 | 2007 | 2007 | ||||||||||||||
Supplemental disclosure of non-cash financing and investing activity: | |||||||||||||||||
Contribution for severance plan payments | — | $ | 0.5 | $ | 1.5 | $ | 0.4 | ||||||||||
Increase in distributions payable to founding members and managing member | $ | 53.1 | $ | 49.7 | $ | 37.0 | — | ||||||||||
Contributions from members collected after period end. | — | $ | 0.4 | $ | 3.7 | — | |||||||||||
Integration payment from founding member collected after period end | $ | 1.2 | $ | 1.2 | — | — | |||||||||||
Purchase of an intangible asset with subsidiary equity | $ | 28.5 | $ | 116.1 | — | — | |||||||||||
Settlement of put liability by issuance of debt | $ | 7.0 | — | — | — | ||||||||||||
Assets acquired in settlement of put liability | $ | 2.5 | — | — | — | ||||||||||||
Increase in property and equipment not requiring cash in the period | — | — | $ | 0.6 | — | ||||||||||||
Unit option plan reclassified to equity | — | — | $ | 2.3 | — | ||||||||||||
Supplemental disclosure of cash flow information: | |||||||||||||||||
Cash paid for interest | $ | 38.8 | $ | 48.3 | $ | 44.0 | $ | 0.1 | |||||||||
Cash paid for income taxes | $ | 0.8 | $ | 0.6 | — | — |
F-53
F-54
F-55
As of December 31, | As of January 1, | |||||||
2009 | 2009 | |||||||
Trade accounts | $ | 91.6 | $ | 92.4 | ||||
Other | 1.0 | 2.2 | ||||||
Less allowance for doubtful accounts | (3.6 | ) | (2.6 | ) | ||||
Total | $ | 89.0 | $ | 92.0 | ||||
F-56
Period | Period | ||||||||||||||||
February 13, | December 29, | ||||||||||||||||
Year Ended | 2007 through | 2006 through | |||||||||||||||
December 31, | Year Ended | December 27, | February 12, | ||||||||||||||
2009 | January 1, 2009 | 2007 | 2007 | ||||||||||||||
ALLOWANCE FOR DOUBTFUL ACCOUNTS: | |||||||||||||||||
Balance at beginning of period. | $ | 2.6 | $ | 1.5 | $ | 1.1 | $ | 1.1 | |||||||||
Provision for bad debt | 2.4 | 2.3 | 1.0 | 0.1 | |||||||||||||
Write-offs, net | (1.4 | ) | (1.2 | ) | (0.6 | ) | (0.1 | ) | |||||||||
Balance at end of period | $ | 3.6 | $ | 2.6 | $ | 1.5 | $ | 1.1 | |||||||||
F-57
Period | ||||||||||||
February 13, 2007 | ||||||||||||
Year Ended | through | |||||||||||
Dec. 31, | Year Ended | December 27, | ||||||||||
2009 | Jan. 1, 2009 | 2007 | ||||||||||
Beginning Balance | $ | (73.5 | ) | $ | (14.4 | ) | $ | — | ||||
Change in fair value on cash flow hedge | 24.8 | (59.5 | ) | (14.4 | ) | |||||||
Reclassifications into earnings | 1.3 | 0.4 | — | |||||||||
Ending Balance | $ | (47.4 | ) | $ | (73.5 | ) | $ | (14.4 | ) | |||
F-58
As of | As of | |||||||
December 31, | January 1, | |||||||
2009 | 2009 | |||||||
Equipment | $ | 60.6 | $ | 53.3 | ||||
Leasehold Improvements | 1.6 | 1.4 | ||||||
Less accumulated depreciation | (39.3 | ) | (27.0 | ) | ||||
Subtotal | 22.9 | 27.7 | ||||||
Construction in Progress | 0.8 | 0.3 | ||||||
Total property and equipment | $ | 23.7 | $ | 28.0 | ||||
F-59
As of December | As of January 1, | |||||||
31, 2009 | 2009 | |||||||
(in millions) | ||||||||
Beginning balance | $ | 111.8 | $ | — | ||||
Purchase of intangible asset subject to amortization | 28.5 | 116.1 | ||||||
Less integration payments | (3.2 | ) | (2.8 | ) | ||||
Less amortization expense | (2.9 | ) | (1.5 | ) | ||||
Total intangible assets | $ | 134.2 | $ | 111.8 | ||||
2010 | $ | 3.0 | ||
2011 | 4.9 | |||
2012 | 4.9 | |||
2013 | 4.9 | |||
2014 | 4.9 |
As of December 31, | As of January 1, | |||||||
2009 | 2009 | |||||||
Make-good Reserve | $ | 0.3 | $ | 1.3 | ||||
Accrued Interest | 9.8 | 4.0 | ||||||
Other accrued expenses | 2.3 | 1.0 | ||||||
Total accrued | $ | 12.4 | $ | 6.3 | ||||
F-60
2009 | 2008 | Post-IPO | ||||||||||
AMC | $ | 25.8 | $ | 24.3 | $ | 22.2 | ||||||
Cinemark | 20.8 | 18.5 | 16.7 | |||||||||
Regal | 34.9 | 32.7 | 26.9 | |||||||||
NCM, Inc. | 57.8 | 55.6 | 53.3 | |||||||||
Total | $ | 139.3 | $ | 131.1 | $ | 119.1 | ||||||
AMC | Cinemark | Regal | Total | |||||||||||||
Theatre access fees, net of beverage revenues | $ | 0.5 | $ | 0.4 | $ | 0.5 | $ | 1.4 | ||||||||
Cost and other reimbursement | (0.5 | ) | (0.5 | ) | (0.5 | ) | (1.5 | ) | ||||||||
Distributions payable, net | 9.9 | 7.9 | 12.1 | 29.9 | ||||||||||||
Total | $ | 9.9 | $ | 7.8 | $ | 12.1 | $ | 29.8 | ||||||||
AMC | Cinemark | Regal | Total | |||||||||||||
Theatre access fees, net of beverage revenues | $ | (0.1 | ) | $ | — | $ | 0.7 | $ | 0.6 | |||||||
Cost and other reimbursement | (1.1 | ) | (0.5 | ) | (0.6 | ) | (2.2 | ) | ||||||||
Distributions payable, net | 8.9 | 7.0 | 11.3 | 27.2 | ||||||||||||
Total | $ | 7.7 | $ | 6.5 | $ | 11.4 | $ | 25.6 | ||||||||
F-61
Pre-IPO Period December 29, 2006 | ||||||||
through February 12, 2007 | ||||||||
Circuit Share Cost | Administrative Fee Revenue | |||||||
AMC | $ | 4.1 | $ | — | ||||
Cinemark | 3.7 | 0.1 | ||||||
Regal | 6.6 | — | ||||||
Total | $ | 14.4 | $ | 0.1 | ||||
At December 31, 2009 | At January 1, 2009 | |||||||
Distributions payable | $ | 22.0 | $ | 21.0 | ||||
Cost and other reimbursement | 0.9 | 1.1 | ||||||
Total | $ | 22.9 | $ | 22.1 | ||||
F-62
F-63
2010 | $ | 4.3 | ||
2011 | — | |||
2012 | — | |||
