UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30,March 31, 20222023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number | Exact Name of Registrant as Specified in its Charter, Principal Executive Office Address and Telephone Number | State of Incorporation | I.R.S. Employer Identification No. |
001-33401 | Cinemark Holdings, Inc. 3900 Dallas Parkway Plano, Texas 75093 (972) 665-1000 | Delaware | 20-5490327 |
33-47040 | Cinemark USA, Inc. 3900 Dallas Parkway Plano, Texas 75093 (972) 665-1000 | Texas | 75-2206284 |
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | |
Cinemark Holdings, Inc. ("Holdings") | Common stock, par value $.001 per share | CNK | New York Stock Exchange |
Cinemark USA, Inc. ("CUSA") | None | None | None |
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.
Cinemark Holdings, Inc. Yes ☒ No ☐
Cinemark USA, Inc. Yes ☐ No ☒
(Note: As a voluntary filer, Cinemark USA, Inc. is not subject to the filing requirement of Section 13 or 15(d) of the Exchange Act. Cinemark USA, Inc. has filed all reports pursuant to Section 13 or 15(d) of the Exchange Act during the preceding 12 months as if it was subject to such filing requirements.)
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Cinemark Holdings, Inc. Yes ☒ No ☐
Cinemark USA, Inc. Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Cinemark Holdings, Inc.
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Cinemark USA, Inc.
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||||
Non-accelerated filer | ☒ | Smaller reporting company | ☐ | |||||||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Cinemark Holdings, Inc. Yes ☐ No ☒
Cinemark USA, Inc. Yes ☐ No ☒
As of OctoberApril 28, 2022,2023, 120,424,973121,578,644 shares of common stock, $0.001 per value per share, of Cinemark Holdings, Inc. were issued and outstanding.
As of October 30, 2022,April 28, 2023, 1,500 shares of Class A common stock, $0.01 par value per share, and 182,648 shares of Class B common stock, no par value per share, of Cinemark USA, Inc. were outstanding and held by Cinemark Holdings, Inc.
Cinemark USA, Inc. meetS the conditions set forth in General Instructions (H)(1)(a) and (b) of Form 10-Q and IS therefore filing this form with reduced disclosure format pursuant to General Instructions (H)(2).
This combined Form 10-Q is separately filed by Cinemark Holdings Inc. and Cinemark USA, Inc.CUSA. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants. When this Form 10-Q is incorporated by reference into any filings with the SEC made by Cinemark Holdings Inc. or Cinemark USA, Inc.,CUSA, as a registrant, the portions of this Form 10-Q that relate to the other registrant are not incorporated by reference therein.
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CINEMARK USA, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page | |||||
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Item 1. | Cinemark Holdings, Inc. and Subsidiaries Financial Statements (unaudited) | ||||
3 | |||||
4 | |||||
5 | |||||
6 | |||||
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Cinemark USA, Inc. and Subsidiaries Financial Statements (unaudited) | |||||
8 | |||||
9 | |||||
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Cinemark Holdings, Inc. and Cinemark USA, Inc. Notes to Condensed Consolidated Financial Statements |
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Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. | 44 | ||||
Item 5. |
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Item 6. |
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1
Cautionary Statement Regarding Forward-Looking Statements
Certain matters within this Quarterly Report on Form 10-Q include “forward–looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The “forward-looking statements” may include our current expectations, assumptions, estimates and projections about ourthe respective business and our industry.industry of Holdings and CUSA. They may include statements relating to:
Forward-lookingYou can identify forward-looking statements can be identified by the use of words such as “may,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “anticipates,” “believes,” “plans,” “expects,” “future” and “intends” and similar expressions. These statements are neither historical facts nor guarantees of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions and are, therefore, subject to risks, inherent uncertainties and other factors, some of which are beyond our control and difficult to predict, including, among others, the impacts of the COVID-19 pandemic.predict. Such risks and uncertainties could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. For a description of theour risk factors, please review the “Risk Factors” section or other sections of, or incorporated by reference to, Holdings'the Company’s Annual Report on Form 10-K filed February 25, 2022 or CUSA's Annual Report on Form 10-K filed March 9, 2022, as applicable.24, 2023. All forward-looking statements attributable to either Holdings or CUSA or persons acting on our behalf, are expressly qualified in their entirety by such risk factors. WeForward-looking statements contained in this Form 10-Q reflect the views of Holdings and CUSA only as of the date of this Form 10-Q. Neither Holdings nor CUSA undertake noany 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.
Where it is important to distinguish between the entities, this report either refers specifically to Holdings or CUSA. Otherwise, unlessUnless the context otherwise requires, all references to “we,” “our,” “us,” "the Company” or “Cinemark” relate to Cinemark Holdings, Inc. and its consolidated subsidiaries, and all references to CUSA relate to Cinemark USA, Inc. and its consolidated subsidiaries. All references to Latin America relate to Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia Curacao and Paraguay.
2
PART I - FINANCIALFINANCIAL INFORMATION
Item 1. FinancialFinancial Statements
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data, unaudited)
|
| September 30, |
|
| December 31, |
|
| March 31, |
|
| December 31, |
| ||||
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
| ||||||
Current assets |
|
|
|
|
|
|
|
|
|
| ||||||
Cash and cash equivalents |
| $ | 631.9 |
|
| $ | 707.3 |
|
| $ | 650.1 |
|
| $ | 674.5 |
|
Inventories |
|
| 19.6 |
|
|
| 15.5 |
|
|
| 21.9 |
|
|
| 23.7 |
|
Accounts receivable |
|
| 52.4 |
|
|
| 68.8 |
|
|
| 57.4 |
|
|
| 69.6 |
|
Current income tax receivable |
|
| 45.4 |
|
|
| 46.6 |
|
|
| 45.9 |
|
|
| 45.1 |
|
Prepaid expenses and other |
|
| 51.6 |
|
|
| 36.2 |
|
|
| 51.3 |
|
|
| 50.7 |
|
Total current assets |
|
| 800.9 |
|
|
| 874.4 |
|
|
| 826.6 |
|
|
| 863.6 |
|
Theatre properties and equipment, net of accumulated depreciation of $2,132.1 and $1,985.9 |
|
| 1,260.0 |
|
|
| 1,382.9 |
| ||||||||
Theatre properties and equipment, net of accumulated depreciation of $2,225.8 and $2,165.7 |
|
| 1,204.1 |
|
|
| 1,232.1 |
| ||||||||
Operating lease right-of-use assets, net |
|
| 1,144.0 |
|
|
| 1,230.8 |
|
|
| 1,067.8 |
|
|
| 1,102.7 |
|
Other assets |
|
|
|
|
|
|
|
|
|
| ||||||
Goodwill |
|
| 1,249.2 |
|
|
| 1,248.8 |
|
|
| 1,253.3 |
|
|
| 1,250.9 |
|
Intangible assets, net |
|
| 309.1 |
|
|
| 310.8 |
|
|
| 304.2 |
|
|
| 304.6 |
|
Investment in NCM |
|
| 28.4 |
|
|
| 135.4 |
| ||||||||
Investment in NCMI/NCM |
|
| 5.7 |
|
|
| 9.6 |
| ||||||||
Investments in affiliates |
|
| 26.3 |
|
|
| 25.2 |
|
|
| 23.7 |
|
|
| 22.6 |
|
Deferred charges and other assets, net |
|
| 32.6 |
|
|
| 22.3 |
|
|
| 26.7 |
|
|
| 31.6 |
|
Total other assets |
|
| 1,645.6 |
|
|
| 1,742.5 |
|
|
| 1,613.6 |
|
|
| 1,619.3 |
|
Total assets |
| $ | 4,850.5 |
|
| $ | 5,230.6 |
|
| $ | 4,712.1 |
|
| $ | 4,817.7 |
|
|
|
|
|
|
| |||||||||||
Liabilities and equity |
|
|
|
|
|
|
|
|
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| ||||||
Current liabilities |
|
|
|
|
|
|
|
|
|
| ||||||
Current portion of long-term debt |
| $ | 22.0 |
|
| $ | 24.3 |
|
| $ | 110.0 |
|
| $ | 10.7 |
|
Current portion of operating lease obligations |
|
| 217.9 |
|
|
| 217.1 |
|
|
| 217.7 |
|
|
| 219.3 |
|
Current portion of finance lease obligations |
|
| 14.6 |
|
|
| 14.6 |
|
|
| 14.5 |
|
|
| 14.4 |
|
Current income tax payable |
|
| 2.4 |
|
|
| — |
|
|
| 5.2 |
|
|
| 3.2 |
|
Accounts payable and accrued expenses |
|
| 371.5 |
|
|
| 513.1 |
|
|
| 393.5 |
|
|
| 460.9 |
|
Total current liabilities |
|
| 628.4 |
|
|
| 769.1 |
|
|
| 740.9 |
|
|
| 708.5 |
|
Long-term liabilities |
|
|
|
|
|
|
|
|
|
| ||||||
Long-term debt, less current portion |
|
| 2,473.5 |
|
|
| 2,476.3 |
|
|
| 2,375.4 |
|
|
| 2,474.0 |
|
Operating lease obligations, less current portion |
|
| 987.6 |
|
|
| 1,078.3 |
|
|
| 935.8 |
|
|
| 970.6 |
|
Finance lease obligations, less current portion |
|
| 91.6 |
|
|
| 102.6 |
|
|
| 84.4 |
|
|
| 88.0 |
|
Long-term deferred tax liability |
|
| 39.5 |
|
|
| 39.8 |
|
|
| 24.4 |
|
|
| 33.7 |
|
Long-term liability for uncertain tax positions |
|
| 47.3 |
|
|
| 45.9 |
|
|
| 50.2 |
|
|
| 47.9 |
|
NCM screen advertising advances |
|
| 340.5 |
|
|
| 346.0 |
|
|
| 335.8 |
|
|
| 338.2 |
|
Other long-term liabilities |
|
| 36.7 |
|
|
| 38.1 |
|
|
| 41.4 |
|
|
| 37.3 |
|
Total long-term liabilities |
|
| 4,016.7 |
|
|
| 4,127.0 |
|
|
| 3,847.4 |
|
|
| 3,989.7 |
|
Equity |
|
|
|
|
|
|
|
|
|
| ||||||
Cinemark Holdings, Inc.'s stockholders' equity: |
|
|
|
|
|
|
|
|
|
| ||||||
Common stock, $0.001 par value: 300.0 shares authorized, 126.08 shares issued and 120.43 shares outstanding at September 30, 2022 and 125.10 shares issued and 119.75 shares outstanding at December 31, 2021 |
|
| 0.1 |
|
|
| 0.1 |
| ||||||||
Common stock, $0.001 par value: 300,000,000 shares authorized, 127,458,666 shares issued and 121,576,900 shares outstanding at March 31, 2023 and 126,082,187 shares issued and 120,403,833 shares outstanding at December 31, 2022 |
|
| 0.1 |
|
|
| 0.1 |
| ||||||||
Additional paid-in-capital |
|
| 1,214.1 |
|
|
| 1,197.8 |
|
|
| 1,225.0 |
|
|
| 1,219.3 |
|
Treasury stock, 5.66 and 5.35 shares, at cost, at September 30, 2022 and December 31, 2021, respectively |
|
| (95.2 | ) |
|
| (91.1 | ) | ||||||||
Retained deficit |
|
| (561.3 | ) |
|
| (389.4 | ) | ||||||||
Treasury stock, 5,881,766 and 5,678,354 shares, at cost, at March 31, 2023 and December 31, 2022, respectively |
|
| (97.5 | ) |
|
| (95.4 | ) | ||||||||
Accumulated deficit |
|
| (663.7 | ) |
|
| (660.6 | ) | ||||||||
Accumulated other comprehensive loss |
|
| (362.9 | ) |
|
| (394.5 | ) |
|
| (350.0 | ) |
|
| (353.2 | ) |
Total Cinemark Holdings, Inc.'s stockholders' equity |
|
| 194.8 |
|
|
| 322.9 |
|
|
| 113.9 |
|
|
| 110.2 |
|
Noncontrolling interests |
|
| 10.6 |
|
|
| 11.6 |
|
|
| 9.9 |
|
|
| 9.3 |
|
Total equity |
|
| 205.4 |
|
|
| 334.5 |
|
|
| 123.8 |
|
|
| 119.5 |
|
Total liabilities and equity |
| $ | 4,850.5 |
|
| $ | 5,230.6 |
|
| $ | 4,712.1 |
|
| $ | 4,817.7 |
|
The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
3
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(in millions, except per share data, unaudited)
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended March 31, |
| |||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Admissions |
| $ | 324.6 |
|
| $ | 225.5 |
|
| $ | 942.3 |
|
| $ | 435.1 |
|
| $ | 311.0 |
|
| $ | 235.8 |
|
Concession |
|
| 253.6 |
|
|
| 164.2 |
|
|
| 712.6 |
|
|
| 313.5 |
|
|
| 235.8 |
|
|
| 173.0 |
|
Other |
|
| 72.2 |
|
|
| 45.1 |
|
|
| 200.1 |
|
|
| 95.2 |
|
|
| 63.9 |
|
|
| 51.7 |
|
Total revenue |
|
| 650.4 |
|
|
| 434.8 |
|
|
| 1,855.0 |
|
|
| 843.8 |
|
| $ | 610.7 |
|
| $ | 460.5 |
|
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Film rentals and advertising |
|
| 180.9 |
|
|
| 117.0 |
|
|
| 531.1 |
|
|
| 216.8 |
|
|
| 166.7 |
|
|
| 127.6 |
|
Concession supplies |
|
| 46.3 |
|
|
| 28.2 |
|
|
| 128.8 |
|
|
| 54.2 |
|
|
| 43.6 |
|
|
| 30.0 |
|
Salaries and wages |
|
| 97.0 |
|
|
| 67.6 |
|
|
| 277.0 |
|
|
| 149.2 |
|
|
| 86.2 |
|
|
| 79.8 |
|
Facility lease expense |
|
| 77.2 |
|
|
| 68.8 |
|
|
| 231.2 |
|
|
| 200.8 |
|
|
| 79.5 |
|
|
| 73.7 |
|
Utilities and other |
|
| 110.4 |
|
|
| 81.7 |
|
|
| 303.8 |
|
|
| 192.0 |
|
|
| 103.8 |
|
|
| 86.9 |
|
General and administrative expense |
|
| 45.1 |
|
|
| 38.6 |
|
|
| 134.0 |
|
|
| 111.8 |
| ||||||||
General and administrative expenses |
|
| 46.5 |
|
|
| 40.7 |
| ||||||||||||||||
Depreciation and amortization |
|
| 58.3 |
|
|
| 67.2 |
|
|
| 181.0 |
|
|
| 202.3 |
|
|
| 54.9 |
|
|
| 61.7 |
|
Impairment of long-lived and other assets |
|
| 15.2 |
|
|
| 7.5 |
|
|
| 107.5 |
|
|
| 7.5 |
| ||||||||
Restructuring costs |
|
| — |
|
|
| (0.4 | ) |
|
| (0.2 | ) |
|
| (1.3 | ) | ||||||||
Impairment of other assets |
|
| 0.7 |
|
|
| — |
| ||||||||||||||||
(Gain) loss on disposal of assets and other |
|
| 1.2 |
|
|
| 1.1 |
|
|
| (6.4 | ) |
|
| 7.9 |
|
|
| 0.3 |
|
|
| (6.9 | ) |
Total cost of operations |
|
| 631.6 |
|
|
| 477.3 |
|
|
| 1,887.8 |
|
|
| 1,141.2 |
|
|
| 582.2 |
|
|
| 493.5 |
|
Operating income (loss) |
|
| 18.8 |
|
|
| (42.5 | ) |
|
| (32.8 | ) |
|
| (297.4 | ) |
|
| 28.5 |
|
|
| (33.0 | ) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Interest expense |
|
| (38.4 | ) |
|
| (38.0 | ) |
|
| (114.6 | ) |
|
| (111.6 | ) |
|
| (36.8 | ) |
|
| (38.1 | ) |
Interest income |
|
| 6.4 |
|
|
| 0.8 |
|
|
| 11.1 |
|
|
| 5.3 |
|
|
| 11.9 |
|
|
| 1.6 |
|
Loss on extinguishment of debt |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (6.5 | ) | ||||||||
Foreign currency exchange loss |
|
| (5.4 | ) |
|
| (0.2 | ) |
|
| (5.3 | ) |
|
| (0.9 | ) | ||||||||
Distributions from NCM |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.1 |
| ||||||||
Distributions from DCIP |
|
| 3.7 |
|
|
| 6.5 |
|
|
| 3.7 |
|
|
| 6.5 |
| ||||||||
Foreign currency exchange gain (loss) |
|
| (2.2 | ) |
|
| 3.2 |
| ||||||||||||||||
Interest expense - NCM |
|
| (5.8 | ) |
|
| (5.9 | ) |
|
| (17.5 | ) |
|
| (17.7 | ) |
|
| (5.7 | ) |
|
| (5.8 | ) |
Equity in income (loss) of affiliates |
|
| 0.2 |
|
|
| (7.2 | ) |
|
| (7.5 | ) |
|
| (22.1 | ) | ||||||||
Equity in loss of affiliates |
|
| (2.1 | ) |
|
| (2.2 | ) | ||||||||||||||||
Total other expense |
|
| (39.3 | ) |
|
| (44.0 | ) |
|
| (130.1 | ) |
|
| (146.9 | ) |
|
| (34.9 | ) |
|
| (41.3 | ) |
Loss before income taxes |
|
| (20.5 | ) |
|
| (86.5 | ) |
|
| (162.9 | ) |
|
| (444.3 | ) |
|
| (6.4 | ) |
|
| (74.3 | ) |
Income tax expense (benefit) |
|
| 3.4 |
|
|
| (8.9 | ) |
|
| 6.3 |
|
|
| (15.6 | ) | ||||||||
Income tax benefit |
|
| (3.9 | ) |
|
| (1.8 | ) | ||||||||||||||||
Net loss |
| $ | (23.9 | ) |
| $ | (77.6 | ) |
| $ | (169.2 | ) |
| $ | (428.7 | ) |
| $ | (2.5 | ) |
| $ | (72.5 | ) |
Less: Net income (loss) attributable to noncontrolling interests |
|
| 0.6 |
|
|
| 0.2 |
|
|
| 2.7 |
|
|
| (0.2 | ) | ||||||||
Less: Net income attributable to noncontrolling interests |
|
| 0.6 |
|
|
| 1.5 |
| ||||||||||||||||
Net loss attributable to Cinemark Holdings, Inc. |
| $ | (24.5 | ) |
| $ | (77.8 | ) |
| $ | (171.9 | ) |
| $ | (428.5 | ) |
| $ | (3.1 | ) |
| $ | (74.0 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Basic |
|
| 118.4 |
|
|
| 117.3 |
|
|
| 118.1 |
|
|
| 117.2 |
|
|
| 118.8 |
|
|
| 117.9 |
|
Diluted |
|
| 118.4 |
|
|
| 117.3 |
|
|
| 118.1 |
|
|
| 117.2 |
|
|
| 118.8 |
|
|
| 117.9 |
|
Loss per share attributable to Cinemark Holdings, Inc.'s common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Basic |
| $ | (0.20 | ) |
| $ | (0.65 | ) |
| $ | (1.43 | ) |
| $ | (3.59 | ) |
| $ | (0.03 | ) |
| $ | (0.62 | ) |
Diluted |
| $ | (0.20 | ) |
| $ | (0.65 | ) |
| $ | (1.43 | ) |
| $ | (3.59 | ) |
| $ | (0.03 | ) |
| $ | (0.62 | ) |
The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
4
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSINCOME (LOSS)
(in millions, unaudited)
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Net loss |
| $ | (23.9 | ) |
| $ | (77.6 | ) |
| $ | (169.2 | ) |
| $ | (428.7 | ) |
Other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
|
| 11.6 |
|
|
| 1.4 |
|
|
| 34.2 |
|
|
| 7.9 |
|
Foreign currency translation adjustments |
|
| (4.6 | ) |
|
| (13.8 | ) |
|
| (5.9 | ) |
|
| (15.0 | ) |
Total other comprehensive income (loss), net of tax |
|
| 7.0 |
|
|
| (12.4 | ) |
| $ | 28.3 |
|
| $ | (7.1 | ) |
Total comprehensive loss, net of tax |
|
| (16.9 | ) |
|
| (90.0 | ) |
|
| (140.9 | ) |
|
| (435.8 | ) |
Comprehensive (income) loss attributable to noncontrolling interests |
|
| (0.6 | ) |
|
| (0.2 | ) |
|
| (2.7 | ) |
|
| 0.2 |
|
Comprehensive loss attributable to Cinemark Holdings, Inc. |
| $ | (17.5 | ) |
| $ | (90.2 | ) |
| $ | (143.6 | ) |
| $ | (435.6 | ) |
|
| Three Months Ended March 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Net loss |
| $ | (2.5 | ) |
| $ | (72.5 | ) |
Other comprehensive income, net of tax |
|
|
|
|
|
| ||
Unrealized gain (loss) due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
|
| (3.4 | ) |
|
| 18.4 |
|
Foreign currency translation adjustments |
|
| 8.1 |
|
|
| 14.4 |
|
Total other comprehensive income, net of tax |
| $ | 4.7 |
|
| $ | 32.8 |
|
Total comprehensive income (loss), net of tax |
|
| 2.2 |
|
|
| (39.7 | ) |
Comprehensive income attributable to noncontrolling interests |
|
| (0.6 | ) |
|
| (1.5 | ) |
Comprehensive income (loss) attributable to Cinemark Holdings, Inc. |
| $ | 1.6 |
|
| $ | (41.2 | ) |
The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
5
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(in millions, unaudited)
|
| Common Stock |
| Treasury Stock |
| Additional Paid-In-Capital |
| Retained Earnings (Deficit) |
| Accumulated Other Comprehensive Loss |
| Total Cinemark Holdings, Inc. Stockholders’ Equity |
| Noncontrolling Interests |
| Total Equity |
| ||||||||
Balance at January 1, 2022 |
| $ | 0.1 |
| $ | (91.1 | ) | $ | 1,197.8 |
| $ | (389.4 | ) | $ | (394.5 | ) | $ | 322.9 |
| $ | 11.6 |
| $ | 334.5 |
|
Issuance of share based awards and share based awards compensation expense |
| — |
| — |
|
| 5.1 |
|
| — |
|
| — |
|
| 5.1 |
|
| — |
|
| 5.1 |
| ||
Stock withholdings related to vesting of share based awards |
| — |
|
| (1.6 | ) |
| — |
|
| — |
|
| — |
|
| (1.6 | ) |
| — |
|
| (1.6 | ) | |
Net income (loss) |
| — |
| — |
|
| — |
|
| (74.0 | ) |
| — |
|
| (74.0 | ) |
| 1.5 |
|
| (72.5 | ) | ||
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
| — |
| — |
|
| — |
|
| — |
|
| 18.4 |
|
| 18.4 |
|
| — |
|
| 18.4 |
| ||
Amortization of accumulated losses for amended swap agreements |
| — |
| — |
|
| — |
|
| — |
|
| 1.1 |
|
| 1.1 |
|
| — |
|
| 1.1 |
| ||
Foreign currency translation adjustments |
| — |
| — |
|
| — |
|
| — |
|
| 14.4 |
|
| 14.4 |
|
| — |
|
| 14.4 |
| ||
Balance at March 31, 2022 |
| $ | 0.1 |
| $ | (92.7 | ) | $ | 1,202.9 |
| $ | (463.4 | ) | $ | (360.6 | ) | $ | 286.3 |
| $ | 13.1 |
| $ | 299.4 |
|
Issuance of share based awards and share based awards compensation expense |
| — |
|
| — |
|
| 6.0 |
|
| — |
|
| — |
|
| 6.0 |
|
| — |
|
| 6.0 |
| |
Stock withholdings related to vesting of share based awards |
| — |
|
| (0.5 | ) |
| — |
|
| — |
|
| — |
|
| (0.5 | ) |
| — |
|
| (0.5 | ) | |
Net income (loss) |
| — |
|
| — |
|
| — |
|
| (73.4 | ) |
| — |
|
| (73.4 | ) |
| 0.6 |
|
| (72.8 | ) | |
Distributions to noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (3.0 | ) |
| (3.0 | ) | |
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
| — |
|
| — |
|
| — |
|
| — |
|
| 4.2 |
|
| 4.2 |
|
| — |
|
| 4.2 |
| |
Amortization of accumulated losses for amended swap agreements |
| — |
|
| — |
|
| — |
|
| — |
|
| 1.1 |
|
| 1.1 |
|
| — |
|
| 1.1 |
| |
Foreign currency translation adjustments |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (15.7 | ) |
| (15.7 | ) |
| — |
|
| (15.7 | ) |
Balance at June 30, 2022 |
| $ | 0.1 |
| $ | (93.2 | ) | $ | 1,208.9 |
| $ | (536.8 | ) | $ | (371.0 | ) | $ | 208.0 |
| $ | 10.7 |
| $ | 218.7 |
|
Issuance of share based awards and share based awards compensation expense |
| — |
|
| — |
|
| 5.2 |
|
| — |
|
| — |
|
| 5.2 |
|
| — |
|
| 5.2 |
| |
Stock withholdings related to vesting of share based awards |
| — |
|
| (2.0 | ) |
| — |
|
| — |
|
| — |
|
| (2.0 | ) |
| — |
|
| (2.0 | ) | |
Net income (loss) |
| — |
|
| — |
|
| — |
|
| (24.5 | ) |
| — |
|
| (24.5 | ) |
| 0.6 |
|
| (23.9 | ) | |
Distributions to noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (0.7 | ) |
| (0.7 | ) | |
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
| — |
|
| — |
|
| — |
|
| — |
|
| 11.6 |
|
| 11.6 |
|
| — |
|
| 11.6 |
| |
Amortization of accumulated losses for amended swap agreements |
| — |
|
| — |
|
| — |
|
| — |
|
| 1.1 |
|
| 1.1 |
|
| — |
|
| 1.1 |
| |
Foreign currency translation adjustments |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (4.6 | ) |
| (4.6 | ) |
| — |
|
| (4.6 | ) |
Balance at September 30, 2022 |
| $ | 0.1 |
| $ | (95.2 | ) | $ | 1,214.1 |
| $ | (561.3 | ) | $ | (362.9 | ) | $ | 194.8 |
| $ | 10.6 |
| $ | 205.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
| Cinemark |
|
|
|
|
| |||||||||
|
| Common Stock |
|
|
| Additional |
|
|
| Other |
| Holdings, Inc's |
|
|
|
|
| ||||||||||||
|
| Shares |
|
|
|
| Treasury |
| Paid-in- |
| Accumulated |
| Comprehensive |
| Stockholders’ |
| Noncontrolling |
| Total |
| |||||||||
|
| Issued |
|
| Amount |
| Stock |
| Capital |
| Deficit |
| Loss |
| Equity |
| Interests |
| Equity |
| |||||||||
Balance at January 1, 2023 |
|
| 126.1 |
|
| $ | 0.1 |
| $ | (95.4 | ) | $ | 1,219.3 |
| $ | (660.6 | ) | $ | (353.2 | ) | $ | 110.2 |
| $ | 9.3 |
| $ | 119.5 |
|
Restricted stock forfeitures and stock withholdings related to share based awards that vested during the three months ended March 31, 2023 |
|
| — |
|
|
| — |
|
| (2.1 | ) |
| — |
|
| — |
|
| — |
|
| (2.1 | ) |
| — |
|
| (2.1 | ) |
Issuance of stock upon vesting of performance stock units |
|
| 0.1 |
|
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
Issuance of share based awards and share based awards compensation expense |
|
| 1.3 |
|
| — |
| — |
|
| 5.7 |
|
| — |
|
| — |
|
| 5.7 |
|
| — |
|
| 5.7 |
| ||
Net (loss) income |
|
| — |
|
| — |
| — |
|
| — |
|
| (3.1 | ) |
| — |
|
| (3.1 | ) |
| 0.6 |
|
| (2.5 | ) | ||
Amortization of accumulated gains for amended swap agreements |
|
| — |
|
| — |
| — |
| — |
| — |
|
| (1.5 | ) |
| (1.5 | ) |
| — |
|
| (1.5 | ) | ||||
Other comprehensive income |
|
| — |
|
| — |
| — |
|
| — |
|
| — |
|
| 4.7 |
|
| 4.7 |
|
|
|
| 4.7 |
| |||
Balance at March 31, 2023 |
|
| 127.5 |
|
| $ | 0.1 |
| $ | (97.5 | ) | $ | 1,225.0 |
| $ | (663.7 | ) | $ | (350.0 | ) | $ | 113.9 |
| $ | 9.9 |
| $ | 123.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
| Cinemark |
|
|
|
|
| |||||||||
|
| Common Stock |
|
|
| Additional |
|
|
| Other |
| Holdings, Inc's |
|
|
|
|
| ||||||||||||
|
| Shares |
|
|
|
| Treasury |
| Paid-in- |
| Accumulated |
| Comprehensive |
| Stockholders’ |
| Noncontrolling |
| Total |
| |||||||||
|
| Issued |
|
| Amount |
| Stock |
| Capital |
| Deficit |
| Loss |
| Equity |
| Interests |
| Equity |
| |||||||||
Balance at January 1, 2022 |
|
| 125.1 |
|
| $ | 0.1 |
| $ | (91.1 | ) | $ | 1,197.8 |
| $ | (389.4 | ) | $ | (394.5 | ) | $ | 322.9 |
| $ | 11.6 |
| $ | 334.5 |
|
Restricted stock forfeitures and stock withholdings related to share based awards that vested during the three months ended March 31, 2022 |
|
| — |
|
|
| — |
|
| (1.6 | ) |
| — |
|
| — |
|
| — |
|
| (1.6 | ) |
| — |
|
| (1.6 | ) |
Issuance of stock upon vesting of performance stock units |
|
| 0.1 |
|
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
Issuance of share based awards and share based awards compensation expense |
|
| 0.7 |
|
|
| — |
|
| — |
|
| 5.1 |
|
| — |
|
| — |
|
| 5.1 |
|
| — |
|
| 5.1 |
|
Net (loss) income |
|
| — |
|
|
| — |
|
| — |
|
| — |
|
| (74.0 | ) |
| — |
|
| (74.0 | ) |
| 1.5 |
|
| (72.5 | ) |
Amortization of accumulated losses for amended swap agreements |
|
| — |
|
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1.1 |
|
| 1.1 |
|
| — |
|
| 1.1 |
|
Other comprehensive income |
|
| — |
|
|
| — |
|
| — |
|
| — |
|
| — |
|
| 32.8 |
|
| 32.8 |
|
| — |
|
| 32.8 |
|
Balance at March 31, 2022 |
|
| 125.9 |
|
| $ | 0.1 |
| $ | (92.7 | ) | $ | 1,202.9 |
| $ | (463.4 | ) | $ | (360.6 | ) | $ | 286.3 |
| $ | 13.1 |
| $ | 299.4 |
|
The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
6
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)
(in millions, unaudited)
|
| Common Stock |
| Treasury Stock |
| Additional Paid-In-Capital |
| Retained Earnings (Deficit) |
| Accumulated Other Comprehensive Loss |
| Total Cinemark Holdings, Inc. Stockholders’ Equity |
| Noncontrolling Interests |
| Total Equity |
| ||||||||
Balance at January 1, 2021 |
| $ | 0.1 |
| $ | (87.0 | ) | $ | 1,245.6 |
| $ | 27.9 |
| $ | (398.7 | ) | $ | 787.9 |
| $ | 11.0 |
| $ | 798.9 |
|
Impact of adoption of ASU 2020-06, net of deferred taxes |
| — |
| — |
|
| (73.6 | ) |
| 5.4 |
| — |
|
| (68.2 | ) |
| — |
|
| (68.2 | ) | |||
Issuance of share based awards and share based awards compensation expense |
| — |
| — |
|
| 4.7 |
| — |
| — |
|
| 4.7 |
|
| — |
|
| 4.7 |
| ||||
Net loss |
| — |
| — |
| — |
|
| (208.3 | ) |
| — |
|
| (208.3 | ) |
| (0.6 | ) |
| (208.9 | ) | |||
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
| — |
| — |
| — |
| — |
|
| 5.7 |
|
| 5.7 |
|
| — |
|
| 5.7 |
| ||||
Amortization of accumulated losses for amended swap agreements |
| — |
| — |
| — |
| — |
|
| 1.1 |
|
| 1.1 |
|
| — |
|
| 1.1 |
| ||||
Foreign currency translation adjustments |
| — |
| — |
| — |
| — |
|
| (9.5 | ) |
| (9.5 | ) |
| — |
|
| (9.5 | ) | ||||
