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, 20172022
Commission File Number: 033-47040or
CINEMARK USA, INC.☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
(Exact name of registrant as specified in its charter)SECURITIES EXCHANGE ACT OF 1934
| Exact Name of Registrant as Specified in its Charter, Principal Executive Office Address and Telephone Number |
| I.R.S. Employer Identification No. |
| Cinemark Holdings, Inc. 3900 Dallas Parkway Plano, Texas75093 (972) 665-1000 |
| 20-5490327 |
33-47040 | Cinemark USA, Inc. 3900 Dallas Parkway Plano, Texas75093 (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 | |
("Holdings") | Common stock, par value $.001 per share | CNK | New York Stock Exchange |
("CUSA") | None | ||
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Registrant's telephone number, including area code: (972) 665-1000
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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”,filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
Cinemark Holdings, Inc.
Large accelerated filer |
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| Accelerated filer |
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Non-accelerated filer |
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| Smaller reporting company |
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Emerging growth company |
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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 October 31, 2017, 28, 2022, 120,424,973 shares of common stock, $0.001 per value per share, of Cinemark Holdings, Inc. were issued and outstanding.
As of October 30, 2022, 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 issuedoutstanding and outstanding.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. 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., 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
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| Item 1. | Cinemark Holdings, Inc. and Subsidiaries Financial Statements (unaudited) |
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| Cinemark USA, Inc. and Subsidiaries Financial Statements (unaudited) |
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| Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 | 9 | |
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| Item 1. |
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21
Cautionary Statement Regarding Forward-Looking Statements
Certain matters within this Quarterly Report on Form 10Q10-Q include “forward–looking statements” within the meaning of Section 27Athe safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.1995. The “forward-looking statements” may include our current expectations, assumptions, estimates and projections about our business and our industry. They may include statements relating to to:
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. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statements. These statements are notneither historical facts nor guarantees of future performanceperformance. 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. 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 the risk factors, please review the “Risk Factors” section or other sections in the Company’sof, or incorporated by reference to, Holdings' Annual Report on Form 10-K filed February 25, 2022 or CUSA's Annual Report on Form 10-K filed March 3, 2017 and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission.9, 2022, as applicable. All forward-looking statements are expressly qualified in their entirety by such risk factors. We undertake no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
3Where it is important to distinguish between the entities, this report either refers specifically to Holdings or CUSA. Otherwise, unless 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
CINEMARK USA,HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands,millions, except share and per share data, unaudited)
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| September 30, |
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| December 31, |
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| 2022 |
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| 2021 |
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Assets |
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Current assets |
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Cash and cash equivalents |
| $ | 631.9 |
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| $ | 707.3 |
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Inventories |
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| 19.6 |
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| 15.5 |
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Accounts receivable |
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| 52.4 |
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| 68.8 |
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Current income tax receivable |
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| 45.4 |
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| 46.6 |
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Prepaid expenses and other |
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| 51.6 |
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| 36.2 |
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Total current assets |
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| 800.9 |
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| 874.4 |
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Theatre properties and equipment, net of accumulated depreciation of $2,132.1 and $1,985.9 |
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| 1,260.0 |
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| 1,382.9 |
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Operating lease right-of-use assets, net |
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| 1,144.0 |
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| 1,230.8 |
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Other assets |
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Goodwill |
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| 1,249.2 |
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| 1,248.8 |
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Intangible assets, net |
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| 309.1 |
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| 310.8 |
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Investment in NCM |
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| 28.4 |
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| 135.4 |
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Investments in affiliates |
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| 26.3 |
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| 25.2 |
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Deferred charges and other assets, net |
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| 32.6 |
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| 22.3 |
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Total other assets |
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| 1,645.6 |
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| 1,742.5 |
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Total assets |
| $ | 4,850.5 |
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| $ | 5,230.6 |
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Liabilities and equity |
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Current liabilities |
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Current portion of long-term debt |
| $ | 22.0 |
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| $ | 24.3 |
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Current portion of operating lease obligations |
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| 217.9 |
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| 217.1 |
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Current portion of finance lease obligations |
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| 14.6 |
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| 14.6 |
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Current income tax payable |
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| 2.4 |
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| — |
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Accounts payable and accrued expenses |
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| 371.5 |
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| 513.1 |
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Total current liabilities |
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| 628.4 |
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| 769.1 |
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Long-term liabilities |
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Long-term debt, less current portion |
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| 2,473.5 |
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| 2,476.3 |
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Operating lease obligations, less current portion |
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| 987.6 |
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| 1,078.3 |
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Finance lease obligations, less current portion |
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| 91.6 |
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| 102.6 |
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Long-term deferred tax liability |
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| 39.5 |
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| 39.8 |
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Long-term liability for uncertain tax positions |
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| 47.3 |
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| 45.9 |
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NCM screen advertising advances |
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| 340.5 |
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| 346.0 |
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Other long-term liabilities |
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| 36.7 |
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| 38.1 |
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Total long-term liabilities |
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| 4,016.7 |
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| 4,127.0 |
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Equity |
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Cinemark Holdings, Inc.'s stockholders' equity: |
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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 |
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| 0.1 |
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| 0.1 |
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Additional paid-in-capital |
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| 1,214.1 |
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| 1,197.8 |
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Treasury stock, 5.66 and 5.35 shares, at cost, at September 30, 2022 and December 31, 2021, respectively |
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| (95.2 | ) |
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| (91.1 | ) |
Retained deficit |
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| (561.3 | ) |
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| (389.4 | ) |
Accumulated other comprehensive loss |
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| (362.9 | ) |
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| (394.5 | ) |
Total Cinemark Holdings, Inc.'s stockholders' equity |
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| 194.8 |
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| 322.9 |
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Noncontrolling interests |
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| 10.6 |
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| 11.6 |
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Total equity |
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| 205.4 |
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| 334.5 |
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Total liabilities and equity |
| $ | 4,850.5 |
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| $ | 5,230.6 |
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| September 30, |
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| December 31, |
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| 2017 |
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| 2016 |
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Assets |
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Current assets |
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Cash and cash equivalents |
| $ | 469,309 |
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| $ | 561,138 |
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Inventories |
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| 16,844 |
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| 16,961 |
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Accounts receivable |
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| 82,647 |
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| 74,993 |
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Current income tax receivable |
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| 4,381 |
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| 7,367 |
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Prepaid expenses and other |
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| 17,010 |
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| 15,754 |
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Accounts receivable from parent |
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| 14,192 |
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| 10,080 |
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Total current assets |
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| 604,383 |
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| 686,293 |
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Theatre properties and equipment |
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| 3,268,653 |
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| 3,059,754 |
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Less: accumulated depreciation and amortization |
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| 1,477,047 |
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| 1,355,218 |
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Theatre properties and equipment, net |
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| 1,791,606 |
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| 1,704,536 |
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Other assets |
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Goodwill |
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| 1,294,342 |
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| 1,262,963 |
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Intangible assets - net |
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| 335,657 |
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| 334,899 |
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Investment in NCM |
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| 204,347 |
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| 189,995 |
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Investments in and advances to affiliates |
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| 112,878 |
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| 98,317 |
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Long-term deferred tax asset |
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| 2,098 |
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| 2,051 |
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Deferred charges and other assets - net |
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| 40,391 |
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| 37,555 |
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Total other assets |
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| 1,989,713 |
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| 1,925,780 |
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Total assets |
| $ | 4,385,702 |
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| $ | 4,316,609 |
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Liabilities and equity |
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Current liabilities |
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Current portion of long-term debt |
| $ | 7,099 |
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| $ | 5,671 |
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Current portion of capital lease obligations |
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| 24,836 |
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| 21,139 |
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Current income tax payable |
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| 7,893 |
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| 5,071 |
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Current liability for uncertain tax positions |
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| 11,714 |
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| 10,085 |
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Accounts payable and accrued expenses |
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| 340,405 |
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| 400,836 |
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Total current liabilities |
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| 391,947 |
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| 442,802 |
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Long-term liabilities |
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Long-term debt, less current portion |
|
| 1,781,952 |
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| 1,782,441 |
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Capital lease obligations, less current portion |
|
| 252,047 |
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| 234,281 |
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Long-term deferred tax liability |
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| 144,740 |
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| 135,014 |
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Long-term liability for uncertain tax positions |
|
| 7,801 |
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| 8,105 |
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Deferred lease expenses |
|
| 41,291 |
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| 42,378 |
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Deferred revenue - NCM |
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| 354,419 |
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| 343,928 |
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Other long-term liabilities |
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| 44,273 |
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| 43,580 |
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Total long-term liabilities |
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| 2,626,523 |
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| 2,589,727 |
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Commitments and contingencies (see Note 15) |
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Equity |
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Cinemark USA, Inc.'s stockholder's equity: |
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Class A common stock, $0.01 par value: 10,000,000 shares authorized, |
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1,500 shares issued and outstanding |
|
| — |
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| — |
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Class B common stock, no par value: 1,000,000 shares authorized, |
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239,893 shares issued and 182,648 shares outstanding |
|
| 49,543 |
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|
| 49,543 |
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Treasury stock, 57,245 Class B shares at cost |
|
| (24,233 | ) |
|
| (24,233 | ) |
Additional paid-in-capital |
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| 1,261,545 |
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| 1,252,715 |
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Retained earnings |
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| 311,279 |
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| 241,926 |
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Accumulated other comprehensive loss |
|
| (242,894 | ) |
|
| (247,013 | ) |
Total Cinemark USA, Inc.'s stockholder's equity |
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| 1,355,240 |
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| 1,272,938 |
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Noncontrolling interests |
|
| 11,992 |
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| 11,142 |
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Total equity |
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| 1,367,232 |
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| 1,284,080 |
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Total liabilities and equity |
| $ | 4,385,702 |
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| $ | 4,316,609 |
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The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
43
CINEMARK USA,HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOMELOSS
(in thousandsmillions, except per share data, unaudited)
|
| Three Months Ended September 30, |
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| Nine Months Ended September 30, |
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| 2022 |
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| 2021 |
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| 2022 |
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| 2021 |
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Revenue |