2013 | 74.0 | |||
2014 | — | |||
Thereafter | 725.0 | |||
Total | $ | 803.3 | ||
F-64
Fiscal 2009 | Fiscal 2008 | Fiscal 2007 | ||||||||||
Expected life of options | 6.5 years | 6.5 years | 6.5 to 9 years | |||||||||
Risk free interest rate | 2.23% to 3.70% | 3.74% to 4.09% | 4.1% to 4.9% | |||||||||
Expected volatility | 30 | % | 30 | % | 30 | % | ||||||
Dividend yield | 3 | % | 3 | % | 3 | % |
Weighted Average | ||||||||||||||||
Remaining | ||||||||||||||||
Weighted Average | Contractual Life | Aggregate Intrinsic | ||||||||||||||
Shares | Exercise Price | (in years) | Value (in millions) | |||||||||||||
Outstanding at January 1, 2009 | 2,025,099 | $ | 17.33 | |||||||||||||
Granted | 1,156,515 | 9.53 | ||||||||||||||
Exercised | (1,800 | ) | 5.35 | |||||||||||||
Forfeited | (53,254 | ) | 14.35 | |||||||||||||
Outstanding at December 31, 2009 | 3,126,560 | $ | 14.51 | 9.9 | $ | 9.2 | ||||||||||
Exercisable at December 31, 2009 | 648,359 | $ | 17.67 | 10.5 | $ | 0.2 | ||||||||||
Vested and Expected to Vest at December 31, 2009 | 3,090,782 | $ | 14.52 | 9.9 | $ | 9.0 |
Options Outstanding | Options Exercisable | |||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||
Number | Average | Average | Number | Average | ||||||||||||||||
Outstanding at | Remaining Life (in | Exercise | Exercisable at | Exercise | ||||||||||||||||
Range of Exercise Price | Dec. 31, 2009 | years) | Price | Dec. 31, 2009 | Price | |||||||||||||||
$ 5.35—$ 9.22 | 1,126,350 | 9.0 | $ | 9.06 | 7,800 | $ | 5.35 | |||||||||||||
$11.59—$15.04 | 136,408 | 8.9 | 13.47 | 14,600 | 12.33 | |||||||||||||||
$16.35—$18.01 | 1,409,436 | 11.3 | 16.52 | 476,280 | 16.56 | |||||||||||||||
$19.37—$21.00 | 301,500 | �� | 7.5 | 20.35 | 96,000 | 20.59 | ||||||||||||||
$24.04—$29.05 | 152,866 | 10.1 | 25.40 | 53,679 | 25.59 | |||||||||||||||
3,126,560 | 9.9 | $ | 14.51 | 648,359 | $ | 17.67 | ||||||||||||||
F-65
Weighted Average | ||||||||
Shares | Grant-Date Fair Value | |||||||
Non-vested as of January 1, 2009 | 203,618 | $ | 20.91 | |||||
Granted | 424,555 | 9.50 | ||||||
Forfeited | (12,500 | ) | 10.10 | |||||
Vested | (25,299 | ) | 21.93 | |||||
Non-vested as of December 31, 2009 | 590,374 | $ | 13.15 |
F-66
2010 | $ | 2.2 | ||
2011 | 2.1 | |||
2012 | 2.0 | |||
2013 | 1.9 | |||
2014 | 0.8 | |||
Thereafter | 0.2 | |||
Total | $ | 9.2 | ||
F-67
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Quoted Prices in | Significant | |||||||||||||||
At | Active Markets | Other | Significant | |||||||||||||
December 31, | for Identical | Observable | Unobservable | |||||||||||||
2009 | Assets (Level 1) | Inputs (Level 2) | Inputs (Level 3) | |||||||||||||
LIABILITIES: | ||||||||||||||||
Interest Rate Swap Agreements | $ | 54.6 | — | $ | 54.6 | — | ||||||||||
F-68
Liability Derivatives | ||||||||||||||||
As of December 31, 2009 | As of January 1, 2009 | |||||||||||||||
Balance Sheet | Balance Sheet | |||||||||||||||
Location | Fair Value | Location | Fair Value | |||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||
Interest Rate Swaps | Other Liabilities | $ | 40.9 | Other Liabilities | $ | 65.8 | ||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||
Interest Rate Swaps | Other Liabilities | $ | 13.7 | Other Liabilities | $ | 21.9 | ||||||||||
Total derivatives | $ | 54.6 | $ | 87.7 |
Unrealized Gain (Loss) | Realized Gain (Loss) | |||||||||||||||||||||||
Recognized in NCM LLC’s | Recognized in Interest | |||||||||||||||||||||||
OCI (Pre-tax) | Expense (Pre-tax) | |||||||||||||||||||||||
Period | Period | |||||||||||||||||||||||
Feb.13, | Feb.13, | |||||||||||||||||||||||
Year | Year | 2007 | Year | Year | 2007 | |||||||||||||||||||
Ended | Ended | through | Ended | Ended | through | |||||||||||||||||||
Dec. 31, | Jan. 1, | Dec. 27, | Dec. 31, | Jan. 1, | Dec. 27, | |||||||||||||||||||
2009 | 2009 | 2007 | 2009 | 2009 | 2007 | |||||||||||||||||||
Interest Rate Swaps | $ | 9.3 | $ | (67.9 | ) | $ | (12.3 | ) | $ | (16.7 | ) | $ | (8.8 | ) | $ | 2.1 |
Gain or (Loss) Recognized | ||||||||||||
in Interest Expense (Pre-tax) | ||||||||||||
Year | Year | Period Feb. | ||||||||||
Ended | Ended | 13, 2007 through | ||||||||||
Dec. 31, | Jan. 1, | Dec. 27, | ||||||||||
2009 | 2009 | 2007 | ||||||||||
Borrowings | $ | (6.2 | ) | $ | (1.0 | ) | $ | — | ||||
Change in derivative fair value | 7.0 | (14.2 | ) | — | ||||||||
Total | $ | 0.8 | $ | (15.2 | ) | $ | — | |||||
F-69
Year Ended December 31, 2009 (in millions) | ||||||||||||||||
Network, | ||||||||||||||||
Administrative | ||||||||||||||||
and | ||||||||||||||||
Unallocated | ||||||||||||||||
Advertising | Other | Costs | Total | |||||||||||||
Revenue | $ | 335.1 | $ | 45.5 | $ | 0.1 | $ | 380.7 | ||||||||
Operating costs | 72.7 | 29.1 | 101.8 | |||||||||||||
Selling and marketing costs | 40.6 | 8.6 | 1.0 | 50.2 | ||||||||||||
Other costs | 2.8 | 0.9 | 3.7 | |||||||||||||
Operating income, net of direct expenses | $ | 219.0 | $ | 6.9 | ||||||||||||
Network, administrative and other costs | 56.8 | 56.8 | ||||||||||||||
Total Operating Income | $ | 168.2 | ||||||||||||||