Balance at March 31, 2021 |
| $ | 0.1 |
| $ | (87.0 | ) | $ | 1,176.7 |
| $ | (175.0 | ) | $ | (401.4 | ) | $ | 513.4 |
| $ | 10.4 |
| $ | 523.8 |
|
Issuance of share based awards and share based awards compensation expense |
|
| — |
|
| — |
|
| 5.9 |
|
| — |
|
| — |
|
| 5.9 |
|
| — |
|
| 5.9 |
|
Net income (loss) |
|
| — |
|
| — |
|
| — |
|
| (142.4 | ) |
| — |
|
| (142.4 | ) |
| 0.2 |
|
| (142.2 | ) |
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes, net of settlements |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 0.8 |
|
| 0.8 |
|
| — |
|
| 0.8 |
|
Amortization of accumulated losses for amended swap agreements |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1.1 |
|
| 1.1 |
|
| — |
|
| 1.1 |
|
Foreign currency translation adjustments |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 8.3 |
|
| 8.3 |
|
| — |
|
| 8.3 |
|
Balance at June 30, 2021 |
| $ | 0.1 |
| $ | (87.0 | ) | $ | 1,182.6 |
| $ | (317.4 | ) | $ | (391.2 | ) | $ | 387.1 |
| $ | 10.6 |
| $ | 397.7 |
|
Issuance of share based awards and share based awards compensation expense |
|
| — |
|
| — |
|
| 6.0 |
|
| — |
|
|
|
| 6.0 |
|
|
|
| 6.0 |
| ||
Net loss |
|
| — |
|
| — |
|
| — |
|
| (77.8 | ) |
| — |
|
| (77.8 | ) |
| 0.2 |
|
| (77.6 | ) |
Unrealized gain to fair value adjustments on interest rate swap agreements, net of taxes, net of settlements |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1.4 |
|
| 1.4 |
|
| — |
|
| 1.4 |
|
Amortization of accumulated losses for amended swap agreements |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1.1 |
|
| 1.1 |
|
| — |
|
| 1.1 |
|
Foreign currency translation adjustments |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (13.8 | ) |
| (13.8 | ) |
| — |
|
| (13.8 | ) |
Balance at September 30, 2021 |
| $ | 0.1 |
| $ | (87.0 | ) | $ | 1,188.6 |
| $ | (395.2 | ) | $ | (402.5 | ) | $ | 304.0 |
| $ | 10.8 |
| $ | 314.8 |
|
The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
7
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, unaudited)
|
| Nine Months Ended September 30, |
|
| Three Months Ended March 31, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||
Operating activities |
|
|
|
|
|
|
|
|
|
| ||||||
Net loss |
| $ | (169.2 | ) |
| $ | (428.7 | ) |
| $ | (2.5 | ) |
| $ | (72.5 | ) |
Adjustments to reconcile net loss to cash provided by (used for) operating activities: |
|
|
|
|
|
|
|
|
|
| ||||||
Depreciation |
|
| 179.1 |
|
|
| 200.3 |
|
|
| 54.4 |
|
|
| 61.1 |
|
Amortization of intangible and other assets |
|
| 1.9 |
|
|
| 2.0 |
|
|
| 0.5 |
|
|
| 0.6 |
|
Amortization of debt issuance costs |
|
| 8.2 |
|
|
| 8.0 |
|
|
| 2.7 |
|
|
| 2.7 |
|
Interest accrued on NCM screen advertising advances |
|
| 17.5 |
|
|
| 17.7 |
|
|
| 5.7 |
|
|
| 5.8 |
|
Amortization of NCM screen advertising advances and other deferred revenues |
|
| (24.5 | ) |
|
| (24.3 | ) | ||||||||
Amortization of accumulated losses for amended swap agreements |
|
| 3.4 |
|
|
| 3.4 |
| ||||||||
Amortization of NCM screen advertising advances and other deferred revenue |
|
| (8.1 | ) |
|
| (8.2 | ) | ||||||||
Amortization of accumulated (gains) losses for amended swap agreements |
|
| (1.5 | ) |
|
| 1.1 |
| ||||||||
Impairment of other assets |
|
| 0.7 |
|
|
| — |
| ||||||||
Share based awards compensation expense |
|
| 16.2 |
|
|
| 16.6 |
|
|
| 5.7 |
|
|
| 5.1 |
|
Impairment of long-lived and other assets |
|
| 107.5 |
|
|
| 7.5 |
| ||||||||
(Gain) loss on disposal of assets and other |
|
| (6.4 | ) |
|
| 7.9 |
|
|
| 0.3 |
|
|
| (6.9 | ) |
Loss on extinguishment of debt |
|
| — |
|
|
| 6.5 |
| ||||||||
Non-cash rent expense |
|
| (7.5 | ) |
|
| (1.8 | ) |
|
| (3.9 | ) |
|
| (2.3 | ) |
Equity in loss of affiliates |
|
| 7.5 |
|
|
| 22.1 |
|
|
| 2.1 |
|
|
| 2.2 |
|
Deferred income tax benefit |
|
| (1.5 | ) |
|
| (21.1 | ) |
|
| (8.8 | ) |
|
| (3.2 | ) |
Distributions from equity investees |
|
| 1.5 |
|
|
| 0.2 |
|
|
| — |
|
|
| 0.6 |
|
Changes in assets and liabilities and other |
|
| (106.0 | ) |
|
| 141.5 |
|
|
| (39.4 | ) |
|
| (104.9 | ) |
Net cash provided by (used for) operating activities |
|
| 27.7 |
|
|
| (42.2 | ) |
|
| 7.9 |
|
|
| (118.8 | ) |
|
|
|
|
|
|
|
|
|
|
| ||||||
Investing activities |
|
|
|
|
|
|
|
|
|
| ||||||
Additions to theatre properties and equipment |
|
| (65.3 | ) |
|
| (57.2 | ) |
|
| (26.3 | ) |
|
| (18.7 | ) |
Proceeds from sale of theatre properties and equipment and other |
|
| 12.0 |
|
|
| 2.2 |
|
|
| — |
|
|
| 10.6 |
|
Net cash used for investing activities |
|
| (53.3 | ) |
|
| (55.0 | ) |
|
| (26.3 | ) |
|
| (8.1 | ) |
|
|
|
|
|
|
|
|
|
|
| ||||||
Financing activities |
|
|
|
|
|
|
|
|
|
| ||||||
Restricted stock withholdings for payroll taxes |
|
| (4.1 | ) |
|
| — |
|
|
| (2.0 | ) |
|
| (1.6 | ) |
Proceeds from issuance of senior notes |
|
| — |
|
|
| 1,170.0 |
| ||||||||
Proceeds from other borrowings |
|
| — |
|
|
| 9.7 |
| ||||||||
Redemption of senior notes |
|
| — |
|
|
| (1,155.0 | ) | ||||||||
Repayments of long-term debt |
|
| (14.0 | ) |
|
| (7.2 | ) |
|
| (2.6 | ) |
|
| (3.4 | ) |
Payment of debt issuance costs |
|
| — |
|
|
| (17.3 | ) | ||||||||
Fees paid related to debt refinancing |
|
| — |
|
|
| (2.1 | ) | ||||||||
Payments on finance leases |
|
| (10.8 | ) |
|
| (11.0 | ) |
|
| (3.5 | ) |
|
| (3.6 | ) |
Other financing activities |
|
| (3.7 | ) |
|
| — |
|
|
| 3.2 |
|
|
| — |
|
Net cash used for financing activities |
|
| (32.6 | ) |
|
| (12.9 | ) |
|
| (4.9 | ) |
|
| (8.6 | ) |
|
|
|
|
|
|
|
|
|
|
| ||||||
Effect of exchange rate changes on cash and cash equivalents |
|
| (17.2 | ) |
|
| (2.2 | ) |
|
| (1.1 | ) |
|
| (3.2 | ) |
|
|
|
|
|
|
|
|
|
|
| ||||||
Decrease in cash and cash equivalents |
|
| (75.4 | ) |
|
| (112.3 | ) |
|
| (24.4 | ) |
|
| (138.7 | ) |
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
| ||||||
Beginning of period |
|
| 707.3 |
|
|
| 655.3 |
|
|
| 674.5 |
|
|
| 707.3 |
|
End of period |
| $ | 631.9 |
|
| $ | 543.0 |
|
| $ | 650.1 |
|
| $ | 568.6 |
|
The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
* * * * * * * *
87
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data, unaudited)
|
| September 30, |
|
| December 31, |
|
| March 31, |
|
| December 31, |
| ||||
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
| ||||||
Current assets |
|
|
|
|
|
|
|
|
|
| ||||||
Cash and cash equivalents |
| $ | 386.6 |
|
| $ | 442.7 |
|
| $ | 410.7 |
|
| $ | 427.3 |
|
Inventories |
|
| 19.6 |
|
|
| 15.5 |
|
|
| 21.9 |
|
|
| 23.7 |
|
Accounts receivable |
|
| 52.1 |
|
|
| 68.8 |
|
|
| 56.8 |
|
|
| 69.0 |
|
Current income tax receivable |
|
| 45.4 |
|
|
| 46.6 |
|
|
| 45.9 |
|
|
| 45.1 |
|
Prepaid expenses and other |
|
| 51.6 |
|
|
| 36.2 |
|
|
| 51.3 |
|
|
| 50.7 |
|
Accounts receivable from parent |
|
| 60.5 |
|
|
| 46.7 |
|
|
| 56.0 |
|
|
| 53.4 |
|
Total current assets |
|
| 615.8 |
|
|
| 656.5 |
|
|
| 642.6 |
|
|
| 669.2 |
|
Theatre properties and equipment, net of accumulated depreciation of $2,132.1 and $1,985.9 |
|
| 1,260.0 |
|
|
| 1,382.9 |
| ||||||||
Theatre properties and equipment, net of accumulated depreciation of $2,225.8 and $2,165.7 |
|
| 1,204.1 |
|
|
| 1,232.1 |
| ||||||||
Operating lease right-of-use assets, net |
|
| 1,144.0 |
|
|
| 1,230.8 |
|
|
| 1,067.8 |
|
|
| 1,102.7 |
|
Other assets |
|
|
|
|
|
|
|
|
|
| ||||||
Goodwill |
|
| 1,249.2 |
|
|
| 1,248.8 |
|
|
| 1,253.3 |
|
|
| 1,250.9 |
|
Intangible assets, net |
|
| 309.1 |
|
|
| 310.8 |
|
|
| 304.2 |
|
|
| 304.6 |
|
Investment in NCM |
|
| 28.4 |
|
|
| 135.4 |
| ||||||||
Investment in NCMI/NCM |
|
| 5.7 |
|
|
| 9.6 |
| ||||||||
Investments in affiliates |
|
| 26.3 |
|
|
| 25.2 |
|
|
| 23.7 |
|
|
| 22.6 |
|
Deferred charges and other assets, net |
|
| 32.6 |
|
|
| 22.3 |
|
|
| 26.7 |
|
|
| 31.6 |
|
Total other assets |
|
| 1,645.6 |
|
|
| 1,742.5 |
|
|
| 1,613.6 |
|
|
| 1,619.3 |
|
Total assets |
| $ | 4,665.4 |
|
| $ | 5,012.7 |
|
| $ | 4,528.1 |
|
| $ | 4,623.3 |
|
Liabilities and equity |
|
|
|
|
|
|
|
|
|
| ||||||
Current liabilities |
|
|
|
|
|
|
|
|
|
| ||||||
Current portion of long-term debt |
| $ | 22.0 |
|
| $ | 24.3 |
|
| $ | 110.0 |
|
| $ | 10.7 |
|
Current portion of operating lease obligations |
|
| 217.9 |
|
|
| 217.1 |
|
|
| 217.7 |
|
|
| 219.3 |
|
Current portion of finance lease obligations |
|
| 14.6 |
|
|
| 14.6 |
|
|
| 14.5 |
|
|
| 14.4 |
|
Current income tax payable |
|
| 2.4 |
|
|
| — |
|
|
| 5.2 |
|
|
| 3.2 |
|
Accounts payable and accrued expenses |
|
| 368.5 |
|
|
| 504.6 |
|
|
| 390.5 |
|
|
| 452.7 |
|
Total current liabilities |
|
| 625.4 |
|
|
| 760.6 |
|
|
| 737.9 |
|
|
| 700.3 |
|
Long-term liabilities |
|
|
|
|
|
|
|
|
|
| ||||||
Long-term debt, less current portion |
|
| 2,023.4 |
|
|
| 2,028.7 |
|
|
| 1,923.5 |
|
|
| 2,023.0 |
|
Operating lease obligations, less current portion |
|
| 987.6 |
|
|
| 1,078.3 |
|
|
| 935.8 |
|
|
| 970.6 |
|
Finance lease obligations, less current portion |
|
| 91.6 |
|
|
| 102.6 |
|
|
| 84.4 |
|
|
| 88.0 |
|
Long-term deferred tax liability |
|
| 58.4 |
|
|
| 57.8 |
|
|
| 22.3 |
|
|
| 36.1 |
|
Long-term liability for uncertain tax positions |
|
| 47.3 |
|
|
| 45.9 |
|
|
| 50.2 |
|
|
| 47.9 |
|
NCM screen advertising advances |
|
| 340.5 |
|
|
| 346.0 |
|
|
| 335.8 |
|
|
| 338.2 |
|
Other long-term liabilities |
|
| 36.6 |
|
|
| 37.9 |
|
|
| 41.4 |
|
|
| 37.3 |
|
Total long-term liabilities |
|
| 3,585.4 |
|
|
| 3,697.2 |
|
|
| 3,393.4 |
|
|
| 3,541.1 |
|
Equity |
|
|
|
|
|
|
|
|
|
| ||||||
Cinemark USA, Inc.'s stockholder's equity: |
|
|
|
|
|
|
|
|
|
| ||||||
Class A common stock, $0.01 par value: 10,000,000 shares authorized, 1,500 shares issued and outstanding |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Class B common stock, no par value: 1,000,000 shares authorized, 239,893 shares issued and 182,648 shares outstanding |
|
| 49.5 |
|
|
| 49.5 |
|
|
| 49.5 |
|
|
| 49.5 |
|
Treasury stock, 57,245 Class B shares at cost |
|
| (24.2 | ) |
|
| (24.2 | ) |
|
| (24.2 | ) |
|
| (24.2 | ) |
Additional paid-in-capital |
|
| 1,474.5 |
|
|
| 1,459.0 |
|
|
| 1,484.9 |
|
|
| 1,479.5 |
|
Retained deficit |
|
| (687.6 | ) |
|
| (544.0 | ) | ||||||||
Accumulated deficit |
|
| (770.2 | ) |
|
| (775.9 | ) | ||||||||
Accumulated other comprehensive loss |
|
| (368.2 | ) |
|
| (397.0 | ) |
|
| (353.1 | ) |
|
| (356.3 | ) |
Total Cinemark USA, Inc.'s stockholder's equity |
|
| 444.0 |
|
|
| 543.3 |
|
|
| 386.9 |
|
|
| 372.6 |
|
Noncontrolling interests |
|
| 10.6 |
|
|
| 11.6 |
|
|
| 9.9 |
|
|
| 9.3 |
|
Total equity |
|
| 454.6 |
|
|
| 554.9 |
|
|
| 396.8 |
|
|
| 381.9 |
|
Total liabilities and equity |
| $ | 4,665.4 |
|
| $ | 5,012.7 |
|
| $ | 4,528.1 |
|
| $ | 4,623.3 |
|
The accompanying notes, as they relate to Cinemark USA, Inc., are an integral part of the condensed consolidated financial statements.
8
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in millions, unaudited)
|
| Three Months Ended March 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Revenue |
|
|
|
|
|
| ||
Admissions |
| $ | 311.0 |
|
| $ | 235.8 |
|
Concession |
|
| 235.8 |
|
|
| 173.0 |
|
Other |
|
| 63.9 |
|
|
| 51.7 |
|
Total revenue |
|
| 610.7 |
|
|
| 460.5 |
|
Cost of operations |
|
|
|
|
|
| ||
Film rentals and advertising |
|
| 166.7 |
|
|
| 127.6 |
|
Concession supplies |
|
| 43.6 |
|
|
| 30.0 |
|
Salaries and wages |
|
| 86.2 |
|
|
| 79.8 |
|
Facility lease expense |
|
| 79.5 |
|
|
| 73.7 |
|
Utilities and other |
|
| 103.8 |
|
|
| 86.9 |
|
General and administrative expenses |
|
| 45.6 |
|
|
| 39.9 |
|
Depreciation and amortization |
|
| 54.9 |
|
|
| 61.7 |
|
Impairment of other assets |
|
| 0.7 |
|
|
| — |
|
(Gain) loss on disposal of assets and other |
|
| 0.3 |
|
|
| (6.9 | ) |
Total cost of operations |
|
| 581.3 |
|
|
| 492.7 |
|
Operating income (loss) |
|
| 29.4 |
|
|
| (32.2 | ) |
Other income (expense) |
|
|
|
|
|
| ||
Interest expense |
|
| (30.8 | ) |
|
| (32.1 | ) |
Interest income |
|
| 9.2 |
|
|
| 1.6 |
|
Foreign currency exchange gain (loss) |
|
| (2.2 | ) |
|
| 3.2 |
|
Interest expense - NCM |
|
| (5.7 | ) |
|
| (5.8 | ) |
Equity in loss of affiliates |
|
| (2.1 | ) |
|
| (2.2 | ) |
Total other expense |
|
| (31.6 | ) |
|
| (35.3 | ) |
Loss before income taxes |
|
| (2.2 | ) |
|
| (67.5 | ) |
Income tax benefit |
|
| (8.5 | ) |
|
| (6.5 | ) |
Net income (loss) |
| $ | 6.3 |
|
| $ | (61.0 | ) |
Less: Net income attributable to noncontrolling interests |
|
| 0.6 |
|
|
| 1.5 |
|
Net income (loss) attributable to Cinemark USA, Inc. |
| $ | 5.7 |
|
| $ | (62.5 | ) |
The accompanying notes, as they relate to Cinemark USA, Inc., are an integral part of the condensed consolidated financial statements.
9
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF LOSSCOMPREHENSIVE INCOME (LOSS)
(in millions, except per share data, unaudited)
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Admissions |
| $ | 324.6 |
|
| $ | 225.5 |
|
| $ | 942.3 |
|
| $ | 435.1 |
|
Concession |
|
| 253.6 |
|
|
| 164.2 |
|
|
| 712.6 |
|
|
| 313.5 |
|
Other |
|
| 72.2 |
|
|
| 45.1 |
|
|
| 200.1 |
|
|
| 95.2 |
|
Total revenue |
|
| 650.4 |
|
|
| 434.8 |
|
|
| 1,855.0 |
|
|
| 843.8 |
|
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Film rentals and advertising |
|
| 180.9 |
|
|
| 117.0 |
|
|
| 531.1 |
|
|
| 216.8 |
|
Concession supplies |
|
| 46.3 |
|
|
| 28.2 |
|
|
| 128.8 |
|
|
| 54.2 |
|
Salaries and wages |
|
| 97.0 |
|
|
| 67.6 |
|
|
| 277.0 |
|
|
| 149.2 |
|
Facility lease expense |
|
| 77.2 |
|
|
| 68.8 |
|
|
| 231.2 |
|
|
| 200.8 |
|
Utilities and other |
|
| 110.4 |
|
|
| 81.7 |
|
|
| 303.8 |
|
|
| 192.0 |
|
General and administrative expense |
|
| 44.4 |
|
|
| 37.9 |
|
|
| 131.8 |
|
|
| 109.7 |
|
Depreciation and amortization |
|
| 58.3 |
|
|
| 67.2 |
|
|
| 181.0 |
|
|
| 202.3 |
|
Impairment of long-lived and other assets |
|
| 15.2 |
|
|
| 7.5 |
|
|
| 107.5 |
|
|
| 7.5 |
|
Restructuring costs |
|
| — |
|
|
| (0.4 | ) |
|
| (0.2 | ) |
|
| (1.3 | ) |
(Gain) loss on disposal of assets and other |
|
| 1.2 |
|
|
| 1.1 |
|
|
| (6.4 | ) |
|
| 7.9 |
|
Total cost of operations |
|
| 630.9 |
|
|
| 476.6 |
|
|
| 1,885.6 |
|
|
| 1,139.1 |
|
Operating income (loss) |
|
| 19.5 |
|
|
| (41.8 | ) |
|
| (30.6 | ) |
|
| (295.3 | ) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest expense |
|
| (32.4 | ) |
|
| (31.9 | ) |
|
| (96.5 | ) |
|
| (93.5 | ) |
Interest income |
|
| 5.2 |
|
|
| 0.9 |
|
|
| 9.5 |
|
|
| 5.3 |
|
Loss on extinguishment of debt |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (6.5 | ) |
Foreign currency exchange loss |
|
| (5.4 | ) |
|
| (0.2 | ) |
|
| (5.3 | ) |
|
| (0.9 | ) |
Distributions from NCM |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.1 |
|
Distributions from DCIP |
|
| 3.7 |
|
|
| 6.5 |
|
|
| 3.7 |
|
|
| 6.5 |
|
Interest expense - NCM |
|
| (5.8 | ) |
|
| (5.9 | ) |
|
| (17.5 | ) |
|
| (17.7 | ) |
Equity in income (loss) of affiliates |
|
| 0.2 |
|
|
| (7.2 | ) |
|
| (7.5 | ) |
|
| (22.1 | ) |
Total other expense |
|
| (34.5 | ) |
|
| (37.8 | ) |
|
| (113.6 | ) |
|
| (128.8 | ) |
Loss before income taxes |
|
| (15.0 | ) |
|
| (79.6 | ) |
|
| (144.2 | ) |
|
| (424.1 | ) |
Income tax benefit |
|
| (0.4 | ) |
|
| (7.4 | ) |
|
| (3.3 | ) |
|
| (11.3 | ) |
Net loss |
| $ | (14.6 | ) |
| $ | (72.2 | ) |
| $ | (140.9 | ) |
| $ | (412.8 | ) |
Less: Net income (loss) attributable to noncontrolling interests |
|
| 0.6 |
|
|
| 0.2 |
|
|
| 2.7 |
|
|
| (0.2 | ) |
Net loss attributable to Cinemark USA, Inc. |
| $ | (15.2 | ) |
| $ | (72.4 | ) |
| $ | (143.6 | ) |
| $ | (412.6 | ) |
|
| Three Months Ended March 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Net income (loss) |
| $ | 6.3 |
|
| $ | (61.0 | ) |
Other comprehensive income, net of tax |
|
|
|
|
|
| ||
Unrealized gain (loss) due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
|
| (3.4 | ) |
|
| 14.6 |
|
Foreign currency translation adjustments |
|
| 8.1 |
|
|
| 14.4 |
|
Total other comprehensive income, net of tax |
|
| 4.7 |
|
|
| 29.0 |
|
Total comprehensive income (loss), net of tax |
|
| 11.0 |
|
|
| (32.0 | ) |
Comprehensive income attributable to noncontrolling interests |
|
| (0.6 | ) |
|
| (1.5 | ) |
Comprehensive income (loss) attributable to Cinemark USA, Inc. |
| $ | 10.4 |
|
| $ | (33.5 | ) |
The accompanying notes, as they relate to Cinemark USA, Inc., are an integral part of the condensed consolidated financial statements.
10
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSEQUITY
(in millions, unaudited)
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Net loss |
| $ | (14.6 | ) |
| $ | (72.2 | ) |
| $ | (140.9 | ) |
| $ | (412.8 | ) |
Other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
|
| 9.8 |
|
|
| 1.4 |
|
|
| 31.4 |
|
|
| 7.9 |
|
Foreign currency translation adjustments |
|
| (4.6 | ) |
|
| (13.8 | ) |
|
| (5.9 | ) |
|
| (15.0 | ) |
Total other comprehensive income (loss), net of tax |
|
| 5.2 |
|
|
| (12.4 | ) |
|
| 25.5 |
|
|
| (7.1 | ) |
Total comprehensive loss, net of tax |
|
| (9.4 | ) |
|
| (84.6 | ) |
|
| (115.4 | ) |
|
| (419.9 | ) |
Comprehensive (income) loss attributable to noncontrolling interests |
|
| (0.6 | ) |
|
| (0.2 | ) |
|
| (2.7 | ) |
|
| 0.2 |
|
Comprehensive loss attributable to Cinemark USA, Inc. |
| $ | (10.0 | ) |
| $ | (84.8 | ) |
| $ | (118.1 | ) |
| $ | (419.7 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
| |||||||||
|
| Class B |
|
|
|
|
|
|
| Accumulated |
| Cinemark |
|
|
|
|
| ||||||||||||
|
| Common Stock |
|
|
| Additional |
|
|
| Other |
| USA, Inc's |
|
|
|
|
| ||||||||||||
|
| Shares |
|
|
|
| Treasury |
| Paid-in- |
| Accumulated |
| Comprehensive |
| Stockholder's |
| Noncontrolling |
| Total |
| |||||||||
|
| Issued |
|
| Amount |
| Stock |
| Capital |
| Deficit |
| Loss |
| Equity |
| Interests |
| Equity |
| |||||||||
Balance at January 1, 2023 |
| 0.2 |
|
| $ | 49.5 |
| $ | (24.2 | ) | $ | 1,479.5 |
| $ | (775.9 | ) | $ | (356.3 | ) | $ | 372.6 |
| $ | 9.3 |
| $ | 381.9 |
| |
Share based awards compensation expense |
|
| — |
|
|
| — |
|
| — |
|
| 5.4 |
|
| — |
|
| — |
|
| 5.4 |
|
| — |
|
| 5.4 |
|
Net income |
|
| — |
|
|
| — |
|
| — |
|
| — |
|
| 5.7 |
|
| — |
|
| 5.7 |
|
| 0.6 |
|
| 6.3 |
|
Amortization of accumulated gains for amended swap agreements |
|
| — |
|
|
| — |
|
| — |
|
| — |
|
| — |
|
| (1.5 | ) |
| (1.5 | ) |
| — |
|
| (1.5 | ) |
Other comprehensive income |
|
| — |
|
|
| — |
|
| — |
|
| — |
|
| — |
|
| 4.7 |
|
| 4.7 |
|
| — |
|
| 4.7 |
|
Balance at March 31, 2023 |
|
| 0.2 |
|
| $ | 49.5 |
| $ | (24.2 | ) | $ | 1,484.9 |
| $ | (770.2 | ) | $ | (353.1 | ) | $ | 386.9 |
| $ | 9.9 |
| $ | 396.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
| |||||||||
|
| Class B |
|
|
|
|
|
|
| Accumulated |
| Cinemark |
|
|
|
|
| ||||||||||||
|
| Common Stock |
|
|
| Additional |
|
|
| Other |
| USA, Inc's |
|
|
|
|
| ||||||||||||
|
| Shares |
|
|
|
| Treasury |
| Paid-in- |
| Accumulated |
| Comprehensive |
| Stockholder's |
| Noncontrolling |
| Total |
| |||||||||
|
| Issued |
|
| Amount |
| Stock |
| Capital |
| Deficit |
| Loss |
| Equity |
| Interests |
| Equity |
| |||||||||
Balance at January 1, 2022 |
| 0.2 |
|
| $ | 49.5 |
| $ | (24.2 | ) | $ | 1,459.0 |
| $ | (544.0 | ) | $ | (397.0 | ) | $ | 543.3 |
| $ | 11.6 |
| $ | 554.9 |
| |
Share based awards compensation expense |
|
| — |
|
|
| — |
|
| — |
|
| 4.9 |
|
| — |
|
| — |
|
| 4.9 |
|
| — |
|
| 4.9 |
|
Net (loss) income |
|
| — |
|
|
| — |
|
| — |
|
| — |
|
| (62.5 | ) |
| — |
|
| (62.5 | ) |
| 1.5 |
|
| (61.0 | ) |
Amortization of accumulated losses for amended swap agreements |
|
| — |
|
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1.1 |
|
| 1.1 |
|
| — |
|
| 1.1 |
|
Other comprehensive income |
|
| — |
|
|
| — |
|
| — |
|
| — |
|
| — |
|
| 29.0 |
|
| 29.0 |
|
| — |
|
| 29.0 |
|
Balance at March 31, 2022 |
|
| 0.2 |
|
| $ | 49.5 |
| $ | (24.2 | ) | $ | 1,463.9 |
| $ | (606.5 | ) | $ | (366.9 | ) | $ | 515.8 |
| $ | 13.1 |
| $ | 528.9 |
|
The accompanying notes, as they relate to Cinemark USA, Inc., are an integral part of the condensed consolidated financial statements.
11
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITYCASH FLOWS
(in millions, unaudited)
|
| Common Stock |
| Treasury Stock |
| Additional Paid-In-Capital |
| Retained Earnings (Deficit) |
| Accumulated Other Comprehensive Loss |
| Total Cinemark USA, Inc. Stockholder's Equity |
| Noncontrolling Interests |
| Total Equity |
| ||||||||
Balance at January 1, 2022 |
| $ | 49.5 |
| $ | (24.2 | ) | $ | 1,459.0 |
| $ | (544.0 | ) | $ | (397.0 | ) | $ | 543.3 |
| $ | 11.6 |
| $ | 554.9 |
|
Issuance of share based awards and share based awards compensation expense |
|
| — |
|
| — |
|
| 4.9 |
|
| — |
|
| — |
|
| 4.9 |
|
| — |
|
| 4.9 |
|
Net income (loss) |
|
| — |
|
| — |
|
| — |
|
| (62.5 | ) |
| — |
|
| (62.5 | ) |
| 1.5 |
|
| (61.0 | ) |
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 14.6 |
|
| 14.6 |
|
| — |
|
| 14.6 |
|
Amortization of accumulated losses for amended swap agreements |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1.1 |
|
| 1.1 |
|
| — |
|
| 1.1 |
|
Foreign currency translation adjustments |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 14.4 |
|
| 14.4 |
|
| — |
|
| 14.4 |
|
Balance at March 31, 2022 |
| $ | 49.5 |
| $ | (24.2 | ) | $ | 1,463.9 |
| $ | (606.5 | ) | $ | (366.9 | ) | $ | 515.8 |
| $ | 13.1 |
| $ | 528.9 |
|
Issuance of share based awards and share based awards compensation expense |
|
| — |
|
| — |
|
| 5.7 |
|
| — |
|
| — |
|
| 5.7 |
|
| — |
|
| 5.7 |
|
Net income (loss) |
|
| — |
|
| — |
|
| — |
|
| (65.9 | ) |
| — |
|
| (65.9 | ) |
| 0.6 |
|
| (65.3 | ) |
Distributions to noncontrolling interests |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (3.0 | ) |
| (3.0 | ) |
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 7.0 |
|
| 7.0 |
|
| — |
|
| 7.0 |
|
Amortization of accumulated losses for amended swap agreements |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1.1 |
|
| 1.1 |
|
| — |
|
| 1.1 |
|
Foreign currency translation adjustments |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (15.7 | ) |
| (15.7 | ) |
| — |
|
| (15.7 | ) |
Balance at June 30, 2022 |
| $ | 49.5 |
| $ | (24.2 | ) | $ | 1,469.6 |
| $ | (672.4 | ) | $ | (374.5 | ) | $ | 448.0 |
| $ | 10.7 |
| $ | 458.7 |
|
Share based awards compensation expense |
|
| — |
|
| — |
|
| 4.9 |
|
| — |
|
| — |
|
| 4.9 |
|
| — |
|
| 4.9 |
|
Net income (loss) |
|
| — |
|
| — |
|
| — |
|
| (15.2 | ) |
| — |
|
| (15.2 | ) |
| 0.6 |
|
| (14.6 | ) |
Distributions to noncontrolling interests |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (0.7 | ) |
| (0.7 | ) | |
Amortization of accumulated losses for amended swap agreements |
| — |
|
| — |
|
| — |
|
| — |
|
| 1.1 |
|
| 1.1 |
|
| — |
|
| 1.1 |
| |
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
| — |
|
| — |
|
| — |
|
| — |
|
| 9.8 |
|
| 9.8 |
|
| — |
|
| 9.8 |
| |
Foreign currency translation adjustments |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (4.6 | ) |
| (4.6 | ) |
| — |
|
| (4.6 | ) |
Balance at September 30, 2022 |
| $ | 49.5 |
| $ | (24.2 | ) | $ | 1,474.5 |
| $ | (687.6 | ) | $ | (368.2 | ) | $ | 444.0 |
| $ | 10.6 |
| $ | 454.6 |
|
|
| Three Months Ended March 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Operating activities |
|
|
|
|
|
| ||
Net income (loss) |
| $ | 6.3 |
|
| $ | (61.0 | ) |
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities: |
|
|
|
|
|
| ||
Depreciation |
|
| 54.4 |
|
|
| 61.1 |
|
Amortization of intangible and other assets |
|
| 0.5 |
|
|
| 0.6 |
|
Amortization of debt issuance costs |
|
| 1.9 |
|
|
| 1.9 |
|
Interest accrued on NCM screen advertising advances |
|
| 5.7 |
|
|
| 5.8 |
|
Amortization of NCM screen advertising advances and other deferred revenue |
|
| (8.1 | ) |
|
| (8.2 | ) |
Amortization of accumulated (gains) losses for amended swap agreements |
|
| (1.5 | ) |
|
| 1.1 |
|
Share based awards compensation expense |
|
| 5.4 |
|
|
| 4.9 |
|
Impairment of other assets |
|
| 0.7 |
|
|
| — |
|
(Gain) loss on disposal of assets and other |
|
| 0.3 |
|
|
| (6.9 | ) |
Non-cash rent expense |
|
| (3.9 | ) |
|
| (2.3 | ) |
Equity in loss of affiliates |
|
| 2.1 |
|
|
| 2.2 |
|
Deferred income tax benefit |
|
| (13.3 | ) |
|
| (7.9 | ) |
Distributions from equity investees |
|
| — |
|
|
| 0.6 |
|
Changes in assets and liabilities and other |
|
| (34.8 | ) |
|
| (100.4 | ) |
Net cash provided by (used for) operating activities |
|
| 15.7 |
|
|
| (108.5 | ) |
|
|
|
|
|
|
| ||
Investing activities |
|
|
|
|
|
| ||
Additions to theatre properties and equipment |
|
| (26.3 | ) |
|
| (18.7 | ) |
Proceeds from sale of theatre properties and equipment and other |
|
| — |
|
|
| 10.6 |
|
Net cash used for investing activities |
|
| (26.3 | ) |
|
| (8.1 | ) |
|
|
|
|
|
|
| ||
Financing activities |
|
|
|
|
|
| ||
Restricted stock withholdings for payroll taxes |
|
| (2.0 | ) |
|
| (1.6 | ) |
Repayments of long-term debt |
|
| (2.6 | ) |
|
| (3.4 | ) |
Payments on finance leases |
|
| (3.5 | ) |
|
| (3.6 | ) |
Other financing activities |
|
| 3.2 |
|
|
| — |
|
Net cash used for financing activities |
|
| (4.9 | ) |
|
| (8.6 | ) |
|
|
|
|
|
|
| ||
Effect of exchange rate changes on cash and cash equivalents |
|
| (1.1 | ) |
|
| (3.2 | ) |
|
|
|
|
|
|
| ||
Decrease in cash and cash equivalents |
|
| (16.6 | ) |
|
| (128.4 | ) |
|
|
|
|
|
|
| ||
Cash and cash equivalents: |
|
|
|
|
|
| ||
Beginning of period |
|
| 427.3 |
|
|
| 442.7 |
|
End of period |
| $ | 410.7 |
|
| $ | 314.3 |
|
|
|
|
|
|
|
|
The accompanying notes, as they relate to Cinemark USA, Inc., are an integral part of the condensed consolidated financial statements.