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Admissions |
| $ | 324.6 |
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| $ | 225.5 |
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| $ | 942.3 |
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| $ | 435.1 |
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Concession |
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| 253.6 |
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| 164.2 |
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| 712.6 |
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| 313.5 |
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Other |
|
| 72.2 |
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|
| 45.1 |
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|
| 200.1 |
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|
| 95.2 |
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Total revenue |
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| 650.4 |
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|
| 434.8 |
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|
| 1,855.0 |
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|
| 843.8 |
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Cost of operations |
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Film rentals and advertising |
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| 180.9 |
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| 117.0 |
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| 531.1 |
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|
| 216.8 |
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Concession supplies |
|
| 46.3 |
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| 28.2 |
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|
| 128.8 |
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|
| 54.2 |
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Salaries and wages |
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| 97.0 |
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| 67.6 |
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| 277.0 |
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|
| 149.2 |
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Facility lease expense |
|
| 77.2 |
|
|
| 68.8 |
|
|
| 231.2 |
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|
| 200.8 |
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Utilities and other |
|
| 110.4 |
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|
| 81.7 |
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| 303.8 |
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|
| 192.0 |
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General and administrative expense |
|
| 45.1 |
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|
| 38.6 |
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|
| 134.0 |
|
|
| 111.8 |
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Depreciation and amortization |
|
| 58.3 |
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| 67.2 |
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| 181.0 |
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|
| 202.3 |
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Impairment of long-lived and other assets |
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| 15.2 |
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|
| 7.5 |
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|
| 107.5 |
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|
| 7.5 |
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Restructuring costs |
|
| — |
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|
| (0.4 | ) |
|
| (0.2 | ) |
|
| (1.3 | ) |
(Gain) loss on disposal of assets and other |
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| 1.2 |
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|
| 1.1 |
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|
| (6.4 | ) |
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| 7.9 |
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Total cost of operations |
|
| 631.6 |
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|
| 477.3 |
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|
| 1,887.8 |
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|
| 1,141.2 |
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Operating income (loss) |
|
| 18.8 |
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|
| (42.5 | ) |
|
| (32.8 | ) |
|
| (297.4 | ) |
Other income (expense) |
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Interest expense |
|
| (38.4 | ) |
|
| (38.0 | ) |
|
| (114.6 | ) |
|
| (111.6 | ) |
Interest income |
|
| 6.4 |
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|
| 0.8 |
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|
| 11.1 |
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|
| 5.3 |
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Loss on extinguishment of debt |
|
| — |
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|
| — |
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|
| — |
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|
| (6.5 | ) |
Foreign currency exchange loss |
|
| (5.4 | ) |
|
| (0.2 | ) |
|
| (5.3 | ) |
|
| (0.9 | ) |
Distributions from NCM |
|
| — |
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|
| — |
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|
| — |
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|
| 0.1 |
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Distributions from DCIP |
|
| 3.7 |
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|
| 6.5 |
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|
| 3.7 |
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|
| 6.5 |
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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 |
|
| (39.3 | ) |
|
| (44.0 | ) |
|
| (130.1 | ) |
|
| (146.9 | ) |
Loss before income taxes |
|
| (20.5 | ) |
|
| (86.5 | ) |
|
| (162.9 | ) |
|
| (444.3 | ) |
Income tax expense (benefit) |
|
| 3.4 |
|
|
| (8.9 | ) |
|
| 6.3 |
|
|
| (15.6 | ) |
Net loss |
| $ | (23.9 | ) |
| $ | (77.6 | ) |
| $ | (169.2 | ) |
| $ | (428.7 | ) |
Less: Net income (loss) attributable to noncontrolling interests |
|
| 0.6 |
|
|
| 0.2 |
|
|
| 2.7 |
|
|
| (0.2 | ) |
Net loss attributable to Cinemark Holdings, Inc. |
| $ | (24.5 | ) |
| $ | (77.8 | ) |
| $ | (171.9 | ) |
| $ | (428.5 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
|
| 118.4 |
|
|
| 117.3 |
|
|
| 118.1 |
|
|
| 117.2 |
|
Diluted |
|
| 118.4 |
|
|
| 117.3 |
|
|
| 118.1 |
|
|
| 117.2 |
|
Loss per share attributable to Cinemark Holdings, Inc.'s common stockholders |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | (0.20 | ) |
| $ | (0.65 | ) |
| $ | (1.43 | ) |
| $ | (3.59 | ) |
Diluted |
| $ | (0.20 | ) |
| $ | (0.65 | ) |
| $ | (1.43 | ) |
| $ | (3.59 | ) |
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Admissions |
| $ | 425,128 |
|
| $ | 472,842 |
|
| $ | 1,351,477 |
|
| $ | 1,364,737 |
|
Concession |
|
| 247,027 |
|
|
| 261,391 |
|
|
| 777,573 |
|
|
| 752,798 |
|
Other |
|
| 38,593 |
|
|
| 34,341 |
|
|
| 112,503 |
|
|
| 100,312 |
|
Total revenues |
|
| 710,748 |
|
|
| 768,574 |
|
|
| 2,241,553 |
|
|
| 2,217,847 |
|
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Film rentals and advertising |
|
| 226,229 |
|
|
| 249,766 |
|
|
| 725,603 |
|
|
| 733,101 |
|
Concession supplies |
|
| 40,178 |
|
|
| 41,888 |
|
|
| 124,117 |
|
|
| 116,999 |
|
Salaries and wages |
|
| 87,305 |
|
|
| 84,460 |
|
|
| 261,318 |
|
|
| 243,833 |
|
Facility lease expense |
|
| 81,919 |
|
|
| 82,848 |
|
|
| 248,569 |
|
|
| 241,904 |
|
Utilities and other |
|
| 92,341 |
|
|
| 94,999 |
|
|
| 271,751 |
|
|
| 265,506 |
|
General and administrative expenses |
|
| 36,512 |
|
|
| 34,660 |
|
|
| 111,179 |
|
|
| 106,986 |
|
Depreciation and amortization |
|
| 58,052 |
|
|
| 54,187 |
|
|
| 174,545 |
|
|
| 155,874 |
|
Impairment of long-lived assets |
|
| 5,026 |
|
|
| 406 |
|
|
| 9,600 |
|
|
| 2,323 |
|
Loss on sale of assets and other |
|
| 8,576 |
|
|
| 6,940 |
|
|
| 9,464 |
|
|
| 10,985 |
|
Total cost of operations |
|
| 636,138 |
|
|
| 650,154 |
|
|
| 1,936,146 |
|
|
| 1,877,511 |
|
Operating income |
|
| 74,610 |
|
|
| 118,420 |
|
|
| 305,407 |
|
|
| 340,336 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| (26,317 | ) |
|
| (26,659 | ) |
|
| (79,208 | ) |
|
| (81,980 | ) |
Loss on debt amendments and refinancing |
|
| — |
|
|
| — |
|
|
| (246 | ) |
|
| (13,284 | ) |
Interest income |
|
| 1,678 |
|
|
| 1,665 |
|
|
| 4,391 |
|
|
| 5,030 |
|
Foreign currency exchange gain |
|
| 584 |
|
|
| 485 |
|
|
| 2,018 |
|
|
| 2,883 |
|
Distributions from NCM |
|
| 2,144 |
|
|
| 1,381 |
|
|
| 11,704 |
|
|
| 10,117 |
|
Equity in income of affiliates |
|
| 10,902 |
|
|
| 12,390 |
|
|
| 26,767 |
|
|
| 24,597 |
|
Total other expense |
|
| (11,009 | ) |
|
| (10,738 | ) |
|
| (34,574 | ) |
|
| (52,637 | ) |
Income before income taxes |
|
| 63,601 |
|
|
| 107,682 |
|
|
| 270,833 |
|
|
| 287,699 |
|
Income taxes |
|
| 24,797 |
|
|
| 41,165 |
|
|
| 99,167 |
|
|
| 106,821 |
|
Net income |
| $ | 38,804 |
|
| $ | 66,517 |
|
| $ | 171,666 |
|
| $ | 180,878 |
|
Less: Net income attributable to noncontrolling interests |
|
| 401 |
|
|
| 471 |
|
|
| 1,438 |
|
|
| 1,454 |
|
Net income attributable to Cinemark USA, Inc. |
| $ | 38,403 |
|
| $ | 66,046 |
|
| $ | 170,228 |
|
| $ | 179,424 |
|
The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
54
CINEMARK USA,HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMELOSS
(In thousands,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 September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Net income |
| $ | 38,804 |
|
| $ | 66,517 |
|
| $ | 171,666 |
|
| $ | 180,878 |
|
Other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of settlements, net of taxes of $0, $0, $0 and $138 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 234 |
|
Other comprehensive income (loss) in equity method investments |
|
| (11 | ) |
|
| (7 | ) |
|
| 92 |
|
|
| (183 | ) |
Foreign currency translation adjustments |
|
| 9,085 |
|
|
| (3,669 | ) |
|
| 5,578 |
|
|
| 34,998 |
|
Total other comprehensive income (loss), net of tax |
|
| 9,074 |
|
|
| (3,676 | ) |
|
| 5,670 |
|
|
| 35,049 |
|
Total comprehensive income, net of tax |
|
| 47,878 |
|
|
| 62,841 |
|
|
| 177,336 |
|
|
| 215,927 |
|
Comprehensive income attributable to noncontrolling interests |
|
| (401 | ) |
|
| (475 | ) |
|
| (1,438 | ) |
|
| (1,478 | ) |
Comprehensive income attributable to Cinemark USA, Inc. |
| $ | 47,477 |
|
| $ | 62,366 |
|
| $ | 175,898 |
|
| $ | 214,449 |
|
The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
65
CINEMARK USA,HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSEQUITY
(in thousands,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 |
|
|
| Nine Months Ended September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Operating activities |
|
|
|
|
|
|
|
|
Net income |
| $ | 171,666 |
|
| $ | 180,878 |
|
Adjustments to reconcile net income to cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
| 173,378 |
|
|
| 154,308 |
|
Amortization of intangible and other assets and favorable/unfavorable leases |
|
| 1,167 |
|
|
| 1,566 |
|
Amortization of long-term prepaid rents |
|
| 1,540 |
|
|
| 1,357 |
|
Amortization of debt issue costs |
|
| 4,619 |
|
|
| 4,068 |
|
Amortization of deferred revenues, deferred lease incentives and other |
|
| (12,037 | ) |
|
| (13,017 | ) |
Impairment of long-lived assets |
|
| 9,600 |
|
|
| 2,323 |
|
Share based awards compensation expense |
|
| 8,862 |
|
|
| 9,458 |
|
Loss on sale of assets and other |
|
| 9,464 |
|
|
| 10,985 |
|
Write-off of unamortized debt issue costs associated with early retirement of debt |
|
| — |
|
|
| 2,369 |
|
Deferred lease expenses |
|
| (1,019 | ) |
|
| (809 | ) |
Equity in income of affiliates |
|
| (26,767 | ) |
|
| (24,597 | ) |
Deferred income tax expenses |
|
| 9,541 |
|
|
| 16,382 |
|
Distributions from equity investees |
|
| 17,321 |
|
|
| 9,660 |
|
Changes in assets and liabilities and other |
|
| (56,399 | ) |
|
| (77,181 | ) |
Net cash provided by operating activities |
|
| 310,936 |
|
|
| 277,750 |
|
Investing activities |
|
|
|
|
|
|
|
|
Additions to theatre properties and equipment and other |
|
| (262,730 | ) |
|
| (230,346 | ) |
Acquisitions of theatres in the U.S. and international markets |
|
| (41,000 | ) |
|
| (15,300 | ) |
Proceeds from sale of theatre properties and equipment and other |
|
| 14,816 |
|
|
| 3,398 |
|
Proceeds from sale of marketable securities |
|
| — |
|
|
| 13,451 |
|
Investment in joint ventures and other |
|
| (1,178 | ) |
|
| (1,703 | ) |
Net cash used for investing activities |
|
| (290,092 | ) |
|
| (230,500 | ) |
Financing activities |
|
|
|
|
|
|
|
|
Dividends paid to parent |
|
| (100,875 | ) |
|
| (93,650 | ) |
Payroll taxes paid as a result of restricted stock withholdings |
|
| (2,943 | ) |
|
| (6,828 | ) |
Proceeds from issuance of Senior Notes, net of discount |
|
| — |
|
|
| 222,750 |
|
Retirement of Senior Subordinated Notes |
|
| — |
|
|
| (200,000 | ) |
Repayments of long-term debt |
|
| (2,855 | ) |
|
| (15,217 | ) |
Payment of debt issue costs |
|
| (817 | ) |
|
| (4,504 | ) |
Payments on capital leases |
|
| (15,814 | ) |
|
| (14,655 | ) |
Proceeds from financing lease |
|
| 10,200 |
|
|
| — |
|
Other |
|
| (620 | ) |
|
| 1,282 |
|
Net cash used for financing activities |
|
| (113,724 | ) |
|
| (110,822 | ) |
Effect of exchange rate changes on cash and cash equivalents |
|
| 1,051 |
|
|
| 2,081 |
|
Decrease in cash and cash equivalents |
|
| (91,829 | ) |
|
| (61,491 | ) |
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
Beginning of period |
|
| 561,138 |
|
|
| 588,503 |
|
End of period |
| $ | 469,309 |
|
| $ | 527,012 |
|
Supplemental information (see Note 12)
The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
76
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, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Operating activities |
|
|
|
|
|
| ||
Net loss |
| $ | (169.2 | ) |
| $ | (428.7 | ) |
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 |
|
| 8.2 |
|
|
| 8.0 |
|
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 |
|
| 16.2 |
|
|
| 16.6 |
|
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 |
|
| (1.5 | ) |
|
| (21.1 | ) |
Distributions from equity investees |
|
| 1.5 |
|
|
| 0.2 |
|
Changes in assets and liabilities and other |
|
| (106.0 | ) |
|
| 141.5 |
|
Net cash provided by (used for) operating activities |
|
| 27.7 |
|
|
| (42.2 | ) |
|
|
|
|
|
|
| ||
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 | ) |
|
| — |
|
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 used for financing activities |
|
| (32.6 | ) |
|
| (12.9 | ) |
|
|
|
|
|
|
| ||
Effect of exchange rate changes on cash and cash equivalents |
|
| (17.2 | ) |
|
| (2.2 | ) |
|
|
|
|
|
|
| ||
Decrease in cash and cash equivalents |
|
| (75.4 | ) |
|
| (112.3 | ) |
|
|
|
|
|
|
| ||
Cash and cash equivalents: |
|
|
|
|
|
| ||
Beginning of period |
|
| 707.3 |
|
|
| 655.3 |
|
End of period |
| $ | 631.9 |
|
| $ | 543.0 |
|
The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
* * * * * * * *
8
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except per share data, unaudited)
|
| September 30, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Assets |
|
|
|
|
|
| ||
Current assets |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 386.6 |
|
| $ | 442.7 |
|
Inventories |
|
| 19.6 |
|
|
| 15.5 |
|
Accounts receivable |
|
| 52.1 |
|
|
| 68.8 |
|
Current income tax receivable |
|
| 45.4 |
|
|
| 46.6 |
|
Prepaid expenses and other |
|
| 51.6 |
|
|
| 36.2 |
|
Accounts receivable from parent |
|
| 60.5 |
|
|
| 46.7 |
|
Total current assets |
|
| 615.8 |
|
|
| 656.5 |
|
Theatre properties and equipment, net of accumulated depreciation of $2,132.1 and $1,985.9 |
|
| 1,260.0 |
|
|
| 1,382.9 |
|
Operating lease right-of-use assets, net |
|
| 1,144.0 |
|
|
| 1,230.8 |
|
Other assets |
|
|
|
|
|
| ||
Goodwill |
|
| 1,249.2 |
|
|
| 1,248.8 |
|
Intangible assets, net |
|
| 309.1 |
|
|
| 310.8 |
|
Investment in NCM |
|
| 28.4 |
|
|
| 135.4 |
|
Investments in affiliates |
|
| 26.3 |
|
|
| 25.2 |
|
Deferred charges and other assets, net |
|
| 32.6 |
|
|
| 22.3 |
|
Total other assets |
|
| 1,645.6 |
|
|
| 1,742.5 |
|
Total assets |
| $ | 4,665.4 |
|
| $ | 5,012.7 |
|
Liabilities and equity |
|
|
|
|
|
| ||
Current liabilities |
|
|
|
|
|
| ||
Current portion of long-term debt |
| $ | 22.0 |
|
| $ | 24.3 |
|
Current portion of operating lease obligations |
|
| 217.9 |
|
|
| 217.1 |
|
Current portion of finance lease obligations |
|
| 14.6 |
|
|
| 14.6 |
|
Current income tax payable |
|
| 2.4 |
|
|
| — |
|
Accounts payable and accrued expenses |
|
| 368.5 |
|
|
| 504.6 |
|
Total current liabilities |
|
| 625.4 |
|
|
| 760.6 |
|
Long-term liabilities |
|
|
|
|
|
| ||
Long-term debt, less current portion |
|
| 2,023.4 |
|
|
| 2,028.7 |
|
Operating lease obligations, less current portion |
|
| 987.6 |
|
|
| 1,078.3 |
|
Finance lease obligations, less current portion |
|
| 91.6 |
|
|
| 102.6 |
|
Long-term deferred tax liability |
|
| 58.4 |
|
|
| 57.8 |
|
Long-term liability for uncertain tax positions |
|
| 47.3 |
|
|
| 45.9 |
|
NCM screen advertising advances |
|
| 340.5 |
|
|
| 346.0 |
|
Other long-term liabilities |
|
| 36.6 |
|
|
| 37.9 |
|
Total long-term liabilities |
|
| 3,585.4 |
|
|
| 3,697.2 |
|
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 |
|
Treasury stock, 57,245 Class B shares at cost |
|
| (24.2 | ) |
|
| (24.2 | ) |
Additional paid-in-capital |
|
| 1,474.5 |
|
|
| 1,459.0 |
|
Retained deficit |
|
| (687.6 | ) |
|
| (544.0 | ) |
Accumulated other comprehensive loss |
|
| (368.2 | ) |
|
| (397.0 | ) |
Total Cinemark USA, Inc.'s stockholder's equity |
|
| 444.0 |
|
|
| 543.3 |
|
Noncontrolling interests |
|
| 10.6 |
|
|
| 11.6 |
|
Total equity |
|
| 454.6 |
|
|
| 554.9 |
|
Total liabilities and equity |
| $ | 4,665.4 |
|
| $ | 5,012.7 |
|
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 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 | ) |
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 LOSS
(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 | ) |
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 EQUITY
(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 |
|
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 thousands,(in millions, except share and per share data,
unaudited)
|
|
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 a majority of the balance of Holdings’ assets, liabilities and subsidiaries (the “Company”), a wholly-owned subsidiaryoperating cash flows. In addition, CUSA’s revenue comprises 100% and its operating expenses comprise nearly 100% of Holdings’ revenue and operating expenses, respectively. These Notes to Condensed Consolidated Financial Statements include disclosures for Holdings and CUSA and their respective consolidated subsidiaries. Where it is important to distinguish between the entities, this report either refers specifically to Holdings or CUSA. Otherwise, all references to “we,” “our,” “us,” “the Company” or "Cinemark" relate to Cinemark Holdings, Inc., operates and its consolidated subsidiaries and all references to CUSA relate to CUSA and its consolidated subsidiaries.
The Company and its subsidiaries 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 accompanying condensed consolidated balance sheetsheets of Holdings and CUSA as of December 31, 2016,2021, each of which waswere derived from audited financial statements, and the unaudited condensed consolidated financial statements haveof Holdings and CUSA, respectively, has 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 thatover which the Company has control of are consolidated while those affiliatesinvestments in entities of which the CompanyHoldings or CUSA, as applicable, owns between 20%20% and 50%50% and does not control are accounted for under the equity method. Those affiliatesInvestments in entities of which the CompanyHoldings or CUSA, as applicable, owns less than 20%20% are generally accounted for under the cost method, unless the CompanyHoldings or CUSA, as applicable, is deemed to have the ability to exercise significant influence over the affiliate,entities, in which case the CompanyHoldings or CUSA, as applicable, would account for its investment under the equity method. TheThe results of these subsidiaries and affiliatesentities are included in the condensed consolidated financial statements effective with their formation or from their dates of acquisition. Intercompany balances and transactions are eliminated in consolidation.
These condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and the notes thereto for the year ended December 31, 2016,2021, included in the Annual Report on Form 10-K filed February 25, 2022 by Holdings and the Annual Report on Form 10-K filed March 3, 20179, 2022 by the CompanyCUSA, as applicable, each under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Operating results for the three and nine months ended September 30, 20172022 are not necessarily indicative of the results to be achieved for the full year.
|
|
In May 2014,Amounts included in the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, Revenue from Contractscondensed consolidated financial statements of this Quarterly Report on Form 10-Q are rounded in millions with Customers (Topic 606), (“ASU 2014-09”).the exception of per share data. The purposeamounts reported in the consolidated financial statements, and the notes thereto, of ASU 2014-09 is to clarify the principles for recognizing revenue and create a common revenue standard for U.S. GAAP and International Financial Reporting Standards. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contractsAnnual Report on Form 10-K for the transfer of nonfinancial assets unless those contractsyear ended December 31, 2021 filed by Holdings on February 25, 2022 and by CUSA on March 9, 2022 are within the scope of other standards (for example, insurance contracts or lease contracts). The following subsequent Accounting Standards Updates either clarified or revised guidance set forthrounded in ASU 2014-09:thousands.
In August 2015, the FASB issued Accounting Standards Update 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral2.Effective Date, (“ASU 2015-14”). ASU 2015-14 deferredCOVID-19 Pandemic
The COVID-19 pandemic has had an unprecedented impact on the effective dateworld 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 ASU 2014-09.2020 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 guidance in ASU 2014-09industry’s recovery from the COVID-19 pandemic is now effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period.