Year Ended January 1, 2009 (in millions) | ||||||||||||||||
Network, | ||||||||||||||||
Administrative | ||||||||||||||||
and | ||||||||||||||||
Unallocated | ||||||||||||||||
Advertising | Other | Costs | Total | |||||||||||||
Revenue | $ | 330.3 | $ | 38.9 | $ | 0.3 | $ | 369.5 | ||||||||
Operating costs | 68.5 | 25.1 | 93.6 | |||||||||||||
Selling and marketing costs | 38.5 | 8.3 | 1.1 | 47.9 | ||||||||||||
Other costs | 2.8 | 0.8 | 3.6 | |||||||||||||
Operating income, net of direct expenses | $ | 220.5 | $ | 4.7 | ||||||||||||
Network, administrative and other costs | 51.2 | 51.2 | ||||||||||||||
Total Operating Income | $ | 173.2 | ||||||||||||||
Period February 13, 2007 through December 27, 2007 | ||||||||||||||||
(in millions) | ||||||||||||||||
Network, | ||||||||||||||||
Administrative | ||||||||||||||||
and | ||||||||||||||||
Unallocated | ||||||||||||||||
Advertising | Other | Costs | Total | |||||||||||||
Revenue | $ | 282.7 | $ | 25.4 | $ | 0.2 | $ | 308.3 | ||||||||
Operating costs | 50.6 | 15.4 | 66.0 | |||||||||||||
Selling and marketing costs | 32.2 | 7.4 | 1.3 | 40.9 | ||||||||||||
Other costs | 2.4 | 0.4 | 2.8 | |||||||||||||
Operating income, net of direct expenses | $ | 197.5 | $ | 2.2 | ||||||||||||
Network, administrative and other costs | 37.1 | 37.1 | ||||||||||||||
Total Operating Income | $ | 161.5 | ||||||||||||||
F-70
Period December 29, 2006 through February 12, 2007 | ||||||||||||||||
(in millions) | ||||||||||||||||
Network, | ||||||||||||||||
Administrative | ||||||||||||||||
and | ||||||||||||||||
Unallocated | ||||||||||||||||
Advertising | Other | Costs | Total | |||||||||||||
Revenue | $ | 20.7 | $ | 2.9 | $ | 23.6 | ||||||||||
Operating costs | 15.5 | 1.4 | 16.9 | |||||||||||||
Selling and marketing costs | 4.4 | 0.8 | 5.2 | |||||||||||||
Other costs | 0.3 | 0.1 | 0.4 | |||||||||||||
Operating income, net of direct expenses | $ | 0.5 | $ | 0.6 | ||||||||||||
Network, administrative and other costs | $ | 5.2 | 5.2 | |||||||||||||
Total Operating Income (Loss) | ($4.1 | ) | ||||||||||||||
Period | Period | ||||||||||||||||
February 13, | December 29, | ||||||||||||||||
Year Ended | Year Ended | 2007 through | 2006 through | ||||||||||||||
December | January 1, | December 27, | February 12, | ||||||||||||||
31, 2009 | 2009 | 2007 | 2007 | ||||||||||||||
National Advertising Revenue | $ | 236.8 | $ | 223.1 | $ | 187.1 | $ | 15.3 | |||||||||
Founding Member Advertising Revenue | 36.3 | 43.3 | 40.9 | — | |||||||||||||
Regional Advertising Revenue | 62.0 | 63.9 | 54.7 | 5.4 | |||||||||||||
Fathom Consumer Revenue | 28.6 | 20.2 | 8.2 | 1.4 | |||||||||||||
Fathom Business Revenue | 16.9 | 18.7 | 17.2 | 1.5 | |||||||||||||
Other Revenue | 0.1 | 0.3 | 0.2 | — | |||||||||||||
Total Revenues | $ | 380.7 | $ | 369.5 | $ | 308.3 | $ | 23.6 | |||||||||
F-71
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR
CINEMARK HOLDINGS, INC.
FOR FISCAL YEAR ENDED
DECEMBER 31, 2009
E-12012
Number | Exhibit Title | ||
2.1(a) | Stock Contribution and Exchange Agreement, dated as of August 7, 2006, by and between Cinemark Holdings, Inc., Cinemark, Inc., Syufy Enterprises, LP and Century Theatres Holdings, LLC (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K, File No. 000-47040, filed by Cinemark USA, Inc. on August 11, 2006). | ||
2.1(b) | Stock Purchase Agreement, dated as of August 7, 2006, by and among Cinemark USA, | ||
2.2 | Contribution and Exchange Agreement, dated as of August 7, 2006, by and among Cinemark Holdings, Inc. and Lee Roy Mitchell, The Mitchell Special Trust, Alan W. Stock, Timothy Warner, Robert Copple, Michael Cavalier, Northwestern University, John Madigan, Quadrangle Select Partners LP, Quadrangle Capital Partners A LP, Madison Dearborn Capital Partners IV, L.P., K&E Investment Partners, LLC — 2004-B-DIF, Piola Investments Ltd., Quadrangle (Cinemark) Capital Partners LP and Quadrangle Capital Partners LP (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K, File No. 000-47040, filed by Cinemark USA, Inc. on August 11, 2006). | ||
*2.3 | Asset Purchase Agreement, dated as of November 16, 2012, by and among Cinemark USA, Inc., Rave Real Property Holdco, LLC and certain of its subsidiaries, Rave Cinemas, LLC and RC Processing, LLC. | ||
3.1 | Second Amended and Restated Certificate of Incorporation of Cinemark Holdings, Inc. filed with the Delaware Secretary of State on April 9, 2007 (incorporated by reference to Exhibit 3.1 to Amendment No. 2 to our Registration Statement on Form S-1, File No. 333-140390, filed April 9, 2007). | ||
3.2(a) | Amended and Restated Bylaws of Cinemark Holdings, Inc. dated April 9, 2007 (incorporated by reference to Exhibit 3.2 to Amendment No. 2 to our Registration Statement on Form S-1, File No. 333-140390, filed April 9, 2007). | ||
3.2(b) | First Amendment to the Amended and Restated Bylaws of Cinemark Holdings, Inc. dated April 16, 2007 (incorporated by reference to Exhibit 3.2(b) to Amendment No. 4 to our Registration Statement on Form S-1, File No. 333-140390, filed April 19, 2007). | ||