12
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)
(in millions, unaudited)
|
| Common Stock |
| Treasury Stock |
| Additional Paid-In-Capital |
| Retained Earnings (Deficit) |
| Accumulated Other Comprehensive Loss |
| Total Cinemark USA, Inc. Stockholder's Equity |
| Noncontrolling Interests |
| Total Equity |
| ||||||||
Balance at January 1, 2021 |
| $ | 49.5 |
| $ | (24.2 | ) | $ | 1,310.6 |
| $ | (163.3 | ) | $ | (398.6 | ) | $ | 774.0 |
| $ | 11.0 |
| $ | 785.0 |
|
Issuance of share based awards and share based awards compensation expense |
|
| — |
|
| — |
|
| 4.4 |
|
| — |
|
| — |
|
| 4.4 |
|
| — |
|
| 4.4 |
|
Contributions from parent |
|
| — |
|
| — |
|
| 120.0 |
|
| — |
|
| — |
|
| 120.0 |
|
| — |
|
| 120.0 |
|
Net loss |
| — |
| — |
| — |
|
| (202.9 | ) |
| — |
|
| (202.9 | ) |
| (0.6 | ) |
| (203.5 | ) | |||
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
| — |
| — |
| — |
| — |
|
| 5.7 |
|
| 5.7 |
|
| — |
|
| 5.7 |
| ||||
Amortization of accumulated losses for amended swap agreements |
| — |
| — |
| — |
| — |
|
| 1.1 |
|
| 1.1 |
|
| — |
|
| 1.1 |
| ||||
Foreign currency translation adjustments |
| — |
| — |
| — |
| — |
|
| (9.5 | ) |
| (9.5 | ) |
| — |
|
| (9.5 | ) | ||||
Balance at March 31, 2021 |
| $ | 49.5 |
| $ | (24.2 | ) | $ | 1,435.0 |
| $ | (366.2 | ) | $ | (401.3 | ) | $ | 692.8 |
| $ | 10.4 |
| $ | 703.2 |
|
Issuance of share based awards and share based awards compensation expense |
|
| — |
|
| — |
|
| 5.7 |
|
| — |
|
| — |
|
| 5.7 |
|
| — |
|
| 5.7 |
|
Net income (loss) |
|
| — |
|
| — |
|
| — |
|
| (137.3 | ) |
| — |
|
| (137.3 | ) |
| 0.2 |
|
| (137.1 | ) |
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 0.8 |
|
| 0.8 |
|
| — |
|
| 0.8 |
|
Amortization of accumulated losses for amended swap agreements |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1.1 |
|
| 1.1 |
|
| — |
|
| 1.1 |
|
Foreign currency translation adjustments |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 8.3 |
|
| 8.3 |
|
| — |
|
| 8.3 |
|
Balance at June 30, 2021 |
| $ | 49.5 |
| $ | (24.2 | ) | $ | 1,440.7 |
| $ | (503.5 | ) | $ | (391.1 | ) | $ | 571.4 |
| $ | 10.6 |
| $ | 582.0 |
|
Share based awards compensation expense |
|
| — |
|
| — |
|
| 5.8 |
|
| — |
|
| — |
|
| 5.8 |
|
| — |
|
| 5.8 |
|
Net loss |
|
| — |
|
| — |
|
| — |
|
| (72.4 | ) |
| — |
|
| (72.4 | ) |
| 0.2 |
|
| (72.2 | ) |
Unrealized gain to fair value adjustments on interest rate swap agreements, net of taxes, net of settlements |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1.5 |
|
| 1.5 |
|
| — |
|
| 1.5 |
|
Amortization of accumulated losses for amended swap agreements |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1.1 |
|
| 1.1 |
|
| — |
|
| 1.1 |
|
Foreign currency translation adjustments |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (13.8 | ) |
| (13.8 | ) |
| — |
|
| (13.8 | ) |
Balance at September 30, 2021 |
| $ | 49.5 |
| $ | (24.2 | ) | $ | 1,446.5 |
| $ | (575.9 | ) | $ | (402.3 | ) | $ | 493.6 |
| $ | 10.8 |
| $ | 504.4 |
|
The accompanying notes, as they relate to Cinemark USA, Inc., are an integral part of the condensed consolidated financial statements.
13
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, unaudited)
|
| Nine Months Ended September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Operating activities |
|
|
|
|
|
| ||
Net loss |
| $ | (140.9 | ) |
| $ | (412.8 | ) |
Adjustments to reconcile net loss to cash provided by (used for) operating activities: |
|
|
|
|
|
| ||
Depreciation |
|
| 179.1 |
|
|
| 200.3 |
|
Amortization of intangible and other assets |
|
| 1.9 |
|
|
| 2.0 |
|
Amortization of debt issuance costs |
|
| 5.6 |
|
|
| 5.4 |
|
Interest accrued on NCM screen advertising advances |
|
| 17.5 |
|
|
| 17.7 |
|
Amortization of NCM screen advertising advances and other deferred revenues |
|
| (24.5 | ) |
|
| (24.3 | ) |
Amortization of accumulated losses for amended swap agreements |
|
| 3.4 |
|
|
| 3.4 |
|
Share based awards compensation expense |
|
| 15.5 |
|
|
| 15.9 |
|
Impairment of long-lived and other assets |
|
| 107.5 |
|
|
| 7.5 |
|
(Gain) loss on disposal of assets and other |
|
| (6.4 | ) |
|
| 7.9 |
|
Loss on extinguishment of debt |
|
| — |
|
|
| 6.5 |
|
Non-cash rent expense |
|
| (7.5 | ) |
|
| (1.8 | ) |
Equity in loss of affiliates |
|
| 7.5 |
|
|
| 22.1 |
|
Deferred income tax benefit |
|
| (3.3 | ) |
|
| (20.9 | ) |
Distributions from equity investees |
|
| 1.5 |
|
|
| 0.2 |
|
Changes in assets and liabilities and other |
|
| (109.9 | ) |
|
| 139.2 |
|
Net cash provided by (used for) operating activities |
|
| 47.0 |
|
|
| (31.7 | ) |
|
|
|
|
|
|
| ||
Investing activities |
|
|
|
|
|
| ||
Additions to theatre properties and equipment |
|
| (65.3 | ) |
|
| (57.2 | ) |
Proceeds from sale of theatre properties and equipment and other |
|
| 12.0 |
|
|
| 2.2 |
|
Net cash used for investing activities |
|
| (53.3 | ) |
|
| (55.0 | ) |
|
|
|
|
|
|
| ||
Financing activities |
|
|
|
|
|
| ||
Restricted stock withholdings for payroll taxes |
|
| (4.1 | ) |
|
| — |
|
Contributions received from parent |
|
| — |
|
|
| 120.0 |
|
Proceeds from issuance of senior notes |
|
| — |
|
|
| 1,170.0 |
|
Proceeds from other borrowings |
|
| — |
|
|
| 9.7 |
|
Redemption of senior notes |
|
| — |
|
|
| (1,155.0 | ) |
Repayments of long-term debt |
|
| (14.0 | ) |
|
| (7.2 | ) |
Payment of debt issuance costs |
|
| — |
|
|
| (17.3 | ) |
Fees paid related to debt refinancing |
|
| — |
|
|
| (2.1 | ) |
Payments on finance leases |
|
| (10.8 | ) |
|
| (11.0 | ) |
Other financing activities |
|
| (3.7 | ) |
|
| — |
|
Net cash provided by (used for) financing activities |
|
| (32.6 | ) |
|
| 107.1 |
|
|
|
|
|
|
|
| ||
Effect of exchange rate changes on cash and cash equivalents |
|
| (17.2 | ) |
|
| (2.2 | ) |
|
|
|
|
|
|
| ||
Increase (decrease) in cash and cash equivalents |
|
| (56.1 | ) |
|
| 18.2 |
|
|
|
|
|
|
|
| ||
Cash and cash equivalents: |
|
|
|
|
|
| ||
Beginning of period |
|
| 442.7 |
|
|
| 260.5 |
|
End of period |
| $ | 386.6 |
|
| $ | 278.7 |
|
|
|
|
|
|
|
|
The accompanying notes, as they relate to Cinemark USA, Inc., are an integral part of the condensed consolidated financial statements.
14
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
Cinemark Holdings, Inc. (“Holdings”) is a holding company and its wholly-owned subsidiary is Cinemark USA, Inc.Inc (“CUSA”). Holdings consolidates CUSA and its subsidiaries for financial statement purposes.purposes, and CUSA comprises a majority ofapproximately the entire balance of Holdings’ assets, liabilities and operating cash flows. In addition, CUSA’s operating revenue comprises 100% and its operating expenses comprise nearly 100% of Holdings’ revenue and operating expenses, respectively. TheseAs such, the following Notes to Condensed Consolidated Financial Statements include disclosures forrelate to Holdings and CUSA and their respective consolidated subsidiaries.subsidiaries in all material respects, unless otherwise noted. Where it is important to distinguish between the entities, this reportHoldings and CUSA, specific reference is made to either refers specifically to Holdings or CUSA. Otherwise, all references to “we,” “our,” “us,” and “the Company” or "Cinemark" relate to Cinemark Holdings, Inc. and its consolidated subsidiaries and all references to CUSA relate to CUSA and its consolidated subsidiaries.
The Company and its subsidiariesWe operate in the motion picture exhibition industry, with theatres in the United States (“U.S.”), Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao and Paraguay. The Company closed its one theatre in Curacao in January 2023 and our theatres in Ecuador are currently held for sale. See Note 6 for a discussion of the Ecuador theatre assets held for sale.
The impact of COVID-19 had an unprecedented impact on the theatrical exhibition industry. While the industry has made significant progress in its recovery from the pandemic, its ongoing recovery will be contingent upon several key factors, including the volume of new film content available, the box office performance of new film content released, the duration of the exclusive theatrical release window, and evolving consumer behavior with competition from other forms of in-and-out-of-home entertainment.
The accompanying condensed consolidated balance sheets of Holdings and CUSA as of December 31, 2021,2022, each of which were derived from audited financial statements, and the unaudited condensed consolidated financial statements of Holdings and CUSA, respectively, hashave been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from these estimates. Majority-owned subsidiaries over which the Companythat Holdings or CUSA, as applicable, has control of are consolidated while those investments in entities of which Holdings or CUSA, as applicable, owns between 20% and 50% and does not control are accounted for under the equity method. Investments in entities of which Holdings or CUSA, as applicable, owns less than 20% are generally accounted for under the cost method, unless Holdings or CUSA, as applicable, is deemed to have the ability to exercise significant influence over the entities, in which case Holdings or CUSA, as applicable, would account for its investment under the equity method. The results of these subsidiaries and entitiesequity method investees are included in the condensed consolidated financial statements of Holdings and CUSA, as applicable, effective withfrom their date of formation or from their datesdate of acquisition. Intercompany balances and transactions are eliminated in consolidation.
These condensed consolidated financial statements of Holdings and CUSA should be read in conjunction with the audited annual consolidated financial statements of Holdings and CUSA and the notes thereto for the year ended December 31, 2021,2022, included in the Company’s Annual Report on Form 10-K filed February 25, 2022 by Holdings and the Annual Report on Form 10-K filed March 9, 2022 by CUSA, as applicable, each24, 2023 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Operating results for the three and nine months ended September 30, 2022March 31, 2023 are not necessarily indicative of the results to be achieved for the full year.
Amounts included in the condensed consolidated financial statements of this Quarterly Report on Form 10-Q are rounded in millions with the exception of per share data. The amounts reported in the consolidated financial statements, and the notes thereto, of the Annual Report on Form 10-K for the year ended December 31, 2021 filed by Holdings on February 25, 2022 and by CUSA on March 9, 2022 are rounded in thousands.
The COVID-19 pandemic has had an unprecedented impact on the world and the movie exhibition industry with widespread social and economic effects. The Company temporarily closed its theatres in the U.S. and Latin America during March of 2020 at the onset of the COVID-19 outbreak. During that time, the Company implemented various cash preservation strategies, including, but not limited to, temporary personnel and salary reductions, halting non-essential operating and capital expenditures, negotiating modified timing and/or abatement of contractual payments with landlords and other major suppliers, and suspending quarterly dividends paid by Holdings to its shareholders.
Throughout 2020 and 2021 the Company reopened theatres as local restrictions and the status of the COVID-19 pandemic would allow. All of the Company's domestic and international theatres were reopened by the end of the fourth quarter of 2021. The industry’s recovery from the COVID-19 pandemic is still underway and is contingent upon the volume of new film content available, as well as the box office performance of new film content released, consumer sentiment around movie-going and government restrictions. The industry is also adjusting to the evolution of the exclusive theatrical window, competition from streaming platforms, supply chain constraints, inflationary impacts and other economic factors.
Restructuring Charges
15
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
During June 2020, Company management approved and announced a restructuring plan to realign its operations to create a more efficient cost structure (referred to herein as the “Restructuring Plan”) in response to the COVID-19 pandemic. The Restructuring Plan primarily included a headcount reduction at its domestic corporate office and the permanent closure of certain domestic and international theatres. The Company paid approximately $0.9 related to previously accrued restructuring costs during the nine months ended September 30, 2022. The Company recorded a $0.2 reduction to previously accrued restructuring costs during the nine months ended September 30, 2022 related to the settlement of facility closure costs for certain theatres. The remaining accrued restructuring costs of $0.4, which are primarily related to facility closure costs, are reflected in accounts payable and accrued expenses on the condensed consolidated balance sheet as of September 30, 2022.
Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, (“ASU 2020-04”) and, ASU 2021-01, Reference Rate Reform (Topic 848): Scope, (“ASU 2021-01”) and ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”). The purpose of ASU 2020-04 is to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. More specifically, the amendments in ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2021-01 clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The amendments in ASU 2022-06 defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The amendments in ASU 2020-04 and ASU 2021-01 are effective as of March 12, 2020 through December 31, 2022.2024. The Company does not expectguidance in ASU 2020-04 and ASU 2021-01 has not impacted the consolidated financial statements
13
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
of Holdings or CUSA to have a materialdate. The Company will continue to monitor the impact of ASU 2020-04 and ASU 2021-01 on the condensed consolidated financial statements of Holdings or CUSA.
ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, (“ASU 2021-10”). The purpose of ASU 2021-10 is to provide annual disclosureCUSA, and may apply the optional relief guidance about transactions with a government for which the entity is applying a grant or contribution accounting model by analogy. More specifically, the amendments in ASU 2021-10 require disclosure of a) the nature of the transactions and the related accounting policy used to account for the transactions, b) the line items on the balance sheet and statement of loss, including the amountsas applicable to each line item, that are affected by the transactions and c) significant terms and conditions of the transactions, including commitments and contingencies. The amendments in ASU 2021-10 are effective for annual periods beginning after December 15, 2021. The amendments in ASU 2021-10 should be applied either a) prospectively to all transactions at the date of initial application and new transactions that are entered into after the date of initial application or b) retrospectively to those transactions. Holdings and CUSA will provide the disclosures required by ASU 2021-10 in the Form 10-K for the year endedthrough December 31, 2022.2024.
Lease Deferrals and Abatements
Upon the temporary closure of theatres in March 2020, the Company began negotiating the deferral of rent and other lease-related payments with its landlords while theatres remained closed. These negotiations resulted in amendments to the leases that involved varying concessions, including the abatement of rent payments during closure, deferral of all or a portion of rent payments to later periods, temporary percentage rent terms and deferrals of rent payments combined with an early exercise of an existing renewal option or extension of the lease term. Total remaining deferred payments as of September 30, 2022 and December 31, 2021 were $5.3 and $31.9, respectively, and are included in accounts payable and accrued expenses in the condensed consolidated balance sheets.
16
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
The following table represents the Company’s aggregate lease costs, by lease classification, for the periods presented.
|
| Three Months Ended |
| Nine Months Ended |
|
| Three Months Ended |
| ||||||||||||||||
|
| September 30, |
|
| September 30, |
|
| March 31, |
| |||||||||||||||
Lease Cost | Classification | 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| Classification | 2023 |
|
| 2022 |
| ||||||
Operating lease costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Equipment (1) | Utilities and other | $ | 1.0 |
|
| $ | 0.7 |
|
| $ | 2.6 |
|
| $ | 1.6 |
| Utilities and other | $ | 1.4 |
|
| $ | 0.6 |
|
Real Estate (2)(3) | Facility lease expense |
| 79.5 |
|
|
| 69.5 |
|
|
| 236.4 |
|
|
| 200.9 |
| Facility lease expense |
| 82.1 |
|
|
| 75.0 |
|
Total operating lease costs |
| $ | 80.5 |
|
| $ | 70.2 |
|
| $ | 239.0 |
|
| $ | 202.5 |
|
| $ | 83.5 |
|
| $ | 75.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Finance lease costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Amortization of leased assets | Depreciation and amortization | $ | 3.1 |
|
| $ | 3.1 |
|
| $ | 9.4 |
|
| $ | 9.5 |
| Depreciation and amortization | $ | 3.0 |
|
| $ | 3.1 |
|
Interest on lease liabilities | Interest expense |
| 1.4 |
|
|
| 1.4 |
|
|
| 4.1 |
|
|
| 4.5 |
| Interest expense |
| 1.2 |
|
|
| 1.4 |
|
Total finance lease costs |
| $ | 4.5 |
|
| $ | 4.5 |
|
| $ | 13.5 |
|
| $ | 14.0 |
|
| $ | 4.2 |
|
| $ | 4.5 |
|
The following table represents the minimum cash lease payments included in the measurement of lease liabilities and the non-cash addition of lease right-of-use assets for the periods presented.
|
| Nine Months Ended |
|
| Three Months Ended |
| ||||||||||
|
| September 30, |
|
| March 31, |
| ||||||||||
Other Information |
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||
Cash paid for amounts included in the measurement of lease liabilities |
|
|
|
|
|
| ||||||||||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
| ||||||||||
Cash outflows for operating leases |
| $ | 209.3 |
|
| $ | 201.4 |
|
| $ | 69.6 |
|
| $ | 69.3 |
|
Cash outflows for finance leases - operating activities |
| $ | 4.1 |
|
| $ | 4.5 |
|
| $ | 1.2 |
|
| $ | 1.4 |
|
Cash outflows for finance leases - financing activities |
| $ | 10.8 |
|
| $ | 11.0 |
|
| $ | 3.5 |
|
| $ | 3.6 |
|
Non-cash amount of right-of-use assets obtained in exchange for: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating lease liability additions, net of write-offs |
| $ | 78.5 |
|
| $ | 109.1 |
|
| $ | 9.5 |
|
| $ | 11.8 |
|
As of September 30, 2022,March 31, 2023, the Company had signed lease agreements with total noncancelable lease payments of approximately $69.357.5 related to theatre leases that had not yet commenced. The timing of lease commencement is dependent on the completion of construction of the related theatre facility. Additionally, these amounts are based on estimated square footage and costs to construct each facility and may be subject to adjustment upon final completion of each construction project. In accordance with ASC Topic 842, Leases,fixed minimum lease payments related to these theatres are not included in the right-of-use assets and lease liabilities as of September 30, 2022.March 31, 2023.
The Company’s patrons have the option to purchase movie tickets well in advance of a movie showtime or right before the movie showtime, or at any point in between those two timeframes depending on seat availability. The Company recognizes such admissions revenue when the showtime for a purchased movie ticket has passed. Concession revenue is recognized when products are sold to the consumer.consumer, or if purchased in advance, based on the showtime associated with the customer’s movie ticket. Other revenue primarily consists of screen advertising, and screen rental revenue, promotional income, studio trailer placements and transactional fees. Except for National CineMedia, LLC. ("NCM"(“NCM”) screen advertising advances discussed below in Note 8, these revenues are generally recognized when the Company has performed the related services.met its performance obligations. The Company sells gift cards and discount ticket vouchers called Supersavers, the proceeds from which are recorded as deferred revenue. Deferred revenue for gift cards and discount ticket vouchers is recognized when they are redeemed for concession items or, if redeemed for movie tickets, when the showtime has passed. The Company generally records breakage revenue on gift cards and discount ticket vouchers based on redemption activity and historical experience with unused balances. The Company offers a subscription program in the U.S. whereby patrons can pay a monthly or annual fee to receive a monthly credit for use towards a future movie ticket purchase. The Company records the subscription program fees as
1714
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
credit for use towards a future movie ticket purchase. The Company records the subscription program fees as deferred revenue and records admissions revenue when the showtime for a movie ticket purchased with a credit has passed. The Company has loyalty programs in the U.S. and many of its international locations that either have a prepaid annual fee or award points to customers as purchases are made. For those loyalty programs that have a prepaid annual fee, the Company recognizes the fee collected as other revenue on a straight-line basis.basis over the annual term. For those loyalty programs that award points to customers based on their purchases, the Company records a portion of the original transaction proceeds as deferred revenue based on the number of reward points issued to customers and recognizes the deferred revenue when the customer redeems such points. The value of loyalty points issued is based on the estimated fair value of the rewards offered. The Company records breakage revenue on its loyalty and subscription programs generally upon the expiration of loyalty points orand subscription credits.credits as the Company does not yet have sufficient historical data related to the redemption patterns for these programs to estimate breakage. Advances collected on concession and other contracts are deferred and recognized during the period in which the Company satisfies the related performance obligations, which may differ from the period in which the advances are collected.
Accounts receivable as of September 30, 2022March 31, 2023 and December 31, 20212022 included approximately $19.417.6 and $23.522.9, respectively, of receivables related to contracts with customers. The Company did not record any assets related to the costs to obtain or fulfill a contract with customers during the ninethree months ended September 30, 2022.March 31, 2023.
Disaggregation of Revenue
The following tables present revenue disaggregated based on major type of good or service and by reportable operating segment.
|
| Three Months Ended |
| Nine Months Ended |
|
| Three Months Ended |
| ||||||||||||||||||||||
|
| September 30, 2022 |
|
| September 30, 2022 |
|
| March 31, 2023 |
| |||||||||||||||||||||
|
| U.S. |
| International |
|
|
| U.S. |
| International |
|
|
|
| U.S. |
| International |
|
|
| ||||||||||
|
| Operating |
| Operating |
|
|
| Operating |
| Operating |
|
|
|
| Operating |
| Operating |
|
|
| ||||||||||
|
| Segment (1) |
| Segment |
| Consolidated |
|
| Segment (1) |
| Segment |
| Consolidated |
|
| Segment (1) |
| Segment |
| Consolidated |
| |||||||||
Admissions revenue |
| $ | 257.6 |
| $ | 67.0 |
| $ | 324.6 |
|
| $ | 759.1 |
| $ | 183.2 |
| $ | 942.3 |
|
| $ | 244.7 |
| $ | 66.3 |
| $ | 311.0 |
|
Concession revenue |
|
| 200.8 |
| 52.8 |
| 253.6 |
|
|
| 576.5 |
| 136.1 |
| 712.6 |
|
|
| 186.8 |
| 49.0 |
| 235.8 |
| ||||||
Screen advertising, screen rental and promotional revenue (2) |
|
| 20.6 |
| 11.3 |
| 31.9 |
|
|
| 60.7 |
| 30.7 |
| 91.4 |
|
|
| 21.8 |
| 9.3 |
| 31.1 |
| ||||||
Other revenue |
|
| 32.7 |
|
| 7.6 |
|
| 40.3 |
|
|
| 88.2 |
|
| 20.5 |
|
| 108.7 |
|
|
| 25.8 |
|
| 7.0 |
|
| 32.8 |
|
Total revenue |
| $ | 511.7 |
| $ | 138.7 |
| $ | 650.4 |
|
| $ | 1,484.5 |
| $ | 370.5 |
| $ | 1,855.0 |
|
| $ | 479.1 |
| $ | 131.6 |
| $ | 610.7 |
|
|
| Three Months Ended |
| Nine Months Ended |
|
| Three Months Ended |
| ||||||||||||||||||||||
|
| September 30, 2021 |
|
| September 30, 2021 |
|
| March 31, 2022 |
| |||||||||||||||||||||
|
| U.S. |
| International |
|
|
| U.S. |
| International |
|
|
|
| U.S. |
| International |
|
|
| ||||||||||
|
| Operating |
| Operating |
|
|
| Operating |
| Operating |
|
|
|
| Operating |
| Operating |
|
|
| ||||||||||
|
| Segment (1) |
| Segment |
| Consolidated |
|
| Segment (1) |
| Segment |
| Consolidated |
|
| Segment (1) |
| Segment |
| Consolidated |
| |||||||||
Admissions revenue |
| $ | 195.3 |
| $ | 30.2 |
| $ | 225.5 |
|
| $ | 384.4 |
| $ | 50.7 |
| $ | 435.1 |
|
| $ | 191.8 |
| $ | 44.0 |
| $ | 235.8 |
|
Concession revenue |
|
| 142.6 |
| 21.6 |
| 164.2 |
|
|
| 275.0 |
| 38.5 |
| 313.5 |
|
|
| 141.1 |
| 31.9 |
| 173.0 |
| ||||||
Screen advertising, screen rental and promotional revenue (2) |
|
| 18.0 |
| 4.8 |
| 22.8 |
|
|
| 44.5 |
| 7.6 |
| 52.1 |
|
|
| 18.7 |
| 8.1 |
| 26.8 |
| ||||||
Other revenue |
|
| 19.5 |
|
| 2.8 |
|
| 22.3 |
|
|
| 37.9 |
|
| 5.2 |
|
| 43.1 |
|
|
| 20.4 |
|
| 4.5 |
|
| 24.9 |
|
Total revenue |
| $ | 375.4 |
| $ | 59.4 |
| $ | 434.8 |
|
| $ | 741.8 |
| $ | 102.0 |
| $ | 843.8 |
|
| $ | 372.0 |
| $ | 88.5 |
| $ | 460.5 |
|
The following tables present revenue disaggregated based on timing of recognition and by reportable operating segment.
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||||||||
|
| September 30, 2022 |
|
| September 30, 2022 |
|
| March 31, 2023 |
| |||||||||||||||||||||
|
| U.S. |
| International |
|
|
| U.S. |
| International |
|
|
|
| U.S. |
| International |
|
|
| ||||||||||
|
| Operating |
| Operating |
|
|
|
| Operating |
| Operating |
|
|
|
| Operating |
| Operating |
|
|
| |||||||||
|
| Segment (1) |
| Segment |
| Consolidated |
|
| Segment (1) |
| Segment |
| Consolidated |
|
| Segment (1) |
| Segment |
| Consolidated |
| |||||||||
Goods and services transferred at a point in time |
| $ | 478.9 |
| $ | 123.8 |
| $ | 602.7 |
|
| $ | 1,401.0 |
| $ | 332.2 |
| $ | 1,733.2 |
|
| $ | 447.8 |
| $ | 119.2 |
| $ | 567.0 |
|
Goods and services transferred over time (2) |
|
| 32.8 |
|
| 14.9 |
|
| 47.7 |
|
|
| 83.5 |
|
| 38.3 |
|
| 121.8 |
|
|
| 31.3 |
|
| 12.4 |
|
| 43.7 |
|
Total |
| $ | 511.7 |
| $ | 138.7 |
| $ | 650.4 |
|
| $ | 1,484.5 |
| $ | 370.5 |
| $ | 1,855.0 |
|
| $ | 479.1 |
| $ | 131.6 |
| $ | 610.7 |
|
1815
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||||||||
|
| September 30, 2021 |
|
| September 30, 2021 |
|
| March 31, 2022 |
| |||||||||||||||||||||
|
| U.S. |
| International |
|
|
| U.S. |
| International |
|
|
|
| U.S. |
| International |
|
|
| ||||||||||
|
| Operating |
| Operating |
|
|
|
| Operating |
| Operating |
|
|
|
| Operating |
| Operating |
|
|
| |||||||||
|
| Segment (1) |
| Segment |
| Consolidated |
|
| Segment (1) |
| Segment |
| Consolidated |
|
| Segment (1) |
| Segment |
| Consolidated |
| |||||||||
Goods and services transferred at a point in time |
| $ | 348.4 |
| $ | 53.3 |
| $ | 401.7 |
|
| $ | 678.4 |
| $ | 91.5 |
| $ | 769.9 |
|
| $ | 348.3 |
| $ | 78.6 |
| $ | 426.9 |
|
Goods and services transferred over time (2) |
|
| 27.0 |
|
| 6.1 |
|
| 33.1 |
|
|
| 63.4 |
|
| 10.5 |
|
| 73.9 |
|
|
| 23.7 |
|
| 9.9 |
|
| 33.6 |
|
Total |
| $ | 375.4 |
| $ | 59.4 |
| $ | 434.8 |
|
| $ | 741.8 |
| $ | 102.0 |
| $ | 843.8 |
|
| $ | 372.0 |
| $ | 88.5 |
| $ | 460.5 |
|
19
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
NCM Screen Advertising Advances and Other Deferred Revenue
The following table presents changes in the Company’s NCM screen advertising advances and other deferred revenue for the ninethree months ended September 30, 2022.March 31, 2023.
|
| NCM screen advertising advances (1) |
|
| Other |
|
| NCM screen advertising advances (1) |
|
| Other |
| ||||
Balance at January 1, 2022 |
| $ | 346.0 |
|
| $ | 160.3 |
| ||||||||
Balance at January 1, 2023 |
| $ | 338.2 |
|
| $ | 194.9 |
| ||||||||
Amounts recognized as accounts receivable |
|
| — |
|
|
| 1.0 |
|
|
| — |
|
|
| 0.3 |
|
Cash received from customers in advance |
|
| — |
|
|
| 163.5 |
|
|
| — |
|
|
| 60.9 |
|
Common units received from NCM |
|
| 1.3 |
|
|
| — |
| ||||||||
Interest accrued related to significant financing component |
|
| 17.5 |
|
|
| — |
|
|
| 5.7 |
|
|
| — |
|
Revenue recognized during period |
|
| (24.3 | ) |
|
| (150.9 | ) |
|
| (8.1 | ) |
|
| (62.8 | ) |
Foreign currency translation adjustments |
|
| — |
|
|
| (1.0 | ) |
|
| — |
|
|
| (0.1 | ) |
Balance at September 30, 2022 |
| $ | 340.5 |
|
| $ | 172.9 |
| ||||||||
Balance at March 31, 2023 |
| $ | 335.8 |
|
| $ | 193.2 |
|
The table below summarizes the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied as of September 30, 2022March 31, 2023 and when the Company expects to recognize this revenue.
|
| Twelve Months Ended September 30, |
|
|
|
|
|
|
| Twelve Months Ended March 31, |
|
|
|
|
|
| |||||||||||||||||
Remaining Performance Obligations |
| 2023 |
|
| 2024 |
|
| Thereafter |
|
| Total |
|
| 2024 |
|
| 2025 |
|
| Thereafter |
|
| Total |
| |||||||||
Other deferred revenue |
| $ | 153.3 |
|
| $ | 19.6 |
|
| $ | — |
|
| $ | 172.9 |
|
| $ | 170.7 |
|
| $ | 22.5 |
|
| $ | — |
|
| $ | 193.2 |
|
2016
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
The following table presents computations of basic and diluted loss per share for Holdings:
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| September 30, |
|
| September 30, |
|
| March 31, |
| |||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net loss attributable to Cinemark Holdings, Inc. |
| $ | (24.5 | ) |
| $ | (77.8 | ) |
| $ | (171.9 | ) |
| $ | (428.5 | ) |
| $ | (3.1 | ) |
| $ | (74.0 | ) |
Loss allocated to participating share-based awards (1) |
|
| 0.4 |
|
|
| 1.5 |
|
|
| 2.4 |
|
|
| 7.6 |
|
|
| — |
|
|
| 1.2 |
|
Net loss attributable to common stockholders |
| $ | (24.1 | ) |
| $ | (76.3 | ) |
| $ | (169.5 | ) |
| $ | (420.9 | ) |
| $ | (3.1 | ) |
| $ | (72.8 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Basic weighted average shares outstanding |
|
| 118.4 |
|
|
| 117.3 |
|
|
| 118.1 |
|
|
| 117.2 |
|
|
| 118.8 |
|
|
| 117.9 |
|
Common equivalent shares for restricted stock units (2) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Common equivalent shares for convertible notes and warrants (3) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Diluted weighted average shares outstanding |
|
| 118.4 |
|
|
| 117.3 |
|
|
| 118.1 |
|
|
| 117.2 |
|
|
| 118.8 |
|
|
| 117.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Basic loss per share attributable to common stockholders |
| $ | (0.20 | ) |
| $ | (0.65 | ) |
| $ | (1.43 | ) |
| $ | (3.59 | ) |
| $ | (0.03 | ) |
| $ | (0.62 | ) |
Diluted loss per share attributable to common stockholders |
| $ | (0.20 | ) |
| $ | (0.65 | ) |
| $ | (1.43 | ) |
| $ | (3.59 | ) |
| $ | (0.03 | ) |
| $ | (0.62 | ) |
Share-based awards
Holdings considers its unvested share-based payment awards, which contain non-forfeitable rights to dividends, participating securities, and includes such participating securities in its computation of loss per share pursuant to the two-class method. Basic loss per share for the two classes of stock (common stock and unvested restricted stock) is calculated by dividing net loss by the weighted average number of shares of common stock and unvested restricted stock outstanding during the reporting period. Diluted loss per share is calculated using the weighted average number of shares of common stock plus the potentially dilutive effect of common equivalent shares outstanding determined under both the two-class method and the treasury stock method.