In March 2016,still underway and is contingent upon the FASB issued Accounting Standards Update 2016-08, Revenuevolume 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 Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenues Gross versus Net), (“ASU 2016-08”). The purpose of ASU 2016-08 is to clarify the implementation of revenue recognition guidance for principal versus agent considerations.
In April 2016, the FASB issued Accounting Standards Update 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligationsstreaming platforms, supply chain constraints, inflationary impacts and Licensing, (“ASU 2016-10”). The purpose of ASU 2016-10 is to clarify certain aspects of identifying performance obligations and licensing implementation guidance.other economic factors.
In May 2016, the FASB issued Accounting Standards Update 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, (“ASU 2016-12”). The purpose of ASU 2016-12 is to address certain narrow aspects of Accounting Standards Codification (“ASC”) Topic 606 including assessing collectability, presentation of sales taxes, noncash considerations, contract modifications and completed contracts at transition.Restructuring Charges
815
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands,(in millions, except share and 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 amendments in these accounting standards updates may be applied either usingRestructuring Plan primarily included a modified retrospective transition method by meansheadcount reduction at its domestic corporate office and the permanent closure of a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is effective or retrospectively to each period presented. Early adoption is permitted.
certain domestic and international theatres. The Company will adoptpaid approximately $0.9 related to previously accrued restructuring costs during the amendments within these accounting standards updates in the first quarter of 2018 using the modified retrospective transition method.nine months ended September 30, 2022. The Company is continuingrecorded a $0.2 reduction to evaluatepreviously accrued restructuring costs during the impact of these accounting standards updates on its condensed consolidated financial statements, specifically with respectnine months ended September 30, 2022 related to the Company’s Exhibitor Services Agreement (“ESA”) with NCM, loyalty program accounting, breakage incomesettlement of facility closure costs for stored value cards as well as other ancillary and contractual revenues.certain theatres. The Company believes its ESA with NCM includes a significant financing component and, as a result, other revenues will increase with a similar offsetting increase in interest expense each year until the ESA term expires. In addition, the amortization method used to amortize the deferred revenue associated with the ESA will change to straight-line under the new accounting standards due to the natureremaining accrued restructuring costs of the Company’s performance obligation under the ESA. The change in amortization method will result in a cumulative effect adjustment upon adoption, the value of$0.4, which the Company is currently evaluating.
In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842), (“ASU 2016-02”). The purpose of ASU 2016-02 is to provide financial statement users a better understanding of the amount, timing, and uncertainty of cash flows arising from leases. The adoption of ASU 2016-02 will result in the recognition of a right-of-use asset and a lease liability for most operating leases. New disclosure requirements include qualitative and quantitative information about the amounts recorded in the financial statements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. ASU 2016-02 requires a modified retrospective transition by means of a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is effective with the option to elect certain practical expedients. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2016-02 on its condensed consolidated financial statements. The most significant impact of the amendments in ASU 2016-02 will be the recognition of new right-of-use assets and lease liabilities for assets currently subject to operating leases. The Company will adopt the amendments in ASU 2016-02 in the first quarter of 2019.
In March 2016, the FASB issued Accounting Standards Update 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, (“ASU 2016-09”). The purpose of ASU 2016-09 is to simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification of such activity on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within that year. Prospective, retrospective, or modified retrospective application may be used dependent on the specific requirements of the amendments within ASU 2016-09. Effective January 1, 2017, the Company adopted ASU 2016-09 on a prospective basis. Excess income tax benefits or deficienciesare primarily related to share based awards are recognized as discrete items in the income statement during the period in which they occur. As such, prior periods have not been adjusted.
In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments – a consensus of the FASB Emerging Issues Task Force, (“ASU 2016-15”). The purpose of ASU 2016-15 is to reduce the diversity in practice regarding how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within that year. A retrospective transition method should be used in the application of the amendments within ASU 2016-15. Early adoption is permitted. The Company does not expect ASU 2016-15 to have a material impact on its condensed consolidated financial statements.
In January 2017, the FASB issued Accounting Standards Update 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, (“ASU 2017-04”). The purpose of ASU 2017-04 is to simplify the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendments should be applied on a prospective basis. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, including interim periods within that year. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted the amendments in ASU 2017-04 during the second quarter of 2017 in order to reduce the complexity of
9
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
performing its goodwill impairment tests. As discussed in Note 8, these tests are generally performed in the fourth quarter of each year. The Company does not expect ASU 2017-04 to have a material impact on its condensed consolidated financial statements.
In May 2017, the FASB issued Accounting Standards Update 2017-09, Compensation – Stock Compensation (Topic 718): Scope Modification Accounting, (“ASU 2017-09”). The amendments in ASU 2017-09 provide guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting as described in ASC Topic 718. The amendments should be applied on a prospective basis. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017, including interim periods within that year. Early adoption is permitted. The Company does not expect ASU 2017-09 to have a material impact on its condensed consolidated financial statements.
In August 2017, the FASB issued Accounting Standards Update 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, (“ASU 2017-12”). The amendments in ASU 2017-12 improve the financial reporting of hedging relationships to better reflect the economic results of an entity’s risk management activities in its financial statements. Additionally, the amendments in ASU 2017-12 simplify certain steps of applying hedge accounting guidance. ASU 2017-04 is effective for fiscal years beginning after December 15, 2017, including interim periods within that year. Early adoption is permitted. The Company does not expect ASU 2017-12 to have a material impact on its condensed consolidated financial statements.
|
|
Senior Secured Credit Facility
On June 16, 2017, the Company amended its senior secured credit facility to reduce the rate at which the term loan bears interest by 0.25% and to modify certain covenant definitions within the agreement. The Company incurred debt issueclosure costs, of approximately $521 in connection with the amendment, which are reflected as a reduction of long term debtin accounts payable and accrued expenses on the condensed consolidated balance sheet as of September 30, 2017. In addition,2022.
Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Company incurred approximately $246Effects of Reference Rate Reform on Financial Reporting, (“ASU 2020-04”) and ASU 2021-01, Reference Rate Reform (Topic 848): Scope, (“ASU 2021-01”). The purpose of ASU 2020-04 is to provide optional guidance for a limited period of time to ease the potential burden in legal feesaccounting 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 reflectedaffected by the discounting transition. The amendments in ASU 2020-04 and ASU 2021-01 are effective as loss on debt amendmentsof March 12, 2020 through December 31, 2022. The Company does not expect ASU 2020-04 and refinancingASU 2021-01 to have a material impact on the condensed consolidated financial statements of incomeHoldings 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 disclosure 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 amounts 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 ended December 31, 2022.
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 |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
Lease Cost | Classification | 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Operating lease costs |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Equipment (1) | Utilities and other | $ | 1.0 |
|
| $ | 0.7 |
|
| $ | 2.6 |
|
| $ | 1.6 |
|
Real Estate (2)(3) | Facility lease expense |
| 79.5 |
|
|
| 69.5 |
|
|
| 236.4 |
|
|
| 200.9 |
|
Total operating lease costs |
| $ | 80.5 |
|
| $ | 70.2 |
|
| $ | 239.0 |
|
| $ | 202.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Finance lease costs |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Amortization of leased assets | Depreciation and amortization | $ | 3.1 |
|
| $ | 3.1 |
|
| $ | 9.4 |
|
| $ | 9.5 |
|
Interest on lease liabilities | Interest expense |
| 1.4 |
|
|
| 1.4 |
|
|
| 4.1 |
|
|
| 4.5 |
|
Total finance lease costs |
| $ | 4.5 |
|
| $ | 4.5 |
|
| $ | 13.5 |
|
| $ | 14.0 |
|
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 |
| |||||
|
| September 30, |
| |||||
Other Information |
| 2022 |
|
| 2021 |
| ||
Cash paid for amounts included in the measurement of lease liabilities |
|
|
|
|
|
| ||
Cash outflows for operating leases |
| $ | 209.3 |
|
| $ | 201.4 |
|
Cash outflows for finance leases - operating activities |
| $ | 4.1 |
|
| $ | 4.5 |
|
Cash outflows for finance leases - financing activities |
| $ | 10.8 |
|
| $ | 11.0 |
|
Non-cash amount of right-of-use assets obtained in exchange for: |
|
|
|
|
|
| ||
Operating lease liability additions, net of write-offs |
| $ | 78.5 |
|
| $ | 109.1 |
|
As of September 30, 2022, the Company had signed lease agreements with total noncancelable lease payments of approximately $69.3 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, 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.
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. 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") screen advertising advances discussed below in Note 8, these revenues are generally recognized when the Company has performed the related services. The Company sells gift cards and discount ticket vouchers, 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
17
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
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. 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 or subscription credits. Advances collected on 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, 2022 and December 31, 2021 included approximately $19.4 and $23.5, 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 nine months ended September 30, 2022.
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 |
| ||||||||||||||
|
| September 30, 2022 |
|
| September 30, 2022 |
| ||||||||||||||
|
| U.S. |
| International |
|
|
|
| U.S. |
| International |
|
|
| ||||||
|
| Operating |
| Operating |
|
|
|
| Operating |
| Operating |
|
|
| ||||||
|
| Segment (1) |
| Segment |
| Consolidated |
|
| Segment (1) |
| Segment |
| Consolidated |
| ||||||
Admissions revenue |
| $ | 257.6 |
| $ | 67.0 |
| $ | 324.6 |
|
| $ | 759.1 |
| $ | 183.2 |
| $ | 942.3 |
|
Concession revenue |
|
| 200.8 |
|
| 52.8 |
|
| 253.6 |
|
|
| 576.5 |
|
| 136.1 |
|
| 712.6 |
|
Screen advertising, screen rental and promotional revenue (2) |
|
| 20.6 |
|
| 11.3 |
|
| 31.9 |
|
|
| 60.7 |
|
| 30.7 |
|
| 91.4 |
|
Other revenue |
|
| 32.7 |
|
| 7.6 |
|
| 40.3 |
|
|
| 88.2 |
|
| 20.5 |
|
| 108.7 |
|
Total revenue |
| $ | 511.7 |
| $ | 138.7 |
| $ | 650.4 |
|
| $ | 1,484.5 |
| $ | 370.5 |
| $ | 1,855.0 |
|
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||||||
|
| September 30, 2021 |
|
| September 30, 2021 |
| ||||||||||||||
|
| U.S. |
| International |
|
|
|
| U.S. |
| International |
|
|
| ||||||
|
| Operating |
| Operating |
|
|
|
| Operating |
| Operating |
|
|
| ||||||
|
| Segment (1) |
| Segment |
| Consolidated |
|
| Segment (1) |
| Segment |
| Consolidated |
| ||||||
Admissions revenue |
| $ | 195.3 |
| $ | 30.2 |
| $ | 225.5 |
|
| $ | 384.4 |
| $ | 50.7 |
| $ | 435.1 |
|
Concession revenue |
|
| 142.6 |
|
| 21.6 |
|
| 164.2 |
|
|
| 275.0 |
|
| 38.5 |
|
| 313.5 |
|
Screen advertising, screen rental and promotional revenue (2) |
|
| 18.0 |
|
| 4.8 |
|
| 22.8 |
|
|
| 44.5 |
|
| 7.6 |
|
| 52.1 |
|
Other revenue |
|
| 19.5 |
|
| 2.8 |
|
| 22.3 |
|
|
| 37.9 |
|
| 5.2 |
|
| 43.1 |
|
Total revenue |
| $ | 375.4 |
| $ | 59.4 |
| $ | 434.8 |
|
| $ | 741.8 |
| $ | 102.0 |
| $ | 843.8 |
|
The following tables present revenue disaggregated based on timing of recognition and by reportable operating segment.
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||||||
|
| September 30, 2022 |
|
| September 30, 2022 |
| ||||||||||||||
|
| U.S. |
| International |
|
|
|
| U.S. |
| International |
|
|
| ||||||
|
| Operating |
| Operating |
|
|
|
| Operating |
| Operating |
|
|
| ||||||
|
| 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 |
|
Goods and services transferred over time (2) |
|
| 32.8 |
|
| 14.9 |
|
| 47.7 |
|
|
| 83.5 |
|
| 38.3 |
|
| 121.8 |
|
Total |
| $ | 511.7 |
| $ | 138.7 |
| $ | 650.4 |
|
| $ | 1,484.5 |
| $ | 370.5 |
| $ | 1,855.0 |
|
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)
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||||||
|
| September 30, 2021 |
|
| September 30, 2021 |
| ||||||||||||||
|
| U.S. |
| International |
|
|
|
| U.S. |
| International |
|
|
| ||||||
|
| Operating |
| Operating |
|
|
|
| Operating |
| Operating |
|
|
| ||||||
|
| 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 |
|
Goods and services transferred over time (2) |
|
| 27.0 |
|
| 6.1 |
|
| 33.1 |
|
|
| 63.4 |
|
| 10.5 |
|
| 73.9 |
|
Total |
| $ | 375.4 |
| $ | 59.4 |
| $ | 434.8 |
|
| $ | 741.8 |
| $ | 102.0 |
| $ | 843.8 |
|
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 nine months ended September 30, 2022.
|
| NCM screen advertising advances (1) |
|
| Other |
| ||
Balance at January 1, 2022 |
| $ | 346.0 |
|
| $ | 160.3 |
|
Amounts recognized as accounts receivable |
|
| — |
|
|
| 1.0 |
|
Cash received from customers in advance |
|
| — |
|
|
| 163.5 |
|
Common units received from NCM |
|
| 1.3 |
|
|
| — |
|
Interest accrued related to significant financing component |
|
| 17.5 |
|
|
| — |
|
Revenue recognized during period |
|
| (24.3 | ) |
|
| (150.9 | ) |
Foreign currency translation adjustments |
|
| — |
|
|
| (1.0 | ) |
Balance at September 30, 2022 |
| $ | 340.5 |
|
| $ | 172.9 |
|
The table below summarizes the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied as of September 30, 2022 and when the Company expects to recognize this revenue.
|
| Twelve Months Ended September 30, |
|
|
|
|
|
|
| |||||||
Remaining Performance Obligations |
| 2023 |
|
| 2024 |
|
| Thereafter |
|
| Total |
| ||||
Other deferred revenue |
| $ | 153.3 |
|
| $ | 19.6 |
|
| $ | — |
|
| $ | 172.9 |
|
20
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 |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net loss attributable to Cinemark Holdings, Inc. |
| $ | (24.5 | ) |
| $ | (77.8 | ) |
| $ | (171.9 | ) |
| $ | (428.5 | ) |
Loss allocated to participating share-based awards (1) |
|
| 0.4 |
|
|
| 1.5 |
|
|
| 2.4 |
|
|
| 7.6 |
|
Net loss attributable to common stockholders |
| $ | (24.1 | ) |
| $ | (76.3 | ) |
| $ | (169.5 | ) |
| $ | (420.9 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic weighted average shares outstanding |
|
| 118.4 |
|
|
| 117.3 |
|
|
| 118.1 |
|
|
| 117.2 |
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic loss per share attributable to common stockholders |
| $ | (0.20 | ) |
| $ | (0.65 | ) |
| $ | (1.43 | ) |
| $ | (3.59 | ) |
Diluted loss per share attributable to common stockholders |
| $ | (0.20 | ) |
| $ | (0.65 | ) |
| $ | (1.43 | ) |
| $ | (3.59 | ) |
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 13 of Holdings' Annual Report on Form 10-K filed February 26, 2021, 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 EPS assuming conversion at the beginning of the reporting period. The closing price of Holdings' common stock did not exceed the strike price of $18.65 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 months ended September 30, 2022 and, therefore, the 4.50% Convertible Senior Notes are not convertible during the fourth quarter of 2022. The if-converted value of the 4.50% Convertible Senior Notes exceeded the aggregate outstanding principal value of the notes by $54.3 as of September 30, 2022.
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 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
21
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 per share of Holdings' common stock to approximately $22.08 per share.