4.1 | Specimen stock certificate of Cinemark Holdings, Inc. (incorporated by reference to Exhibit 4.1 to Amendment No. 2 to our Registration Statement on Form S-1, File No. 333-140390, filed April 9, 2007). | ||
4.2(a) | Indenture dated as of | ||
4.2(b) | Form of | ||
4.3(a) | Indenture, dated as of | ||
4.3(b) | |||
Form of |
4.4(a) | |||
Indenture, dated as of | |||
4.4(b) | |||
4.5 | Exchange and Registration Rights Agreement, dated as of December 18, 2012, by and among Cinemark USA, Inc., the Guarantors and Barclay’s Capital Inc., Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc., Wells Fargo Securities, LLC and Nomura Securities International, Inc. (incorporated by reference to Exhibit 4.2 to Cinemark Holdings Inc.’s Current Report on Form 8-K, File No. 001-33401, filed on December 20, 2012). | ||
10.1(a) | Management Agreement, dated December 10, 1993, between Laredo Theatre, Ltd. and Cinemark USA, Inc. (incorporated by reference to Exhibit 10.14(b) to Cinemark USA, Inc.’s Annual Report on Form 10-K, File No. 033-47040, filed March 31, 1994). | ||
10.1(b) | First Amendment to Management Agreement of Laredo Theatre, Ltd., effective as of December 10, 2003, between CNMK Texas Properties, Ltd. (successor in interest to Cinemark USA, Inc.) and Laredo Theatre Ltd. (incorporated by reference to Exhibit 10.1(d) to Cinemark, Inc.’s Registration Statement on Form S-4, File No. 333-116292, filed June 8, 2004). | ||
10.1(c) | |||
E-2
License Agreement, dated December 10, 1993, between Laredo Joint Venture and Cinemark USA, Inc. (incorporated by reference to Exhibit 10.14(c) to Cinemark USA, Inc.’s Annual Report on Form 10-K, File No. 033-47040, filed March 31, 1994). | |||
10.4(a) | |||
E-3
10.4(b) | Guarantee and Collateral Agreement, dated as of October 5, 2006, among Cinemark Holdings, Inc., Cinemark, Inc., CNMK Holding, Inc., Cinemark USA, Inc. and each subsidiary guarantor party thereto (incorporated by reference to Exhibit 10.6 to Current Report on Form 8-K, File No. 000-47040, filed by Cinemark USA, Inc. on October 12, 2006). | |
*10.4(c) | Reaffirmation agreement, dated as of December 18, 2012, between Cinemark Holdings, Inc., Cinemark USA, Inc. and each subsidiary guarantor party thereto. | |
10.5(a) | Tax Sharing Agreement, between Cinemark | |
10.5(b) | Tax Sharing Agreement, dated as of July 28, 1993, between Cinemark USA, Inc. and Cinemark Mexico (USA) (incorporated by reference to Exhibit 10.10 to Cinemark Mexico (USA)’s Registration Statement on Form S-4, File No. 033-72114, filed November 24, 1993). | |
+10.6(a) | Employment Agreement, dated as of June 16, 2008, between Cinemark Holdings, Inc. and Robert Copple (incorporated by reference to Exhibit 10.3 to Cinemark Holdings, Inc.’s |
+10.6(b) | |||
+10.6(c) | Employment Agreement, dated as of December | ||
+10.6(d) | Employment Agreement, dated as of December 15, 2008, between Cinemark Holdings, Inc. and Rob Carmony (incorporated by reference to Exhibit 10.5 (r) to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed March 13, 2009). | ||
10.6(e) | Employment agreement, dated as of April 7, 2009, between Cinemark Holdings, Inc. and Steven Bunnell (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s | ||
+10.6(f) | Employment Agreement, dated as of February 15, 2010, between Cinemark Holdings, Inc. and Valmir Fernandes (incorporated by reference to Exhibit 10.5(v) to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed March 10, 2010). | ||
+ | Amended and Restated Cinemark Holdings, Inc. 2006 Long Term Incentive Plan (incorporated by reference to Exhibit 4.1 to Cinemark Holdings, Inc.’s Quarterly Report on form 10-Q, File No. 001-33401, filed May 9, 2008). | ||
+ | Form of Stock Option Agreement (incorporated by reference to Exhibit 10.7(b) to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed February 1, 2007). | ||
+ | Form of Restricted Share Award Agreement pursuant to the Amended and Restated Cinemark Holdings, Inc. 2006 Long Term Incentive Plan (incorporated by reference to Exhibit 4.6 to Cinemark Holdings, Inc.’s Registration Statement on Form S-8, File No. 333-146349, filed August 29, 2008). | ||
+ | Form of Restricted Stock Unit Award Agreement pursuant to the Amended and Restated Cinemark Holdings, Inc. 2006 Long Term Incentive Plan (incorporated by reference to Exhibit | ||
10.8 | Exhibitor Services Agreement, dated as of February 13, 2007, by and between National CineMedia, LLC and Cinemark USA, Inc. (incorporated by reference to Exhibit 10.8 to Amendment No. 1 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed March 16, 2007). | ||
10.9 | Third Amended and Restated Limited Liability Company Operating Agreement, dated as of February 12, 2007, by and between Cinemark Media, Inc., American Multi-Cinema, Inc., Regal CineMedia, LLC and National CineMedia, Inc. (incorporated by reference to Exhibit 10.9 to Amendment No. 1 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed March 16, 2007). |
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 14, Sacramento, CA (incorporated by reference to Exhibit 10.10(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 14, Sacramento, CA (incorporated by reference to Exhibit 10.10(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). |