Convertible notes, hedges and warrants
The 4.50% Convertible Senior Notes, discussed further in Note 1314 of Holdings'the Company’s Annual Report on Form 10-K filed February 26, 2021,24, 2023, may be considered dilutive in future periods in which Holdings has net income. The impact of such dilution on earnings per share will be calculated under the if-converted method, which requires that all of the shares of Holdings' common stock issuable upon conversion of the 4.50% Convertible Senior Notes be included in the calculation of diluted EPSearnings per share assuming conversion at the beginning of the reporting period.
The closing price of Holdings' common stock did not exceed the strike price of $18.6518.66 per share (130% of the initial exercise price of $14.35 per share) during at least 20 of the last 30 trading days of the nine monthsquarter ended September 30, 2022March 31, 2023 and, therefore, the 4.50% Convertible Senior Notes arewill not be convertible during the fourthsecond quarter of 2022.2023. The if-converted value of the 4.50% Convertible Senior Notes, exceededbased on the weighted average closing price of Holdings common stock for the first quarter of 2023, was $77.8 less than the aggregate outstanding principal value of the notes by $54.3as of September 30, 2022.March 31, 2023.
Holdings entered into hedge transactions with counterparties in connection with the issuance of the 4.50% Convertible Senior Notes. The convertible note hedge transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the 4.50% Convertible Senior Notes, the number of shares of Holdings' common stock underlying the 4.50% Convertible Notes, which initially gives Holdings the option to purchase approximately 32.0 shares of its common stock at a price of approximately $14.35 per share. Concurrently with entering into the convertible note hedge transactions, Holdings also entered into warrant transactions with each option counterparty whereby Holdings sold to such option counterparty warrants to purchase, subject to customary anti-dilution adjustments, up to the same number of shares of Holdings' common stock, which initially gives the option counterparties the option to purchase approximately 32.0 million shares at a price of approximately $22.08 per share. The economic effect of these transactions is to
2117
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
to effectively raise the strike price of the 4.50% Convertible Senior Notes from approximately $18.65$18.66 per share of Holdings' common stock to approximately $22.08 per share.
During December 2022, the Company entered into a purchase and sale agreement for the sale of the stock of its Ecuador subsidiary. The transaction is expected to close during 2023, pending customary antitrust and regulatory approvals. At March 31, 2023 and December 31, 2022, the assets and liabilities of the Ecuador subsidiary qualified as held for sale upon satisfaction of the criteria set forth in ASC 360-10-45-9 (205-20-45-1E), Property, Plant, and Equipment. The sale of the Ecuador subsidiary does not qualify as discontinued operations since it does not represent a strategic shift in the Company’s operations that will have a major effect on its results and operations. The following table presents the carrying value of Ecuador’s significant assets and liabilities as of the periods presented:
| March 31, |
|
| December 31, |
| ||
| 2023 |
|
| 2022 |
| ||
Theatre property and equipment, net | $ | 5.5 |
|
| $ | 5.4 |
|
Operating lease right-of-use asset, net |
| 2.9 |
|
|
| 2.9 |
|
Goodwill |
| 4.2 |
|
|
| 4.2 |
|
|
|
|
|
|
| ||
Total assets | $ | 15.3 |
|
| $ | 15.3 |
|
Total liabilities | $ | 8.6 |
|
| $ | 8.5 |
|
Total revenue and operating losses for the Ecuador subsidiary were $3.5 and $0.1, respectively, for the three months ended March 31, 2023.
Long-term debt of Holdings consisted of the following for the periods presented:
| September 30, |
|
| December 31, |
| March 31, |
|
| December 31, |
| ||||
| 2022 |
|
| 2021 |
| 2023 |
|
| 2022 |
| ||||
Cinemark Holdings, Inc. 4.500% convertible senior notes due 2025 | $ | 460.0 |
|
| $ | 460.0 |
| |||||||
Cinemark Holdings, Inc. 4.50% convertible senior notes due 2025 | $ | 460.0 |
|
| $ | 460.0 |
| |||||||
Cinemark USA, Inc. term loan due 2025 |
| 628.2 |
|
|
| 633.1 |
|
| 624.9 |
|
|
| 626.5 |
|
Cinemark USA, Inc. 8.750% senior secured notes due 2025 |
| 250.0 |
|
|
| 250.0 |
| |||||||
Cinemark USA, Inc. 8.75% senior secured notes due 2025 |
| 250.0 |
|
|
| 250.0 |
| |||||||
Cinemark USA, Inc. 5.875% senior notes due 2026 |
| 405.0 |
|
|
| 405.0 |
|
| 405.0 |
|
|
| 405.0 |
|
Cinemark USA, Inc. 5.250% senior notes due 2028 |
| 765.0 |
|
|
| 765.0 |
| |||||||
Cinemark USA, Inc. 5.25% senior notes due 2028 |
| 765.0 |
|
|
| 765.0 |
| |||||||
Other |
| 21.9 |
|
|
| 30.2 |
|
| 9.7 |
|
|
| 10.1 |
|
Total carrying value of long-term debt | $ | 2,530.1 |
|
| $ | 2,543.3 |
| |||||||
Total long-term debt carrying value (1) | $ | 2,514.6 |
|
| $ | 2,516.6 |
| |||||||
Less: Current portion |
| 22.0 |
|
|
| 24.3 |
|
| 110.0 |
|
|
| 10.7 |
|
Less: Debt issuance costs, net of accumulated amortization |
| 34.6 |
|
|
| 42.7 |
|
| 29.2 |
|
|
| 31.9 |
|
Long-term debt, less current portion, net of unamortized debt issuance costs | $ | 2,473.5 |
|
| $ | 2,476.3 |
| $ | 2,375.4 |
|
| $ | 2,474.0 |
|
| September 30, |
|
| December 31, |
| ||
| 2022 |
|
| 2021 |
| ||
Cinemark USA, Inc. term loan due 2025 | $ | 628.2 |
|
| $ | 633.1 |
|
Cinemark USA, Inc. 8.750% senior secured notes due 2025 |
| 250.0 |
|
|
| 250.0 |
|
Cinemark USA, Inc. 5.875% senior notes due 2026 |
| 405.0 |
|
|
| 405.0 |
|
Cinemark USA, Inc. 5.250% senior notes due 2028 |
| 765.0 |
|
|
| 765.0 |
|
Other |
| 21.9 |
|
|
| 30.2 |
|
Total carrying value of long-term debt | $ | 2,070.1 |
|
| $ | 2,083.3 |
|
Less: Current portion |
| 22.0 |
|
|
| 24.3 |
|
Less: Debt issuance costs, net of accumulated amortization |
| 24.7 |
|
|
| 30.3 |
|
Long-term debt, less current portion, net of unamortized debt issuance costs | $ | 2,023.4 |
|
| $ | 2,028.7 |
|
| March 31, |
|
| December 31, |
| ||
| 2023 |
|
| 2022 |
| ||
Total long-term debt carrying value | $ | 2,054.6 |
|
| $ | 2,056.6 |
|
Less: Current portion |
| 110.0 |
|
|
| 10.7 |
|
Less: Debt issuance costs, net of accumulated amortization |
| 21.1 |
|
|
| 22.9 |
|
Long-term debt, less current portion, net of unamortized debt issuance costs | $ | 1,923.5 |
|
| $ | 2,023.0 |
|
Senior Secured Credit Facility
CUSA has a senior secured credit facility that includes a $700.0 term loan and a $100.0 revolving credit line (the “Credit Agreement”) which is guaranteed by Holdings. As of September 30, 2022,March 31, 2023, there was $628.2624.9 outstanding under the term loan and no borrowings were outstanding under the revolving credit line. As of September 30, 2022,March 31, 2023, $100.0 was available for borrowing under the revolving credit line. Quarterly principal payments of $1.6 are due on the term loan through December 31, 2024, with a final principal
18
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
payment of $613.4 due on March 29, 2025. The revolving credit line matures on November 28, 2024. The average interest rate on outstanding term loan borrowings under the Credit Agreement as of September 30, 2022March 31, 2023 was approximately 4.14.6% per annum, after giving effect to the interest rate swap agreements discussed below.
8.75% Secured Notes
On March 30, 2023, CUSA sent a notice of optional partial redemption to Computershare Trust Services, N.A. (successor to Wells Fargo Bank, N.A.) (the “Trustee”) to redeem $100 in principal amount of the 8.75% Secured Notes on May 1, 2023 (the “Redemption Date”) at a cash redemption price equal to 102.188% of the principal amount redeemed plus any accrued and unpaid interest thereon to the Redemption Date. Following the redemption, $150 in aggregate principal amount of the 8.75% Secured Notes will remain outstanding. See further discussion at Note 19. For additional discussion of the 8.75% Secured Notes, see Note 14 to the Company’s consolidated financial statements for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed February 24, 2023.
Interest Rate Swap Agreements
The Company’s interest rate swap agreements are used to hedge a portion of the interest rate risk associated with the variable interest rates on the Company’s term loan debt and qualify for cash flow hedge accounting. Below is a summary of the Company's interest rate swap agreements, which are designated as cash flow hedges, as of September 30, 2022:March 31, 2023:
Notional |
|
|
|
|
|
|
|
|
|
| Estimated |
| ||
Amount |
|
| Effective Date |
| Pay Rate |
| Receive Rate |
| Expiration Date |
| Fair Value (1) |
| ||
$ | 137.5 |
|
| December 31, 2018 |
| 2.12% |
| 1-Month LIBOR |
| December 31, 2024 |
| $ | 6.1 |
|
$ | 175.0 |
|
| December 31, 2018 |
| 2.12% |
| 1-Month LIBOR |
| December 31, 2024 |
|
| 8.0 |
|
$ | 137.5 |
|
| December 31, 2018 |
| 2.19% |
| 1-Month LIBOR |
| December 31, 2024 |
|
| 6.1 |
|
|
|
|
|
|
|
|
|
| Total |
| $ | 20.2 |
|
22
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
Notional |
|
|
|
|
|
|
|
|
|
| Estimated |
| ||
Amount |
|
| Effective Date |
| Pay Rate |
| Receive Rate |
| Expiration Date |
| Fair Value (1) |
| ||
$ | 137.5 |
|
| December 31, 2018 |
| 2.12% |
| 1-Month LIBOR |
| December 31, 2024 |
| $ | 5.1 |
|
$ | 175.0 |
|
| December 31, 2018 |
| 2.12% |
| 1-Month LIBOR |
| December 31, 2024 |
|
| 6.5 |
|
$ | 137.5 |
|
| December 31, 2018 |
| 2.19% |
| 1-Month LIBOR |
| December 31, 2024 |
|
| 5.0 |
|
|
|
|
|
|
|
|
|
| Total |
| $ | 16.6 |
|
Effective March 31, 2020, the Company amended and extended its three then existing interest rate swap agreements, all of which are used to hedge a portion of the interest rate risk associated with the variable interest rates on its term loan debt and qualify for cash flow hedge accounting. Upon amending the interest rate swap agreements effective March 31, 2020, the Company determined that the interest payments hedged with the agreements are still probable to occur, therefore the loss that accumulated on the swaps prior to the amendments is being amortized to interest expense through December 31, 2022, the original maturity dates of the swaps. Approximately $1.1 was recorded in interest expense in the condensed consolidated statements of loss for the three months ended September 30, 2022 and 2021 and $3.4 was recorded in interest expense in the condensed consolidated statements of loss for the nine months ended September 30, 2022 and 2021.
The fair values of the interest rate swaps are recorded on Holdings' and CUSA's condensed consolidated balance sheets as an asset or liability with the related gains or losses reported as a component of accumulated other comprehensive loss. The changes in fair value are reclassified from accumulated other comprehensive loss into earnings in the same period that the hedged items affect earnings. The valuation technique used to determine fair value is the income approach and, under this approach, the Company used 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 the agreement. Therefore, the Company's measurements use significant unobservable inputs, which fall in Level 2 of the U.S. GAAP hierarchy as defined by FASB ASC Topic 820-10-35. The Company is currently assessing the impact of reference rate reform, as well as the impact of ASU 2020-04, ASU 2021-01 and ASU 2022-06, on the Company’s interest rate swaps.
Fair Value of Long-Term Debt
The Company estimates the fair value of its long-term debt primarily using quoted market prices, which fall under Level 2 of the U.S. GAAP fair value hierarchy as defined by ASC 820, Fair Value Measurement (“ASC Topic 820”). The table below presents the fair value of the Company's long-term debt as of the periods presented:
|
| As of |
|
| As of |
| ||||||||||
|
| September 30, 2022 |
|
| December 31, 2021 |
|
| March 31, 2023 |
|
| December 31, 2022 |
| ||||
Holdings fair value (1) |
| $ | 2,326.2 |
|
| $ | 2,749.8 |
|
| $ | 2,509.8 |
|
| $ | 2,210.5 |
|
CUSA fair value |
| $ | 1,798.7 |
|
| $ | 2,058.0 |
|
| $ | 1,925.7 |
|
| $ | 1,771.3 |
|
Below is a summary of activity with NCM included in each of Holdings' and CUSA's condensed consolidated financial statements:
|
| Investment |
| NCM Screen Advertising Advances |
| Equity in |
| Other |
| Interest |
| Cash |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance as of January 1, 2022 |
| $ | 135.4 |
| $ | (346.0 | ) |
|
|
|
|
|
|
|
| ||||
Receipt of common units due to annual common unit adjustment ("CUA") |
|
| 1.3 |
|
| (1.3 | ) |
|
|
|
|
|
|
|
| ||||
Screen rental revenue earned under ESA (1) |
|
| — |
|
| — |
| $ | — |
| $ | (15.0 | ) | $ | — |
| $ | 15.0 |
|
Interest accrued related to significant financing component |
|
| — |
|
| (17.5 | ) |
| — |
|
| — |
|
| 17.5 |
|
| — |
|
Equity in loss |
|
| (10.3 | ) |
| — |
|
| 10.3 |
|
| — |
|
| — |
|
| — |
|
Impairment of investment in NCM |
|
| (98.0 | ) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
Amortization of screen advertising advances |
|
| — |
|
| 24.3 |
|
| — |
|
| (24.3 | ) |
| — |
|
| — |
|
Balance as of and for the nine months ended September 30, 2022 |
| $ | 28.4 |
| $ | (340.5 | ) | $ | 10.3 |
| $ | (39.3 | ) | $ | 17.5 |
| $ | 15.0 |
|
2319
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
Below is a summary of activity with NCMI and NCM included in each of Holdings' and CUSA's condensed consolidated financial statements:
|
| Investment |
| NCM Screen Advertising Advances |
| Equity in |
| Other |
| Interest |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance as of January 1, 2023 |
| $ | 9.6 |
| $ | (338.2 | ) | $ | — |
| $ | — |
| $ | — |
|
Screen rental revenue earned under ESA (1) |
|
| — |
|
| — |
|
| — |
|
| (4.8 | ) |
| — |
|
Interest accrued related to significant financing component |
|
| — |
|
| (5.7 | ) |
| — |
|
| — |
|
| 5.7 |
|
Equity in loss (2) |
|
| (3.2 | ) |
| — |
|
| (3.2 | ) |
| — |
|
| — |
|
Redemption of common units of NCM for common stock of NCMI. See Investment in National CineMedia below. |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
Impairment of investment in NCMI |
|
| (0.7 | ) |
| — |
|
| — |
|
| — |
|
| — |
|
Amortization of screen advertising advances |
|
| — |
|
| 8.1 |
|
| — |
|
| (8.1 | ) |
| — |
|
Balance as of and for the three months ended March 31, 2023 |
| $ | 5.7 |
| $ | (335.8 | ) | $ | (3.2 | ) | $ | (12.9 | ) | $ | 5.7 |
|
Investment in National CineMedia
NCM operates a digital in-theatre network in the U.S. for providing cinema advertising. The Company entered into an Exhibitor Services Agreement with NCM (“ESA”), pursuant to which NCM primarily provides advertising to our theatres.
On February 17, 2023, the Company delivered a redemption notice to NCM pursuant to the redemption right under its operating agreement with NCM to redeem approximately 42.0 of the Company’s 43.7 common units in NCM in exchange for approximately 42.0 newly issued shares of National Cinemedia, Inc. (“NCMI”) common stock, with a redemption date of February 23, 2023 (the “Redemption”). On March 20, 2023, the Company delivered a second redemption notice to NCM to redeem the Company’s remaining 1.7 common units in NCM in exchange for 1.7 newly issued shares of NCMI common stock, with a redemption date of March 23, 2023 (collectively with the February 23, 2023 redemption, the “Redemptions”). NCMI is a holding company and the sole manager of NCM. NCM comprises approximately the entire balance of NCMI’s assets, liabilities and operating cash flows. The Company has the same rights and level of influence through its ownership of NCMI common stock following the Redemptions as it did through its previous ownership of common units in NCM and therefore continued to account for its investment in NCMI under the equity method of accounting for the first quarter of 2023. See Note 819 for discussion of subsequent event related to Holdings'NCMI.
See Note 9 to the Company’s Annual Report on Form 10-K filed February 25, 2022 and Note 6 to CUSA's Annual Report on From 10-K filed March 9, 202224, 2023 for additional discussion of the Company's investment in NCM as well as the accounting for its original NCM membership units and subsequent common unit adjustments.
Common Unit Adjustments
The Company also periodically receives consideration in the form of common units from NCM. Annual adjustments to the common membership units are made primarily based on increases or decreases in the number of theatre screens operated and the impact of these theatres on total attendance. The common units received are recorded at estimated fair value as an increase in the Company's investment in NCM with an offset to NCM screen advertising advances.
During March 2022,2023, NCM performed itsthe annual common unit adjustment calculation under the Common Unit Adjustment Agreement. As a result of the calculation, the Company receivedwill receive an additional 0.54.8 common units of NCM during April 2022 and recordedthe second quarter of 2023. The Company will record the additional common units received in the second quarter of 2023 at their estimated fair value of $1.3 with a corresponding adjustment to NCM screen advertising advances. The fair value of the common units received was estimated based on the market price of National Cinemedia, Inc. ("NCMI") common stock (Level 1 input as defined
20
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in FASB ASC Topic 820) at the time the common units were determined, adjusted for volatility associated with the estimated time period it would take to convert the common units and register the respective shares.millions, except per share data, unaudited)
Impairment of NCMNCMI Investment
As of September 30, 2022, the Company owned a total of 43.7 common units of NCM representing an ownership interest of approximately 25.5%. Each of the Company’s common units in NCM is convertible into one share of NCMI common stock. As of September 30, 2022,March 31, 2023, the estimated fair value of the Company’s investment in NCMNCMI, was approximately $28.45.7 based on NCMI's stock price as of September 30, 2022March 31, 2023 of $0.650.13 per share (Level 1 input as defined in FASB ASC Topic 820). Because the share price of NCMI was significantly below the Company’s carrying value of NCMNCMI per common unitshare and due to the prolongedlag in the recovery pace of NCM'sNCM’s business from the COVID-19 pandemic compared to that of the Company and the movie theatre industry, the Company wrote down its investment in NCMNCMI to its estimated fair value during the nine months ended September 30, 2022. See Note 12 foras of March 31, 2023. The Company recorded an impairment expense recordedcharge of $0.7 on its investment in NCMI during the three and nine months ended September 30, 2022 and 2021.March 31, 2023.
Exhibitor Services Agreement
As discussed above, the Company’s domestic theatres are part of the in-theatre digital network operated by NCM, the terms of which are defined in the ESA. NCM provides advertising to its theatres through its branded “Noovie” pre-show entertainment program and also handles lobby promotions and displays for our theatres. The Company receives a monthly theatre access fee for participation in the NCM network and also earns screen advertising or screen rental revenue on a per patron basis. See Note 89 to Holdings'the Company’s Annual Report on Form 10-K filed February 25, 2022 and Note 6 to CUSA's Annual Report on Form 10-K filed March 9, 202224, 2023 for further discussion of the accounting for revenue earned under the ESA as well as the accounting related to NCM screen advertising advances.
The deferredrecognition of revenue related to the NCM screen advertising advances areis recorded on a straight-line basis over the term of the amended ESA through February 2041.2041. The table below summarizes when the Company expects to recognize this revenue:
|
| Twelve Months Ended September 30, |
|
|
|
|
|
|
| Twelve Months Ended March 31, |
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||
Remaining Maturity |
| 2023 |
|
| 2024 |
|
| 2025 |
|
| 2026 |
|
| 2027 |
|
| Thereafter |
|
| Total |
|
| 2024 |
|
| 2025 |
|
| 2026 |
|
| 2027 |
|
| 2028 |
|
| Thereafter |
|
| Total |
| ||||||||||||||
NCM screen advertising advances (1) |
| $ | 9.6 |
|
| $ | 10.3 |
|
| $ | 11.0 |
|
| $ | 11.8 |
|
| $ | 12.6 |
|
| $ | 285.2 |
|
| $ | 340.5 |
|
| $ | 10.0 |
|
| $ | 10.6 |
|
| $ | 11.4 |
|
| $ | 12.2 |
|
| $ | 13.0 |
|
| $ | 278.6 |
|
| $ | 335.8 |
|
Significant Financing Component
As discussed in Note 89 to Holdings'the Company’s Annual Report on Form 10-K filed February 25, 2022 and Note 6 to CUSA's Annual Report on Form 10-K filed March 9, 2022, CUSA's24, 2023, the Company’s ESA with NCM includes an implied significant financing component, as per the guidance in ASC Topic 606.606, Revenue from Contracts with Customers. As a result of the significant financing component, the Company recognized incremental screen rental revenue and interest expense of $24.38.1 and $17.55.7, respectively, during the ninethree months ended September 30, 2022March 31, 2023 and incremental screen rental revenue and interest expense of $24.08.0 and $17.75.8, respectively, during the ninethree months ended September 30, 2021.March 31, 2022. The interest expense was calculated using the Company's incremental borrowing rates at the time when the cash was received from the NCM, Inc. IPO and each tranche of common units waswere received from NCM, which ranged from 4.4% to 8.3%.
24
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
NCMNCMI Financial Information
Below is summary financial information for NCMNCMI for the periods indicated:
|
| Three Months Ended |
|
| Three Months Ended |
| Nine Months Ended |
| Nine Months Ended |
|
| Twelve Months Ended |
|
| Three Months Ended |
| ||||||||
|
| September 29, 2022 |
|
| September 30, 2021 |
|
| September 29, 2022 |
|
| September 30, 2021 |
|
| December 29, 2022 (1) |
|
| March 31, 2022 |
| ||||||
Gross revenue |
| $ | 54.5 |
|
| $ | 31.7 |
|
| $ | 157.5 |
|
| $ | 51.1 |
|
| $ | 249.2 |
|
| $ | 35.9 |
|
Operating loss |
| $ | (4.3 | ) |
| $ | (18.7 | ) |
| $ | (21.2 | ) |
| $ | (76.6 | ) | ||||||||
Operating income (loss) |
| $ | 6.9 |
|
| $ | (22.5 | ) | ||||||||||||||||
Net loss |
| $ | (24.4 | ) |
| $ | (35.3 | ) |
| $ | (79.0 | ) |
| $ | (125.7 | ) |
| $ | (66.2 | ) |
| $ | (46.0 | ) |
Net loss attributable to NCMI |
| $ | (28.7 | ) |
| $ | (25.2 | ) |
|
| As of |
| |
|
| December 29, 2022 (1) |
| |
Current assets |
| $ | 164.4 |
|
Noncurrent assets |
| $ | 628.0 |
|
Current liabilities |
| $ | 1,203.1 |
|
Noncurrent liabilities |
| $ | 53.3 |
|
Noncontrolling interests |
| $ | 51.3 |
|
Total deficit |
| $ | (464.0 | ) |
|
| As of |
|
| As of |
| ||
|
| September 29, 2022 |
|
| December 30, 2021 |
| ||
Current assets |
| $ | 123.5 |
|
| $ | 115.4 |
|
Noncurrent assets |
| $ | 637.5 |
|
| $ | 658.0 |
|
Current liabilities |
| $ | 72.7 |
|
| $ | 67.2 |
|
Noncurrent liabilities |
| $ | 1,162.4 |
|
| $ | 1,114.7 |
|
Members deficit |
| $ | (474.1 | ) |
| $ | (408.5 | ) |
2521
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
Digital Cinema Implementation Partners LLC (“DCIP”)
On February 12, 2007, the Company, AMC and Regal (the “Exhibitors”) entered into a joint venture known as 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. As of September 30, 2022, the Company had a 33% voting interest in DCIP and a 24.3% economic interest in DCIP. DCIP also entered into long-term Digital Cinema Deployment Agreements (“DCDAs”) with six major motion picture studios pursuant to which Kasima LLC, one of DCIP’s subsidiaries, received a virtual print fee ("VPF") each time the studio booked a film or certain other content on the leased digital projection systems. Other content distributors entered into similar DCDAs that provided for the payment of VPFs for bookings of the distributor's content on a leased digital projection system. The DCDAs expired in October 2021. Pursuant to the operating agreement between the Exhibitors and DCIP, DCIP began to distribute excess cash generated from their operations to the Exhibitors during 2019. As the DCDAs have expired and the MELA (as defined below) has been terminated, as discussed below, DCIP and its subsidiaries no longer have regular operations, and a final distribution was made during July 2022.
Effective November 1, 2020, the Company amended the master equipment lease agreement (“MELA”) with Kasima LLC, which is an indirect subsidiary of DCIP, resulting in the termination of the MELA. Upon termination of the MELA, the Company received a distribution of the digital projection equipment that it previously leased. As the fair value of the distributed projectors was greater than the Company's investment in DCIP at the time of the distribution, the investment in DCIP was reduced to zero at the time of the distribution. The Company does not recognize undistributed equity in the earnings or loss of its investment in DCIP until such time that future net earnings, less distributions received, surpass the amount of the excess distribution. The investment in DCIP on the condensed consolidated balance sheets of Holdings and CUSA as of December 31, 2021 and September 30, 2022 was $0. DCIP ceased operations at the end of the second quarter of 2022.
The Company received distributions and warranty reimbursements from DCIP for the three and nine months ended September 30, 2022 and 2021 as follows:
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
Transactions | September 30, 2022 |
|
| September 30, 2021 |
|
| September 30, 2022 |
|
| September 30, 2021 |
| ||||
Warranty reimbursements (1) | $ | — |
|
| $ | (0.1 | ) |
| $ | — |
|
| $ | (0.8 | ) |
Distributions from DCIP (2) | $ | 3.7 |
|
| $ | 6.5 |
|
| $ | 3.7 |
|
| $ | 6.5 |
|
Other Investment Activity
Below is a summary of activity for each of the Company’s other investees and corresponding changes to the Company's investment balances during the ninethree months ended September 30, 2022:March 31, 2023. See Note 10 to the consolidated financial statements in the Company’s Annual Report on Form 10-K filed February 24, 2023 for a further discussion of the Company’s Other investments.
|
| AC JV, |
| DCDC |
| FE Concepts |
| Other |
| Total |
| |||||
Balance at January 1, 2022 |
| $ | 3.7 |
| $ | 1.8 |
| $ | 19.3 |
| $ | 0.4 |
| $ | 25.2 |
|
Cash distributions received |
|
| (1.5 | ) |
| — |
|
| — |
|
| — |
|
| (1.5 | ) |
Equity income |
|
| 1.6 |
|
| 0.1 |
|
| 1.1 |
|
| — |
|
| 2.8 |
|
Other |
|
| — |
|
| — |
|
| — |
|
| (0.2 | ) |
| (0.2 | ) |
Balance at September 30, 2022 |
| $ | 3.8 |
| $ | 1.9 |
| $ | 20.4 |
| $ | 0.2 |
| $ | 26.3 |
|
|
| AC JV, |
| DCDC |
| FE Concepts |
| Other |
| Total |
| |||||
Balance at January 1, 2023 |
| $ | 4.2 |
| $ | 1.8 |
| $ | 16.5 |
| $ | 0.1 |
| $ | 22.6 |
|
Equity income |
|
| 0.8 |
|
| — |
|
| 0.3 |
|
| — |
|
| 1.1 |
|
Balance at March 31, 2023 |
| $ | 5.0 |
| $ | 1.8 |
| $ | 16.8 |
| $ | 0.1 |
| $ | 23.7 |
|
26
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
Transactions with Other Investees
Below is a summary of transactions with each of the Company’s other investees for the three and nine months ended September 30, 2022March 31, 2023 and 2021:2022:
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||
Investee | Transactions | September 30, 2022 |
|
| September 30, 2021 |
|
| September 30, 2022 |
|
| September 30, 2021 |
| Transactions | March 31, 2023 |
|
| March 31, 2022 |
| ||||||
AC JV, LLC | Event fees paid (1) | $ | 2.1 |
|
| $ | 0.8 |
|
| $ | 6.6 |
|
| $ | 1.4 |
| Event fees paid (1) | $ | 3.0 |
|
| $ | 1.8 |
|
DCDC | Content delivery fees paid (1) | $ | 0.1 |
|
| $ | 0.2 |
|
| $ | 0.4 |
|
| $ | 0.4 |
| Content delivery fees paid (1) | $ | 0.1 |
|
| $ | 0.2 |
|
Treasury Stock - Holdings
Treasury stock represents shares of common stock repurchased or withheld by Holdings and not yet retired. The Company has applied the cost method in recording its treasury shares. Below is a summary of Holdings’ treasury stock activity for the ninethree months ended September 30, 2022:March 31, 2023:
|
| Number of |
|
|
|
| Number of |
|
|
| ||||||
|
| Treasury |
|
|
|
| Treasury |
|
|
| ||||||
|
| Shares |
|
| Cost |
|
| Shares |
|
| Cost |
| ||||
Balance at January 1, 2022 |
|
| 5.35 |
|
| $ | 91.1 |
| ||||||||
Balance at January 1, 2023 |
|
| 5.68 |
|
| $ | 95.4 |
| ||||||||
Restricted stock withholdings (1) |
|
| 0.24 |
|
|
| 4.1 |
|
|
| 0.17 |
|
|
| 2.1 |
|
Restricted stock forfeitures |
|
| 0.07 |
|
|
| — |
|
|
| 0.03 |
|
|
| — |
|
Balance at September 30, 2022 |
|
| 5.66 |
|
| $ | 95.2 |
| ||||||||
Balance at March 31, 2023 |
|
| 5.88 |
|
| $ | 97.5 |
|
As of September 30, 2022,March 31, 2023, Holdings had no plans to retire any shares of treasury stock.