Long-term debt of Holdings consisted of the following for the periods presented:
| September 30, |
|
| December 31, |
| ||
| 2022 |
|
| 2021 |
| ||
Cinemark Holdings, Inc. 4.500% convertible senior notes due 2025 | $ | 460.0 |
|
| $ | 460.0 |
|
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 | $ | 2,530.1 |
|
| $ | 2,543.3 |
|
Less: Current portion |
| 22.0 |
|
|
| 24.3 |
|
Less: Debt issuance costs, net of accumulated amortization |
| 34.6 |
|
|
| 42.7 |
|
Long-term debt, less current portion, net of unamortized debt issuance costs | $ | 2,473.5 |
|
| $ | 2,476.3 |
|
Long-term debt of CUSA consisted of the following for the periods presented:
| 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 |
|
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, there was $628.2 outstanding under the term loan and no borrowings were outstanding under the revolving credit line. As of September 30, 2022, $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 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, 2022 was approximately 4.1% per annum, after giving effect to the interest rate swap agreements discussed below.
Interest Rate Swap Agreements
Below is a summary of the Company's interest rate swap agreements, which are designated as cash flow hedges, as of September 30, 2022:
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)
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.
Fair Value of Long-Term Debt
The Company estimates the fair value of its long-term debt primarily using the market approach, which utilizes quoted market prices, thatwhich fall under Level 2 of the U.S. GAAP fair value hierarchy as defined by ASC 820, Fair Value Measurement (“ASC Topic 820. 820”).The carryingtable below presents the fair value of the Company’sCompany's long-term debt was $1,820,112as of the periods presented:
|
| As of |
| |||||
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||
Holdings fair value (1) |
| $ | 2,326.2 |
|
| $ | 2,749.8 |
|
CUSA fair value |
| $ | 1,798.7 |
|
| $ | 2,058.0 |
|
|
|
Below is a summary of changesactivity with NCM included in stockholder’s equity attributableeach 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 |
|
|
| Cinemark |
|
|
|
|
|
|
|
|
| |
|
| USA, Inc. |
|
|
|
|
|
|
|
|
| |
|
| Stockholder’s |
|
| Noncontrolling |
|
| Total |
| |||
|
| Equity |
|
| Interests |
|
| Equity |
| |||
Balance at January 1, 2017 |
| $ | 1,272,938 |
|
| $ | 11,142 |
|
| $ | 1,284,080 |
|
Share based awards compensation expense |
|
| 8,862 |
|
|
| — |
|
|
| 8,862 |
|
Tax expense related to share based awards vesting |
|
| (32 | ) |
| ― |
|
|
| (32 | ) | |
Dividends paid to parent |
|
| (100,875 | ) |
|
| — |
|
|
| (100,875 | ) |
Dividends paid to noncontrolling interests |
|
| — |
|
|
| (588 | ) |
|
| (588 | ) |
Net income |
|
| 170,228 |
|
|
| 1,438 |
|
|
| 171,666 |
|
Other comprehensive income in equity method investees |
|
| 92 |
|
|
| — |
|
|
| 92 |
|
Foreign currency translation adjustments (see Note 11) |
|
| 4,027 |
|
|
| — |
|
|
| 4,027 |
|
Balance at September 30, 2017 |
| $ | 1,355,240 |
|
| $ | 11,992 |
|
| $ | 1,367,232 |
|
1023
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands,(in millions, except share and per share data, unaudited)
|
| Cinemark |
|
|
|
|
|
|
|
|
| |
|
| USA, Inc. |
|
|
|
|
|
|
|
|
| |
|
| Stockholder’s |
|
| Noncontrolling |
|
| Total |
| |||
|
| Equity |
|
| Interests |
|
| Equity |
| |||
Balance at January 1, 2016 |
| $ | 1,102,146 |
|
| $ | 11,105 |
|
| $ | 1,113,251 |
|
Share based awards compensation expense |
|
| 9,458 |
|
| ― |
|
|
| 9,458 |
| |
Tax benefit related to share based awards vesting |
|
| 1,797 |
|
| ― |
|
|
| 1,797 |
| |
Dividends paid to parent |
|
| (93,650 | ) |
| ― |
|
|
| (93,650 | ) | |
Dividends paid to noncontrolling interests |
| ― |
|
|
| (515 | ) |
|
| (515 | ) | |
Net income |
|
| 179,424 |
|
|
| 1,454 |
|
|
| 180,878 |
|
Fair value adjustments on interest rate swap agreements designated as hedges, net of settlements, net of taxes of $138 |
|
| 234 |
|
| ― |
|
|
| 234 |
| |
Gain realized on available-for-sale securities, net of taxes of $1,180 |
|
| (2,011 | ) |
| ― |
|
|
| (2,011 | ) | |
Other comprehensive loss in equity method investees |
|
| (183 | ) |
| ― |
|
|
| (183 | ) | |
Foreign currency translation adjustments |
|
| 34,974 |
|
|
| 24 |
|
|
| 34,998 |
|
Balance at September 30, 2016 |
| $ | 1,232,189 |
|
| $ | 12,068 |
|
| $ | 1,244,257 |
|
| Investment |
The Company has an investment in National CineMedia LLC (“NCM”).
NCM operates a digital in-theatre network in the U.S. for providing cinema advertising. Upon joining NCM, theThe Company entered into an Exhibitor Services Agreement with NCM (“ESA”), pursuant to which NCM primarily provides advertising and promotions to our theatres. As described further inSee Note 38 to the Company’s financial statements as included in its 2016Holdings' Annual Report on Form 10-K filed February 25, 2022 and Note 6 to CUSA's Annual Report on February 13, 2007, National CineMedia, Inc. (“From 10-K filed March 9, 2022 for additional discussion of the Company's investment in NCM Inc.”), an entity that servesas well as the sole manager of NCM, completed an initial public offering (“IPO”) of its common stock. In connection with the NCM, Inc. initial public offering, the Company amended its operating agreement and the ESA. Following the NCM, Inc. IPO, the Company does not recognize undistributed equity in the earnings onaccounting for its original NCM membership units (referred to herein as the Company’s Tranche 1 Investment) until NCM’s future net earnings, less distributions received, surpass the amount of the excess distribution. and subsequent common unit adjustments.
Common Unit Adjustments
The Company recognizes equityalso periodically receives consideration in earnings on its Tranche 1 Investment only to the extent it receives cash distributionsform of common units from NCM. The Company recognizes cash distributions it receives from NCM on its Tranche 1 Investment as a component of earnings as Distributions from NCM. The Company believes that the accounting model provided by ASC Topic 323-10-35-22 for recognition of equity investee losses in excess of an investor’s basis is analogous to the accounting for equity income subsequent to recognizing an excess distribution.
Below is a summary of activity with NCM included in the Company’s condensed consolidated financial statements:
|
|
|
|
|
|
|
|
|
| Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Investment |
|
| Deferred |
|
| from |
|
| Equity in |
|
| Other |
|
| Cash |
| ||||||
|
| in NCM |
|
| Revenue |
|
| NCM |
|
| Income |
|
| Revenue |
|
| Received |
| ||||||
Balance as of January 1, 2017 |
| $ | 189,995 |
|
| $ | (343,928 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receipt of common units due to annual common unit adjustment |
|
| 18,363 |
|
|
| (18,363 | ) |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
Revenues earned under ESA (1) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (8,446 | ) |
|
| 8,446 |
|
Receipt of excess cash distributions |
|
| (10,020 | ) |
|
| — |
|
|
| (9,630 | ) |
|
| — |
|
|
| — |
|
|
| 19,650 |
|
Receipt under tax receivable agreement |
|
| (2,089 | ) |
|
| — |
|
|
| (2,074 | ) |
|
| — |
|
|
| — |
|
|
| 4,163 |
|
Equity in earnings |
|
| 8,098 |
|
|
| — |
|
|
| — |
|
|
| (8,098 | ) |
|
| — |
|
|
| — |
|
Amortization of deferred revenue |
|
| — |
|
|
| 7,872 |
|
|
| — |
|
|
| — |
|
|
| (7,872 | ) |
|
| — |
|
Balance as of and for the nine months ended September 30, 2017 |
| $ | 204,347 |
|
| $ | (354,419 | ) |
| $ | (11,704 | ) |
| $ | (8,098 | ) |
| $ | (16,318 | ) |
| $ | 32,259 |
|
|
|
11
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
During the three months ended September 30, 2017 and 2016, the Company recorded equity in earnings of approximately $5,032 and $5,815, respectively. During the nine months ended September 30, 2017 and 2016, the Company recorded equity in earnings of approximately $8,098 and $7,660, respectively.
The Company made payments to NCM of approximately $75 and $41 during the nine months ended September 30, 2017 and 2016, respectively, related to installation of certain equipment used for digital advertising, which is included in theatre properties and equipment on the condensed consolidated balance sheets.
Pursuant to a Common Unit Adjustment Agreement dated as of February 13, 2007 between NCM, Inc. and the Company, AMC Entertainment, Inc. (“AMC”) and Regal Entertainment Group (“Regal”) (collectively, “Founding Members”), annualAnnual adjustments to the common membership units are made primarily based on increases or decreases in the number of theatre screens operated and theatre attendance generated by each Founding Member. As further discussed in Note 3 to the Company’s financial statements as included in its 2016 Annual Reportimpact of these theatres on Form 10-K, thetotal attendance. The common units received are recorded at estimated fair value as an increase in the Company’sCompany's investment in NCM with an offset to deferred revenue. The deferred revenue is amortized over the remaining term of the ESA. NCM screen advertising advances.
During March 2017,2022, NCM performed its annual common unit adjustment calculation under the Common Unit Adjustment Agreement. As a result of the calculation, on March 30, 2017, the Company received an additional 1,487,2180.5 common units of NCM each of which is convertible into one share of NCM, Inc. common stock. The Companyduring April 2022 and recorded the additional common units received at their estimated fair value of $1.3 with a corresponding adjustment to deferred revenue of approximately $18,363.NCM screen advertising advances. The fair value of the common units received was estimated based on the market price of NCM,National Cinemedia, Inc. ("NCMI") common stock (Level 1 input as defined 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. The deferred revenue will be recognized over the remaining term
Impairment of the ESA, which is approximately 19 years.NCM Investment
As of September 30, 2017,2022, the Company owned a total of 27,871,86243.7 common units of NCM representing an ownership interest of approximately 18%25.5%. TheEach of the Company’s common units in NCM is convertible into one share of NCMI common stock. As of September 30, 2022, the estimated fair value of the Company’s investment in NCM was approximately $194,546$28.4 based on NCM, Inc.’sNCMI's stock price as of September 30, 20172022 of $6.98$0.65 per share (Level 1 input as defined in FASB ASC Topic 820), which. Because the share price of NCMI was less thansignificantly below the Company’s carrying value of $204,347. TheNCM per common unit and due to the prolonged recovery of NCM's business, the Company does not believe that the decline in NCM, Inc.’s stock price is other than temporary and therefore, no impairment of the Company’swrote down its investment in NCM was recordedto its estimated fair value during the nine months ended September 30, 2017. The market value of NCM, Inc.’s stock price may change due to2022. See Note 12 for impairment expense recorded during the performancethree and nine months ended September 30, 2022 and 2021.
Exhibitor Services Agreement
As discussed above, the Company’s domestic theatres are part of the business, industry trends, generalin-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 economic conditionsalso handles lobby promotions and other factors. 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 8 to Holdings' 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 for further discussion of the accounting for revenue earned under the ESA as well as the accounting related to NCM screen advertising advances.
The deferred NCM screen advertising advances are recorded on a straight-line basis over the term of the amended ESA through February 2041. The table below summarizes when the Company expects to recognize this revenue:
|
| Twelve Months Ended September 30, |
|
|
|
|
|
|
| |||||||||||||||||||
Remaining Maturity |
| 2023 |
|
| 2024 |
|
| 2025 |
|
| 2026 |
|
| 2027 |
|
| Thereafter |
|
| Total |
| |||||||
NCM screen advertising advances (1) |
| $ | 9.6 |
|
| $ | 10.3 |
|
| $ | 11.0 |
|
| $ | 11.8 |
|
| $ | 12.6 |
|
| $ | 285.2 |
|
| $ | 340.5 |
|
Significant Financing Component
As discussed in Note 8 to Holdings' 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's ESA with NCM includes an implied significant financing component, as per the guidance in ASC Topic 606. As a result of the significant financing component, the Company recognized incremental screen rental revenue and interest expense of $24.3 and $17.5, respectively, during the nine months ended September 30, 2022 and incremental screen rental revenue and interest expense of $24.0 and $17.7, respectively, during the nine months ended September 30, 2021. 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 was 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)
NCM Financial Information
Below is summary financial information for NCM for the three and six months ended June 29, 2017 (the financial information for the three and nine months ended September 28, 2017 is not yet available) and the three and nine months ended September 29, 2016:periods indicated:
|
| Three Months Ended |
|
| Three Months Ended |
|
| Nine Months Ended |
|
| Nine Months Ended |
| ||||
|
| September 29, 2022 |
|
| September 30, 2021 |
|
| September 29, 2022 |
|
| September 30, 2021 |
| ||||
Gross revenue |
| $ | 54.5 |
|
| $ | 31.7 |
|
| $ | 157.5 |
|
| $ | 51.1 |
|
Operating loss |
| $ | (4.3 | ) |
| $ | (18.7 | ) |
| $ | (21.2 | ) |
| $ | (76.6 | ) |
Net loss |
| $ | (24.4 | ) |
| $ | (35.3 | ) |
| $ | (79.0 | ) |
| $ | (125.7 | ) |
|
| 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 | ) |
|
| Three Months |
|
| Six Months |
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||
|
| Ended June 29, 2017 |
|
| Ended June 29, 2017 |
|
| September 29, 2016 |
|
| September 29, 2016 |
| ||||
Gross revenues |
| $ | 97,042 |
|
| $ | 168,962 |
|
| $ | 113,476 |
|
| $ | 305,101 |
|
Operating income |
| $ | 28,430 |
|
| $ | 33,500 |
|
| $ | 48,481 |
|
| $ | 100,911 |
|
Net income |
| $ | 15,377 |
|
| $ | 7,465 |
|
| $ | 23,909 |
|
| $ | 49,619 |
|
|
|
Below is a summary of activity for each of the Company’s other investments for the nine months ended September 30, 2017:
|
| DCIP |
|
| AC JV, LLC |
|
| DCDC |
|
| Other |
|
| Total |
| |||||
Balance at January 1, 2017 |
| $ | 87,819 |
|
| $ | 5,980 |
|
| $ | 2,750 |
|
| $ | 1,768 |
|
| $ | 98,317 |
|
Cash contributions |
|
| 1,109 |
|
|
| — |
|
|
| — |
|
|
| 68 |
|
|
| 1,177 |
|
Cash distributions |
|
| (5,212 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (5,212 | ) |
Equity in income |
|
| 16,820 |
|
|
| 996 |
|
|
| 853 |
|
|
| — |
|
|
| 18,669 |
|
Equity in other comprehensive income |
|
| 92 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 92 |
|
Other |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (165 | ) |
|
| (165 | ) |
Balance at September 30, 2017 |
| $ | 100,628 |
|
| $ | 6,976 |
|
| $ | 3,603 |
|
| $ | 1,671 |
|
| $ | 112,878 |
|
1225
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands,(in millions, except share and 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, 2017,2022, the Company had a 33%33% voting interest in DCIP and a 24.3%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 accounts fordoes 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 its subsidiaries underCUSA as of December 31, 2021 and September 30, 2022 was $0. DCIP ceased operations at the equity methodend of accounting.the second quarter of 2022.