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 14, Sacramento, | |||||
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 14, Sacramento, CA (incorporated by reference to Exhibit 10.10(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 14, Sacramento, CA (incorporated by reference to Exhibit 10.10(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Laguna 16, Elk Grove, CA (incorporated by reference to Exhibit 10.11(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Laguna 16, Elk Grove, CA (incorporated by reference to Exhibit 10.11(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Laguna 16, Elk Grove, CA (incorporated by reference to Exhibit 10.11(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Laguna 16, Elk Grove, CA (incorporated by reference to Exhibit 10.11(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Laguna 16, Elk Grove, CA (incorporated by reference to Exhibit 10.11(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Capitol 16, San Jose, CA (incorporated by reference to Exhibit 10.12(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Capitol 16, San Jose, CA (incorporated by reference to Exhibit 10.12(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). |
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Capitol 16, San Jose, CA (incorporated by reference to Exhibit 10.12(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
E-4
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Capitol 16, San Jose, CA (incorporated by reference to Exhibit 10.12(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Capitol 16, San Jose, CA (incorporated by reference to Exhibit 10.12(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 10 Berryessa, San Jose, CA (incorporated by reference to Exhibit 10.13(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 10 Berryessa, San Jose, CA (incorporated by reference to Exhibit 10.13(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 10 Berryessa, San Jose, CA (incorporated by reference to Exhibit 10.13(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 10 Berryessa, San Jose, CA (incorporated by reference to Exhibit 10.13(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 10 Berryessa, San Jose, CA (incorporated by reference to Exhibit 10.13(e) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 14, Folsom, CA (incorporated by reference to Exhibit 10.14(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 14, Folsom, CA (incorporated by reference to Exhibit 10.14(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). |
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 14, Folsom, CA (incorporated by reference to Exhibit 10.14(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 14, Folsom, CA (incorporated by reference to Exhibit 10.14(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 14, Folsom, CA (incorporated by reference to Exhibit 10.14(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Cinedome 12, Henderson, NV (incorporated by reference to Exhibit 10.15(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Cinedome 12, Henderson, NV (incorporated by reference to Exhibit 10.15(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Cinedome 12, Henderson, NV (incorporated by reference to Exhibit 10.15(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Cinedome 12, Henderson, NV (incorporated by reference to Exhibit 10.15(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Cinedome 12, Henderson, NV (incorporated by reference to Exhibit 10.15(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Park 12, Redwood City, CA (incorporated by reference to Exhibit 10.16(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Park 12, Redwood City, CA (incorporated by reference to Exhibit 10.16(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). |
E-5
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Park 12, Redwood City, CA (incorporated by reference to Exhibit 10.16(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Park 12, Redwood City, CA (incorporated by reference to Exhibit 10.16(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Park 12, Redwood City, CA (incorporated by reference to Exhibit 10.16(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 8, North Hollywood, CA (incorporated by reference to Exhibit 10.17(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 8, North Hollywood, CA (incorporated by reference to Exhibit 10.17(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 8, North Hollywood, CA (incorporated by reference to Exhibit 10.17(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 8, North Hollywood, CA (incorporated by reference to Exhibit 10.17(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Third Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 8, North Hollywood, CA (incorporated by reference to Exhibit 10.17(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Plaza 10, S. San Francisco, CA (incorporated by reference to Exhibit 10.18(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of October 31, 1996, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Plaza 10, S. San Francisco, CA (incorporated by reference to Exhibit 10.18(b) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). |