Restricted Stock
Below is a summary of restricted stock activity for the ninethree months ended September 30, 2022:March 31, 2023:
|
| Shares of |
|
| Weighted |
| ||
|
| Restricted |
|
| Grant Date |
| ||
|
| Stock |
|
| Fair Value |
| ||
Outstanding at January 1, 2022 |
|
| 2.00 |
|
| $ | 21.73 |
|
Granted |
|
| 0.88 |
|
| $ | 16.40 |
|
Vested |
|
| (0.90 | ) |
| $ | 19.00 |
|
Forfeited |
|
| (0.07 | ) |
| $ | 18.80 |
|
Outstanding at September 30, 2022 |
|
| 1.91 |
|
| $ | 20.66 |
|
Unvested restricted stock at September 30, 2022 |
|
| 1.91 |
|
| $ | 20.66 |
|
|
| Shares of |
|
| Weighted |
| ||
|
| Restricted |
|
| Grant Date |
| ||
|
| Stock |
|
| Fair Value |
| ||
Outstanding at January 1, 2023 |
|
| 1.85 |
|
| $ | 20.64 |
|
Granted |
|
| 1.27 |
|
|
| 11.68 |
|
Vested |
|
| (0.56 | ) |
|
| 21.89 |
|
Forfeited |
|
| (0.03 | ) |
|
| 16.97 |
|
Outstanding at March 31, 2023 |
|
| 2.53 |
|
|
| 15.98 |
|
Unvested restricted stock at March 31, 2023 |
|
| 2.53 |
|
|
|
|
27
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
|
| Nine Months Ended |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Compensation expense recognized during the period |
|
|
|
|
|
| ||
CUSA employees |
| $ | 11.3 |
|
| $ | 13.1 |
|
Holdings directors |
|
| 0.7 |
|
|
| 0.7 |
|
Total recognized by Holdings |
| $ | 12.0 |
|
| $ | 13.8 |
|
|
|
|
|
|
|
| ||
Fair value of vested restricted stock held by: |
|
|
|
|
|
| ||
CUSA employees |
| $ | 14.6 |
|
| $ | 1.2 |
|
Holdings directors |
|
| 0.6 |
|
|
| 1.3 |
|
Holdings total |
| $ | 15.2 |
|
| $ | 2.5 |
|
|
|
|
|
|
|
| ||
Income tax benefit (cost) related to vested restricted stock held by: |
|
|
|
|
|
| ||
CUSA employees |
| $ | 2.4 |
|
| $ | (0.4 | ) |
Holdings directors |
|
| 0.1 |
|
|
| 0.3 |
|
Holdings total income tax benefit (cost) |
| $ | 2.5 |
|
| $ | (0.1 | ) |
2822
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
During the ninethree months ended September 30, 2022,March 31, 2023, Holdings granted 0.881.27 shares of its restricted stock to certain CUSA employees and its directors.employees. The fair value of the restricted stock granted was determined based on the closing price of Holdings' common stock on the grant dates, which ranged from $13.3611.19 to $17.0711.68 per share. Holdings assumed forfeiture rates for the restricted stock awards that ranged from 0% to 1210%. The restricted stock granted during the ninethree months ended September 30, 2022March 31, 2023 vests over periods ranging from one to three years. The recipients of restricted stock are entitled to receive non-forfeitable dividends and to vote their respective shares, however, the sale and transfer of the restricted shares is prohibited during the restriction period.
Below is a summary of restricted stock award activity recorded for the periods indicated.
|
| Three Months Ended |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Compensation expense recognized during the period: |
|
|
|
|
|
| ||
CUSA employees |
| $ | 3.6 |
|
| $ | 4.0 |
|
Holdings directors |
|
| 0.3 |
|
|
| 0.2 |
|
Total recognized by Holdings |
| $ | 3.9 |
|
| $ | 4.2 |
|
|
|
|
|
|
|
| ||
Fair value of restricted stock that vested during the period: |
|
|
|
|
|
| ||
CUSA employees |
| $ | 6.9 |
|
| $ | 5.6 |
|
Holdings directors |
|
| — |
|
|
| — |
|
Holdings total |
| $ | 6.9 |
|
| $ | 5.6 |
|
|
|
|
|
|
|
| ||
Income tax benefit related to vested restricted stock: |
|
|
|
|
|
| ||
CUSA employees |
| $ | 0.8 |
|
| $ | 0.8 |
|
Holdings directors |
|
| — |
|
|
| — |
|
Holdings total income tax benefit |
| $ | 0.8 |
|
| $ | 0.8 |
|
As of September 30, 2022,March 31, 2023, the estimated remaining unrecognized compensation expense related to unvested restricted stock awards was as follows:
|
| Estimated |
|
| Estimated |
| ||
|
| Remaining |
|
| Remaining |
| ||
|
| Expense |
|
| Expense |
| ||
CUSA employees (1) |
| $ | 23.0 |
|
| $ | 29.5 |
|
Holdings directors |
|
| 0.8 |
|
|
| 0.5 |
|
Total remaining - Holdings (1) |
| $ | 23.8 |
|
| $ | 30.0 |
|
Restricted Stock Units
Below is a summary of restricted stock unit activity for the periods presented:
|
| Nine Months Ended September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Number of restricted stock units that vested during the period |
|
| 0.10 |
|
|
| 0.01 |
|
Fair value of restricted stock units that vested during the period |
| $ | 1.7 |
|
| $ | 0.3 |
|
Accumulated dividends paid upon vesting of restricted stock units |
| $ | 0.3 |
|
| $ | 0.1 |
|
Compensation expense recognized during the period |
| $ | 4.2 |
|
| $ | 2.8 |
|
Income tax benefit (cost) related to restricted stock units |
| $ | 0.1 |
|
| $ | (0.5 | ) |
During the nine months ended September 30, 2022, Holdings granted performance awards in the form of restricted stock units. The maximum number of shares issuable under the performance awards is 0.8 shares of Holdings' common stock. The performance metrics for these awards are based upon the achievement of pre-established criteria that consists of revenue and consolidated cash flows as defined in the award agreement. The performance measurement period for these performance awards is one year with an additional service requirement to the third anniversary of the date of grant. Each performance target underlying the performance award has a threshold, target and maximum level, with the maximum level equal to 175% of the target award. If the performance metrics meet the threshold level, approximately 29% of the maximum restricted stock units vest. If the performance metrics for the one-year period are at target, approximately 57% of the maximum restricted stock units vest. If the performance metrics are at the maximum, 100% of the maximum restricted stock units vest. Grantees are eligible to receive a ratable portion of the common stock issuable if the achievement of the performance goals is within the targets previously noted.All restricted stock units granted during 2022 will be paid in the form of Holdings' common stock if the participant continues to provide services through the third anniversary of the grant date. Restricted stock unit award participants are eligible to receive dividend equivalent payments from the grant date to the extent declared by Holdings if, and at the time that, the restricted stock unit awards vest.
When the performance awards were issued, the Company estimated that the most likely outcome is the achievement of the target level. The fair value of the restricted stock unit awards was determined based on the closing price of Holdings' common stock on the date of grant, which was $16.65 per share. The Company assumed a forfeiture rate of 5% for the restricted stock unit awards. Based on updated performance expectations, the Company determined that the maximum performance level was more likely to be achieved. The Company recorded incremental compensation expense of approximately $0.6 related to the change in estimated performance level during the nine months ended September 30, 2022.
As of September 30, 2022, the estimated remaining unrecognized compensation expense related to outstanding restricted stock units was $12.0. The weighted average period over which this remaining compensation expense will be recognized is approximately two years. As of September 30, 2022, Holdings had restricted stock units outstanding that represented a total of 1.0 hypothetical shares
2923
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
Performance Stock Units
During the three months ended March 31, 2023, Holdings granted performance awards in the form of performance stock units (“PSU”), formerly referred to as restricted stock units. The maximum number of shares issuable under the performance awards is 1.5 shares of Holdings' common stock. The grant date fair value for the units issued was determined based on the closing price of Holdings' common stock on the date of grant, which was $11.68 per share. The performance metrics for these performance awards are based upon Adjusted EBITDA and consolidated cash flows, and payout levels are determined based upon the achievement of pre-established criteria for these metrics as defined in the award agreement. Based upon the terms of the award agreement, PSUs vest based on a combination of performance factors and continued service. The performance measurement period for the PSUs is three years, January 1, 2023 through December 31, 2025 and the service period ends on February 20, 2026. Below is a summary of the performance metrics and measurement period for these performance awards:
Performance Measurement Period | Three years with additional service requirement to the third anniversary of the date of the grant | |
Maximum Performance Target Level | 200% of target level | |
Percentage of maximum performance stock units that vest if performance metrics meet the threshold level (1) | 25% or 0.37 PSUs | |
Percentage of maximum performance stock units that vest if performance metrics are at target (1) | 50% or 0.73 PSUs | |
Percentage of maximum performance stock units that vest if performance metrics are at the maximum (1) | 100% or 1.47 PSUs | |
Most likely performance metrics outcome estimated to be achieved at the time performance stock units were issued | Target | |
Assumed forfeiture rate for performance stock unit awards | 5% |
Below is a summary of performance stock unit activity for the periods presented:
|
| Three Months Ended March 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Number of performance stock units that vested during the period |
|
| 0.1 |
|
|
| 0.1 |
|
Fair value of performance stock units that vested during the period |
| $ | 1.2 |
|
| $ | 1.7 |
|
Accumulated dividends paid upon vesting of performance stock units |
| $ | 0.2 |
|
| $ | 0.3 |
|
Compensation expense recognized during the period |
| $ | 1.8 |
|
| $ | 0.9 |
|
Income tax benefit related to performance stock units |
| $ | — |
|
| $ | 0.3 |
|
As of March 31, 2023, the estimated remaining unrecognized compensation expense related to outstanding performance stock units was $19.5. The weighted average period over which this remaining compensation expense will be recognized is approximately 2.5 years. As of March 31, 2023, Holdings had performance stock units outstanding that represented a total of 1.6 hypothetical shares of common stock, net of forfeitures, reflecting actual certified performance levels for restricted stock units granted during 2019 and 2020 and 2022, and the maximumtarget performance level for the 2022 grant as discussed above, adjusted for estimated forfeitures.2023 grant.
24
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
A summary of the Company's goodwill is as follows:
|
| U.S. |
|
| International |
|
| Total |
| |||
Balance at January 1, 2022 (1) |
| $ | 1,182.9 |
|
| $ | 65.9 |
|
| $ | 1,248.8 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| 0.4 |
|
|
| 0.4 |
|
Balance at September 30, 2022 (1) |
| $ | 1,182.9 |
|
| $ | 66.3 |
|
| $ | 1,249.2 |
|
|
| U.S. |
|
| International |
|
| Total |
| |||
Balance at January 1, 2023 (1) |
| $ | 1,182.9 |
|
| $ | 68.0 |
|
| $ | 1,250.9 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| 2.4 |
|
|
| 2.4 |
|
Balance at March 31, 2023 (1) |
| $ | 1,182.9 |
|
| $ | 70.4 |
|
| $ | 1,253.3 |
|
A summary of the Company's intangible assets is as follows:
|
| Balance at |
| Amortization |
| Foreign Currency Translation Adjustments |
| Other (1) |
| Balance at September 30, 2022 |
|
| Balance at |
| Amortization |
| Foreign Currency Translation Adjustments |
| Balance at March 31, 2023 |
| |||||||||
Intangible assets with finite lives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross carrying amount |
| $ | 81.8 |
| $ | — |
| $ | 0.1 |
| $ | (0.2 | ) | $ | 81.7 |
|
| $ | 77.7 |
| $ | — |
| $ | — |
| $ | 77.7 |
|
Accumulated amortization |
|
| (71.1 | ) |
| (1.8 | ) |
| — |
|
| 0.2 |
|
| (72.7 | ) |
|
| (73.2 | ) |
| (0.5 | ) |
| — |
|
| (73.7 | ) |
Total net intangible assets with finite lives |
| $ | 10.7 |
| $ | (1.8 | ) | $ | 0.1 |
| $ | — |
| $ | 9.0 |
|
| $ | 4.5 |
| $ | (0.5 | ) | $ | — |
| $ | 4.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Intangible assets with indefinite lives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Tradename and other |
|
| 300.1 |
|
| — |
|
| — |
|
| — |
|
| 300.1 |
|
|
| 300.1 |
|
| — |
|
| 0.1 |
|
| 300.2 |
|
Total intangible assets, net |
| $ | 310.8 |
| $ | (1.8 | ) | $ | 0.1 |
| $ | — |
| $ | 309.1 |
|
| $ | 304.6 |
| $ | (0.5 | ) | $ | 0.1 |
| $ | 304.2 |
|
(1)
The estimated aggregate future amortization expense for intangible assets is as follows:
|
| Estimated |
| |
|
| Amortization |
| |
For the three months ended December 31, 2022 |
| $ | 0.6 |
|
For the twelve months ended December 31, 2023 |
|
| 2.5 |
|
For the twelve months ended December 31, 2024 |
|
| 2.5 |
|
For the twelve months ended December 31, 2025 |
|
| 1.9 |
|
For the twelve months ended December 31, 2026 |
|
| 1.5 |
|
Thereafter |
|
| — |
|
Total |
| $ | 9.0 |
|
|
| Estimated |
| |
|
| Amortization |
| |
For the nine months ended December 31, 2023 |
| $ | 1.5 |
|
For the twelve months ended December 31, 2024 |
|
| 2.0 |
|
For the twelve months ended December 31, 2025 |
|
| 0.5 |
|
Total |
| $ | 4.0 |
|
3025
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
The Company performed a qualitative impairment analysis on its long-lived assets, goodwill and tradename intangible assets as of September 30, 2022.March 31, 2023. As a result of the qualitative assessment, the Company noted no impairment indicators related to its goodwill and tradename intangiblethese assets as of September 30, 2022.March 31, 2023.
The qualitative impairment analysis, by asset class, is described below:
The Company performed a qualitative impairment analysisSee Note 1 and Note 12 to the consolidated financial statements included in the Company’s Annual Report on other long-lived assets, namely theatre properties and right-of-use assets, as of September 30,Form 10-K for the year ended December 31, 2022, to determine whether indicators of potential impairment existed at the theatre level, which is the level at which the Company tests its other long-lived assets. If an impairment indicator was identifiedfiled February 24, 2023, for a theatre asfurther discussion of the Company’s impairment policy and a resultdescription of the qualitative test, then the Company performed aand quantitative test for that theatre.impairment assessments performed.
The quantitative evaluation at the theatre level uses 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 remaining lease period, which includes the probability of the exercise of available renewal periods for leased properties, and the lesser of twenty years or the building’s remaining useful life for owned properties. If the estimated undiscounted cash flows are not sufficient to recover a long-lived asset’s carrying value, the carrying value of the asset group (theatre) is compared with its estimated fair value. Significant judgment is involved in estimating fair value, including management’s estimate of future theatre level cash flows for each of the theatres based on projected box office. Fair value is estimated based on a multiple of cash flows. 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 projected operating performance, market transactions and industry trading multiples.
Below is a summary ofThere were no impairment charges on long-lived assets, goodwill and intangible assets for the periods presented:
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
U.S. Segment |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Theatre properties |
| $ | 1.1 |
|
| $ | 4.8 |
|
| $ | 3.6 |
|
| $ | 4.8 |
|
Theatre operating lease right-of-use assets |
|
| 2.7 |
|
|
| 2.6 |
|
|
| 4.7 |
|
|
| 2.6 |
|
Investment in NCM (1) |
|
| 11.2 |
|
|
| — |
|
|
| 98.0 |
|
|
| — |
|
U.S. total |
|
| 15.0 |
|
|
| 7.4 |
|
|
| 106.3 |
|
|
| 7.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
International segment |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Theatre properties |
|
| 0.1 |
|
|
| 0.1 |
|
|
| 0.8 |
|
|
| 0.1 |
|
Theatre operating lease right-of-use assets |
|
| 0.1 |
|
|
| — |
|
|
| 0.4 |
|
|
| — |
|
International total |
|
| 0.2 |
|
|
| 0.1 |
|
|
| 1.2 |
|
|
| 0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Impairment |
| $ | 15.2 |
|
| $ | 7.5 |
|
| $ | 107.5 |
|
| $ | 7.5 |
|
318 for a discussion of the impairment charge on the Company’s investment in NCMI.
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
The Company determines fair value measurements in accordance with ASC Topic 820, which establishes a fair value hierarchy under which an asset or liability is categorized based on the lowest level of input significant to its fair value measurement. The levels of input defined by 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 a recurring basis under FASB ASC Topic 820 as of September 30, 2022March 31, 2023 and December 31, 2021:2022:
|
| Carrying |
| Fair Value Hierarchy |
|
| Carrying |
| Fair Value Hierarchy |
| ||||||||||||||||||||||||||
Description |
| As of |
| Value |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| As of |
| Value |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||||||
Interest rate swap assets (1) |
| September 30, 2022 |
| $ | 20.2 |
|
| $ | — |
|
| $ | 20.2 |
|
| $ | — |
|
| March 31, 2023 |
| $ | 16.6 |
|
| $ | — |
|
| $ | 16.6 |
|
| $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Interest rate swap liabilities (1) |
| December 31, 2021 |
| $ | 14.6 |
|
| $ | — |
|
| $ | 14.6 |
|
| $ | — |
| ||||||||||||||||||
Interest rate swap assets (1) |
| December 31, 2022 |
| $ | 20.4 |
|
| $ | — |
|
| $ | 20.4 |
|
| $ | — |
|
The market approach is used for fair value measurements on a nonrecurring basis in the impairment evaluations of its goodwill, intangible assets and long-lived assets (see Note 11 and Note 12). See additional explanation of fair value measurement techniques used for long-lived assets, goodwill and intangible assets in “Critical Accounting Policies” in the Holdings'Company’s Annual Report on Form 10-K for the year ended December 31, 2021,2022, filed February 25, 2022 and the CUSA's Annual Report on Form 10-K for the year ended December 31, 2021, filed March 9, 2022.24, 2023. There were no changes in valuation techniques.techniques for the three months ended March 31, 2023. There were no transfers into or out of Level 1, Level 2 or Level 3 during the ninethree months ended September 30, 2022.March 31, 2023.
The accumulated other comprehensive loss account in HoldingsHoldings’ stockholders’ equity of $362.9350.0 and $394.5353.2 and CUSACUSA’s stockholder's equity of $368.2353.1 and $397.0356.3, each as of September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively, primarily includes cumulative foreign currency net losses of $400.4381.7 and $394.5389.8, respectively, as of March 31, 2023 and December 31, 2022 from translating the financial statements of the Company's international subsidiaries and the cumulative changes in fair value of the interest rate swap agreements that are designated as hedges.
As of September 30, 2022,March 31, 2023, all foreign countries where the Company has operations are non-highly inflationary, other than Argentina. In non-highly inflationary countries, the local currency is the same as the functional currency and any fluctuation in the currency results in a cumulative foreign currency translation adjustment recorded to accumulated other comprehensive loss. The Company deemed Argentina to be highly inflationary beginning July 1, 2018. A highly inflationary economy is defined as an economy with a cumulative
26
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
inflation rate of 100 percent or more over a three-year period. If a country’s economy is classified as highly inflationary, the financial statements of the foreign entity operating in that country must be remeasured to the functional currency of the reporting entity. The financial information of the Company’s Argentina subsidiaries was remeasured in U.S. dollars in accordance with ASC Topic 830, Foreign Currency Matters, effective July 1, 2018.
Below is a summary of the impact of translating the September 30,March 31, 2023 and March 31, 2022 and September 30, 2021 financial statements of the Company’s international subsidiaries:
|
|
|
|
|
| Other Comprehensive Income (Loss) for |
|
|
|
|
|
| Other Comprehensive Income (Loss) for |
| ||||||||||||||||
|
| Exchange Rate as of |
|
| Nine Months Ended |
|
| Exchange Rate as of |
|
| Three Months Ended |
| ||||||||||||||||||
Country |
| September 30, 2022 |
|
| December 31, 2021 |
|
| September 30, 2022 |
| September 30, 2021 |
|
| March 31, 2023 |
|
| December 31, 2022 |
|
| March 31, 2023 |
| March 31, 2022 |
| ||||||||
Brazil |
|
| 5.40 |
|
|
| 5.57 |
|
| $ | 0.4 |
| $ | (3.4 | ) |
|
| 5.08 |
|
|
| 5.29 |
|
| $ | 2.7 |
| $ | 8.0 |
|
Chile |
|
| 965.80 |
|
|
| 852.00 |
|
|
| (7.7 | ) |
| (7.9 | ) |
|
| 790.92 |
|
|
| 852.00 |
|
|
| 5.2 |
| 4.8 |
| |
Peru |
|
| 3.99 |
|
|
| 4.02 |
|
|
| 0.2 |
| (3.6 | ) |
|
| 3.78 |
|
|
| 3.81 |
|
|
| 0.2 |
| 1.6 |
| ||
All other |
|
|
|
|
|
|
|
| 1.2 |
|
| (0.1 | ) |
|
|
|
|
|
|
|
| — |
|
| — |
| ||||
|
|
|
|
|
| $ | (5.9 | ) | $ | (15.0 | ) |
|
|
|
|
| $ | 8.1 |
| $ | 14.4 |
|
As noted above, beginning July 1, 2018, Argentina was deemed highly inflationary. A foreign currency exchange loss of $5.13.6 and a gain of $0.40.5 waswere recorded for the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, respectively, as a result of translating Argentina's financial results to U.S. dollars.
32
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
The following is provided as supplemental information to the condensed consolidated statements of cash flows:
|
| Nine Months Ended |
|
| Three Months Ended |
| ||||||||||
|
| September 30, |
|
| March 31, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||
Cash paid for interest by Holdings (1) |
| $ | 121.0 |
|
| $ | 89.8 |
|
| $ | 51.0 |
|
| $ | 53.0 |
|
Cash paid for interest by CUSA |
| $ | 100.3 |
|
| $ | 69.5 |
|
| $ | 40.6 |
|
| $ | 42.6 |
|
Cash paid (refunds received) for income taxes, net |
| $ | 2.3 |
|
| $ | (136.9 | ) | ||||||||
Cash deposited in (transferred from) restricted accounts (2) |
| $ | (2.9 | ) |
| $ | 7.3 |
| ||||||||
Cash paid for income taxes, net |
| $ | 0.9 |
|
| $ | 0.7 |
| ||||||||
Noncash operating activities: |
|
|
|
|
|
|
|
|
|
| ||||||
Interest expense - NCM (see Note 8) |
| $ | (17.5 | ) |
| $ | (17.7 | ) |
| $ | (5.7 | ) |
| $ | (5.8 | ) |
Noncash investing activities: |
|
|
|
|
|
|
|
|
|
| ||||||
Change in accounts payable and accrued expenses for the acquisition of theatre properties and equipment (3) |
| $ | 4.2 |
|
| $ | (2.4 | ) | ||||||||
Investment in NCM – receipt of common units (see Note 8) |
| $ | 1.3 |
|
| $ | 10.2 |
| ||||||||
Change in accounts payable and accrued expenses for the acquisition of theatre properties and equipment (2) |
| $ | (5.1 | ) |
| $ | (1.2 | ) |
The international market and U.S. market are managed as separate reportable operating segments, with the international segment consisting of operations in Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao and Paraguay. The Company closed its one theatre in Curacao in January 2023. Each segment’s revenue is derived from admissions and concession sales and other ancillary revenue. Holdings uses Adjusted EBITDA, as shown in the reconciliation table below, as the primary measure of segment profit and loss to evaluate performance and allocate its resources. The Company does not report total assets by segment because that information is not used to evaluate the performance of or allocate resources between segments.
Holdings revenue, Adjusted EBITDA and capital expenditures by reportable operating segment
Below is a breakdown of selected financial information by reportable operating segment for Holdings:
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. |
| $ | 514.4 |
|
| $ | 376.3 |
|
| $ | 1,491.6 |
|
| $ | 743.0 |
|
International |
|
| 138.7 |
|
|
| 59.3 |
|
|
| 370.5 |
|
|
| 101.9 |
|
Eliminations |
|
| (2.7 | ) |
|
| (0.8 | ) |
|
| (7.1 | ) |
|
| (1.1 | ) |
Total revenue |
| $ | 650.4 |
|
| $ | 434.8 |
|
| $ | 1,855.0 |
|
| $ | 843.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. |
| $ | 70.7 |
|
| $ | 44.8 |
|
| $ | 196.2 |
|
| $ | (31.7 | ) |
International |
|
| 28.8 |
|
|
| (0.5 | ) |
|
| 66.8 |
|
|
| (27.8 | ) |
Total Adjusted EBITDA |
| $ | 99.5 |
|
| $ | 44.3 |
|
| $ | 263.0 |
|
| $ | (59.5 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. |
| $ | 20.2 |
|
| $ | 22.4 |
|
| $ | 50.7 |
|
| $ | 47.5 |
|
International |
|
| 4.5 |
|
|
| 2.0 |
|
|
| 14.6 |
|
|
| 9.7 |
|
Total capital expenditures |
| $ | 24.7 |
|
| $ | 24.4 |
|
| $ | 65.3 |
|
| $ | 57.2 |
|
3327
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
Holdings revenue, Adjusted EBITDA and capital expenditures by reportable operating segment
Below is a breakdown of selected financial information by reportable operating segment for Holdings:
|
| Three Months Ended |
| |||||
|
| March 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Revenue |
|
|
|
|
|
| ||
U.S. |
| $ | 481.7 |
|
| $ | 373.7 |
|
International |
|
| 131.6 |
|
|
| 88.5 |
|
Eliminations |
|
| (2.6 | ) |
|
| (1.7 | ) |
Total revenue |
| $ | 610.7 |
|
| $ | 460.5 |
|
|
|
|
|
|
| |||
Adjusted EBITDA |
|
|
|
|
|
| ||
U.S. |
| $ | 63.4 |
|
| $ | 14.4 |
|
International |
|
| 22.8 |
|
|
| 10.8 |
|
Total Adjusted EBITDA |
| $ | 86.2 |
|
| $ | 25.2 |
|
|
|
|
|
|
| |||
Capital expenditures |
|
|
|
|
|
| ||
U.S. |
| $ | 22.7 |
|
| $ | 14.0 |
|
International |
|
| 3.6 |
|
|
| 4.7 |
|
Total Capital expenditures |
| $ | 26.3 |
|
| $ | 18.7 |
|
The following table sets forth a reconciliation of net loss to Adjusted EBITDA for Holdings:
|
| Three Months Ended |
| Nine Months Ended |
|
| Three Months Ended |
| ||||||||||||||||
|
| September 30, |
|
| September 30, |
|
| March 31, |
| |||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||||
Net loss |
| $ | (23.9 | ) |
| $ | (77.6 | ) |
| $ | (169.2 | ) |
| $ | (428.7 | ) |
| $ | (2.5 | ) |
| $ | (72.5 | ) |
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Income tax expense (benefit) |
|
| 3.4 |
|
|
| (8.9 | ) |
|
| 6.3 |
|
|
| (15.6 | ) | ||||||||
Income tax benefit |
|
| (3.9 | ) |
|
| (1.8 | ) | ||||||||||||||||
Interest expense (1) |
|
| 38.4 |
|
|
| 38.0 |
|
|
| 114.6 |
|
|
| 111.6 |
|
|
| 36.8 |
|
|
| 38.1 |
|
Other expense, net (2) |
|
| 4.5 |
|
|
| 12.5 |
|
|
| 19.2 |
|
|
| 35.3 |
| ||||||||
Cash distributions from other equity investees (3) |
|
| — |
|
|
| — |
|
|
| 1.5 |
|
|
| 0.2 |
| ||||||||
Other (income) expense, net (2) |
|
| (1.9 | ) |
|
| 3.2 |
| ||||||||||||||||
Cash distributions from equity investees (3) |
|
| — |
|
|
| 0.6 |
| ||||||||||||||||
Depreciation and amortization |
|
| 58.3 |
|
|
| 67.2 |
|
|
| 181.0 |
|
|
| 202.3 |
|
|
| 54.9 |
|
|
| 61.7 |
|
Impairment of long-lived and other assets |
|
| 15.2 |
|
|
| 7.5 |
|
|
| 107.5 |
|
|
| 7.5 |
| ||||||||
Restructuring costs |
|
| — |
|
|
| (0.4 | ) |
|
| (0.2 | ) |
|
| (1.3 | ) | ||||||||
Impairment of other assets |
|
| 0.7 |
|
|
| — |
| ||||||||||||||||
(Gain) loss on disposal of assets and other |
|
| 1.2 |
|
|
| 1.1 |
|
|
| (6.4 | ) |
|
| 7.9 |
|
|
| 0.3 |
|
|
| (6.9 | ) |
Loss on extinguishment of debt |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6.5 |
| ||||||||
Non-cash rent expense |
|
| (2.8 | ) |
|
| (1.1 | ) |
|
| (7.5 | ) |
|
| (1.8 | ) |
|
| (3.9 | ) |
|
| (2.3 | ) |
Share based awards compensation expense |
|
| 5.2 |
|
|
| 6.0 |
|
|
| 16.2 |
|
|
| 16.6 |
|
|
| 5.7 |
|
|
| 5.1 |
|
Adjusted EBITDA |
| $ | 99.5 |
|
| $ | 44.3 |
|
| $ | 263.0 |
|
| $ | (59.5 | ) |
| $ | 86.2 |
|
| $ | 25.2 |
|
Financial Information About Geographic Areas
Below is a breakdown of selected financial information for the Company by geographic area:
|
| Three Months Ended |
| Nine Months Ended |
|
| Three Months Ended |
| ||||||||||||||||
|
| September 30, |
|
| September 30, |
|
| March 31, |
| |||||||||||||||
Revenue |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||||
U.S. |
| $ | 514.4 |
|
| $ | 376.3 |
|
| $ | 1,491.6 |
|
| $ | 743.0 |
|
| $ | 481.7 |
|
| $ | 373.7 |
|
Brazil |
|
| 45.2 |
|
|
| 20.6 |
|
|
| 133.1 |
|
|
| 30.5 |
|
|
| 44.5 |
|
|
| 33.1 |
|
Other international countries |
|
| 93.5 |
|
|
| 38.6 |
|
|
| 237.4 |
|
|
| 71.4 |
|
|
| 87.1 |
|
|
| 55.4 |
|
Eliminations |
|
| (2.7 | ) |
|
| (0.7 | ) |
|
| (7.1 | ) |
|
| (1.1 | ) |
|
| (2.6 | ) |
|
| (1.7 | ) |
Total |
| $ | 650.4 |
|
| $ | 434.8 |
|
| $ | 1,855.0 |
|
| $ | 843.8 |
|
| $ | 610.7 |
|
| $ | 460.5 |
|
|
| As of |
|
| As of |
| ||
Theatre Properties and Equipment, net |
| September 30, 2022 |
|
| December 31, 2021 |
| ||
U.S. |
| $ | 1,105.4 |
|
| $ | 1,208.7 |
|
Brazil |
|
| 49.6 |
|
|
| 56.8 |
|
Other international countries |
|
| 105.0 |
|
|
| 117.4 |
|
Total |
| $ | 1,260.0 |
|
| $ | 1,382.9 |
|
3428
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
|
| As of |
|
| As of |
| ||
Theatre properties and equipment, net |
| March 31, 2023 |
|
| December 31, 2022 |
| ||
U.S. |
| $ | 1,047.7 |
|
| $ | 1,075.3 |
|
Brazil |
|
| 50.6 |
|
|
| 49.5 |
|
Other international countries |
|
| 105.8 |
|
|
| 107.3 |
|
Total |
| $ | 1,204.1 |
|
| $ | 1,232.1 |
|
A subsidiary of theThe Company manages a theatre 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, who is Lee Roy Mitchell’s son-in-law.son-in-law and Kevin Mitchell’s brother-in-law. Lee Roy Mitchell, our founder, and a member of Holdings' Board of Directors, owns, both directly and indirectly, approximately 8.5% of HoldingsHoldings’ common stock.stock and Kevin Mitchell is a member of Holdings’ Board of Directors. Under the agreement, management fees are paid by Laredo to the Company at a rate of 5% of annual theatre revenue. The Company recorded $0.50.1 and $0.20.1 of management fee revenue during the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, respectively. All such amounts are included in each of Holdings' and CUSA'sthe condensed consolidated financial statements of income (loss), with the intercompany amounts eliminated in consolidation. During the nine months ended September 30, 2022, cash distributions of $2.4 were paid to Lone Star Theatres, Inc. as required by the partnership agreement, which were recorded as a reduction of noncontrolling interests on the condensed consolidating balance sheet.
Walter Hebert, Mr.Lee Roy Mitchell’s brother-in-law, previously served as the Executive Vice President – Purchasing of the Company and retired in July 2021. Mr. Hebert served as a consultant until July 2022. During the ninethree months ended September 30,March 31, 2022, the Company paid Mr. Hebert $0.20.1 related to consulting services.
A subsidiary of theThe Company leases 1312 theatres from Syufy Enterprises, LP (“Syufy”) or affiliates of Syufy. Raymond Syufy is one of Holdings' directors and is an officer of the general partner of Syufy. For the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, the Company paid total rent of $16.75.5 and $17.95.6, respectively, to Syufy. CUSA provides digital equipment support to drive-in theatres owned by Syufy. The Company recorded management fees related to these services of $0.10.00 and $0.10.03 related to these services during each of the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, respectively.
A subsidiary of theThe Company has a 50% voting interest in FE Concepts, a joint venture with AWSR, an entity owned by Lee Roy Mitchell and Tandy Mitchell. FE Concepts operates a family entertainment center that offers bowling, gaming, movies and other amenities. See Note 9 for further discussion. CUSA has a theatre services agreement with FE Concepts under which the Company receives service fees for providing film booking and equipment monitoring services for the facility.
CUSA has paid certain The Company recorded management fees on behalf of its parent, Holdings, and Holdings has paid income taxes and other expenses on behalf of CUSA. The net receivable from Holdings as of September 30, 2022 and December 31, 2021 was $60.50.02 and $46.70.02, respectively. CUSA received contributions from Holdings of $120.0 related to these services during the ninethree months ended September 30, 2021.March 31, 2023 and 2022, respectively.