Below is summary financial information forThe Company received distributions and warranty reimbursements from DCIP for the three and nine months ended September 30, 20172022 and 2016.2021 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 |
|
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, 2017 |
|
| September 30, 2016 |
|
| September 30, 2017 |
|
| September 30, 2016 |
| ||||
Gross revenues |
| $ | 39,961 |
|
| $ | 48,274 |
|
| $ | 132,535 |
|
| $ | 133,675 |
|
Operating income |
| $ | 22,702 |
|
| $ | 31,180 |
|
| $ | 80,574 |
|
| $ | 82,369 |
|
Net income |
| $ | 19,701 |
|
| $ | 26,949 |
|
| $ | 69,458 |
|
| $ | 67,728 |
|
As of September 30, 2017, the Company had 3,796 digital projection systems being leased under the master equipment lease agreement with Kasima LLC, which is an indirect subsidiary of DCIP and(1)
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 nine months ended September 30, 2022:
|
| 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 |
|
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 DCIP duringOther Investees
Below is a summary of transactions with each of the Company’s other investees for the three and nine months ended September 30, 20172022 and 2016:2021:
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
Investee | Transactions | September 30, 2022 |
|
| September 30, 2021 |
|
| September 30, 2022 |
|
| September 30, 2021 |
| ||||
AC JV, LLC | Event fees paid (1) | $ | 2.1 |
|
| $ | 0.8 |
|
| $ | 6.6 |
|
| $ | 1.4 |
|
DCDC | Content delivery fees paid (1) | $ | 0.1 |
|
| $ | 0.2 |
|
| $ | 0.4 |
|
| $ | 0.4 |
|
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, 2017 |
|
| September 30, 2016 |
|
| September 30, 2017 |
|
| September 30, 2016 |
| ||||
Equipment lease payments |
| $ | 1,452 |
|
| $ | 1,333 |
|
| $ | 4,333 |
|
| $ | 3,864 |
|
Warranty reimbursements from DCIP |
| $ | (2,234 | ) |
| $ | (1,608 | ) |
| $ | (6,141 | ) |
| $ | (4,367 | ) |
Management service fees |
| $ | 207 |
|
| $ | 207 |
|
| $ | 619 |
|
| $ | 619 |
|
AC JV, LLC
During December 2013, the Company, Regal, AMC (the “AC Founding Members”) and NCM entered into a series of agreements that resulted in the formation of AC JV, LLC (“AC”), a joint venture that owns “Fathom Events” (consisting of Fathom Events and Fathom Consumer Events) formerly operated by NCM. The Fathom Events business focuses on the marketing and distribution of live and pre-recorded entertainment programming to various theatre operators to provide additional programs that augment their feature film schedule. The Fathom Consumer Events business includes live and pre-recorded concerts featuring contemporary music, opera and symphony, DVD product releases and marketing events, theatrical premieres, Broadway plays, live sporting events and other special events. The Company paid event fees to AC of $9,448 and $7,808 for the nine months ended September 30, 2017 and 2016, respectively, which are included(1)
Treasury Stock - Holdings
AC was formedTreasury stock represents shares of common stock repurchased or withheld by Holdings and not yet retired. The Company has applied the AC Founding Members and NCM. NCM, undercost method in recording its treasury shares. Below is a contribution agreement, contributedsummary of treasury stock activity for the assets associated with its Fathom Events division to AC in exchange for 97% ownershipnine months ended September 30, 2022:
|
| Number of |
|
|
|
| ||
|
| Treasury |
|
|
|
| ||
|
| Shares |
|
| Cost |
| ||
Balance at January 1, 2022 |
|
| 5.35 |
|
| $ | 91.1 |
|
Restricted stock withholdings (1) |
|
| 0.24 |
|
|
| 4.1 |
|
Restricted stock forfeitures |
|
| 0.07 |
|
|
| — |
|
Balance at September 30, 2022 |
|
| 5.66 |
|
| $ | 95.2 |
|
As of September 30, 2017 was $4,167.2022, Holdings had no plans to retire any shares of treasury stock.
Digital Cinema Distribution CoalitionRestricted Stock
Digital Cinema Distribution Coalition (“DCDC”)Below is a joint venture among the Company, Universal, Warner Bros., AMC and Regal. DCDC operates a satellite distribution network that distributes all digital content to U.S. theatres via satellite. The Company has an approximate 14.6% ownership in DCDC. The Company paid approximately $637 and $707 to DCDC duringsummary of restricted stock activity for the nine months ended September 30, 2022:
|
| 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 |
|
1327
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands,(in millions, except share and 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 | ) |
28
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
ended September 30, 2017 and 2016, respectively, related to content delivery services provided by DCDC. These fees are included CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in film rentals and advertising costs on the condensed consolidated statements of income.millions, except per share data, unaudited)
|
|
Restricted Stock – During the nine months ended September 30, 2017, Cinemark2022, Holdings Inc. granted 237,9330.88 shares of its restricted stock to certain CUSA employees and its directors and to employees of the Company.directors. The fair value of the restricted stock granted was determined based on the market valueclosing price of Cinemark Holdings, Inc.’sHoldings' common stock on the grant dates, of grant, which ranged from $38.65$13.36 to $42.37$17.07 per share. The CompanyHoldings assumed forfeiture rates that ranged from 0% to 10% for the restricted stock awards.awards that ranged from 0% to 12%. The restricted stock granted to Cinemark Holdings, Inc.’s directorsduring the nine months ended September 30, 2022 vests over a periods ranging from one year service period. The restricted stock granted to the Company’s employees vests over a four year service period.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 summaryAs of restricted stock activity for the nine months ended September 30, 2017:
|
| Shares of |
|
| Weighted Average |
| ||
|
| Restricted |
|
| Grant Date |
| ||
|
| Stock |
|
| Fair Value |
| ||
Outstanding at January 1, 2017 |
|
| 606,618 |
|
| $ | 33.51 |
|
Granted |
|
| 237,933 |
|
| $ | 41.94 |
|
Vested |
|
| (192,152 | ) |
| $ | 36.26 |
|
Forfeited |
|
| (9,550 | ) |
| $ | 33.00 |
|
Outstanding at September 30, 2017 |
|
| 642,849 |
|
| $ | 35.82 |
|
Unvested restricted stock at September 30, 2017 |
|
| 642,849 |
|
| $ | 35.82 |
|
|
| Nine Months Ended September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Compensation expense recognized by the Company during the period |
| $ | 5,673 |
|
| $ | 5,762 |
|
Additional compensation expense recognized by Cinemark Holdings, Inc. during the period |
| $ | 625 |
|
| $ | 789 |
|
Fair value of restricted shares held by Company employees that vested during the period |
| $ | 917 |
|
| $ | 13,739 |
|
Fair value of restricted shares held by Cinemark Holdings, Inc.’s directors that vested during the period |
| $ | 7,252 |
|
| $ | 923 |
|
Income tax benefit recognized upon vesting of restricted stock awards held by Company employees |
| $ | 2,280 |
|
| $ | 5,167 |
|
Additional income tax benefit recognized upon vesting of restricted stock awards held by Cinemark Holdings, Inc.'s directors |
| $ | 385 |
|
| $ | 388 |
|
As of September 30, 2017,2022, the estimated remaining unrecognized compensation expense related to unvested restricted stock awards was $15,335, of which $14,456 will be recognized by the Company and $879 of which will be recognized by Cinemark Holdings, Inc. as follows:
|
| Estimated |
| |
|
| Remaining |
| |
|
| Expense |
| |
CUSA employees (1) |
| $ | 23.0 |
|
Holdings directors |
|
| 0.8 |
|
Total remaining - Holdings (1) |
| $ | 23.8 |
|
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, 2017, Cinemark2022, Holdings Inc. granted performance awards in the form of restricted stock units representing 175,634 hypotheticalunits. The maximum number of shares issuable under the performance awards is 0.8 shares of itsHoldings' common stockstock. 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 employeesthe third anniversary of the Company. The restricted stock units vest based on a combinationdate of financialgrant. Each performance factors and continued service. The financialtarget underlying the performance factors are based on an implied equity value concept that determines an internal rate of return (“IRR”) during the two fiscal year periods ending December 31, 2018 based on a formula utilizing a multiple of Adjusted EBITDA subject to certain specified adjustments as specified by Cinemark Holdings, Inc.’s Compensation Committee prior to the grant date. The financial performance factors for the restricted stock units haveaward has a threshold, target and maximum level, with the maximum level equal to 175% of payment opportunity and vest on a prorata basis according to the IRR achieved by the Company duringtarget award. If the performance period. If the IRR for the two-year period is at least 7%, which ismetrics meet the threshold one-thirdlevel, approximately 29% of the maximum restricted stock units vest. If the IRRperformance metrics for the two-yearone-year period isare at least 9.5%, which istarget, approximately 57% of the target, two-thirds of the
14
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
maximum restricted stock units vest. If the IRR for the two-year period isperformance metrics are at least 13%, which is 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 IRRachievement of the performance goals is within the targets previously noted. Further, as an example, if the Company achieves an IRR equal to 11%, the number of restricted stock units that shall vest will be greater than the target but less than the maximum number that would have vested had the Company achieved the highest IRR. All restricted stock units granted during 2017 will vest subject to an additional two-year service requirement and2022 will be paid in the form of shares of Cinemark Holdings, Inc.’sHoldings' common stock if the participant continues to provide services through February 2021, which is the fourththird 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.
Below is a table summarizingWhen the potential number of shares that could vest under restricted stock unitperformance awards granted during the nine months ended September 30, 2017 at each of the three target levels of financial performance (excluding forfeiture assumptions):
|
| Number of |
|
|
|
|
| |
|
| Shares |
|
| Value at |
| ||
|
| Vesting |
|
| Grant |
| ||
at IRR of at least 7% |
|
| 58,545 |
|
| $ | 2,481 |
|
at IRR of at least 9.5% |
|
| 117,089 |
|
| $ | 4,961 |
|
at IRR of at least 13% |
|
| 175,634 |
|
| $ | 7,442 |
|
Due to the fact that the IRR for the two-year performance period could not be determined at the time of the 2017 grant,were issued, the Company estimated that the most likely outcome is the achievement of the target IRR level. The fair value of the restricted stock unit awards was determined based on the closing price of Cinemark Holdings, Inc.’sHoldings' common stock on the date of grant, which was $42.37$16.65 per share. The Company assumed a forfeiture rate of 5%5% for the restricted stock unit awards. IfBased 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 service period, additional information becomes available to lead the Company to believe a different IRR level will be achieved for the two-year performance period, the Company will reassess the number of units that will vest for the grant and adjust its compensation expense accordingly on a prospective basis over the remaining service period.nine months ended September 30, 2022.
|
| Nine Months Ended September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Number of restricted stock unit awards that vested during the period |
|
| 97,115 |
|
|
| 213,984 |
|
Fair value of restricted stock unit awards that vested during the period |
| $ | 4,155 |
|
| $ | 7,260 |
|
Accumulated dividends paid upon vesting of restricted stock unit awards |
| $ | 313 |
|
| $ | 662 |
|
Compensation expense recognized during the period |
| $ | 3,189 |
|
| $ | 3,696 |
|
Income tax benefit recognized upon vesting of restricted stock unit awards |
| $ | 1,745 |
|
| $ | 3,049 |
|
As of September 30, 2017,2022, the estimated remaining unrecognized compensation expense related to the outstanding restricted stock unit awardsunits was $8,314.$12.0. The weighted average period over which this remaining compensation expense will be recognized is approximately two years.years. As of September 30, 20172022, the CompanyHoldings had restricted stock units outstanding that represented a total of 628,1891.0 hypothetical shares of Cinemark Holdings, Inc.’s common stock, net of actual cumulative forfeitures of 7,407 units, assuming the maximum IRR level is achieved for all grants outstanding.
1529
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands,(in millions, except share and per share data, unaudited)
of common stock, net of forfeitures, reflecting actual certified performance levels for restricted stock units granted during 2019 and 2020 and the maximum performance level for the 2022 grant as discussed above, adjusted for estimated forfeitures.
The Company’sA summary of the Company's goodwill wasis 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. Operating Segment |
|
| International Operating Segment |
|
| Total |
| |||
Balance at January 1, 2017 (1) |
| $ | 1,164,163 |
|
| $ | 98,800 |
|
| $ | 1,262,963 |
|
Acquisitions of theatres (2) |
|
| 9,878 |
|
|
| 20,401 |
|
|
| 30,279 |
|
Foreign currency translation adjustments |
|
| — |
|
|
| 1,100 |
|
|
| 1,100 |
|
Balance at September 30, 2017 (1) |
| $ | 1,174,041 |
|
| $ | 120,301 |
|
| $ | 1,294,342 |
|
|
|
|
|
The Company evaluates goodwillBalances are presented net of accumulated impairment losses of $214.0 for impairment annually during the fourth quarter or whenever events or changes in circumstances indicateU.S. operating segment and $43.8 for the carrying valueinternational operating segment. See discussion of the goodwill may not be fully recoverable. The Company evaluates goodwill forqualitative impairment at the reporting unit level and has allocated goodwill to the reporting unit based on an estimate of its relative fair value. Management considers the reporting unit to be each of its nineteen regions in the U.S. and seven countries internationally with Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala considered one reporting unit (the Company does not have goodwill recorded for all of its international locations). For the year ended December 31, 2016,analysis performed by the Company performed a qualitative goodwill impairment assessment on all reporting units, in accordance with ASC Topic 350-20-35. No events or changes in circumstances occurredas of September 30, 2022 at Note 12.
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 |
| |||||
Intangible assets with finite lives: |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross carrying amount |
| $ | 81.8 |
| $ | — |
| $ | 0.1 |
| $ | (0.2 | ) | $ | 81.7 |
|
Accumulated amortization |
|
| (71.1 | ) |
| (1.8 | ) |
| — |
|
| 0.2 |
|
| (72.7 | ) |
Total net intangible assets with finite lives |
| $ | 10.7 |
| $ | (1.8 | ) | $ | 0.1 |
| $ | — |
| $ | 9.0 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Intangible assets with indefinite lives: |
|
|
|
|
|
|
|
|
|
|
| |||||
Tradename and other |
|
| 300.1 |
|
| — |
|
| — |
|
| — |
|
| 300.1 |
|
Total intangible assets, net |
| $ | 310.8 |
| $ | (1.8 | ) | $ | 0.1 |
| $ | — |
| $ | 309.1 |
|
The estimated fair value.
Intangible assets consisted of the following:
|
| Balance at |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at |
| ||
|
| January 1, |
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, |
| ||
|
| 2017 |
|
| Additions (1) |
|
| Amortization |
|
| Other (2) |
|
| 2017 |
| |||||
Intangible assets with finite lives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross carrying amount |
| $ | 99,796 |
|
| $ | 4,453 |
|
| $ | — |
|
| $ | (1,332 | ) |
| $ | 102,917 |
|
Accumulated amortization |
|
| (64,606 | ) |
| ― |
|
|
| (3,606 | ) |
|
| 1,162 |
|
|
| (67,050 | ) | |
Total net intangible assets with finite lives |
| $ | 35,190 |
|
| $ | 4,453 |
|
| $ | (3,606 | ) |
| $ | (170 | ) |
| $ | 35,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets with indefinite lives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tradename |
|
| 299,709 |
|
| ― |
|
| ― |
|
|
| 81 |
|
|
| 299,790 |
| ||
Total intangible assets — net |
| $ | 334,899 |
|
| $ | 4,453 |
|
| $ | (3,606 | ) |
| $ | (89 | ) |
| $ | 335,657 |
|
|
|
|
|
For the year ended December 31, 2016, the Company performed a qualitative assessment for all indefinite-lived tradename assets other than its tradename in Ecuador, for which the Company performed a quantitative assessment. For the year ended December 31, 2016, the Company also performed a quantitative test on its definite-lived tradename associated with certain of its Rave branded theatres acquired in 2013. No events or changes in circumstances occurred during the nine months ended September 30, 2017 that indicated the carrying value of its tradename assets might exceed their estimated fair values.