Second Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Plaza 10, S. San Francisco, CA (incorporated by reference to Exhibit 10.18(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Third Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Plaza 10, S. San Francisco, CA (incorporated by reference to Exhibit 10.18(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Fourth Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Plaza 10, S. San Francisco, CA (incorporated by reference to Exhibit 10.18(e) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Fifth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Plaza 10, S. San Francisco, CA (incorporated by reference to Exhibit 10.18(f) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Freemont, CA (incorporated by reference to Exhibit 10.19(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Freemont, CA (incorporated by reference to Exhibit 10.19(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Freemont, CA (incorporated by reference to Exhibit 10.19(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Freemont, CA (incorporated by reference to Exhibit 10.19(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Freemont, CA (incorporated by reference to Exhibit 10.19(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). |
E-6
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 7, Newark, CA (incorporated by reference to Exhibit 10.20(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). |
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 7, Newark, CA (incorporated by reference to Exhibit 10.20(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 7, Newark, CA (incorporated by reference to Exhibit 10.20(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 7, Newark, | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 7, Newark, CA (incorporated by reference to Exhibit 10.20(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Cinema 16, Mountain View, CA (incorporated by reference to Exhibit 10.21(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Cinema 16, Mountain View, CA (incorporated by reference to Exhibit 10.21(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Cinema 16, Mountain View, CA (incorporated by reference to Exhibit 10.21(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Cinema 16, Mountain View, CA (incorporated by reference to Exhibit 10.21(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Cinema 16, Mountain View, CA (incorporated by reference to Exhibit 10.21(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between |
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinearts 5, Pleasant Hill, CA (incorporated by reference to Exhibit 10.22(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinearts 5, Pleasant Hill, CA (incorporated by reference to Exhibit 10.22(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinearts 5, Pleasant Hill, CA (incorporated by reference to Exhibit 10.22(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinearts 5, Pleasant Hill, CA (incorporated by reference to Exhibit 10.22(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 24, San Jose, CA (incorporated by reference to Exhibit 10.23(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 24, San Jose, CA (incorporated by reference to Exhibit 10.23(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 24, San Jose, CA (incorporated by reference to Exhibit 10.23(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 24, San Jose, CA (incorporated by reference to Exhibit 10.23(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
E-7
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 24, San Jose, CA (incorporated by reference to Exhibit 10.23(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Napa, CA (incorporated by reference to Exhibit 10.24(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). |
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Napa, CA (incorporated by reference to Exhibit 10.24(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Napa, CA (incorporated by reference to Exhibit 10.24(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Napa, CA (incorporated by reference to Exhibit 10.24(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Napa, CA (incorporated by reference to Exhibit 10.24(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Lease Agreement, dated as of April 10, 1998, by and between Dyer Triangle LLC, as landlord and Century Theatres, Inc., as tenant, for Century 25 Union Landing, Union City, CA (incorporated by reference to Exhibit 10.25(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of April 15, 2005, to Lease Agreement, dated as of April 10, 1998, by and between Dyer Triangle LLC, as landlord and Century Theatres, Inc., as tenant, for Century 25 Union