From time to time, the Company is involved in various legal proceedings arising from the ordinary course of its business operations, such as personal injury claims, employment matters, patent claims, landlord-tenant disputes, contractual disputes with landlords over certain termination rights or the right to discontinue rent payments due to the COVID-19 pandemic and other contractual disputes, some of which are covered by insurance. The Company believes its potential liability with respect to proceedings currently pending is not material, individually or in the aggregate, to the Company’s financial position, results of operations and cash flows.
Cinemark Holdings, Inc., et al vs Factory Mutual Insurance Company. The Company filed suit on November 18, 2020, in the District Court, 471st Judicial District, Collin County, Texas. On December 22, 2020, the case was moved to the US District Court for the Eastern District of Texas, Sherman Division. The Company submitted a claim under its property insurance policy issued by Factory Mutual Insurance Company (the “FM Policy”) for losses sustained as a result of the closure of the Company’s theatres due to the COVID-19 pandemic. Factory Mutual Insurance Company (“FM”) denied the Company’s claim. The Company is seeking damages resulting from FM’s breach of contract, FM’s bad faith conduct and a declaration of the parties’ rights under the FM Policy. The Company cannot predict the outcome of this litigation. The District Court granted FM’s motion for summary judgment. The Company has filed a motion for reconsideration with the District Court.
Lakeenya Neal, et al v. Cinemark Holdings, Inc., et al. This class action lawsuit was filed against the Company on December 10, 2021, in the Central District of Los Angeles County Superior Court of the State of California alleging certain violations of the Fair and Accurate Credit Transactions Act. WeThe plaintiffs voluntarily dismissed this case.
Gerardo Rodriguez, individually and on behalf of a class of all others similarly situated vs Cinemark USA, Inc. and Cinemark Holdings, Inc., et al. This class action lawsuit was filed against the Company on February 24, 2023 in the Cook County Circuit Court
29
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
in Illinois alleging violation of the Fair and Accurate Credit Transactions Act. The Company firmly maintainmaintains that the allegations are without merit and will vigorously defend thisitself against the lawsuit. The Company cannot predict the outcome of this litigation.
35On April 11, 2023 NCM filed a petition for reorganization under Chapter 11 of the United States Bankruptcy code. NCMI expects to continue to manage NCM, the “debtor in possession”, under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In general, as debtor in possession under the Bankruptcy Code, NCM is authorized to continue to operate as an ongoing business but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court.
On May 1, 2023 the Company redeemed $100 in principal amount of its 8.75% Secured Notes plus accrued interest thereon for $106.6 in cash. Following the redemption, $150 in aggregate principal amount of the 8.75% Secured Notes remains outstanding. See Note 7 for discussion of the 8.75% Senior Notes.
30
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cinemark Holdings, Inc. is a holding company and its wholly-owned subsidiary is Cinemark USA, Inc. Holdings consolidates CUSA for financial statement purposes. CUSA comprises approximately the entire balance of Holdings’ assets, liabilities and operating cash flows. In addition, CUSA’s revenue comprises 100% and its operating expenses comprise nearly 100% of Holdings’ revenue and operating expenses, respectively. The following discussion and analysis should be read in conjunction with ourthe condensed consolidated financial statements and related notes and schedules included elsewhere in this report. Where it is important to distinguish between the entities, we either refer specifically to Holdings or CUSA. Otherwise, all references to “we,” “our,” “us,” “the Company” or "Cinemark" relate to Cinemark Holdings, Inc. and its consolidated subsidiaries and all references to CUSA relate to CUSA and its consolidated subsidiaries. Amounts included in the following discussion, except for screens, average screens, average ticket price and concessions revenue per patron, are rounded in millions.
We are a leader in the motion picture exhibition industry, with theatres in the U.S., Brazil, Argentina, Chile, Colombia, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao and Paraguay. The Company closed its one theatre in Curacao in January 2023 and our theatres in Ecuador are currently held for sale. See Note 6 to the condensed consolidated financial statements for a discussion of the Ecuador theatre assets held for sale. As of September 30, 2022,March 31, 2023, we managed our business under two reportable operating segments – U.S. markets and international markets. See Note 16 to ourthe condensed consolidated financial statements.
ImpactThe impact of COVID-19 Pandemic
The COVID-19 pandemic has had an unprecedented impact on the world andtheatrical exhibition industry. While the movie exhibition industry with widespread social and economic effects. We temporarily closed our theatreshas made significant progress in the U.S. and Latin America during March of 2020 at the onset of the COVID-19 outbreak. During that time, we implemented various cash preservation strategies, including, but not limited to, temporary personnel and salary reductions, halting non-essential operating and capital expenditures, negotiating modified timing and/or abatement of contractual payments with landlords and other major suppliers, and suspending quarterly dividends paid by Holdings to its shareholders.
Throughout 2020 and 2021 we reopened theatres as local restrictions and the status of the COVID-19 pandemic would allow. All of our domestic and international theatres were reopened by the end of the fourth quarter of 2021. The industry’s recovery from the COVID-19 pandemic, is still underway and isits ongoing recovery will be contingent upon several key factors, including the volume of new film content available, as well as the box office performance of new film content released, consumer sentiment around movie-going and government restrictions. The industry is also adjusting to the evolutionduration of the exclusive theatrical release window, and evolving consumer behavior with competition from streaming platforms, supply chain constraints, inflationary impacts and other economic factors.forms of in-and-out-of-home entertainment.
Revenue and Expense
We generate revenue primarily from filmed entertainment box office receipts and concession sales with additional revenue from screen advertising, screen rental and other revenue streams, such as transactional fees, vendor marketing promotions, studio trailer placements, meeting rentals and electronic video games located in some of our theatres. We also offer alternative entertainment, such as the Metropolitan Opera, concert events, in-theatre gaming, live and pre-recorded sports programs and other special events in our theatres through Fathom Entertainment (operated by AC JV, LLC).theatres. NCM provides our domestic theatres with various forms of in-theatre advertising. Our Flix Media subsidiaries provide screen advertising and alternative content for our international circuit and to other international exhibitors.
Films leading the box office during the ninethree months ended September 30, 2022March 31, 2023 included the carryover of Spider-Man: NoAvatar: The Way Homeof Water and Puss in Boots: The Last Wish, as well as new releases including Top Gun: Maverick, Doctor Strange inM3GAN, Ant-Man and the Multiverse of Madness, Jurassic World: Dominion, The Batman, Minions: The Rise of Gru, Thor: LoveWasp: Quantumania, Creed III and Thunder, Sonic the Hedgehog 2, Elvis, Uncharted, Nope, Lightyear, The Lost CityJohn Wick 4. and Bullet Train. Films currently scheduled for release during the threeremaining nine months ending December 31, 2022of 2023 include Black Panther: Wakanda Forever, Black Adam, Puss in Boots: The Last Wish, Smile, Ticket to ParadiseSuper Mario Bros. Movie, Guardians of the Galaxy Vol. 3, Fast X, The Little Mermaid, Spider-man: Across the Spider-verse, Elemental, The Flash, Indiana Jones and the Dial of Destiny, Mission Impossible: Dead Reckoning Part One, The Marvels, Barbie, Oppenheimer, Dune Part Two, Hunger Games: The Ballad of Songbirds and Snakes, and Aquaman and the highly anticipated sequel, Lost KingdomAvatar: The Way of Water, , among other films. There are several key factors impacting the industry box office's recovery from the COVID-19 pandemic, including the availability and quality of new films released, the duration of the exclusive theatrical windows and evolving consumer behavior with competition from streaming platforms and other forms of entertainment.
Film rental costs are variable in nature and fluctuate with our admissions revenue. Film rental costs as a percentage of revenue are generally higher for periods in which more blockbuster films are released. The Company received virtual print fees from studios for certain of its international locations, which are included as a contra-expense in film rental and advertising costs on the condensed consolidated statements of loss. However, these costs were fully recovered during 2021. Virtual print fees (VPFs) were not received during 2022 and will not be received in future periods. Advertising costs, which are expensed as incurred, are primarily related to reigniting theatrical moviegoing,expanding our customer base, increasing loyalty to Cinemarkthe frequency of visits and building our audiences.growing loyalty. These expenses vary depending on the timing and length of such campaigns.
Concession supplies expense is variable in nature and fluctuates with our concession revenue and also product mix. Supply chain interruptions and inflationary pressures have impacted, and may continue to impact, product costs and product availability in the near
36
term. We source products from a variety of partners around the world to minimize supply chain interruptions and price increases, wherever possible.
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 tend to move in relation to revenue as theatre staffing is adjusted to respond to changes in attendance. Staffing levels may vary based on the amenities offered at aeach location, such as full-service restaurants, bars or expanded food and beverage options. In certain international locations, staffing levels are also subject to local regulations.regulations, including minimum hour requirements. Labor market conditions and inflationary pressures have driven increases in wages across our labor base and increases may continue in the future.
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 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 performance level is achieved. Facility lease expense as a percentage of revenue is also affected by the number of theatres under operating leases, the number of theatres under finance leases and the number of owned theatres.
Utilities and other costs include both fixed and variable costs and primarily consist of utilities, property taxes, janitorial costs, credit card fees, third party ticket sales commissions, repairs and maintenance expenses, security services, and expenses for the maintenance and monitoring of projection and sound equipment.equipment maintenance expenses.
General and administrative expenseexpenses to support the overall management of the Company isare primarily fixed in nature with certain variable expenses. Fixed expenses include salaries, and wages and benefits costs for our corporate office personnel, facility expenses for our corporate and other offices, software license and maintenance costs and audit fees. Some variable expenses may include incentive compensation, consulting and legal fees, supplies, and other costs that are not specifically associated with the operations of our theatres.
3731
Recent Developments
NCM Bankruptcy Proceeding - On April 11, 2023 NCM filed a petition for reorganization under Chapter 11 of the United States Bankruptcy code. NCMI expects to continue to manage NCM, the “debtor in possession”, under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In general, as debtor in possession under the Bankruptcy Code, NCM is authorized to continue to operate as an ongoing business but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. See Part II - Other Information - Item 1A. Risk Factors.
Partial Redemption 8.75% Secured Notes - On May 1, 2023 the Company redeemed $100 million in principal amount of its 8.75% Secured Notes plus accrued interest thereon for $106.6 million in cash. Following the redemption, $150 millon in aggregate principal amount of the 8.75% Secured Notes remains outstanding. See Liquidity and Capital Resources - 8.75% Secured Notes.
32
Results of Operations
The following table sets forth, for the periods indicated, the amounts for certain items reflected in the operating income (loss) of Holdings along with each of those items as a percentage of revenue.
|
| Three Months Ended |
| Nine Months Ended |
|
| Three Months Ended |
| ||||||||||||||||
|
| September 30, |
|
| September 30, |
|
| March 31, |
| |||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||||
Operating data (in millions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Admissions |
| $ | 324.6 |
|
| $ | 225.5 |
|
| $ | 942.3 |
|
| $ | 435.1 |
|
| $ | 311.0 |
|
| $ | 235.8 |
|
Concession |
|
| 253.6 |
|
|
| 164.2 |
|
|
| 712.6 |
|
|
| 313.5 |
|
|
| 235.8 |
|
|
| 173.0 |
|
Other |
|
| 72.2 |
|
|
| 45.1 |
|
|
| 200.1 |
|
|
| 95.2 |
|
|
| 63.9 |
|
|
| 51.7 |
|
Total revenue |
| $ | 650.4 |
|
| $ | 434.8 |
|
| $ | 1,855.0 |
|
| $ | 843.8 |
|
| $ | 610.7 |
|
| $ | 460.5 |
|
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Film rentals and advertising |
|
| 180.9 |
|
|
| 117.0 |
|
|
| 531.1 |
|
|
| 216.8 |
|
|
| 166.7 |
|
|
| 127.6 |
|
Concession supplies |
|
| 46.3 |
|
|
| 28.2 |
|
|
| 128.8 |
|
|
| 54.2 |
|
|
| 43.6 |
|
|
| 30.0 |
|
Salaries and wages |
|
| 97.0 |
|
|
| 67.6 |
|
|
| 277.0 |
|
|
| 149.2 |
|
|
| 86.2 |
|
|
| 79.8 |
|
Facility lease expense |
|
| 77.2 |
|
|
| 68.8 |
|
|
| 231.2 |
|
|
| 200.8 |
|
|
| 79.5 |
|
|
| 73.7 |
|
Utilities and other |
|
| 110.4 |
|
|
| 81.7 |
|
|
| 303.8 |
|
|
| 192.0 |
|
|
| 103.8 |
|
|
| 86.9 |
|
General and administrative expense (1) |
|
| 45.1 |
|
|
| 38.6 |
|
|
| 134.0 |
|
|
| 111.8 |
| ||||||||
General and administrative expenses (1) |
|
| 46.5 |
|
|
| 40.7 |
| ||||||||||||||||
Depreciation and amortization |
|
| 58.3 |
|
|
| 67.2 |
|
|
| 181.0 |
|
|
| 202.3 |
|
|
| 54.9 |
|
|
| 61.7 |
|
Impairment of long-lived and other assets |
|
| 15.2 |
|
|
| 7.5 |
|
|
| 107.5 |
|
|
| 7.5 |
| ||||||||
Restructuring costs |
|
| — |
|
|
| (0.4 | ) |
|
| (0.2 | ) |
|
| (1.3 | ) | ||||||||
Impairment of other assets |
|
| 0.7 |
|
|
| — |
| ||||||||||||||||
(Gain) loss on disposal of assets and other |
|
| 1.2 |
|
|
| 1.1 |
|
|
| (6.4 | ) |
|
| 7.9 |
|
|
| 0.3 |
|
|
| (6.9 | ) |
Total cost of operations (1) |
|
| 631.6 |
|
|
| 477.3 |
|
|
| 1,887.8 |
|
|
| 1,141.2 |
|
|
| 582.2 |
|
|
| 493.5 |
|
Operating income (loss) (1) |
| $ | 18.8 |
|
| $ | (42.5 | ) |
| $ | (32.8 | ) |
| $ | (297.4 | ) |
| $ | 28.5 |
|
| $ | (33.0 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Operating data as a percentage of total revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Admissions |
|
| 49.9 | % |
|
| 51.9 | % |
|
| 50.8 | % |
|
| 51.6 | % |
|
| 50.9 | % |
|
| 51.2 | % |
Concession |
|
| 39.0 | % |
|
| 37.8 | % |
|
| 38.4 | % |
|
| 37.2 | % |
|
| 38.6 | % |
|
| 37.6 | % |
Other |
|
| 11.1 | % |
|
| 10.3 | % |
|
| 10.8 | % |
|
| 11.2 | % |
|
| 10.5 | % |
|
| 11.2 | % |
Total revenue |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
Cost of operations (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Film rentals and advertising |
|
| 55.7 | % |
|
| 51.9 | % |
|
| 56.4 | % |
|
| 49.8 | % |
|
| 53.6 | % |
|
| 54.1 | % |
Concession supplies |
|
| 18.3 | % |
|
| 17.2 | % |
|
| 18.1 | % |
|
| 17.3 | % |
|
| 18.5 | % |
|
| 17.3 | % |
Salaries and wages |
|
| 14.9 | % |
|
| 15.5 | % |
|
| 14.9 | % |
|
| 17.7 | % |
|
| 14.1 | % |
|
| 17.3 | % |
Facility lease expense |
|
| 11.9 | % |
|
| 15.8 | % |
|
| 12.5 | % |
|
| 23.8 | % |
|
| 13.0 | % |
|
| 16.0 | % |
Utilities and other |
|
| 17.0 | % |
|
| 18.8 | % |
|
| 16.4 | % |
|
| 22.8 | % |
|
| 17.0 | % |
|
| 18.9 | % |
General and administrative expense |
|
| 6.9 | % |
|
| 8.9 | % |
|
| 7.2 | % |
|
| 13.2 | % | ||||||||
General and administrative expenses |
|
| 7.6 | % |
|
| 8.8 | % | ||||||||||||||||
Depreciation and amortization |
|
| 9.0 | % |
|
| 15.5 | % |
|
| 9.8 | % |
|
| 24.0 | % |
|
| 9.0 | % |
|
| 13.4 | % |
Impairment of long-lived and other assets |
|
| 2.3 | % |
|
| 1.7 | % |
|
| 5.8 | % |
|
| 0.9 | % | ||||||||
Restructuring costs |
|
| — | % |
|
| (0.1 | )% |
|
| — | % |
|
| (0.2 | )% | ||||||||
Impairment of other assets |
|
| 0.1 | % |
|
| — | % | ||||||||||||||||
(Gain) loss on disposal of assets and other |
|
| 0.2 | % |
|
| 0.3 | % |
|
| (0.3 | )% |
|
| 0.9 | % |
|
| — | % |
|
| (1.5 | )% |
Total cost of operations |
|
| 97.1 | % |
|
| 109.8 | % |
|
| 101.8 | % |
|
| 135.2 | % |
|
| 95.3 | % |
|
| 107.2 | % |
Operating income (loss) |
|
| 2.9 | % |
|
| (9.8 | )% |
|
| (1.8 | )% |
|
| (35.2 | )% |
|
| 4.7 | % |
|
| (7.2 | )% |
Average screen count (month end average) |
|
| 5,843 |
|
|
| 5,876 |
|
|
| 5,850 |
|
|
| 5,890 |
| ||||||||
Average screen count (3) |
|
| 5,837 |
|
|
| 5,859 |
|
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Three Months Ended |
| |||||||||||||||
|
| September 30, |
|
| September 30, |
|
| March 31, |
| |||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||||
Operating data (in millions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
General and administrative expense |
| $ | 44.4 |
|
| $ | 37.9 |
|
| $ | 131.8 |
|
| $ | 109.7 |
| ||||||||
General and administrative expenses |
| $ | 45.6 |
|
| $ | 39.9 |
| ||||||||||||||||
Total cost of operations |
| $ | 630.9 |
|
| $ | 476.6 |
|
| $ | 1,885.6 |
|
| $ | 1,139.1 |
|
| $ | 581.3 |
|
| $ | 492.7 |
|
Operating income (loss) |
| $ | 19.5 |
|
| $ | (41.8 | ) |
| $ | (30.6 | ) |
| $ | (295.3 | ) |
| $ | 29.4 |
|
| $ | (32.2 | ) |
3833
Three months ended September 30, 2022March 31, 2023 (the “third quarter of 2022”“2023 period”) versus the three months ended September 30, 2021March 31, 2022 (the “third quarter of 2021”“2022 period”).
The COVID-19 pandemic has had an ongoing impact on the movie exhibition industry. When comparing the results for the third quarter of 2022 with the third quarter of 2021, the following should be noted:2023 Period -
2022 Period - The North American Industry box office generated approximately $1.3 billion during the 2022 period, which included blockbuster films such as Minions: The Rise of Gru, Thor: Love and Thunder, Top Gun: Maverick, Nope, ElvisBatman andBullet Train Uncharted, as well as the sustained performance of the 2021 release of Spider-Man: No Way Home.
Revenue. The table below, presented by reportable operating segment, summarizes our year-over-year revenue performance and certain key performance indicators that impact our revenue.
|
| U.S. Operating Segment |
|
| International Operating Segment |
|
| Consolidated |
| |||||||||||||||||||
|
| Three Months Ended September 30, |
|
| Three Months Ended September 30, |
|
| Three Months Ended September 30, |
| |||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| Constant |
|
| 2022 |
|
| 2021 |
| |||||||
Admissions revenue |
| $ | 257.6 |
|
| $ | 195.3 |
|
| $ | 67.0 |
|
| $ | 30.2 |
|
| $ | 76.9 |
|
| $ | 324.6 |
|
| $ | 225.5 |
|
Concession revenue |
|
| 200.8 |
|
|
| 142.6 |
|
|
| 52.8 |
|
|
| 21.6 |
|
|
| 60.9 |
|
|
| 253.6 |
|
|
| 164.2 |
|
Other revenue (1) |
|
| 53.3 |
|
|
| 37.6 |
|
|
| 18.9 |
|
|
| 7.5 |
|
|
| 21.7 |
|
|
| 72.2 |
|
|
| 45.1 |
|
Total revenue (1) |
| $ | 511.7 |
|
| $ | 375.5 |
|
| $ | 138.7 |
|
| $ | 59.3 |
|
| $ | 159.5 |
|
| $ | 650.4 |
|
| $ | 434.8 |
|
Attendance |
|
| 29.5 |
|
|
| 21.5 |
|
|
| 18.9 |
|
|
| 9.2 |
|
|
|
|
|
| 48.4 |
|
|
| 30.7 |
| |
Average ticket price (2) |
| $ | 8.73 |
|
| $ | 9.08 |
|
| $ | 3.54 |
|
| $ | 3.28 |
|
| $ | 4.07 |
|
| $ | 6.71 |
|
| $ | 7.35 |
|
Concession revenue per patron (2) |
| $ | 6.81 |
|
| $ | 6.63 |
|
| $ | 2.79 |
|
| $ | 2.35 |
|
| $ | 3.22 |
|
| $ | 5.24 |
|
| $ | 5.35 |
|
|
| U.S. Operating Segment |
|
| International Operating Segment |
|
| Consolidated |
| |||||||||||||||||||
|
| Three Months Ended March 31, |
|
| Three Months Ended March 31, |
|
| Three Months Ended March 31, |
| |||||||||||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| Constant |
|
| 2023 |
|
| 2022 |
| |||||||
Admissions revenue |
| $ | 244.7 |
|
| $ | 191.8 |
|
| $ | 66.3 |
|
| $ | 44.0 |
|
| $ | 78.6 |
|
| $ | 311.0 |
|
| $ | 235.8 |
|
Concession revenue |
|
| 186.8 |
|
|
| 141.1 |
|
|
| 49.0 |
|
|
| 31.9 |
|
|
| 58.6 |
|
|
| 235.8 |
|
|
| 173.0 |
|
Other revenue (1) |
|
| 47.6 |
|
|
| 39.1 |
|
|
| 16.3 |
|
|
| 12.6 |
|
|
| 19.7 |
|
|
| 63.9 |
|
|
| 51.7 |
|
Total revenue (1) |
| $ | 479.1 |
|
| $ | 372.0 |
|
| $ | 131.6 |
|
| $ | 88.5 |
|
| $ | 156.9 |
|
| $ | 610.7 |
|
| $ | 460.5 |
|
Attendance |
|
| 25.2 |
|
|
| 20.7 |
|
|
| 17.7 |
|
|
| 12.4 |
|
|
|
|
|
| 42.9 |
|
|
| 33.1 |
| |
Average ticket price (2) |
| $ | 9.71 |
|
| $ | 9.27 |
|
| $ | 3.75 |
|
| $ | 3.55 |
|
| $ | 4.44 |
|
| $ | 7.25 |
|
| $ | 7.12 |
|
Concession revenue per patron (2) |
| $ | 7.41 |
|
| $ | 6.82 |
|
| $ | 2.77 |
|
| $ | 2.57 |
|
| $ | 3.31 |
|
| $ | 5.50 |
|
| $ | 5.23 |
|
39
Cost of Operations. The table below, presented by reportable operating segment, summarizes certain of our year-over-year theatre operating costs.costs for the periods presented.
|
| U.S. Operating Segment |
|
| International Operating Segment |
|
| Consolidated |
|
| U.S. Operating Segment |
|
| International Operating Segment |
|
| Consolidated |
| ||||||||||||||||||||||||||||||||||||||
|
| Three Months Ended September 30, |
|
| Three Months Ended September 30, |
|
| Three Months Ended September 30, |
|
| Three Months Ended March 31, |
|
| Three Months Ended March 31, |
|
| Three Months Ended March 31, |
| ||||||||||||||||||||||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| Constant |
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| Constant |
|
| 2023 |
|
| 2022 |
| ||||||||||||||
Film rentals and advertising |
| $ | 147.1 |
|
| $ | 101.9 |
|
| $ | 33.8 |
|
| $ | 15.1 |
|
| $ | 38.9 |
|
| $ | 180.9 |
|
| $ | 117.0 |
|
| $ | 133.5 |
|
| $ | 106.2 |
|
| $ | 33.2 |
|
| $ | 21.4 |
|
| $ | 39.8 |
|
| $ | 166.7 |
|
| $ | 127.6 |
|
Concession supplies |
| $ | 34.8 |
|
| $ | 23.0 |
|
| $ | 11.5 |
|
| $ | 5.2 |
|
| $ | 13.2 |
|
| $ | 46.3 |
|
| $ | 28.2 |
|
| $ | 32.9 |
|
| $ | 22.9 |
|
| $ | 10.7 |
|
| $ | 7.1 |
|
| $ | 12.9 |
|
| $ | 43.6 |
|
| $ | 30.0 |
|
Salaries and wages |
| $ | 81.9 |
|
| $ | 58.0 |
|
| $ | 15.1 |
|
| $ | 9.6 |
|
| $ | 17.3 |
|
| $ | 97.0 |
|
| $ | 67.6 |
|
| $ | 71.5 |
|
| $ | 67.1 |
|
| $ | 14.7 |
|
| $ | 12.7 |
|
| $ | 17.6 |
|
| $ | 86.2 |
|
| $ | 79.8 |
|
Facility lease expense |
| $ | 61.9 |
|
| $ | 58.8 |
|
| $ | 15.3 |
|
| $ | 10.0 |
|
| $ | 17.3 |
|
| $ | 77.2 |
|
| $ | 68.8 |
|
| $ | 62.0 |
|
| $ | 62.5 |
|
| $ | 17.5 |
|
| $ | 11.2 |
|
| $ | 19.9 |
|
| $ | 79.5 |
|
| $ | 73.7 |
|
Utilities and other |
| $ | 85.4 |
|
| $ | 68.1 |
|
| $ | 25.0 |
|
| $ | 13.6 |
|
| $ | 28.0 |
|
| $ | 110.4 |
|
| $ | 81.7 |
|
| $ | 80.5 |
|
| $ | 68.1 |
|
| $ | 23.3 |
|
| $ | 18.8 |
|
| $ | 27.6 |
|
| $ | 103.8 |
|
| $ | 86.9 |
|
34
Salaries and wages increased to $81.9$71.5 million for the third quarter of 20222023 period compared with $58.0$67.1 million for the third quarter of 20212022 period as a result of significantly higher attendance, expanded operating hours and wage rate increases with average hourly rates up 11% compared with the third quarter of 2021 and additional labor required for expanded food and beverage offerings. These increases were partially offset by efficiencies and streamlined operations.increases. Facility lease expense, which is primarily fixed in nature, increasedwas relatively flat compared to $61.9 million for the third quarter of 2022 dueperiod, decreasing 0.8% to new theatres and an increase in common area maintenance costs.$62.0 million. Utilities and other costs increased to $85.4$80.5 million, for the third quarter of 2022, as many of these costs, such as janitorial costs, utilities costs, credit card transaction fees, repairs and maintenance and security costs, are variable in nature and increased due towere impacted by the expansion of operating hours, a significant increase in attendance and inflationary pressures.
Salaries and wages increased to $15.1$14.7 million as reported for the third quarter of 20222023 period due to the significantlywage rate increases, higher attendance, and expanded operating hours and wage rate increases.hours. Facility lease expense increased to $15.3$17.5 million as reported for the third quarter of 2022. The increase was2023 period due to higher percentage rent driven by higher revenue and the return of certain minimum rent thresholds compared with the third quarter of 2021.2022 period. Utilities and other costs increased to $25.0$23.3 million as reported, as many of these costs are variable in nature, such as utilities,credit card and other transaction fees, screen advertising commissions, credit card fees, janitorial costs and repairs and maintenance, and were impacted by inflation and the significant increase in attendance infor the third quarter of 2022.2023 period. These expenses, as reported, were also impacted by exchange ratesrate fluctuations in each of the countries in which we operate.
General and Administrative Expense. General and administrative expense for Holdings increased to $45.1$46.5 million for the third quarter of 20222023 period compared with $38.6$40.7 million for the third quarter of 2021.2022 period. General and administrative expense attributable to CUSA increased to $44.4$45.6 million for the third quarter of 20222023 period compared with $37.9$39.9 million for the third quarter of 2021.2022 period. The increase for both Holdings and CUSA is primarily due to higher staffing levels, wages and benefits inflation, professional feesan increase in share-based compensation expense and a continued shift to cloud-based software.
Depreciation and Amortization. Depreciation and amortization expense decreased to $58.3$54.9 million for the third quarter of 20222023 period compared with $67.2$61.7 million for the third quarter of 20212022 period primarily due to the impairment of theatre assets during 2021.2022 and the impact of foreign currency exchange rates.
Impairment of Long-Lived and Other Assets. We recorded an impairment of our investment in NCMI of $0.7 for the 2023 period due to the prolonged recovery of NCM's business from the COVID-19 pandemic. For further discussion, see Note 8 to the condensed consolidated financial statements. There were no asset impairment charges on assets held and used of $15.2 million for the third quarter of 2022. Long-lived asset impairment charges of approximately $4.0 million were recorded primarily due to the prolonged recovery of certain theatres from the COVID-19 pandemic. In addition, we recorded an impairment of $11.2 million for our investment in NCM, as NCMI’s stock price was significantly below the Company’s carrying value of NCM per common unit and due to the prolonged recovery of NCM's business. See Note 12 to our condensed consolidated financial statements for a discussion of2023 or 2022 period.
40
impairment analyses performed and a summary of impairment recorded. We recorded asset impairment charges on assets held and used of $7.5 million for the third quarter of 2021, all of which were long-lived asset impairment charges, primarily due to the limited recovery of certain theatres as a result of the impact of the COVID pandemic.
(Gain) Loss on Disposal of Assets and Other. A loss on disposal of assets and other of $1.2$0.3 million was recorded duringfor the third quarter of 20222023 period compared with a lossgain of $1.1$6.9 million duringfor the third quarter of 2021.2022 period. Activity for the third quarter of 2022 period was primarily related to the write-offsale of assets for a closed theatre and the write-off of assets at certain remodeled theatres. Activity for the third quarter of 2021 was primarily related to the removal and disposal of assets at closed theatres.excess land parcels.
Interest Expense. Interest expense for Holdings, which includes amortization of debt issuance costs and amortization of accumulated lossesgains for swap amendments, increased to $38.4was $36.8 million during the third quarter of 20222023 period compared with $38.0$38.1 million for the third quarter of 2021. Interest2022 period. The interest expense attributable to CUSA, which includes amortization of debt issuance costs and amortization of accumulated losses for swap amendments, increased to $32.4was $30.8 million during the third quarter of 20222023 period compared with $31.9$32.1 million for the third quarter of 2021. The increase for both Holdings and CUSA was primarily due to the increase in variable interest rates.2022 period. See further discussion atLiquidity and Capital Resources - Financing Activities below.
Equity in Income (Loss)Loss of Affiliates. Equity in incomeloss of affiliates of $0.2$2.1 million was recorded during the third quarter of 20222023 period compared with a loss of $(7.2)$2.2 million during the third quarter of 2021. The improvement in equity in income (loss) of affiliates is due to the ongoing recovery of our equity investees’ performance as the industry continues to recover.2022 period. See Notes 8 and 9 to ourthe condensed consolidated financial statements for information about our equity investments.
Income Taxes - Holdings. An income tax expensebenefit of $3.4$3.9 million was recorded for the third quarter of 20222023 period compared with an income tax benefit of $(8.9)$1.8 million for the third quarter of 2021.2022 period. The effective tax rate was approximately (16.6)%60.5% for the third quarter of 20222023 period compared with 10.3%2.4% for the third quarter of 2021.2022 period. The effective tax rate for the third quarter of 2022 was favorably impacted by the use of certain foreign tax credits for which valuation allowances related to certain deferred tax assets for which the ultimate realization is uncertain.had been established in prior periods. For the third quarter of 2022,2023 period, we utilized the annual effective tax rate (“AETR”) method to calculate our interim tax provision. However, in the 2022 period, we recorded the interim tax provision using the discrete method as allowed by ASC Topic 740-270-30-18, Income Taxes Interim Reporting. We used the discrete method rather than the AETR method due to significant variations in income tax expense relative to changes (increases or decreases) in estimated pretax earnings. Use of the AETR method would have resulted in an unreliable tax rate in the prior period. Income tax provisions for interim (quarterly) periods are generally based
35
on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.
Income Taxes - CUSA. An income tax benefit of $8.5 million was recorded for the 2023 period compared with an income tax benefit of $6.5 million for the 2022 period. The effective tax rate was approximately 387.6% for the 2023 period compared with 9.6% for the 2022 period. The effective tax rate was favorably impacted by the use of certain foreign tax credits for which valuation allowances had been established in prior periods. For the 2023 period, we utilized the AETR method to calculate our interim tax provision. However, in the 2022 period, we recorded the interim tax provision using the discrete method as allowed by ASC Topic 740-270-30-18, Income Taxes Interim Reporting. We used the discrete method rather than the AETR method due to significant variations in income tax expense relative to changes (increases or decreases) in estimated pretax earnings. Use of the AETR method would have resulted in an unreliable tax rate in the prior period. Income tax provisions for interim (quarterly) periods are generally based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.
Income Taxes - CUSA. An income tax benefit of $(0.4) million was recorded for the third quarter of 2022 compared with an income tax benefit of $(7.4) million for the third quarter of 2021. The effective tax rate was approximately 2.7% for the third quarter of 2022 compared with 9.3% for the third quarter of 2021. The effective tax rate for the third quarter of 2022 was impacted by valuation allowances related to certain deferred tax assets for which the ultimate realization is uncertain. For the third quarter of 2022, we utilized the annual effective tax rate (“AETR”) method to calculate our interim tax provision. . Income tax provisions for interim (quarterly) periods are generally based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.