16
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
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 |
|
30
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
For the three months ended December 31, 2017 |
| $ | 1,668 |
|
For the twelve months ended December 31, 2018 |
|
| 5,964 |
|
For the twelve months ended December 31, 2019 |
|
| 5,101 |
|
For the twelve months ended December 31, 2020 |
|
| 4,995 |
|
For the twelve months ended December 31, 2021 |
|
| 2,444 |
|
Thereafter |
|
| 15,695 |
|
Total |
| $ | 35,867 |
|
|
|
The Company reviewsperformed a qualitative impairment analysis on its goodwill and tradename intangible assets as of September 30, 2022. As a result of the qualitative assessment, the Company noted no impairment indicators related to its goodwill and tradename intangible assets as of September 30, 2022.
The qualitative impairment analysis, by asset class, is described below:
The Company performed a qualitative impairment analysis on other long-lived assets, namely theatre properties and right-of-use assets, as of September 30, 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 identified for impairment indicators on a quarterly basistheatre as a result of the qualitative test, then the Company performed a quantitative test for that theatre.
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 whenever events or changes in circumstances indicatethe 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 amountvalue of the assets may not be fully recoverable. See discussionasset 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 Company’s long-lived asset impairment evaluation process in “Critical Accounting Policies” in its Annual Reporttheatres based on Form 10-K for the year ended December 31, 2016, filed March 3, 2017. As noted in the discussion, fairprojected box office. Fair value is determinedestimated based on a multiple of cash flows,flows. Management’s estimates, which was six and a half times forfall under Level 3 of the evaluations performed during the nine months ended September 30, 2017 and 2016. As of September 30, 2017, the estimated aggregateU.S. GAAP fair value of the long-lived assets impaired during the nine months ended September 30, 2017 was approximately $5,367.hierarchy, as defined by FASB ASC Topic 820-10-35, are based on projected operating performance, market transactions and industry trading multiples.
The long-lived asset impairment charges recorded during each of the periods presented are specific to theatres that were directly and individually impacted by increased competition, adverse changes in market demographics or adverse changes in the development or the conditions of the areas surrounding the theatre.
Below is a summary of impairment charges 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 |
|
31
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 |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
U.S. theatre properties |
| $ | 1,054 |
|
| $ | 406 |
|
| $ | 1,411 |
|
| $ | 1,500 |
|
International theatre properties |
|
| 3,972 |
|
|
| — |
|
|
| 8,189 |
|
|
| 823 |
|
Impairment of long-lived assets |
| $ | 5,026 |
|
| $ | 406 |
|
| $ | 9,600 |
|
| $ | 2,323 |
|
|
|
The Company determines fair value measurements in accordance with FASB ASC Topic 820: Fair Value Measurements (“ASC Topic 820”),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.
The Company did not have anyBelow is a summary of assets orand liabilities measured at fair value on a recurring basis under FASB ASC Topic 820 as of September 30, 2022 and December 31, 2016 or September 30, 2017. 2021:
|
|
|
| Carrying |
|
| Fair Value Hierarchy |
| ||||||||||
Description |
| As of |
| Value |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Interest rate swap assets (1) |
| September 30, 2022 |
| $ | 20.2 |
|
| $ | — |
|
| $ | 20.2 |
|
| $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest rate swap liabilities (1) |
| December 31, 2021 |
| $ | 14.6 |
|
| $ | — |
|
| $ | 14.6 |
|
| $ | — |
|
17
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
BelowThe market approach is a reconciliation of the beginning and ending balance for liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2016:
|
| Liabilities (1) |
| |
|
| 2016 |
| |
Beginning balance - January 1 |
| $ | 373 |
|
Total loss included in accumulated other comprehensive loss |
|
| 71 |
|
Settlements included in interest expense |
|
| (444 | ) |
Ending balance - September 30 |
| $ | — |
|
|
|
The Company uses the market approachused for fair value measurements on a nonrecurring basis in the impairment evaluations of its goodwill, intangible assets and long-lived assets (see Note 711 and Note 8)12). See additional explanation of fair value measurement techniques used for long-lived assets, goodwill and intangible assets in “Critical Accounting Policies” in the Company’sHoldings' Annual Report on Form 10-K for the year ended December 31, 2016,2021, filed February 25, 2022 and the CUSA's Annual Report on Form 10-K for the year ended December 31, 2021, filed March 3, 2017.9, 2022. There were no changes in valuation techniques and theretechniques. There were no transfers ininto or out of Level 1, Level 2 or Level 3 during the nine months ended September 30, 2017.2022.
|
|
The accumulated other comprehensive loss account in stockholder’sHoldings stockholders’ equity of $242,894$362.9 and $247,013$394.5 and CUSA stockholder's equity of $368.2 and $397.0, each as of September 30, 20172022 and December 31, 2016,2021, respectively, primarily includes cumulative foreign currency adjustmentsnet losses of $243,020$400.4 and $247,047,$394.5, respectively, from translating the financial statements of the Company’sCompany's international subsidiaries.subsidiaries and the cumulative changes in fair value of the interest rate swap agreements that are designated as hedges.
AllAs of September 30, 2022, all foreign countries where the Company has operations are non-highly inflationary, andother than Argentina. In non-highly inflationary countries, the local currency is the same as the functional currency in all of the locations. Thus,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 inflation rate of approximately 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. There has been a steady devaluationThe financial information of the Argentine peso relative to theCompany’s Argentina subsidiaries was remeasured in U.S. dollardollars in recent years. The official cumulative inflation rate for Argentina over the last three years has not definitively reached 100 percent and remeasurement is not required. The Company will continue to monitor the inflation on a quarterly basis to determine whether remeasurement is necessary.accordance with ASC Topic 830, Foreign Currency Matters, effective July 1, 2018.
Below is a summary of the impact of translating the September 30, 20172022 and September 30, 2021 financial statements of the Company’s international subsidiaries:
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
| Other |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
| Comprehensive |
|
|
|
|
|
| Other Comprehensive Income (Loss) for |
| |||||||||
|
| Exchange Rate as of |
|
| Income (Loss) for The |
|
| Exchange Rate as of |
|
| Nine Months Ended |
| |||||||||||||||
Country |
| September 30, 2017 |
|
| December 31, 2016 |
|
| Nine Months Ended September 30, 2017 |
|
| September 30, 2022 |
|
| December 31, 2021 |
|
| September 30, 2022 |
| September 30, 2021 |
| |||||||
Brazil |
|
| 3.17 |
|
|
| 3.26 |
|
| $ | 6,700 |
|
|
| 5.40 |
|
|
| 5.57 |
|
| $ | 0.4 |
| $ | (3.4 | ) |
Argentina |
|
| 17.70 |
|
|
| 16.04 |
|
|
| (5,918 | ) | |||||||||||||||
Chile |
|
| 965.80 |
|
|
| 852.00 |
|
|
| (7.7 | ) |
| (7.9 | ) | ||||||||||||
Peru |
|
| 3.35 |
|
|
| 3.45 |
|
|
| 1,133 |
|
|
| 3.99 |
|
|
| 4.02 |
|
|
| 0.2 |
| (3.6 | ) | |
Chile |
|
| 640.60 |
|
|
| 679.09 |
|
|
| 3,136 |
| |||||||||||||||
All other |
|
|
|
|
|
|
|
|
|
| 527 |
|
|
|
|
|
|
|
|
| 1.2 |
|
| (0.1 | ) | ||
|
|
|
|
|
|
|
|
|
| $ | 5,578 |
|
|
|
|
|
| $ | (5.9 | ) | $ | (15.0 | ) |
DuringAs noted above, beginning July 1, 2018, Argentina was deemed highly inflationary. A foreign currency exchange loss of $5.1 and gain of $0.4 was recorded for the nine months ended September 30, 2017, the Company reclassified $1,5512022 and 2021, respectively, as a result of cumulative foreign currency translation adjustments, relatedtranslating Argentina's financial results to a Canadian subsidiary that was liquidated, from accumulated other comprehensive loss to foreign currency exchange gain on the condensed consolidated statement of income.U.S. dollars.
1832
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands,(in millions, except share and per share data,
unaudited)
|
The following is provided as supplemental information to the condensed consolidated statements of cash flows:
|
| Nine Months Ended |
| |||||
|
| September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Cash paid for interest by Holdings (1) |
| $ | 121.0 |
|
| $ | 89.8 |
|
Cash paid for interest by CUSA |
| $ | 100.3 |
|
| $ | 69.5 |
|
Cash paid (refunds received) for income taxes, net |
| $ | 2.3 |
|
| $ | (136.9 | ) |
Cash deposited in (transferred from) restricted accounts (2) |
| $ | (2.9 | ) |
| $ | 7.3 |
|
Noncash operating activities: |
|
|
|
|
|
| ||
Interest expense - NCM (see Note 8) |
| $ | (17.5 | ) |
| $ | (17.7 | ) |
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 |
|
|
| Nine Months Ended |
| |||||
|
| September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Cash paid for interest |
| $ | 58,334 |
|
| $ | 68,552 |
|
Cash paid for income taxes, net of refunds received |
| $ | 81,271 |
|
| $ | 66,757 |
|
Noncash investing and financing activities: |
|
|
|
|
|
|
|
|
Change in accounts payable and accrued expenses for the acquisition of theatre properties and equipment (1) |
| $ | (5,947 | ) |
| $ | 132 |
|
Theatre properties acquired under capital lease |
| $ | 30,517 |
|
| $ | 11,292 |
|
Investment in NCM – receipt of common units (see Note 5) |
| $ | 18,363 |
|
| $ | 11,111 |
|
|
|
|
|
The Company manages its international market and its 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. Each segment’s revenue is derived from admissions and concession sales and other ancillary revenues. The Companyrevenue. 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: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 |
|
| Three Months Ended |
|
| Nine Months Ended |
| |||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 514,376 |
|
| $ | 572,916 |
|
| $ | 1,650,514 |
|
| $ | 1,677,365 |
|
International |
|
| 200,122 |
|
|
| 199,476 |
|
|
| 602,116 |
|
|
| 551,212 |
|
Eliminations |
|
| (3,750 | ) |
|
| (3,818 | ) |
|
| (11,077 | ) |
|
| (10,730 | ) |
Total revenues |
| $ | 710,748 |
|
| $ | 768,574 |
|
| $ | 2,241,553 |
|
| $ | 2,217,847 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 109,057 |
|
| $ | 137,872 |
|
| $ | 404,095 |
|
| $ | 410,386 |
|
International |
|
| 44,818 |
|
|
| 47,351 |
|
|
| 133,329 |
|
|
| 128,915 |
|
Total Adjusted EBITDA |
| $ | 153,875 |
|
| $ | 185,223 |
|
| $ | 537,424 |
|
| $ | 539,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 65,612 |
|
| $ | 75,839 |
|
| $ | 221,604 |
|
| $ | 175,218 |
|
International |
|
| 14,318 |
|
|
| 22,984 |
|
|
| 41,126 |
|
|
| 55,128 |
|
Total capital expenditures |
| $ | 79,930 |
|
| $ | 98,823 |
|
| $ | 262,730 |
|
| $ | 230,346 |
|
1933
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands,(in millions, except share and per share data, unaudited)
The following table sets forth a reconciliation of net incomeloss to Adjusted EBITDA:EBITDA for Holdings:
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Net loss |
| $ | (23.9 | ) |
| $ | (77.6 | ) |
| $ | (169.2 | ) |
| $ | (428.7 | ) |
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income tax expense (benefit) |
|
| 3.4 |
|
|
| (8.9 | ) |
|
| 6.3 |
|
|
| (15.6 | ) |
Interest expense (1) |
|
| 38.4 |
|
|
| 38.0 |
|
|
| 114.6 |
|
|
| 111.6 |
|
Other expense, net (2) |
|
| 4.5 |
|
|
| 12.5 |
|
|
| 19.2 |
|
|
| 35.3 |
|
Cash distributions from other equity investees (3) |
|
| — |
|
|
| — |
|
|
| 1.5 |
|
|
| 0.2 |
|
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 |
|
Loss on extinguishment of debt |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6.5 |
|
Non-cash rent expense |
|
| (2.8 | ) |
|
| (1.1 | ) |
|
| (7.5 | ) |
|
| (1.8 | ) |
Share based awards compensation expense |
|
| 5.2 |
|
|
| 6.0 |
|
|
| 16.2 |
|
|
| 16.6 |
|
Adjusted EBITDA |
| $ | 99.5 |
|
| $ | 44.3 |
|
| $ | 263.0 |
|
| $ | (59.5 | ) |
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Net income |
| $ | 38,804 |
|
| $ | 66,517 |
|
| $ | 171,666 |
|
| $ | 180,878 |
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
| 24,797 |
|
|
| 41,165 |
|
|
| 99,167 |
|
|
| 106,821 |
|
Interest expense (1) |
|
| 26,317 |
|
|
| 26,659 |
|
|
| 79,208 |
|
|
| 81,980 |
|
Other income (2) |
|
| (13,164 | ) |
|
| (14,540 | ) |
|
| (33,176 | ) |
|
| (32,510 | ) |
Loss on debt amendments and refinancing |
|
| — |
|
|
| — |
|
|
| 246 |
|
|
| 13,284 |
|
Other cash distributions from equity investees (3) |
|
| 2,402 |
|
|
| 1,391 |
|
|
| 17,321 |
|
|
| 9,660 |
|
Depreciation and amortization |
|
| 58,052 |
|
|
| 54,187 |
|
|
| 174,545 |
|
|
| 155,874 |
|
Impairment of long-lived assets |
|
| 5,026 |
|
|
| 406 |
|
|
| 9,600 |
|
|
| 2,323 |
|
Loss on sale of assets and other |
|
| 8,576 |
|
|
| 6,940 |
|
|
| 9,464 |
|
|
| 10,985 |
|
Deferred lease expenses |
|
| (297 | ) |
|
| (162 | ) |
|
| (1,019 | ) |
|
| (809 | ) |
Amortization of long-term prepaid rents |
|
| 551 |
|
|
| 371 |
|
|
| 1,540 |
|
|
| 1,357 |
|
Share based awards compensation expense |
| $ | 2,811 |
|
| $ | 2,289 |
|
| $ | 8,862 |
|
|
| 9,458 |
|
Adjusted EBITDA |
| $ | 153,875 |
|
| $ | 185,223 |
|
| $ | 537,424 |
|
| $ | 539,301 |
|
|
|
|
|
|
|
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 |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
Revenue |
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
U.S. |
| $ | 514.4 |
|
| $ | 376.3 |
|
| $ | 1,491.6 |
|
| $ | 743.0 |
|
Brazil |
|
| 45.2 |
|
|
| 20.6 |
|
|
| 133.1 |
|
|
| 30.5 |
|
Other international countries |
|
| 93.5 |
|
|
| 38.6 |
|
|
| 237.4 |
|
|
| 71.4 |
|
Eliminations |
|
| (2.7 | ) |
|
| (0.7 | ) |
|
| (7.1 | ) |
|
| (1.1 | ) |
Total |
| $ | 650.4 |
|
| $ | 434.8 |
|
| $ | 1,855.0 |
|
| $ | 843.8 |
|
|
| 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 |
|
34
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 |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
Revenues |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
U.S. |
| $ | 514,376 |
|
| $ | 572,916 |
|
| $ | 1,650,514 |
|
| $ | 1,677,365 |
|
Brazil |
|
| 81,545 |
|
|
| 85,051 |
|
|
| 264,085 |
|
|
| 231,556 |
|
Other international countries |
|
| 118,577 |
|
|
| 114,425 |
|
|
| 338,031 |
|
|
| 319,656 |
|
Eliminations |
|
| (3,750 | ) |
|
| (3,818 | ) |
|
| (11,077 | ) |
|
| (10,730 | ) |
Total |
| $ | 710,748 |
|
| $ | 768,574 |
|
| $ | 2,241,553 |
|
| $ | 2,217,847 |
|
Theatre Properties and Equipment-net |
| September 30, 2017 |
|
| December 31, 2016 |
| ||
U.S. |
| $ | 1,392,429 |
|
| $ | 1,306,643 |
|
Brazil |
|
| 194,171 |
|
|
| 197,896 |
|
Other international countries |
|
| 205,006 |
|
|
| 199,997 |
|
Total |
| $ | 1,791,606 |
|
| $ | 1,704,536 |
|
|
|
TheA subsidiary of the Company manages theatresa theatre for Laredo Theatre, Ltd. (“Laredo”). The Company is the sole general partner and owns 75%75% of the limited partnership interests of Laredo. Lone Star Theatres, Inc. owns the remaining 25%25% of the limited partnership interests in Laredo and is 100%100% owned by Mr. David Roberts, Lee Roy Mitchell’s son-in-law. Lee Roy Mitchell, is Cinemark Holdings, Inc.’s Chairmanour founder and a member of theHoldings' Board of Directors, andowns, both directly and indirectly, owns approximately 9%8.5% of Cinemark Holdings Inc.’s common stock. Under the agreement, management fees are paid by Laredo to the Company at a rate of 5%5% of annual theatre revenues up to $50,000 and 3% of annual theatre revenues in excess of $50,000.revenue. The Company recorded $451$0.5 and $410$0.2 of management fee revenuesrevenue during the nine months ended September 30, 20172022 and 2016,2021, respectively. All such amounts are included in the Company’seach of Holdings' and CUSA's condensed consolidated financial statements with the intercompany amounts eliminated in consolidation.