Landing, Union City, CA (incorporated by reference to Exhibit 10.25(b) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Second Amendment, dated as of September 29, 2005, to Lease Agreement, dated as of April 10, 1998, by and between Dyer Triangle LLC, as landlord and Century Theatres, Inc., as tenant, for Century 25 Union Landing, Union City, CA (incorporated by reference to Exhibit 10.25(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Third Amendment, dated as of August 5, 2006, to Lease Agreement, dated as of April 10, 1998, by and between Dyer Triangle LLC, as landlord and Century Theatres, Inc., as tenant, for Century 25 Union Landing, Union City, CA (incorporated by reference to Exhibit 10.25(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of March 7, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Sparks, Sparks, NV (incorporated by reference to Exhibit 10.26(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of March 7, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Sparks, Sparks, NV (incorporated by reference to Exhibit 10.26(b) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). |
Second Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of March 7, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Sparks, Sparks, NV (incorporated by reference to Exhibit 10.26(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Third Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of March 7, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Sparks, Sparks, NV (incorporated by reference to Exhibit 10.26(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Lease Agreement, dated as of October 1, 1996, by and between Syufy Enterprises, L.P. | |||||
First Amendment, dated as of April 15, 2005, to Lease Agreement, dated as of October 1, 1996, by and between Syufy Enterprises, L.P. | |||||
Second Amendment, dated as of September 29, 2005, to Lease Agreement, dated as of October 1, 1996, by and between Syufy Enterprises, L.P. | |||||
Third Amendment, dated as of August 5, 2006, to Lease Agreement, dated as of October 1, 1996, by and between Syufy Enterprises, L.P. | |||||
Indenture of Lease, dated as of July 1, 1996, by and between Synm Properties Inc. | |||||
First Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of July 1, 1996, by and between Synm Properties Inc. | |||||
E-8
Second Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of July 1, 1996, by and between Synm Properties Inc. | |||||
Third Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of July 1, 1996, by and between Synm Properties Inc. |
Indenture of Lease, dated as of September 3, 1996, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century 14, Roseville, CA (incorporated by reference to Exhibit 10.29(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 3, 1996, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century 14, Roseville, CA (incorporated by reference to Exhibit 10.29(b) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Second Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 3, 1996, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century 14, Roseville, CA (incorporated by reference to Exhibit 10.29(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Third Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 3, 1996, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century 14, Roseville, CA (incorporated by reference to Exhibit 10.29(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Rancho Santa Fe 16, Las Vegas, NV (incorporated by reference to Exhibit 10.30(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Rancho Santa Fe 16, Las Vegas, NV (incorporated by reference to Exhibit 10.30(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of September 30, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Rancho Santa Fe 16, Las Vegas, NV (incorporated by reference to Exhibit 10.30(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 16, Ventura, CA (incorporated by reference to Exhibit 10.31(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of October 1, 1996, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 16, Ventura, CA (incorporated by reference to Exhibit 10.31(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 16, Ventura, CA (incorporated by reference to Exhibit 10.31(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). |
Third Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 16, Ventura, CA (incorporated by reference to Exhibit 10.31(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 16, Ventura, CA (incorporated by reference to Exhibit 10.31(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Northridge 14, Salinas, CA (incorporated by reference to Exhibit 10.32(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Northridge 14, Salinas, CA (incorporated by reference to Exhibit 10.32(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of October 1, 2001, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Northridge 14, Salinas, CA (incorporated by reference to Exhibit 10.32(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Third Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Northridge 14, Salinas, CA (incorporated by reference to Exhibit 10.32(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between |