4136
Nine months ended September 30, 2022 (the “2022 period”) versus the nine months ended September 30, 2021 (the “2021 period”)
The COVID-19 pandemic has had an ongoing impact on the movie exhibition industry. When comparing the results for the 2022 period with the 2021 period, the following should be noted:
Revenue. The table below, presented by reportable operating segment, summarizes our year-over-year revenue performance and certain key performance indicators that impact our revenue.
|
| U.S. Operating Segment |
|
| International Operating Segment |
|
| Consolidated |
| |||||||||||||||||||
|
| Nine Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Nine Months Ended September 30, |
| |||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| Constant |
|
| 2022 |
|
| 2021 |
| |||||||
Admissions revenue |
| $ | 759.1 |
|
| $ | 384.4 |
|
| $ | 183.2 |
|
| $ | 50.7 |
|
| $ | 199.5 |
|
| $ | 942.3 |
|
| $ | 435.1 |
|
Concession revenue |
|
| 576.5 |
|
|
| 275.0 |
|
|
| 136.1 |
|
|
| 38.5 |
|
|
| 149.7 |
|
|
| 712.6 |
|
|
| 313.5 |
|
Other revenue (1) |
|
| 148.9 |
|
|
| 82.5 |
|
|
| 51.2 |
|
|
| 12.7 |
|
|
| 55.3 |
|
|
| 200.1 |
|
|
| 95.2 |
|
Total revenue (1) |
| $ | 1,484.5 |
|
| $ | 741.9 |
|
| $ | 370.5 |
|
| $ | 101.9 |
|
| $ | 404.5 |
|
| $ | 1,855.0 |
|
| $ | 843.8 |
|
Attendance |
|
| 84.2 |
|
|
| 41.8 |
|
|
| 49.3 |
|
|
| 15.7 |
|
|
|
|
|
| 133.5 |
|
|
| 57.5 |
| |
Average ticket price (2) |
| $ | 9.02 |
|
| $ | 9.20 |
|
| $ | 3.72 |
|
| $ | 3.23 |
|
| $ | 4.05 |
|
| $ | 7.06 |
|
| $ | 7.57 |
|
Concession revenue per patron (2) |
| $ | 6.85 |
|
| $ | 6.58 |
|
| $ | 2.76 |
|
| $ | 2.45 |
|
| $ | 3.04 |
|
| $ | 5.34 |
|
| $ | 5.45 |
|
42
Cost of Operations. The table below, presented by reportable operating segment, summarizes our year-over-year theatre operating costs.
|
| U.S. Operating Segment |
|
| International Operating Segment |
|
| Consolidated |
| |||||||||||||||||||
|
| Nine Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Nine Months Ended September 30, |
| |||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| Constant |
|
| 2022 |
|
| 2021 |
| |||||||
Film rentals and advertising |
| $ | 439.0 |
|
| $ | 191.5 |
|
| $ | 92.1 |
|
| $ | 25.3 |
|
| $ | 100.6 |
|
| $ | 531.1 |
|
| $ | 216.8 |
|
Concession supplies |
| $ | 98.9 |
|
| $ | 44.6 |
|
| $ | 29.9 |
|
| $ | 9.6 |
|
| $ | 32.9 |
|
| $ | 128.8 |
|
| $ | 54.2 |
|
Salaries and wages |
| $ | 233.4 |
|
| $ | 126.4 |
|
| $ | 43.6 |
|
| $ | 22.8 |
|
| $ | 47.5 |
|
| $ | 277.0 |
|
| $ | 149.2 |
|
Facility lease expense |
| $ | 187.6 |
|
| $ | 177.7 |
|
| $ | 43.6 |
|
| $ | 23.1 |
|
| $ | 46.8 |
|
| $ | 231.2 |
|
| $ | 200.8 |
|
Utilities and other |
| $ | 234.8 |
|
| $ | 161.0 |
|
| $ | 69.0 |
|
| $ | 31.0 |
|
| $ | 74.0 |
|
| $ | 303.8 |
|
| $ | 192.0 |
|
Salaries and wages increased to $233.4 million for the 2022 period compared with $126.4 million for the 2021 period as a result of significantly higher attendance, expanded operating hours and wage rate increases with average hourly rates up approximately 12% over the 2021 period, partially offset by efficiencies and streamlined operations. Facility lease expense increased to $187.6 million primarily due to new theatres and an increase in common area maintenance costs. Utilities and other costs increased to $234.8 million, as many of these costs, such as janitorial costs, utilities costs, credit card fees, repairs and maintenance and security costs, are variable in nature and were impacted by the expansion of operating hours, a significant increase in attendance and inflationary pressures.
Salaries and wages increased to $43.6 million as reported for the 2022 period due to the significantly higher attendance, expanded operating hours and wage rate increases. Facility lease expense increased to $43.6 million as reported for the 2022 period. The increase was due to higher percentage rent driven by higher revenue and the return of minimum rent thresholds compared with the 2021 period. Utilities and other costs increased to $69.0 million as reported, as many of these costs are variable in nature, such as utilities, credit card fees, screen advertising commissions, janitorial costs and repairs and maintenance, and were impacted by the significant increase in attendance. These expenses, as reported, were also impacted by exchange rate fluctuations in each of the countries in which we operate.
General and Administrative Expense. General and administrative expense for Holdings increased to $134.0 million for the 2022 period compared with $111.8 million for the 2021 period. General and administrative expense attributable to CUSA increased to $131.8 million for the 2022 period compared with $109.7 million for the 2021 period. The increase is primarily due to higher staffing levels, incentive-based compensation, professional fees and a shift to cloud-based software.
Depreciation and Amortization. Depreciation and amortization expense decreased to $181.0 million for the 2022 period compared with $202.3 million for the 2021 period primarily due to the impairment of theatre assets during 2021.
Impairment of Long-Lived and Other Assets. We recorded asset impairment charges on assets held and used of $107.5 million for the 2022 period. Long-lived asset impairment charges of approximately $107.5 million were recorded primarily due to the prolonged recovery of certain theatres from the COVID pandemic. In addition, we recorded an impairment of $98.0 million for our investment in NCM as NCMI’s stock price was significantly below the Company’s carrying value of NCM per common unit and due to the prolonged recovery of NCM's business. We recorded asset impairment charges on assets held and used of $7.5 million for the 2021 period. See Note 12 to our condensed consolidated financial statements for a discussion of impairment analyses performed and a summary of impairment recorded.
43
(Gain) Loss on Disposal of Assets and Other. A gain on disposal of assets and other of $(6.4) million was recorded for the 2022 period compared with a loss of $7.9 million for the 2021 period. Activity for the 2022 period was primarily related to the sale of excess land parcels. Activity for the 2021 period was primarily related to the write-off of certain digital projectors received from DCIP in a non-cash distribution that were replaced with laser projectors, partially offset by gains on the sale of excess land parcels.
Interest Expense. Interest expense for Holdings, which includes amortization of debt issuance costs and amortization of accumulated losses for swap amendments, increased to $114.6 million during the 2022 period compared with $111.6 million for the 2021 period. Interest expense attributable to CUSA, which includes amortization of debt issuance costs and amortization of accumulated losses for swap amendments, increased to $96.5 million during the third quarter of 2022 compared with $93.5 million for the third quarter of 2021. The increase for both Holdings and CUSA was primarily due to the issuance of the 5.875% Senior Notes and 5.25% Senior Notes to refinance the 5.125% Senior Notes and 4.875% Senior Notes during 2021. See further discussion at Financing Activities below.
Loss on Extinguishment of Debt. We recorded a loss on extinguishment of debt of $6.5 million during the 2021 period related to the early retirement of our 5.125% Senior Notes and 4.875% Senior Notes, including the write-off of unamortized debt issuance costs and legal and other fees paid.
Equity in Loss of Affiliates. Equity in loss of affiliates of $7.5 million was recorded during the 2022 period compared with $22.1 million during the 2021 period. The decrease in equity in loss of affiliates is due to the ongoing recovery of our equity investees’ performance as the industry continues to recover. See Notes 8 and 9 to our condensed consolidated financial statements for information about our equity investments.
Income Taxes - Holdings. An income tax expense of $6.3 million was recorded for the 2022 period compared with an income tax benefit of $(15.6) million for the 2021 period. The effective tax rate was approximately (3.9)% for the 2022 period compared with 3.5% for the 2021 period. The effective tax rate for the 2022 period was impacted by valuation allowances related to certain deferred tax assets for which the ultimate realization is uncertain. For the 2022 and 2021 periods, we utilized the annual effective tax rate method to calculate our interim tax provision. Income tax provisions for interim (quarterly) periods are based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.
Income Taxes - CUSA. An income tax benefit of $(3.3) million was recorded for the 2022 period compared with an income tax benefit of $(11.3) million for the 2021 period. The effective tax rate was approximately 2.3% for the 2022 period compared with 2.7% for the 2021 period. The effective tax rate for the 2022 period was impacted by valuation allowances related to certain deferred tax assets for which the ultimate realization is uncertain. For the 2022 and 2021 periods, we utilized the annual effective tax rate method to calculate our interim tax provision. Income tax provisions for interim (quarterly) periods are based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.
44
Liquidity and Capital Resources
Operating Activities
We primarily collect our revenue in cash, mainly through box office receipts and the sale of concessions. Our revenue is generally received in cash prior to the payment of related expenses; therefore, we have an operating “float” and historically have not required traditional working capital financing. We temporarily closed all of our theatres during March 2020 and funded operating expenses with cash on hand and new financing discussed below under Financing Activities while theatres were closed and as we reopened our theatres. During the latter part of 2021, as we began to show a steady stream of new film content and our theatres were returning to more consistent operating hours, we began to generate positive cash flows from operations and transition back to our historical working capital “float” position. However, our working capital position will continue to fluctuate based on seasonality, the timing and volume of new film content, the timing of interest payments on our long-term debt as well as timing of payment of other operating expenses that are paid annually or semi-annually, such as property and other taxes and incentive bonuses. We believe our existing cash and expected cash flows from operations will be sufficient to meet our working capital, capital expenditures, and expected cash requirements from known contractual obligations for the next twelve months and beyond.
Cash provided by operating activities was $27.7$7.9 million for Holdings and $47.0$15.7 million for CUSA for the ninethree months ended September 30, 2022,March 31, 2023, compared with cash used for operating activities of $(42.2)$118.8 million for Holdings and $(31.7)$108.5 million for CUSA for the ninethree months ended September 30, 2021.March 31, 2022. The increase in cash provided by (used for) operating activities was primarily a result ofdriven by the timing and level of revenue earned during each period and the timing of payments to vendors for expenses incurred during each period.
As discussed in Note 4 to our condensed consolidated financial statements, rent deferrals and other lease-related payments were negotiated in 2020 and early 2021 with some of our landlords. As of September 30, 2022, approximately $5.3 million of deferred lease payments were outstanding, the majority of which will be repaid during the remainder of 2022.
Investing Activities
Investing activities have been principally related to the development, remodel and acquisition of theatres. New theatre openings, remodels and acquisitions historically have been financed with internally generated cash and by debt financing, including borrowings under our senior secured credit facility. Cash used for investing activities was $(53.3)$26.3 million and $8.1 million for the ninethree months ended September 30,March 31, 2023 and 2022, compared with $(55.0) millionrespectively. The increase in cash used for investing activities was primarily due to higher capital expenditures in 2023 and proceeds from the ninesale of excess land parcels recognized during the three months ended September 30, 2021.March 31, 2022
CapitalBelow is a summary of capital expenditures, disaggregated by new and existing theatres, duringfor the ninethree months ended September 30,March 31, 2023 and 2022 and 2021 were as follows (in millions):
|
| Nine Months Ended September 30, |
|
| Three Months Ended March 31, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||
New theatres |
| $ | 24.8 |
|
| $ | 24.1 |
|
| $ | 1.3 |
|
| $ | 6.6 |
|
Existing theatres |
|
| 40.5 |
|
|
| 33.1 |
|
|
| 25.0 |
|
|
| 12.1 |
|
Total capital expenditures |
| $ | 65.3 |
|
| $ | 57.2 |
|
| $ | 26.3 |
|
| $ | 18.7 |
|
We operated 517516 theatres with 5,8355,833 screens worldwide as of September 30, 2022.March 31, 2023. Theatres and screens builtopened and closed during the ninethree months ended September 30, 2022 are shown below:March 31, 2023 were as follows:
|
| January 1, 2022 |
|
| Built |
|
| Closed |
|
| September 30, 2022 |
|
| January 1, 2023 |
|
| Built |
|
| Closed |
|
| March 31, 2023 |
| ||||||||
U.S (42 states) |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
U.S. (42 states) |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Theatres |
|
| 321 |
|
|
| 1 |
|
|
| (4 | ) |
|
| 318 |
|
|
| 318 |
|
|
| — |
|
|
| (1 | ) |
|
| 317 |
|
Screens |
|
| 4,408 |
|
|
| 14 |
|
|
| (30 | ) |
|
| 4,392 |
|
|
| 4,399 |
|
|
| — |
|
|
| (8 | ) |
|
| 4,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
International (15 countries) |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
International (14 countries) |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Theatres |
|
| 201 |
|
|
| 1 |
|
|
| (3 | ) |
|
| 199 |
|
|
| 200 |
|
|
| — |
|
|
| (1 | ) |
|
| 199 |
|
Screens |
|
| 1,460 |
|
|
| 19 |
|
|
| (36 | ) |
|
| 1,443 |
|
|
| 1,448 |
|
|
| — |
|
|
| (6 | ) |
|
| 1,442 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Worldwide |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Theatres |
|
| 522 |
|
|
| 2 |
|
|
| (7 | ) |
|
| 517 |
|
|
| 518 |
|
|
| — |
|
|
| (2 | ) |
|
| 516 |
|
Screens |
|
| 5,868 |
|
|
| 33 |
|
|
| (66 | ) |
|
| 5,835 |
|
|
| 5,847 |
|
|
| — |
|
|
| (14 | ) |
|
| 5,833 |
|
4537
As of September 30, 2022,March 31, 2023, the following signed commitments were outstanding:
|
| Theatres |
| Screens |
| Estimated |
|
| Theatres (1) |
|
| Screens (1) |
|
| Estimated |
| ||||
Remainder of 2022 |
|
|
|
|
| |||||||||||||||
Remainder of 2023 |
|
|
|
|
|
|
|
| ||||||||||||
U.S. |
| 1 |
| 14 |
| $ | 5.1 |
|
|
| — |
|
|
| — |
|
| $ | 3.5 |
|
International |
| 1 |
| 5 |
|
| 0.6 |
|
|
| 1 |
|
|
| 4 |
|
|
| 7.8 |
|
Total |
| 2 |
| 19 |
| $ | 5.7 |
|
|
| 1 |
|
|
| 4 |
|
| $ | 11.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Subsequent to 2022 |
|
|
|
|
| |||||||||||||||
Subsequent to 2023 |
|
|
|
|
|
|
|
| ||||||||||||
U.S. |
| 3 |
| 34 |
| $ | 23.7 |
|
|
| 4 |
|
|
| 42 |
|
| $ | 27.9 |
|
International |
| 4 |
| 21 |
|
| 8.5 |
|
|
| 2 |
|
|
| 13 |
|
|
| 1.9 |
|
Total |
| 7 |
| 55 |
| $ | 32.2 |
|
| 6 |
| 55 |
|
| $ | 29.8 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total commitments at September 30, 2022 |
| 9 |
| 74 |
| $ | 37.9 |
| ||||||||||||
Total commitments at March 31, 2023 |
| 7 |
|
| 59 |
|
| $ | 41.1 |
|
Actual expenditures for continued theatre development, remodels and acquisitions are subject to change based upon the availability of attractive opportunities. During the next twelve months and the foreseeable future, we plan to fund capital expenditures for our continued development will be funded with cash flow from operations and, if needed, borrowings under our senior secured credit facility, proceeds from debt issuances, sale leaseback transactions and/or sales of excess real estate.
Financing Activities
Cash used for financing activities for Holdings was $(32.6)$4.9 million and $8.6 million for the ninethree months ended September 30,March 31, 2023 and 2022, compared withrespectively. The decrease in cash used for financing activities of $(12.9) million forwas primarily due to proceeds from a sale leaseback transaction recognized during the ninethree months ended September 30, 2021. Cash used for financing activities for CUSA was $(32.6) million for the nine months ended September 30, 2022 compared with cash provided by financing activities of $107.1 million for the nine months ended September 30, 2021. During the nine months ended September 30, 2021, Holdings distributed $120.0 million to CUSA and CUSA issued 5.875% Senior Notes and 5.25% Senior Notes, the proceeds of which were used to redeem the 5.125% Senior Notes and the 4.875% Senior Notes as discussed further below.March 31, 2023.
AtHoldings, at the discretion of theits board of directors and subject to applicable law, Holdings may pay dividends on its common stock. The amount, if any, of the dividends to be paid in the future will depend upon available cash balances, anticipated cash needs, overall financial condition, loan agreement restrictions as discussed below, future prospects for earnings and cash flows, as well as other relevant factors. As a result of the impact of the COVID-19 pandemic, Holdings suspended its quarterly dividend to its shareholders.
We may, from time to time, seek to retire or repurchase our outstanding debt securities through cash purchases or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on the availability and prices of such debt securities, prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
See Note 7 for a summary of long-term debt outstanding as of September 30, 2022March 31, 2023 for Holdings and CUSA.
As of September 30, 2022, $100 million was available for borrowing under the revolving line of credit.
Contractual Obligations
There have been no material changes in the contractual obligations previously disclosed in “Liquidity and Capital Resources” in the HoldingsCompany’s Annual Report on Form 10-K for the year ended December 31, 20212022 filed February 25, 2022 or in the CUSA Annual Report on Form 10-K for the year ended December 31, 2021 filed March 9, 2022.24, 2023.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
4.50% Convertible Senior Notes
On August 21, 2020, Holdings issued $460$460.0 million 4.50% convertible senior notes (the “4.50% Convertible Senior Notes”). The notes will mature on August 15, 2025, unless earlier repurchased or converted. Interest on the notes will beis payable on February 15 and August 15 of each year, beginning on February 15, 2021.year.
46
Holders of the 4.50% Convertible Senior Notes may convert their 4.50% Convertible Senior Notes at their option at any time prior to the close of business on the business day immediately preceding May 15, 2025 only under the following circumstances: (1) during the five business day period after any five consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of ourHoldings’ common stock and the conversion rate on each such trading day; (2) if we distributeHoldings distributes to all or
38
substantially all stockholders (i) rights, options or warrants entitling them to purchase shares at a discount to the recent average trading price of ourHoldings’ common stock (including due to a stockholder rights plan) or (ii) ourHoldings’ assets or securities or rights, options or warrants to purchase the same with a per share value exceeding 10% of the trading price of ourHoldings’ common stock,stock; or (3) upon the occurrence of specified corporate events as described further in the indenture. Beginning May 15, 2025, holders may convert their notes at any time prior to the close of business on the third scheduled trading day immediately preceding the maturity date, or (4) during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of ourHoldings’ common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to $18.65$18.66 per share (130% of the initial conversion price of $14.35 per share), on each applicable trading day. Upon conversion of the notes, we4.50% Convertible Senior Notes, Holdings will pay or deliver cash, shares of ourits common stock or a combination of cash and shares of ourits common stock, at ourits election.
The initial conversion rate is 69.6767 shares of ourHoldings’ common stock per one thousand dollars principal amount of the 4.50% Convertible Senior Notes. The conversion rate will be subject to adjustment upon the occurrence of certain events. If a make-whole fundamental change as defined in the indenture occurs prior to the maturity date, weHoldings will, in certain circumstances, increase the conversion rate for a holder who elects to convert its notes in connection with such make-whole fundamental change.
The 4.50% Convertible Notes are effectively subordinated to any of Holdings,Holdings’, or its subsidiaries’, existing and future secured debt to the extent of the value of the assets securing such indebtedness, including obligations under the Credit Agreement. The 4.50% Convertible Notes are structurally subordinated to all existing and future debt and other liabilities, including trade payables, and including CUSA’s 8.75% Secured Notes due 2025, 5.25% Senior Notes due 2028 and 5.875% Senior Notes due 2026, or, collectively, CUSA’s senior notes (but excluding all obligations under the Credit Agreement, as defined below, which are guaranteed by Holdings). The 4.50% Convertible Notes rank equally in right of payment with all of our existing and future unsubordinated debt, including all obligations under the CUSA Credit Agreement, which such Credit Agreement is guaranteed by Holdings, and senior in right of payment to any future debt that is expressly subordinated in right of payment to the notes.4.50% Convertible Notes. The 4.50% Convertible Notes are not guaranteed by any of Holdings' subsidiaries.
Senior Secured Credit Facility
CUSA has a senior secured credit facility that includes a $700.0 million term loan and a $100.0 million revolving line of credit line (the “Credit Agreement”). Under the amended Credit Agreement, quarterly principal payments of $1.6 million are due on the term loan through December 31, 2024, with a final principal payment of $613.4 million due on March 29, 2025. CUSA had $100.0 million of available borrowing capacity on the revolving line of credit line as of September 30, 2022.March 31, 2023.
Interest on the term loan accrues at CUSA's option at: (A) the base rate equal to the greater of (1) the US “Prime Rate” as quoted in The Wall Street Journal or, if no such rate is quoted therein, in a Federal Reserve Board statistical release, (2) the federal funds effective rate plus 0.50%, and (3) a one-month Eurodollar-based rate plus 1.0%, plus, in each case, a margin of 0.75% per annum, or (B) a Eurodollar-based rate for a period of 1, 2, 3, 6, 9 or 12 months plus a margin of 1.75% per annum. Interest on the revolving line of credit line accrues, at our option, at: (A) a base rate equal to the greater of (1) the US “Prime Rate” as quoted in The Wall Street Journal or if no such rate is quoted therein, in a Federal Reserve Board statistical release, (2) the federal funds effective rate plus 0.50%, and (3) a one-month Eurodollar-based rate plus 1.0%, plus, in each case, a margin that ranges from 0.50% to 1.25% per annum, or (B) a Eurodollar-based rate for a period of 1, 2, 3, 6, 9 or 12 months plus a margin that ranges from 1.50% to 2.25% per annum. The margin of the revolving line of credit line is determined by the consolidated net senior secured leverage ratio as defined in the Credit Agreement.
CUSA's obligations under the Credit Agreement are guaranteed by Holdings, as well as certain of CUSA’s domestic subsidiaries, and are secured by mortgages on certain fee and leasehold properties and security interests in substantially all of CUSA’s and the guarantors’ personal property, including, without limitation, pledges of all of CUSA’s capital stock and, all of the capital stock of certain of CUSA’s domestic subsidiaries.
The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on CUSA’s ability, and in certain instances, its subsidiaries’ and Holdings' 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 or repurchase stock; and make capital expenditures and investments. If CUSA has borrowings outstanding on the revolving credit line, it is required to satisfy a consolidated net senior secured leverage ratio covenant as defined in the Credit Agreement, not to exceed 4.25 to 1. See below for discussionCUSA’s actual ratio as of recent covenant waivers.March 31, 2023 was 2.2 to 1.
4739
The dividend restriction contained in the Credit Agreement prevents Holdings and certain of its subsidiaries from paying a dividend or otherwise distributing cash to its stockholders unless (1) Holdings is not in default, and the distribution would not cause CUSA to be in default, under the Credit Agreement; and (2) the aggregate amount of certain dividends, distributions, investments, redemptions and capital expenditures made since December 18, 2012, including dividends declared by the Holdings' board of directors, is less than the sum of (a) the aggregate amount of cash and cash equivalents received by Holdings or CUSA as common equity since December 18, 2012, (b) CUSA's consolidated EBITDA minus 1.75 times its consolidated interest expense, each as defined in the Credit Agreement, and (c) certain other defined amounts, or collectively, the Applicable Amount. As of September 30, 2022,March 31, 2023, CUSA could have distributed up to approximately $3.0$2.87 billion to its parent company and sole stockholder, Holdings.
On April 17, 2020, in conjunction with the issuance of the 8.75% Secured Notes discussed below, CUSA obtained a waiver of the leverage covenant from the majority of revolving lenders under the Credit Agreement for the fiscal quarters ended September 30, 2020 and December 31, 2020. The waiver was subject to certain liquidity thresholds, restrictions on investments and the use of the Applicable Amount.
On August 21, 2020, in conjunction with the issuance by Holdings of the 4.50% Convertible Senior Notes discussed below, CUSA further amended the waiver of the leverage covenant through the fiscal quarter ending September 30, 2021. The amendment also i) modified the leverage covenant calculation beginning with the calculation for the trailing twelve-month period ended December 31, 2021, ii) for purposes of testing the consolidated net senior secured leverage ratio for the fiscal quarters ended on December 31, 2021, March 31, 2022 and June 30, 2022, permitted substitution of Consolidated EBITDA for the first three fiscal quarters of 2019 in lieu of Consolidated EBITDA for the corresponding fiscal quarters of 2021, (iii) modified the restrictions imposed by the covenant waiver and (iv) made such other changes to permit the issuance of the 4.50% Convertible Senior Notes discussed below. The ratio for the period ended September 30, 2022 was calculated using actual Consolidated EBITDA for the trailing twelve month period then ended. The required maximum ratio is 4.25 to 1 and CUSA's actual ratio as of September 30, 2022 was 2.2.
On June 15, 2021, in conjunction with the issuance of the 5.25% Senior Notes discussed below, the Credit Agreement was amended to, among other things, extend the maturity of the revolving credit line from November 28, 2022 to November 28, 2024.
CUSA hasWe have three interest rate swap agreements that are used to hedge a portion of the interest rate risk associated with the variable interest rates on the term loan outstanding under the Credit Agreement. See Note 7 of ourto the condensed consolidated financial statements for discussion of the interest rate swaps.
As of September 30, 2022,March 31, 2023, there was $628.2$624.9 million outstanding under the term loan and no borrowings were outstanding under the $100.0 million revolving line of credit. The average interest rate on outstanding term loan borrowings under the Credit Agreement as of September 30, 2022March 31, 2023 was approximately 4.0%4.6% per annum, after giving effect to the interest rate swap agreements discussed above.agreements.
5.875% Senior Notes
On March 16, 2021, CUSA issued $405$405.0 million aggregate principal amount of 5.875% senior notes due 2026, at par value (the “5.875% Senior Notes”). Proceeds, after payment of fees, were used to fund a cash tender offer to purchase any and all of CUSA’s 5.125% Senior Notes (the “5.125% Senior Notes”) and to redeem any of the 5.125% Notes that remained outstanding after the tender offer. See further discussion of the tender offer below. Interest on the 5.875% Senior Notes is payable on March 15 and September 15 of each year, beginning September 15, 2021.year. The 5.875% Senior Notes mature on March 15, 2026. CUSA incurred debt issuance costs of approximately $6.0 million in connection with the issuance, which are recorded as a reduction of long-term debt, less current on the condensed consolidated balance sheet.
The 5.875% Senior Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of CUSA's subsidiaries that guarantee, assume or become liable with respect to any of CUSA's or a guarantor’s debt. The 5.875% Senior Notes and the guarantees are senior unsecured obligations and rank equally in right of payment with all of CUSA's and its guarantor’s existing and future senior debt and senior in right of payment to all of CUSA’s and its guarantors’ existing and future senior subordinated debt. The 5.875% Senior Notes and the guarantees are effectively subordinated to all of CUSA’s and its guarantor’s existing and future secured debt to the extent of the value of the collateral securing such debt, including all borrowings under CUSA’s Credit Agreement. The 5.875% Senior Notes and the guarantees are structurally subordinated to all existing and future debt and other liabilities of CUSA's subsidiaries that do not guarantee the 5.875% Senior Notes.
Prior to March 15, 2023, CUSA may redeem all or any part of the 5.875% Senior Notes at its option at 100% of the principal amount plus a make-whole premium plus accrued and unpaid interest on the 5.875% Senior Notes to the date of redemption. After March 15, 2023, CUSA may redeem the 5.875% Senior Notes in whole or in part at redemption prices specified in the indenture. In addition, prior to March 15, 2023, CUSA, may redeem up to 40% of the aggregate principal amount of the 5.875% Senior Notes from the net proceeds of certain equity offerings at the redemption price set forth in the indenture.
5.25% Senior Notes
48
On June 15, 2021, CUSA Inc. issued $765$765.0 million aggregate principal amount of 5.25% senior notes due 2028, at par value (the “5.25% Senior Notes”). Proceeds, after payment of fees, were used to redeem all of CUSA's 4.875% $755 million aggregate principal amount of Senior Notes due 2023 (the “4.875% Senior Notes”). Interest on the 5.25% Senior Notes is payable on January 15 and July 15 of each year, beginning January 15, 2022. The 5.25% Senior Notes mature on July 15, 2028.
The 5.25% Senior Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of CUSA’s subsidiaries that guarantee, assume or become liable with respect to any of CUSA's or a guarantor’s debt. The 5.25% Senior Notes and the guarantees will be CUSA’s and the guarantors’ senior unsecured obligations and (i) rank equally in right of payment to CUSA’s and the guarantors’ existing and future senior debt, including borrowings under CUSA's Credit Agreement (as defined below) and CUSA’s existing senior notes, (ii) rank senior in right of payment to CUSA’s and the guarantors’ future subordinated debt, (iii) are effectively subordinated to all of CUSA’s and the guarantors’ existing and future secured debt, including all obligations under the Credit Agreement and CUSA’s 8.750% senior secured notes due 2025, in each case to the extent of the value of the collateral securing such debt, (iv) are structurally subordinated to all existing and future debt and other liabilities of CUSA’s non-guarantor subsidiaries, and (v) are structurally senior to the 4.50% convertible senior notes due 2025 issued by Holdings.
Prior to July 15, 2024, CUSA may redeem all or any part of the 5.25% Senior Notes at its option at 100% of the principal amount plus a make-whole premium plus accrued and unpaid interest on the 5.25% Senior Notes to the date of redemption. On or after July 15, 2024, CUSA may redeem the 5.25% Senior Notes in whole or in part at redemption prices specified in the indenture. In addition, prior to July 15, 2024, CUSA may redeem up to 40% of the aggregate principal amount of the 5.25% Senior Notes from the net proceeds of certain equity offerings at the redemption price set forth in the indenture, so long as at least 60% of the principal amount of the 5.25% Senior Notes remains outstanding immediately after each such redemption.
8.75% Secured Notes
On April 20, 2020, CUSA issued $250$250.0 million 8.75% senior secured notes (the “8.75% Secured Notes”). The 8.75% Secured Notes will mature on May 1, 2025. Interest on the 8.75% Secured Notes is payable on May 1 and November 1 of each year. CUSA may redeem the 8.75% Secured Notes in whole or in part at redemption prices specified in the indenture.
The 8.75% Secured Notes are fully and unconditionally guaranteed on a joint and several senior basis by certain of CUSA's subsidiaries that guarantee, assume or in any other manner become liable with respect to any of CUSA's or its guarantors’ other debt. If
40
CUSA cannot make payments on the 8.75% Secured Notes when due, CUSA's guarantors must make them instead. Under certain circumstances, the guarantees may be released without action by, or the consent of, the holders of the 8.75% Secured Notes.
CUSA may redeem the 8.75% Secured Notes in whole or in part at redemption prices specified in the indenture.
On March 30, 2023, CUSA sent a notice of optional partial redemption to Computershare Trust Services, N.A. (successor to Wells Fargo Bank, N.A.) (the “Trustee”) to redeem $100 million in principal amount of the 8.75% Secured Notes on May 1, 2023 (the “Redemption Date”) at a cash redemption price equal to 102.188% of the principal amount redeemed plus any accrued and unpaid interest thereon to the Redemption Date. Following the redemption, $150 million in aggregate principal amount of the 8.75% Secured Notes will remain outstanding. See further discussion at Note 19 to the condensed consolidated financial statements for the three months ended March 31, 2023.
Borrowings of International Subsidiaries
As of September 30, 2022,March 31, 2023, certain of the Company’s international subsidiaries have an aggregate borrowingborrowings of $21.9$9.7 million outstanding under various local bank loans. A subsidiary of CUSA has depositedIn conjunction with these borrowings, the Company was required to deposit cash into a collateral account to support the issuance of letters of credit to the lenders for certain of these international bank loans.lenders. The total amount depositedon deposit as of September 30, 2022March 31, 2023 was $22.9$10.8 million and is considered restricted cash.
Covenant Compliance
See discussion above at Senior Secured Credit Facility for discussion of dividend restriction, negative covenants and leverage ratio covenant under the Credit Agreement.
The indentures governing the 5.875% Senior Notes, the 5.25% Senior Notes and the 8.75% Secured Notes ("the indentures") contain covenants that limit, among other things, the ability of CUSA 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 September 30, 2022,March 31, 2023, CUSA could have distributed up to approximately $3.1$3.2 billion to its parent company and sole stockholder, Holdings, under the terms of the indentures, subject to its available cash and other borrowing restrictions outlined in the indentures. Upon a change of control, as defined in the indentures, CUSA would be required to make an offer to repurchase the 5.875% Senior Notes, the 5.25% Senior Notes and the 8.75% Secured 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 indentures allow CUSA 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 September 30, 2022March 31, 2023 was 3.2.3.1 to 1.