20
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
The Company has an Aircraft Time Sharing Agreement with Copper Beech Capital, LLC to use, on occasion, a private aircraft owned by Copper Beech Capital, LLC. Copper Beech Capital, LLC is owned by Mr. Mitchell and his wife, Tandy Mitchell. The private aircraft is used by Mr. Mitchell and other executives who accompany Mr. Mitchell to business meetings for the Company. The Company reimburses Copper Beech Capital, LLC for the actual costs of fuel usage and the expenses of the pilots, landing fees, storage fees and similar expenses incurred during the trip. For During the nine months ended September 30, 2017 and 2016, the aggregate amounts2022, cash distributions of $2.4 were paid to Copper Beech Capital, LLC forLone Star Theatres, Inc. as required by the usepartnership agreement, which were recorded as a reduction of noncontrolling interests on the condensed consolidating balance sheet.
Walter Hebert, Mr. Mitchell’s brother-in-law, previously served as the Executive Vice President – Purchasing of the aircraft was $89Company and $94, respectively.retired in July 2021. Mr. Hebert served as a consultant until July 2022. During the nine months ended September 30, 2022, the Company paid Mr. Hebert $0.2 related to consulting services.
TheA subsidiary of the Company leases 1413 theatres and one parking facility from Syufy Enterprises, LP (“Syufy”) or affiliates of Syufy. Raymond Syufy is one of Cinemark Holdings, Inc.’sHoldings' directors and is an officer of the general partner of Syufy. Of these 15 leases, 14 have fixed minimum annual rent. The one lease without minimum annual rent has rent based upon a specified percentage of gross sales as defined in the lease. For the nine months ended September 30, 20172022 and 2016,2021, the Company paid total rent of approximately $18,844$16.7 and $17,806,$17.9, respectively, to Syufy.
CUSA provides digital equipment support to drive-in theatres owned by Syufy. The Company recorded management fees of $0.1 and $0.1 related to these services during each of the nine months ended September 30, 2022 and 2021, respectively.
A subsidiary of the 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 fees on behalf of its parent, Cinemark Holdings, Inc., and Cinemark Holdings Inc. has paid income taxes and other itemsexpenses on behalf of the Company.CUSA. The net receivable from Cinemark Holdings Inc. as of September 30, 20172022 and December 31, 20162021 was $14,192$60.5 and $10,080,$46.7, respectively. The Company paid CinemarkCUSA received contributions from Holdings Inc. dividends of $100,875 and $93,650$120.0 during the nine months ended September 30, 20172021.
|
|
Joseph Amey, et al. v. Cinemark USA, Inc., Case No. 3:13cv05669, In the United States District Court for the Northern District of California, San Francisco Division. The case presents putative class action claims for damages and attorney’s fees arising from employee wage and hour claims under California law for alleged meal period, rest break, reporting time pay, unpaid wages, pay upon termination, and wage statements violations. The claims are also asserted as a representative action under the California Private Attorney General Act (“PAGA”). The Company denies the claims, denies that class certification is appropriate and denies that a PAGA representative action is appropriate, and is vigorously defending against the claims. The Company denies any violation of law and plans to vigorously defend against all claims. The Court recently determined that class certification is not appropriate and determined that a PAGA representative action is not appropriate. The plaintiff has appealed these rulings. The Company is unable to predict the outcome of this litigation or the range of potential loss.
Flagship Theatres of Palm Desert, LLC d/b/a Cinemas Palme D’Or v. Century Theatres, Inc., and Cinemark USA, Inc.; Superior Court of the State of California, County of Los Angeles. Plaintiff in this case alleges that the Company violated California antitrust and unfair competition laws by engaging in “circuit dealing” with various motion picture distributors and tortuously interfered with Plaintiff’s business relationships. Plaintiff seeks compensatory damages, trebling of those damages under California law, punitive damages, injunctive relief, attorneys’ fees, costs and interest. Plaintiff also alleges that the Company’s conduct ultimately resulted in closure of its theatre in June 2016. The Company denied the allegations. In 2008, the Company moved for summary judgment on Plaintiff’s claims, arguing primarily that clearances between the theatres at issue were lawful and that Plaintiff lacked proof sufficient to support certain technical elements of its antitrust claims. The trial court granted that motion and dismissed Plaintiff’s claims. Plaintiff appealed and, in 2011, the Court of Appeal reversed, holding, among other things, that Plaintiff’s claims were not about the illegality of clearances but were focused, instead, on “circuit dealing.” Having re-framed the claims in that manner, the Court of Appeal held that the trial court’s decision to limit discovery to the market where the theatres at issue operated was an error, as “circuit dealing” necessarily involves activities in different markets. Upon return to the trial court, the parties engaged in additional, broadened discovery related to Plaintiff’s “circuit dealing” claim. Thereafter, the Company moved again for summary judgment on all of Plaintiff’s claims. That new motion for summary judgment was pending when, on or about April 11, 2014, the trial court granted the Company’s motion for terminating sanctions and entered a judgment dismissing the case with prejudice. Plaintiff then appealed that second dismissal, seeking to have the judgment reversed and the case remanded to the trial court. The Court of Appeal issued a ruling on May 24, 2016, reversing the granting of terminating sanctions and instead imposed a lesser evidentiary and damages preclusion sanction. The case returned to the trial court on October 6, 2016. The Company has denied Plaintiff’s allegations and is vigorously defending these claims. The Company is unable to predict the outcome of this litigation or the range of potential loss.
The Company received a Civil Investigative Demand (“CID”) from the Antitrust Division of the United States Department of Justice. The CID relates to an investigation under Sections 1 and 2 of the Sherman Act. The Company also received CIDs from the Antitrust Section of the Office of the Attorney General of the State of Ohio and later from other states regarding similar inquiries under state antitrust laws. The CIDs request the Company to answer interrogatories, and produce documents, or both, related to the investigation of matters including film clearances, potential coordination and/or communication with other major theatre circuits and
21
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
related joint ventures. The Company intends to fully cooperate with all federal and state government agencies. Although the Company does not believe that it has violated any federal or state antitrust or competition laws, it cannot predict the ultimate scope, duration or outcome of these investigations.
From time to time, the Company is involved in various other legal proceedings arising from the ordinary course of its business operations, such as personal injury claims, employment matters, patent claims, landlord-tenant disputes, patent claimscontractual 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.
|
|
AsCinemark 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 September 30, 2017,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.
Lakeenya Neal, et al v. Cinemark Holdings, Inc., et al. This class action lawsuit was filed against the Company had outstanding $400,000 aggregate principal amounton December 10, 2021, in the Central District of 5.125% senior notes due 2022, orLos Angeles County Superior Court of the 5.125% Senior Notes,State of California alleging certain violations of the Fair and $755,000 aggregate principal amountAccurate Credit Transactions Act. We firmly maintain that the allegations are without merit and will vigorously defend this lawsuit. The Company cannot predict the outcome of 4.875% senior notes due 2023, or the 4.875% Senior Notes, (collectively the “Notes”). These Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by the following subsidiaries of Cinemark USA, Inc.:this litigation.
Sunnymead Cinema Corp., Cinemark Properties, Inc., Greeley Holdings, Inc., Cinemark Partners I, Inc., CNMK Investments, Inc., CNMK Texas Properties, LLC., Cinemark Concessions LLC, Century Theatres, Inc., Marin Theatre Management, LLC, Century Theatres NG, LLC, Cinearts LLC, Cinearts Sacramento, LLC, Corte Madera Theatres, LLC, Novato Theatres, LLC, San Rafael Theatres, LLC, Northbay Theatres, LLC, Century Theatres Summit Sierra, LLC and Century Theatres Seattle, LLC.
The following supplemental condensed consolidating financial information presents:
|
|
|
|
|
|
2235
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
DECEMBER 31, 2016
|
| Parent |
|
| Subsidiary |
|
| Subsidiary |
|
|
|
|
|
|
|
|
| |||
|
| Company |
|
| Guarantors |
|
| Non-Guarantors |
|
| Eliminations |
|
| Consolidated |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 146,855 |
|
| $ | 281,023 |
|
| $ | 133,260 |
|
| $ | — |
|
| $ | 561,138 |
|
Other current assets |
|
| 62,425 |
|
|
| 15,098 |
|
|
| 71,706 |
|
|
| (34,154 | ) |
|
| 115,075 |
|
Accounts receivable from parent or subsidiaries |
|
| 76,550 |
|
|
| 121,478 |
|
|
| — |
|
|
| (187,948 | ) |
|
| 10,080 |
|
Total current assets |
|
| 285,830 |
|
|
| 417,599 |
|
|
| 204,966 |
|
|
| (222,102 | ) |
|
| 686,293 |
|
Theatre properties and equipment - net |
|
| 604,506 |
|
|
| 678,984 |
|
|
| 421,046 |
|
|
| — |
|
|
| 1,704,536 |
|
Investment in subsidiaries |
|
| 1,570,592 |
|
|
| 132,892 |
|
|
| — |
|
|
| (1,703,484 | ) |
|
| — |
|
Other assets |
|
| 1,409,320 |
|
|
| 134,284 |
|
|
| 488,535 |
|
|
| (106,359 | ) |
|
| 1,925,780 |
|
Total assets |
| $ | 3,870,248 |
|
| $ | 1,363,759 |
|
| $ | 1,114,547 |
|
| $ | (2,031,945 | ) |
| $ | 4,316,609 |
|
Liabilities and equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt |
| $ | 4,282 |
|
| $ | — |
|
| $ | 1,409 |
|
| $ | (20 | ) |
| $ | 5,671 |
|
Current portion of capital lease obligations |
|
| 7,903 |
|
|
| 9,541 |
|
|
| 3,695 |
|
|
| — |
|
|
| 21,139 |
|
Accounts payable and accrued expenses |
|
| 197,789 |
|
|
| 121,640 |
|
|
| 113,020 |
|
|
| (16,457 | ) |
|
| 415,992 |
|
Accounts payable to parent or subsidiaries |
|
| — |
|
|
| — |
|
|
| 187,948 |
|
|
| (187,948 | ) |
|
| — |
|
Total current liabilities |
|
| 209,974 |
|
|
| 131,181 |
|
|
| 306,072 |
|
|
| (204,425 | ) |
|
| 442,802 |
|
Long-term liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, less current portion |
|
| 1,879,663 |
|
|
| — |
|
|
| 12,600 |
|
|
| (109,822 | ) |
|
| 1,782,441 |
|
Capital lease obligations, less current portion |
|
| 124,944 |
|
|
| 71,228 |
|
|
| 38,109 |
|
|
| — |
|
|
| 234,281 |
|
Other long-term liabilities and deferrals |
|
| 382,729 |
|
|
| 84,429 |
|
|
| 120,061 |
|
|
| (14,214 | ) |
|
| 573,005 |
|
Total long-term liabilities |
|
| 2,387,336 |
|
|
| 155,657 |
|
|
| 170,770 |
|
|
| (124,036 | ) |
|
| 2,589,727 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cinemark USA, Inc.'s stockholder's equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
| 49,543 |
|
|
| 457,368 |
|
|
| 10,239 |
|
|
| (467,607 | ) |
|
| 49,543 |
|
Other stockholder's equity |
|
| 1,223,395 |
|
|
| 619,553 |
|
|
| 616,324 |
|
|
| (1,235,877 | ) |
|
| 1,223,395 |
|
Total Cinemark USA, Inc. stockholder's equity |
|
| 1,272,938 |
|
|
| 1,076,921 |
|
|
| 626,563 |
|
|
| (1,703,484 | ) |
|
| 1,272,938 |
|
Noncontrolling interests |
|
| — |
|
|
| — |
|
|
| 11,142 |
|
|
| — |
|
|
| 11,142 |
|
Total equity |
|
| 1,272,938 |
|
|
| 1,076,921 |
|
|
| 637,705 |
|
|
| (1,703,484 | ) |
|
| 1,284,080 |
|
Total liabilities and equity |
| $ | 3,870,248 |
|
| $ | 1,363,759 |
|
| $ | 1,114,547 |
|
| $ | (2,031,945 | ) |
| $ | 4,316,609 |
|
23
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
SEPTEMBER 30, 2017
|
| Parent |
|
| Subsidiary |
|
| Subsidiary |
|
|
|
|
|
|
|
|
| |||
|
| Company |
|
| Guarantors |
|
| Non-Guarantors |
|
| Eliminations |
|
| Consolidated |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 103,288 |
|
| $ | 176,544 |
|
| $ | 189,477 |
|
| $ | — |
|
| $ | 469,309 |
|
Other current assets |
|
| 116,950 |
|
|
| 21,556 |
|
|
| 74,362 |
|
|
| (91,986 | ) |
|
| 120,882 |
|
Accounts receivable from parent or subsidiaries |
|