E-9
First Amendment, dated as of January 4, 1998, to Indenture of Lease, dated as of September 30, 1995, by and between | |||||
Second Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between | |||||
Third Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between |
Fourth Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between | |||||
Indenture of Lease, dated as of April 17, 1998, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Larkspur, Larkspur, CA (incorporated by reference to Exhibit 10.34(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of April 30, 2003, to Indenture of Lease, dated as of April 17, 1998, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Larkspur, Larkspur, CA (incorporated by reference to Exhibit 10.34(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of April 17, 1998, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Larkspur, Larkspur, CA (incorporated by reference to Exhibit 10.34(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of April 17, 1998, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Larkspur, Larkspur, CA (incorporated by reference to Exhibit 10.34(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of April 17, 1998, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Larkspur, Larkspur, CA (incorporated by reference to Exhibit 10.34(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of August 1, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Park Lane 16, Reno, NV (incorporated by reference to Exhibit 10.35(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of August 1, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Park Lane 16, Reno, NV (incorporated by reference to Exhibit 10.35(b) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Second Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of August 1, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Park Lane 16, Reno, NV (incorporated by reference to Exhibit 10.35(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). |
Third Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of August 1, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Park Lane 16, Reno, NV (incorporated by reference to Exhibit 10.35(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 16, Sacramento, CA (incorporated by reference to Exhibit 10.36(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 16, Sacramento, CA (incorporated by reference to Exhibit 10.36(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Second Amendment, dated as of October 1, 2001, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 16, Sacramento, CA (incorporated by reference to Exhibit 10.36(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Third Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 16, Sacramento, CA (incorporated by reference to Exhibit 10.36(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | |||||
Fourth Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 16, Sacramento, CA (incorporated by reference to Exhibit 10.36(e) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). |
E-10
Fifth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 16, Sacramento, CA (incorporated by reference to Exhibit 10.36(f) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | |||||
Lease Agreement, dated as of October 31, 1997, by and between | |||||
First Amendment, dated as of December 1, 1998, to Lease Agreement, dated as of October 31, 1997, by and between | |||||
+10.38 | |||||
+10.39 | Cinemark Holdings, Inc. Performance Bonus Plan (incorporated by reference to Appendix B to Cinemark Holdings, Inc.’s Definitive Proxy Statement filed on April 15, 2008). | |
+10.40 | Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.40 to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed February 29, 2012). | |
+10.41 | Amended and Restated Employment Agreement, dated as of March 30, 2012, between Cinemark Holdings, Inc. and Timothy Warner (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s Current Report on Form 8K, File No. 001-33401, filed April |
*12 | Calculation of Ratio of Earnings to Fixed Charges. | ||
*21 | Subsidiaries of Cinemark Holdings, Inc. | ||
*23.1 | Consent of Deloitte & Touche LLP. | ||
*31.1 | Certification of | ||
*31.2 | Certification of Robert Copple, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
*32.1 | Certification of | ||
*32.2 | Certification of Robert Copple, Chief Financial Officer, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002. |
*101 | The following financial information from Cinemark Holdings, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on February 28, 2013, formatted in XBRL includes: (i) Consolidated Balance Sheets (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements tagged as detailed text. |
* | Filed herewith. |
+ | Any management contract, compensatory plan or arrangement. |
E-11
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