See discussion of dividend restrictions and the net senior secured leverage ratio under the Credit Agreement at Senior Secured Credit Facility above.
As of September 30, 2022, each of Holdings and CUSA believes it wasMarch 31, 2023, we believe we were in full compliance with all agreements, including all related covenants, governing our outstanding debt.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Holdings and CUSAWe have exposure to financial market risks, including changes in interest rates and foreign currency exchange rates and other relevant market prices.rates.
Interest Rate Risk
The Company currently has variable rate debt. An increase or decrease in interest rates would affect its interest expense related to this variable rate debt. The Company has three interest rate swap agreements that are used to hedge a portion of the interest rate risk associated with our term loan, covering $450.0 million of the $628.2 million outstanding at September 30, 2022. At September 30, 2022,March 31, 2023, we had an aggregate of $200.1$184.6 million of variable rate debt outstanding, andafter giving effect to the interest rate swaps. Based on the interest rates in effect on the variable rate debt outstanding at March 31, 2023 a 100 basis point increase in market interest rates would increase our annual interest expense by $2.0$1.8 million.
The tables below provide information about Holdings' and CUSA’s fixed rate and variable rate long-term debt agreements as of September 30, 2022, which includesMarch 31, 2023. Holdings’ long-term debt agreements include fixed rate and variable rate long-term debt of CUSA which is guaranteed by Holdings.
Holdings Debt
|
| Expected Maturity for the Twelve Months Ending September 30, |
|
| Average |
|
| Expected Maturity for the Twelve Months Ending March 31, |
|
| Average |
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
| (in millions) |
|
| Interest |
|
| (in millions) |
|
| Interest |
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
| 2023 |
| 2024 |
| 2025 |
| 2026 |
| 2027 |
| Thereafter |
| Total |
|
| Fair Value |
|
| Rate |
|
| 2024 |
| 2025 |
| 2026 |
| 2027 |
| 2028 |
| Thereafter |
| Total |
|
| Fair Value |
|
| Rate |
| ||||||||||||||||||
Fixed rate |
| $ | — |
| $ | — |
| $ | 1,160.0 |
| $ | 405.0 |
| $ | — |
| $ | 765.0 |
| $ | 2,330.0 |
|
| $ | 2,135.8 |
|
|
| 5.3 | % |
| $ | 100.0 |
| $ | 450.0 |
| $ | 1,015.0 |
| $ | — |
| $ | — |
| $ | 765.0 |
| $ | 2,330.0 |
|
| $ | 2,327.8 |
|
|
| 5.3 | % |
Variable rate |
|
| 21.9 |
|
| 8.2 |
|
| 166.1 |
|
| 1.1 |
|
| 1.1 |
|
| 1.7 |
|
| 200.1 |
|
|
| 190.4 |
|
|
| 5.1 | % |
|
| 10.1 |
|
| 169.7 |
|
| 1.4 |
|
| 1.4 |
|
| 1.4 |
|
| 0.6 |
|
| 184.6 |
|
|
| 182.0 |
|
|
| 6.5 | % |
Total debt (1) |
| $ | 21.9 |
| $ | 8.2 |
| $ | 1,326.1 |
| $ | 406.1 |
| $ | 1.1 |
| $ | 766.7 |
| $ | 2,530.1 |
|
| $ | 2,326.2 |
|
|
|
|
| $ | 110.1 |
| $ | 619.7 |
| $ | 1,016.4 |
| $ | 1.4 |
| $ | 1.4 |
| $ | 765.6 |
| $ | 2,514.6 |
|
| $ | 2,509.8 |
|
|
|
|
CUSA Debt
|
| Expected Maturity for the Twelve Months Ending September 30, |
|
| Average |
|
| Expected Maturity for the Twelve Months Ending March 31, |
|
| Average |
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
| (in millions) |
|
| Interest |
|
| (in millions) |
|
| Interest |
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
| 2023 |
| 2024 |
| 2025 |
| 2026 |
| 2027 |
| Thereafter |
| Total |
|
| Fair Value |
|
| Rate |
|
| 2024 |
| 2025 |
| 2026 |
| 2027 |
| 2028 |
| Thereafter |
| Total |
|
| Fair Value |
|
| Rate |
| ||||||||||||||||||
Fixed rate |
| $ | — |
| $ | — |
| $ | 700.0 |
| $ | 405.0 |
| $ | — |
| $ | 765.0 |
| $ | 1,870.0 |
|
| $ | 1,608.3 |
|
|
| 5.5 | % |
| $ | 100.0 |
| $ | 450.0 |
| $ | 555.0 |
| $ | — |
| $ | — |
| $ | 765.0 |
| $ | 1,870.0 |
|
| $ | 1,743.7 |
|
|
| 5.5 | % |
Variable rate |
|
| 21.9 |
|
| 8.2 |
|
| 166.1 |
|
| 1.1 |
|
| 1.1 |
|
| 1.7 |
|
| 200.1 |
|
|
| 190.4 |
|
|
| 5.1 | % |
|
| 10.1 |
|
| 169.7 |
|
| 1.4 |
|
| 1.4 |
|
| 1.4 |
|
| 0.6 |
|
| 184.6 |
|
|
| 182.0 |
|
|
| 6.5 | % |
Total debt (1) |
| $ | 21.9 |
| $ | 8.2 |
| $ | 866.1 |
| $ | 406.1 |
| $ | 1.1 |
| $ | 766.7 |
| $ | 2,070.1 |
|
| $ | 1,798.7 |
|
|
|
|
| $ | 110.1 |
| $ | 619.7 |
| $ | 556.4 |
| $ | 1.4 |
| $ | 1.4 |
| $ | 765.6 |
| $ | 2,054.6 |
|
| $ | 1,925.7 |
|
|
|
|
Interest Rate Swap Agreements
All of the interest rate swap agreements qualify for cash flow hedge accounting. The fair values of the interest rate swaps are recorded on each of Holdings'Holdings’ and CUSA'sCUSA’s condensed consolidated balance sheet as an asset or liability with the related gains or losses reported as a component of accumulated other comprehensive loss. See Note 7 to the condensed consolidated financial statements for further discussion of the interest rate swap agreements.
Foreign Currency Exchange Rate Risk
There have been no material changes in foreign currency exchange rate risk previously disclosed in “Quantitative and Qualitative Disclosures About Market Risk” in Holdings'the Company’s Annual Report on Form 10-K for the year ended December 31, 20212022 filed February 25, 2022 or CUSA's Annual Report on Form 10-K for the year ended December 31, 2021 filed March 9, 2022.24, 2023.
Item 4. Controls and Procedures
Evaluation of the Effectiveness of Disclosure Controls and Procedures
As of September 30, 2022, eachMarch 31, 2023, under the supervision and with the participation of Holdings’ and CUSA’s principal executive officer and principal financial officer, Holdings and CUSA carried out an evaluation required by the Exchange Act under the supervision and with the participation of their respective principal executive officer and principal financial officer, of the effectiveness of the design and operation of their respective disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act. Based on this evaluation, the respectiveHoldings’ and CUSA’s principal executive officer and principal financial officer of Holdings and CUSA concluded that, as of September 30, 2022, theirMarch 31, 2023, each of Holdings’ and CUSA’s respective disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by each of themHoldings and CUSA in the reports that are filed or submitted under the Exchange 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 their respectiveHoldings’ and CUSA’s management, including theHoldings’ and CUSA’s principal
50
executive officer and principal financial officer, of Holdings and CUSA, as appropriate to allow timely decisions regarding required disclosures.
42
Changes in Internal Control Over Financial Reporting
There have been no changes in theHoldings’ and CUSA’s internal control over financial reporting for Holdings or CUSA identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 that occurred during the quarter ended September 30, 2022March 31, 2023 that materially affect theaffected, or are reasonably likely to materially affect, ourHoldings’ and CUSA’s internal control over financial reporting for Holdings or CUSA.reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Other than the discussion at Note 18, there have been no material changes from legal proceedings previously reported under “Business – Legal Proceedings” in Holdings'the Company’s Annual Report on Form 10-K for the year ended December 31, 20212022 filed February 25, 2022 or CUSA's24, 2023.
Item 1A. Risk Factors
Other than as set forth below, we believe there have been no material changes in our risk factors from those disclosed in “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed February 24, 2023.
We may not be able to generate additional revenue or continue to realize value from our investment in NCM.
As of March 31, 2023, we owned 43.7 million common shares in National Cinemedia, Inc. (“NCMI”), which represented an ownership interest in NCM of approximately 25.4%. CUSA receives monthly theatre access and advertising fees under an Exhibitor Services Agreement with NCM, and CUSA has received quarterly distributions of excess cash from NCM pursuant to NCM’s operating agreement. During the years ended December 31, 2020, 2021 and 2022, Holdings and CUSA each recorded approximately $36.0 million, $44.1 million and $52.2 million in other revenue related to NCM, respectively, $14.1 million, $0.2 million and $0 million in cash distributions recorded as a reduction of the investment in NCM, respectively, and $7.0 million, $0.1 million and $0 in cash distributions in excess of the investment in NCM, respectively. On February 23, 2023 and March 23, 2023, we redeemed 42.0 million and 1.7 million common units, respectively, of NCM for an equal number of common shares in NCMI. Distributions of excess cash from NCM to its members, including NCMI, were restricted through December 2023 in accordance with the credit agreement amendment NCM entered into with its lenders, and NCMI has suspended its dividend. Cinema advertising is a small component of the U.S. advertising market and therefore, NCM competes with larger, more established and well-known media platforms such as broadcast radio and television, cable and satellite television, outdoor advertising and Internet portals. 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 revenue, its results of operations may be adversely affected and our investment in NCMI may be adversely impacted. NCM has a substantial amount of indebtedness and has been significantly impacted by the COVID-19 pandemic. On April 11, 2023, NCM commenced a Chapter 11 bankruptcy proceeding. Our Exhibitor Services Agreement may be rejected or renegotiated as a result of the bankruptcy proceeding, and we may lose all of our equity in NCMI. Additionally, Cineworld Group plc (“Cineworld”) (the parent company of Regal Entertainment, Inc. (“Regal”)), filed for bankruptcy under Chapter 11 in September 2022. As part of that bankruptcy proceeding, Cineworld has filed motions to reject Regal’s Exhibitor Services Agreement with NCM. If the rejection of the Exhibitor Services Agreement is approved, or if Regal closes or disposes of a significant number of theatres, NCM’s advertising revenue will be adversely impacted.
NCMI’s stock price was $0.13 per share at March 9, 2022.31, 2023, which was significantly below the Company’s carrying value of NCMI per common share. As a result of the decrease in stock price and the prolonged recovery of NCM’s business, during the quarter ended March 31, 2023 we wrote-down CUSA’s investment in NCM by $0.7 million to its estimated fair value. Since NCM's revenues are primarily dependent on theatre attendance, future NCM revenues and future dividends from NCMI will depend on the continued recovery of the motion picture exhibition industry.
Item 1A. Risk Factors2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) In the first quarter of 2023, Holdings purchased shares of its common stock as follows:
|
| Total Number of Shares Purchased (1) |
| Average Price Paid per Share |
| Total Number of Shares Purchased As Part of Publicly Announced Plans |
| Approximate Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Plan |
| ||||
January 1 through January 31 |
|
| 1.55 |
| $ | 11.16 |
|
| — |
|
| — |
|
February 1 through February 28 |
|
| 168.67 |
| $ | 12.12 |
|
| — |
|
| — |
|
March 1 through March 31 |
|
| 0.21 |
| $ | 13.42 |
|
| — |
|
| — |
|
Total |
|
| 170.43 |
|
|
|
| — |
|
| — |
|
(1) Represents shares of Holdings’ common stock (in thousands) repurchased in January, February and March of 2023 to satisfy employee tax-withholding obligations upon vesting in restricted stock and performance stock units. See discussion in “Risk Factors” in Holdings' Annual Report on Form 10-K forNote 10 to the year ended December 31, 2021 filed February 25, 2022 and CUSA's Annual Report on Form 10-K for the year ended December 31, 2021 filed March 9, 2022.condensed consolidated financial statements.
For a description of limitations on the payment of Holdings’ dividends, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.”
44
Item 5. Other Information
Supplemental Schedules Specified by the Senior Notes Indentures
As required by the indentures governing the CUSACUSA’s 5.875% Senior Notes, 5.25% Senior Notes and 8.75% Senior Secured Notes, collectively “the senior notes”, CUSA has included in this filing, interim financial information for its subsidiaries that have been designated as unrestricted subsidiaries, as defined by the indentures. As required by these indentures, CUSA has included an unaudited condensed consolidating balance sheet and unaudited condensed consolidating statements of loss, comprehensive loss and cash flows for CUSA and its subsidiaries.CUSA. See Liquidity and Capital Resources at Part I - Item 2 for discussion of the senior notes, including relevant covenants and restrictions. The following supplementary schedules separately identify CUSA’s restricted subsidiaries and unrestricted subsidiaries as required by the indentures.
Page | ||
Unaudited Condensed Consolidating Balance Sheet as of |
| |
| ||
| ||
|
5245
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2022MARCH 31, 2023
(in millions, unaudited)
|
| Restricted |
| Unrestricted |
|
|
|
|
|
| Restricted |
| Unrestricted |
|
|
|
|
| ||||||||||||||
|
| Group |
|
| Group |
|
| Eliminations |
|
| Consolidated |
|
| Group |
|
| Group |
|
| Eliminations |
|
| Consolidated |
| ||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Cash and cash equivalents |
| $ | 281.1 |
|
| $ | 105.5 |
|
| $ | — |
|
| $ | 386.6 |
|
| $ | 303.6 |
|
| $ | 107.1 |
|
|
| — |
|
| $ | 410.7 |
|
Other current assets |
|
| 346.1 |
|
|
| (109.0 | ) |
|
| (7.9 | ) |
|
| 229.2 |
|
|
| 346.2 |
|
|
| (105.0 | ) |
|
| (9.3 | ) |
|
| 231.9 |
|
Total current assets |
|
| 627.2 |
|
|
| (3.5 | ) |
|
| (7.9 | ) |
|
| 615.8 |
|
|
| 649.8 |
|
|
| 2.1 |
|
|
| (9.3 | ) |
|
| 642.6 |
|
Theatre properties and equipment, net |
|
| 1,260.0 |
|
|
| — |
|
|
| — |
|
|
| 1,260.0 |
|
|
| 1,204.1 |
|
|
| — |
|
|
| — |
|
|
| 1,204.1 |
|
Operating lease right-of-use assets, net |
|
| 1,144.0 |
|
|
| — |
|
|
| — |
|
|
| 1,144.0 |
|
|
| 1,067.8 |
|
|
| — |
|
|
| — |
|
|
| 1,067.8 |
|
Other assets |
|
| 1,736.6 |
|
|
| 280.5 |
|
|
| (371.5 | ) |
|
| 1,645.6 |
|
|
| 1,714.1 |
|
|
| 277.0 |
|
|
| (377.5 | ) |
|
| 1,613.6 |
|
Total assets |
| $ | 4,767.8 |
|
| $ | 277.0 |
|
| $ | (379.4 | ) |
| $ | 4,665.4 |
|
| $ | 4,635.8 |
|
| $ | 279.1 |
|
| $ | (386.8 | ) |
| $ | 4,528.1 |
|
Liabilities and equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Current portion of long-term debt |
| $ | 22.0 |
|
| $ | — |
|
| $ | — |
|
| $ | 22.0 |
|
| $ | 110.0 |
|
|
| — |
|
|
| — |
|
| $ | 110.0 |
|
Current portion of operating lease obligations |
|
| 217.9 |
|
|
| — |
|
|
| — |
|
|
| 217.9 |
|
|
| 217.7 |
|
|
| — |
|
|
| — |
|
|
| 217.7 |
|
Current portion of finance lease obligations |
|
| 14.6 |
|
|
| — |
|
|
| — |
|
|
| 14.6 |
|
|
| 14.5 |
|
|
| — |
|
|
| — |
|
|
| 14.5 |
|
Current income tax payable |
|
| 2.3 |
|
|
| 0.1 |
|
|
| — |
|
|
| 2.4 |
|
|
| 5.2 |
|
|
| — |
|
|
| — |
|
|
| 5.2 |
|
Accounts payable and accrued expenses |
|
| 376.4 |
|
|
| — |
|
|
| (7.9 | ) |
|
| 368.5 |
|
|
| 399.8 |
|
|
| — |
|
|
| (9.3 | ) |
|
| 390.5 |
|
Total current liabilities |
|
| 633.2 |
|
|
| 0.1 |
|
|
| (7.9 | ) |
|
| 625.4 |
|
|
| 747.2 |
|
|
| — |
|
|
| (9.3 | ) |
|
| 737.9 |
|
Long-term liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Long-term debt, less current portion |
|
| 2,287.9 |
|
|
| — |
|
|
| (264.5 | ) |
|
| 2,023.4 |
|
|
| 2,188.0 |
|
|
| — |
|
|
| (264.5 | ) |
|
| 1,923.5 |
|
Operating lease obligations, less current portion |
|
| 987.6 |
|
|
| — |
|
|
| — |
|
|
| 987.6 |
|
|
| 935.8 |
|
|
| — |
|
|
| — |
|
|
| 935.8 |
|
Finance lease obligations, less current portion |
|
| 91.6 |
|
|
| — |
|
|
| — |
|
|
| 91.6 |
|
|
| 84.4 |
|
|
| — |
|
|
| — |
|
|
| 84.4 |
|
Other long-term liabilities and deferrals |
|
| 470.8 |
|
|
| 12.0 |
|
|
| — |
|
|
| 482.8 |
|
|
| 438.6 |
|
|
| 11.1 |
|
|
| — |
|
|
| 449.7 |
|
Total long-term liabilities |
|
| 3,837.9 |
|
|
| 12.0 |
|
|
| (264.5 | ) |
|
| 3,585.4 |
|
|
| 3,646.8 |
|
|
| 11.1 |
|
|
| (264.5 | ) |
|
| 3,393.4 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Equity |
|
| 296.7 |
|
|
| 264.9 |
|
|
| (107.0 | ) |
|
| 454.6 |
|
|
| 241.8 |
|
|
| 268.0 |
|
|
| (113.0 | ) |
|
| 396.8 |
|
Total liabilities and equity |
| $ | 4,767.8 |
|
| $ | 277.0 |
|
| $ | (379.4 | ) |
| $ | 4,665.4 |
|
| $ | 4,635.8 |
|
| $ | 279.1 |
|
| $ | (386.8 | ) |
| $ | 4,528.1 |
|
Note: “Restricted Group” and “Unrestricted Group” are defined in the indentures for the senior notes.
5346
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF LOSSINCOME
NINETHREE MONTHS ENDED SEPTEMBER, 2022MARCH 31, 2023
(in millions, unaudited)
|
| Restricted |
| Unrestricted |
|
|
|
|
|
| Restricted |
| Unrestricted |
|
|
|
|
| ||||||||||||||
|
| Group |
|
| Group |
|
| Eliminations |
|
| Consolidated |
|
| Group |
|
| Group |
|
| Eliminations |
|
| Consolidated |
| ||||||||
Revenue |
| $ | 1,855.0 |
|
| $ | — |
|
| $ | — |
|
| $ | 1,855.0 |
|
| $ | 610.7 |
|
| $ | — |
|
| $ | — |
|
| $ | 610.7 |
|
Cost of operations |
|
|
|
|
|
|
|
|
|
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Theatre operating costs |
|
| 1,471.9 |
|
|
| — |
|
|
| — |
|
|
| 1,471.9 |
|
|
| 479.8 |
|
|
| — |
|
|
| — |
|
|
| 479.8 |
|
General and administrative expense |
|
| 131.8 |
|
|
| — |
|
|
| — |
|
|
| 131.8 |
| ||||||||||||||||
General and administrative expenses |
|
| 45.6 |
|
|
| — |
|
|
| — |
|
|
| 45.6 |
| ||||||||||||||||
Depreciation and amortization |
|
| 181.0 |
|
|
| — |
|
|
| — |
|
|
| 181.0 |
|
|
| 54.9 |
|
|
| — |
|
|
| — |
|
|
| 54.9 |
|
Impairment of long-lived assets and other |
|
| 72.0 |
|
|
| 35.5 |
|
|
| — |
|
|
| 107.5 |
| ||||||||||||||||
Restructuring costs |
|
| (0.2 | ) |
|
| — |
|
|
| — |
|
|
| (0.2 | ) | ||||||||||||||||
Gain on sale of assets and other |
|
| (6.4 | ) |
|
| — |
|
|
| — |
|
|
| (6.4 | ) | ||||||||||||||||
Impairment of other assets |
|
| — |
|
|
| 0.7 |
|
|
| — |
|
|
| 0.7 |
| ||||||||||||||||
Loss on disposal of assets and other |
|
| 0.3 |
|
|
| — |
|
|
| — |
|
|
| 0.3 |
| ||||||||||||||||
Total cost of operations |
|
| 1,850.1 |
|
|
| 35.5 |
|
|
| — |
|
|
| 1,885.6 |
|
|
| 580.6 |
|
|
| 0.7 |
|
|
| — |
|
|
| 581.3 |
|
Operating income (loss) |
|
| 4.9 |
|
|
| (35.5 | ) |
|
| — |
|
|
| (30.6 | ) |
|
| 30.1 |
|
|
| (0.7 | ) |
|
| — |
|
|
| 29.4 |
|
Other income (expense) |
|
| (118.0 | ) |
|
| 4.4 |
|
|
| — |
|
|
| (113.6 | ) | ||||||||||||||||
Interest expense |
|
| (31.5 | ) |
|
| — |
|
|
| 0.7 |
|
|
| (30.8 | ) | ||||||||||||||||
Equity in income (loss) of affiliates |
|
| 0.3 |
|
|
| (2.4 | ) |
|
| — |
|
|
| (2.1 | ) | ||||||||||||||||
Interest expense - NCM |
|
| (5.7 | ) |
|
| — |
|
|
| — |
|
|
| (5.7 | ) | ||||||||||||||||
Other income |
|
| 6.0 |
|
|
| 1.7 |
|
|
| (0.7 | ) |
|
| 7.0 |
| ||||||||||||||||
Total other expense |
|
| (30.9 | ) |
|
| (0.7 | ) |
|
| — |
|
|
| (31.6 | ) | ||||||||||||||||
Loss before income taxes |
|
| (113.1 | ) |
|
| (31.1 | ) |
|
| — |
|
|
| (144.2 | ) |
|
| (0.8 | ) |
|
| (1.4 | ) |
|
| — |
|
|
| (2.2 | ) |
Income tax expense (benefit) |
|
| 3.3 |
|
|
| (6.6 | ) |
|
| — |
|
|
| (3.3 | ) | ||||||||||||||||
Net loss |
|
| (116.4 | ) |
|
| (24.5 | ) |
|
| — |
|
|
| (140.9 | ) | ||||||||||||||||
Income tax benefit |
|
| (7.8 | ) |
|
| (0.7 | ) |
|
| — |
|
|
| (8.5 | ) | ||||||||||||||||
Net income (loss) |
|
| 7.0 |
|
|
| (0.7 | ) |
|
| — |
|
|
| 6.3 |
| ||||||||||||||||
Less: Net income attributable to noncontrolling interests |
|
| 2.7 |
|
|
| — |
|
|
| — |
|
|
| 2.7 |
|
|
| 0.6 |
|
|
| — |
|
|
| — |
|
|
| 0.6 |
|
Net loss attributable to Cinemark USA, Inc. |
| $ | (119.1 | ) |
| $ | (24.5 | ) |
| $ | — |
|
| $ | (143.6 | ) | ||||||||||||||||
Net income (loss) attributable to Cinemark USA, Inc. |
| $ | 6.4 |
|
| $ | (0.7 | ) |
| $ | — |
|
| $ | 5.7 |
|
Note: “Restricted Group” and “Unrestricted Group” are defined in the indentures for the senior notes.
5447
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE LOSSINCOME
NINETHREE MONTHS ENDED SEPTEMBER, 2022MARCH 31, 2023
(in millions, unaudited)
|
| Restricted |
|
| Unrestricted |
|
|
|
|
|
|
| ||||
|
| Group |
|
| Group |
|
| Eliminations |
|
| Consolidated |
| ||||
Net loss |
| $ | (116.4 | ) |
| $ | (24.5 | ) |
| $ | — |
|
| $ | (140.9 | ) |
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
|
| 31.4 |
|
|
| — |
|
|
| — |
|
|
| 31.4 |
|
Foreign currency translation adjustments |
|
| (5.9 | ) |
|
| — |
|
|
| — |
|
|
| (5.9 | ) |
Total other comprehensive income, net of tax |
|
| 25.5 |
|
|
| — |
|
|
| — |
|
|
| 25.5 |
|
Total comprehensive loss, net of tax |
|
| (90.9 | ) |
|
| (24.5 | ) |
|
| — |
|
|
| (115.4 | ) |
Comprehensive income attributable to noncontrolling interests |
|
| (2.7 | ) |
|
| — |
|
|
| — |
|
|
| (2.7 | ) |
Comprehensive loss attributable to Cinemark USA, Inc. |
| $ | (93.6 | ) |
| $ | (24.5 | ) |
| $ | — |
|
| $ | (118.1 | ) |
|
| Restricted |
|
| Unrestricted |
|
|
|
|
|
|
| ||||
|
| Group |
|
| Group |
|
| Eliminations |
|
| Consolidated |
| ||||
Net income (loss) |
| $ | 7.0 |
|
| $ | (0.7 | ) |
| $ | — |
|
| $ | 6.3 |
|
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Unrealized loss due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
|
| (3.4 | ) |
|
| — |
|
|
| — |
|
|
| (3.4 | ) |
Foreign currency translation adjustments |
|
| 8.1 |
|
|
| — |
|
|
| — |
|
|
| 8.1 |
|
Total other comprehensive income, net of tax |
|
| 4.7 |
|
|
| — |
|
|
| — |
|
|
| 4.7 |
|
Total comprehensive income (loss), net of tax |
|
| 11.7 |
|
|
| (0.7 | ) |
|
| — |
|
|
| 11.0 |
|
Comprehensive income attributable to noncontrolling interests |
|
| (0.6 | ) |
|
| — |
|
|
| — |
|
|
| (0.6 | ) |
Comprehensive income (loss) attributable to Cinemark USA, Inc. |
| $ | 11.1 |
|
| $ | (0.7 | ) |
| $ | — |
|
| $ | 10.4 |
|
Note: “Restricted Group” and “Unrestricted Group” are defined in the indentures for the senior notes.
5548
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINETHREE MONTHS ENDED SEPTEMBER, 2022MARCH 31, 2023
(in millions, unaudited)
|
| Restricted |
| Unrestricted |
|
|
|
|
|
| Restricted |
| Unrestricted |
|
|
|
|
| ||||||||||||||
|
| Group |
|
| Group |
|
| Eliminations |
|
| Consolidated |
|
| Group |
|
| Group |
|
| Eliminations |
|
| Consolidated |
| ||||||||
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Net loss |
| $ | (116.4 | ) |
| $ | (24.5 | ) |
| $ | — |
|
| $ | (140.9 | ) | ||||||||||||||||
Adjustments to reconcile net loss to cash provided by (used for) operating activities |
|
| 258.9 |
|
|
| 38.9 |
|
|
| — |
|
|
| 297.8 |
| ||||||||||||||||
Net income (loss) |
| $ | 7.0 |
|
| $ | (0.7 | ) |
| $ | — |
|
| $ | 6.3 |
| ||||||||||||||||
Adjustments to reconcile net loss to cash provided by operating activities |
|
| 54.4 |
|
|
| 3.1 |
|
|
| — |
|
|
| 57.5 |
| ||||||||||||||||
Changes in assets and liabilities |
|
| (100.9 | ) |
|
| (9.0 | ) |
|
| — |
|
|
| (109.9 | ) |
|
| (46.6 | ) |
|
| (1.5 | ) |
|
| — |
|
|
| (48.1 | ) |
Net cash provided by (used for) operating activities |
|
| 41.6 |
|
|
| 5.4 |
|
|
| — |
|
|
| 47.0 |
| ||||||||||||||||
Net cash provided by operating activities |
|
| 14.8 |
|
|
| 0.9 |
|
|
| — |
|
|
| 15.7 |
| ||||||||||||||||
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Additions to theatre properties and equipment |
|
| (65.3 | ) |
|
| — |
|
|
| — |
|
|
| (65.3 | ) |
|
| (26.3 | ) |
|
| — |
|
|
| — |
|
|
| (26.3 | ) |
Proceeds from sale of theatre properties and equipment and other |
|
| 12.0 |
|
|
| — |
|
|
| — |
|
|
| 12.0 |
| ||||||||||||||||
Net cash used for investing activities |
|
| (53.3 | ) |
|
| — |
|
|
| — |
|
|
| (53.3 | ) |
|
| (26.3 | ) |
|
| — |
|
|
| — |
|
|
| (26.3 | ) |
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Restricted stock withholdings for payroll taxes |
|
| (4.1 | ) |
|
| — |
|
|
| — |
|
|
| (4.1 | ) |
|
| (2.0 | ) |
|
| — |
|
|
| — |
|
|
| (2.0 | ) |
Repayments on long-term debt |
|
| (14.0 | ) |
|
| — |
|
|
| — |
|
|
| (14.0 | ) |
|
| (2.6 | ) |
|
| — |
|
|
| — |
|
|
| (2.6 | ) |
Payments on finance leases |
|
| (10.8 | ) |
|
| — |
|
|
| — |
|
|
| (10.8 | ) |
|
| (3.5 | ) |
|
| — |
|
|
| — |
|
|
| (3.5 | ) |
Other financing activities |
|
| (3.7 | ) |
|
| — |
|
|
| — |
|
|
| (3.7 | ) |
|
| 3.2 |
|
|
| — |
|
|
| — |
|
|
| 3.2 |
|
Net cash provided by (used for) financing activities |
|
| (32.6 | ) |
|
| — |
|
|
| — |
|
|
| (32.6 | ) | ||||||||||||||||
Net cash used for financing activities |
|
| (4.9 | ) |
|
| — |
|
|
| — |
|
|
| (4.9 | ) | ||||||||||||||||
Effect of exchange rate changes on cash and cash |
|
| (17.2 | ) |
|
| — |
|
|
| — |
|
|
| (17.2 | ) |
|
| (1.1 | ) |
|
| — |
|
|
| — |
|
|
| (1.1 | ) |
Decrease in cash and cash equivalents |
|
| (61.5 | ) |
|
| 5.4 |
|
|
| — |
|
|
| (56.1 | ) | ||||||||||||||||
Increase (decrease) in cash and cash equivalents |
|
| (17.5 | ) |
|
| 0.9 |
|
|
| — |
|
|
| (16.6 | ) | ||||||||||||||||
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Beginning of year |
|
| 342.6 |
|
|
| 100.1 |
|
|
| — |
|
|
| 442.7 |
|
|
| 321.1 |
|
|
| 106.2 |
|
|
| — |
|
|
| 427.3 |
|
End of year |
| $ | 281.1 |
|
| $ | 105.5 |
|
| $ | — |
|
| $ | 386.6 |
|
| $ | 303.6 |
|
| $ | 107.1 |
|
| $ | — |
|
| $ | 410.7 |
|
Note: “Restricted Group” and “Unrestricted Group” are defined in the indentures for the senior notes.
5649
Item 6. Exhibits
3.2 | ||
*31.1 | ||
*31.2 | ||
*31.3 | ||
*31.4 | ||
**32.1 | ||
**32.2 | ||
**32.3 | ||
**32.4 | ||
**101 | The following material from the combined Cinemark Holdings, Inc. and Cinemark USA, Inc. Form 10-Q for the quarter ended (i) Cinemark Holdings, Inc. Condensed Consolidated Balance Sheets (ii) Cinemark Holdings, Inc. Condensed Consolidated Statements of Loss (iii) Cinemark Holdings, Inc. Condensed Consolidated Statements of Comprehensive (iv) Cinemark Holdings, Inc. Condensed Consolidated Statements of Cash Flows (v) Cinemark Holdings, Inc. Condensed Consolidated Statements of Equity (vi) Cinemark USA, Inc. Condensed Consolidated Balance Sheets (vii) Cinemark USA, Inc. Condensed Consolidated Statements of (viii) Cinemark USA, Inc. Condensed Consolidated Statements of Comprehensive (ix) Cinemark USA, Inc. Condensed Consolidated Statements of Cash Flows (x) Cinemark USA, Inc. Condensed Consolidated Statements of (xi) Notes to Condensed Consolidated Financial Statements of Cinemark Holdings, Inc. and Cinemark USA, Inc. | |
* 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* filed herewith.
** furnished herewith.
5750
CINEMARK HOLDINGS, INC. AND
CINEMARK USA, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CINEMARK HOLDINGS, INC. CINEMARK USA, INC. | |||||
Registrants | |||||
DATE: |
| May 5, 2023 | |||
/s/ Sean Gamble | |||||
Sean Gamble | |||||
Chief Executive Officer | |||||
/s/ Melissa Thomas | |||||
Melissa Thomas | |||||
Chief Financial Officer |
5851