| 131,040 |
|
|
| 97,739 |
|
|
| — |
|
|
| (214,587 | ) |
|
| 14,192 |
|
Total current assets |
|
| 351,278 |
|
|
| 295,839 |
|
|
| 263,839 |
|
|
| (306,573 | ) |
|
| 604,383 |
|
Theatre properties and equipment - net |
|
| 622,590 |
|
|
| 747,046 |
|
|
| 421,970 |
|
|
| — |
|
|
| 1,791,606 |
|
Investment in subsidiaries |
|
| 1,613,492 |
|
|
| 158,349 |
|
|
| — |
|
|
| (1,771,841 | ) |
|
| — |
|
Other assets |
|
| 1,433,344 |
|
|
| 134,645 |
|
|
| 536,003 |
|
|
| (114,279 | ) |
|
| 1,989,713 |
|
Total assets |
| $ | 4,020,704 |
|
| $ | 1,335,879 |
|
| $ | 1,221,812 |
|
| $ | (2,192,693 | ) |
| $ | 4,385,702 |
|
Liabilities and equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt |
| $ | 5,710 |
|
| $ | — |
|
| $ | 1,389 |
|
| $ | — |
|
| $ | 7,099 |
|
Current portion of capital lease obligations |
|
| 9,223 |
|
|
| 10,799 |
|
|
| 4,814 |
|
|
| — |
|
|
| 24,836 |
|
Accounts payable and accrued expenses |
|
| 245,075 |
|
|
| 91,234 |
|
|
| 99,276 |
|
|
| (75,573 | ) |
|
| 360,012 |
|
Accounts payable to parent or subsidiaries |
|
| — |
|
|
| — |
|
|
| 214,587 |
|
|
| (214,587 | ) |
|
| — |
|
Total current liabilities |
|
| 260,008 |
|
|
| 102,033 |
|
|
| 320,066 |
|
|
| (290,160 | ) |
|
| 391,947 |
|
Long-term liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, less current portion |
|
| 1,879,174 |
|
|
| — |
|
|
| 12,600 |
|
|
| (109,822 | ) |
|
| 1,781,952 |
|
Capital lease obligations, less current portion |
|
| 128,080 |
|
|
| 78,681 |
|
|
| 45,286 |
|
|
| — |
|
|
| 252,047 |
|
Other long-term liabilities and deferrals |
|
| 398,202 |
|
|
| 82,665 |
|
|
| 132,527 |
|
|
| (20,870 | ) |
|
| 592,524 |
|
Total long-term liabilities |
|
| 2,405,456 |
|
|
| 161,346 |
|
|
| 190,413 |
|
|
| (130,692 | ) |
|
| 2,626,523 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cinemark USA, Inc.'s stockholder's equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
| 49,543 |
|
|
| 457,368 |
|
|
| 10,238 |
|
|
| (467,606 | ) |
|
| 49,543 |
|
Other stockholder's equity |
|
| 1,305,697 |
|
|
| 615,132 |
|
|
| 689,103 |
|
|
| (1,304,235 | ) |
|
| 1,305,697 |
|
Total Cinemark USA, Inc. stockholder's equity |
|
| 1,355,240 |
|
|
| 1,072,500 |
|
|
| 699,341 |
|
|
| (1,771,841 | ) |
|
| 1,355,240 |
|
Noncontrolling interests |
|
| — |
|
|
| — |
|
|
| 11,992 |
|
|
| — |
|
|
| 11,992 |
|
Total equity |
|
| 1,355,240 |
|
|
| 1,072,500 |
|
|
| 711,333 |
|
|
| (1,771,841 | ) |
|
| 1,367,232 |
|
Total liabilities and equity |
| $ | 4,020,704 |
|
| $ | 1,335,879 |
|
| $ | 1,221,812 |
|
| $ | (2,192,693 | ) |
| $ | 4,385,702 |
|
24
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATION
THREE MONTHS ENDED SEPTEMBER 30, 2016
|
| Parent |
|
| Subsidiary |
|
| Subsidiary |
|
|
|
|
|
|
|
|
| |||
|
| Company |
|
| Guarantors |
|
| Non-Guarantors |
|
| Eliminations |
|
| Consolidated |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Revenues |
| $ | 260,296 |
|
| $ | 312,447 |
|
| $ | 208,654 |
|
| $ | (12,823 | ) |
| $ | 768,574 |
|
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Theatre operating expenses |
|
| 204,521 |
|
|
| 211,283 |
|
|
| 150,980 |
|
|
| (12,823 | ) |
|
| 553,961 |
|
General and administrative expenses |
|
| 3,094 |
|
|
| 20,125 |
|
|
| 11,441 |
|
|
| — |
|
|
| 34,660 |
|
Depreciation and amortization |
|
| 17,690 |
|
|
| 20,891 |
|
|
| 15,606 |
|
|
| — |
|
|
| 54,187 |
|
Impairment of long-lived assets |
|
| 406 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 406 |
|
Loss on sale of assets and other |
|
| 2,047 |
|
|
| 4,660 |
|
|
| 233 |
|
|
| — |
|
|
| 6,940 |
|
Total cost of operations |
|
| 227,758 |
|
|
| 256,959 |
|
|
| 178,260 |
|
|
| (12,823 | ) |
|
| 650,154 |
|
Operating income |
|
| 32,538 |
|
|
| 55,488 |
|
|
| 30,394 |
|
|
| — |
|
|
| 118,420 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| (23,552 | ) |
|
| (1,847 | ) |
|
| (1,607 | ) |
|
| 347 |
|
|
| (26,659 | ) |
Distributions from NCM |
|
| — |
|
|
| — |
|
|
| 1,381 |
|
|
| — |
|
|
| 1,381 |
|
Equity in income of affiliates |
|
| 60,972 |
|
|
| 20,481 |
|
|
| 11,341 |
|
|
| (80,404 | ) |
|
| 12,390 |
|
Other income (expense) |
|
| 104 |
|
|
| (4 | ) |
|
| 2,397 |
|
|
| (347 | ) |
|
| 2,150 |
|
Total other income (expense) |
|
| 37,524 |
|
|
| 18,630 |
|
|
| 13,512 |
|
|
| (80,404 | ) |
|
| (10,738 | ) |
Income before income taxes |
|
| 70,062 |
|
|
| 74,118 |
|
|
| 43,906 |
|
|
| (80,404 | ) |
|
| 107,682 |
|
Income taxes |
|
| 4,016 |
|
|
| 20,903 |
|
|
| 16,246 |
|
|
| — |
|
|
| 41,165 |
|
Net income |
|
| 66,046 |
|
|
| 53,215 |
|
|
| 27,660 |
|
|
| (80,404 | ) |
|
| 66,517 |
|
Less: Net income attributable to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| 471 |
|
|
| — |
|
|
| 471 |
|
Net income attributable to Cinemark USA, Inc. |
| $ | 66,046 |
|
| $ | 53,215 |
|
| $ | 27,189 |
|
| $ | (80,404 | ) |
| $ | 66,046 |
|
25
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATION
THREE MONTHS ENDED SEPTEMBER 30, 2017
|
| Parent |
|
| Subsidiary |
|
| Subsidiary |
|
|
|
|
|
|
|
|
| |||
|
| Company |
|
| Guarantors |
|
| Non-Guarantors |
|
| Eliminations |
|
| Consolidated |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Revenues |
| $ | 230,580 |
|
| $ | 287,525 |
|
| $ | 209,042 |
|
| $ | (16,399 | ) |
| $ | 710,748 |
|
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Theatre operating expenses |
|
| 192,155 |
|
|
| 200,571 |
|
|
| 151,645 |
|
|
| (16,399 | ) |
|
| 527,972 |
|
General and administrative expenses |
|
| 2,632 |
|
|
| 19,697 |
|
|
| 14,183 |
|
|
| — |
|
|
| 36,512 |
|
Depreciation and amortization |
|
| 19,118 |
|
|
| 21,413 |
|
|
| 17,521 |
|
|
| — |
|
|
| 58,052 |
|
Impairment of long-lived assets |
|
| 1,054 |
|
|
| - |
|
|
| 3,972 |
|
|
| — |
|
|
| 5,026 |
|
Loss on sale of assets and other |
|
| 3,075 |
|
|
| 4,277 |
|
|
| 1,224 |
|
|
| — |
|
|
| 8,576 |
|
Total cost of operations |
|
| 218,034 |
|
|
| 245,958 |
|
|
| 188,545 |
|
|
| (16,399 | ) |
|
| 636,138 |
|
Operating income |
|
| 12,546 |
|
|
| 41,567 |
|
|
| 20,497 |
|
|
| — |
|
|
| 74,610 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| (23,565 | ) |
|
| (1,984 | ) |
|
| (1,127 | ) |
|
| 359 |
|
|
| (26,317 | ) |
Distributions from NCM |
|
| — |
|
|
| — |
|
|
| 2,144 |
|
|
| — |
|
|
| 2,144 |
|
Equity in income of affiliates |
|
| 46,446 |
|
|
| 13,101 |
|
|
| 9,578 |
|
|
| (58,223 | ) |
|
| 10,902 |
|
Other income |
|
| 307 |
|
|
| 471 |
|
|
| 1,843 |
|
|
| (359 | ) |
|
| 2,262 |
|
Total other income (expense) |
|
| 23,188 |
|
|
| 11,588 |
|
|
| 12,438 |
|
|
| (58,223 | ) |
|
| (11,009 | ) |
Income before income taxes |
|
| 35,734 |
|
|
| 53,155 |
|
|
| 32,935 |
|
|
| (58,223 | ) |
|
| 63,601 |
|
Income taxes |
|
| (2,669 | ) |
|
| 15,596 |
|
|
| 11,870 |
|
|
| - |
|
|
| 24,797 |
|
Net income |
|
| 38,403 |
|
|
| 37,559 |
|
|
| 21,065 |
|
|
| (58,223 | ) |
|
| 38,804 |
|
Less: Net income attributable to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| 401 |
|
|
| — |
|
|
| 401 |
|
Net income attributable to Cinemark USA, Inc. |
| $ | 38,403 |
|
| $ | 37,559 |
|
| $ | 20,664 |
|
| $ | (58,223 | ) |
| $ | 38,403 |
|
26
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATION
NINE MONTHS ENDED SEPTEMBER 30, 2016
|
| Parent |
|
| Subsidiary |
|
| Subsidiary |
|
|
|
|
|
|
|
|
| |||
|
| Company |
|
| Guarantors |
|
| Non-Guarantors |
|
| Eliminations |
|
| Consolidated |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Revenues |
| $ | 758,952 |
|
| $ | 919,705 |
|
| $ | 579,483 |
|
| $ | (40,293 | ) |
| $ | 2,217,847 |
|
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Theatre operating expenses |
|
| 600,225 |
|
|
| 620,886 |
|
|
| 420,525 |
|
|
| (40,293 | ) |
|
| 1,601,343 |
|
General and administrative expenses |
|
| 10,727 |
|
|
| 63,816 |
|
|
| 32,443 |
|
|
| — |
|
|
| 106,986 |
|
Depreciation and amortization |
|
| 51,687 |
|
|
| 60,782 |
|
|
| 43,405 |
|
|
| — |
|
|
| 155,874 |
|
Impairment of long-lived assets |
|
| 1,501 |
|
|
| — |
|
|
| 822 |
|
|
| — |
|
|
| 2,323 |
|
Loss on sale of assets and other |
|
| 1,623 |
|
|
| 8,598 |
|
|
| 764 |
|
|
| — |
|
|
| 10,985 |
|
Total cost of operations |
|
| 665,763 |
|
|
| 754,082 |
|
|
| 497,959 |
|
|
| (40,293 | ) |
|
| 1,877,511 |
|
Operating income |
|
| 93,189 |
|
|
| 165,623 |
|
|
| 81,524 |
|
|
| — |
|
|
| 340,336 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| (72,667 | ) |
|
| (5,720 | ) |
|
| (4,543 | ) |
|
| 950 |
|
|
| (81,980 | ) |
Loss on debt amendments and refinancing |
|
| (13,284 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (13,284 | ) |
Distributions from NCM |
|
| 1,310 |
|
|
| — |
|
|
| 8,807 |
|
|
| — |
|
|
| 10,117 |
|
Equity in income of affiliates |
|
| 173,232 |
|
|
| 55,812 |
|
|
| 23,309 |
|
|
| (227,756 | ) |
|
| 24,597 |
|
Other income |
|
| 237 |
|
|
| 24 |
|
|
| 8,602 |
|
|
| (950 | ) |
|
| 7,913 |
|
Total other income (expense) |
|
| 88,828 |
|
|
| 50,116 |
|
|
| 36,175 |
|
|
| (227,756 | ) |
|
| (52,637 | ) |
Income before income taxes |
|
| 182,017 |
|
|
| 215,739 |
|
|
| 117,699 |
|
|
| (227,756 | ) |
|
| 287,699 |
|
Income taxes |
|
| 2,593 |
|
|
| 62,281 |
|
|
| 41,947 |
|
|
| — |
|
|
| 106,821 |
|
Net income |
|
| 179,424 |
|
|
| 153,458 |
|
|
| 75,752 |
|
|
| (227,756 | ) |
|
| 180,878 |
|
Less: Net income attributable to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| 1,454 |
|
|
| — |
|
|
| 1,454 |
|
Net income attributable to Cinemark USA, Inc. |
| $ | 179,424 |
|
| $ | 153,458 |
|
| $ | 74,298 |
|
| $ | (227,756 | ) |
| $ | 179,424 |
|
27
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATION
NINE MONTHS ENDED SEPTEMBER 30, 2017
|
| Parent |
|
| Subsidiary |
|
| Subsidiary |
|
|
|
|
|
|
|
|
| |||
|
| Company |
|
| Guarantors |
|
| Non-Guarantors |
|
| Eliminations |
|
| Consolidated |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Revenues |
| $ | 748,282 |
|
| $ | 903,500 |
|
| $ | 631,035 |
|
| $ | (41,264 | ) |
| $ | 2,241,553 |
|
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Theatre operating expenses |
|
| 594,731 |
|
|
| 618,160 |
|
|
| 459,731 |
|
|
| (41,264 | ) |
|
| 1,631,358 |
|
General and administrative expenses |
|
| 9,257 |
|
|
| 60,906 |
|
|
| 41,016 |
|
|
| — |
|
|
| 111,179 |
|
Depreciation and amortization |
|
| 58,969 |
|
|
| 63,574 |
|
|
| 52,002 |
|
|
| — |
|
|
| 174,545 |
|
Impairment of long-lived assets |
|
| 1,340 |
|
|
| 71 |
|
|
| 8,189 |
|
|
| — |
|
|
| 9,600 |
|
(Gain) loss on sale of assets and other |
|
| 8,580 |
|
|
| (405 | ) |
|
| 1,289 |
|
|
| — |
|
|
| 9,464 |
|
Total cost of operations |
|
| 672,877 |
|
|
| 742,306 |
|
|
| 562,227 |
|
|
| (41,264 | ) |
|
| 1,936,146 |
|
Operating income |
|
| 75,405 |
|
|
| 161,194 |
|
|
| 68,808 |
|
|
| — |
|
|
| 305,407 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| (70,348 | ) |
|
| (5,717 | ) |
|
| (4,217 | ) |
|
| 1,074 |
|
|
| (79,208 | ) |
Loss on debt amendments and refinancing |
|
| (246 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (246 | ) |
Distributions from NCM |
|
| — |
|
|
| — |
|
|
| 11,704 |
|
|
| — |
|
|
| 11,704 |
|
Equity in income of affiliates |
|
| 166,691 |
|
|
| 42,855 |
|
|
| 24,905 |
|
|
| (207,684 | ) |
|
| 26,767 |
|
Other income |
|
| 2,194 |
|
|
| 633 |
|
|
| 4,656 |
|
|
| (1,074 | ) |
|
| 6,409 |
|
Total other income (expense) |
|
| 98,291 |
|
|
| 37,771 |
|
|
| 37,048 |
|
|
| (207,684 | ) |
|
| (34,574 | ) |
Income before income taxes |
|
| 173,696 |
|
|
| 198,965 |
|
|
| 105,856 |
|
|
| (207,684 | ) |
|
| 270,833 |
|
Income taxes |
|
| 3,468 |
|
|
| 59,495 |
|
|
| 36,204 |
|
|
| - |
|
|
| 99,167 |
|
Net income |
|
| 170,228 |
|
|
| 139,470 |
|
|
| 69,652 |
|
|
| (207,684 | ) |
|
| 171,666 |
|
Less: Net income attributable to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| 1,438 |
|
|
| — |
|
|
| 1,438 |
|
Net income attributable to Cinemark USA, Inc. |
| $ | 170,228 |
|
| $ | 139,470 |
|
| $ | 68,214 |
|
| $ | (207,684 | ) |
| $ | 170,228 |
|
28
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME INFORMATION
THREE MONTHS ENDED SEPTEMBER 30, 2016
|
| Parent |
|
| Subsidiary |
|
| Subsidiary |
|
|
|
|
|
|
|
|
| |||
|
| Company |
|
| Guarantors |
|
| Non-Guarantors |
|
| Eliminations |
|
| Consolidated |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Net income |
| $ | 66,046 |
|
| $ | 53,215 |
|
| $ | 27,660 |
|
| $ | (80,404 | ) |
| $ | 66,517 |
|
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss of equity method investments |
|
| (7 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (7 | ) |
Foreign currency translation adjustments |
|
| (3,673 | ) |
|
| — |
|
|
| (3,669 | ) |
|
| 3,673 |
|
|
| (3,669 | ) |
Total other comprehensive loss, net of tax |
|
| (3,680 | ) |
|
| — |
|
|
| (3,669 | ) |
|
| 3,673 |
|
|
| (3,676 | ) |
Total comprehensive income, net of tax |
| $ | 62,366 |
|
| $ | 53,215 |
|
| $ | 23,991 |
|
| $ | (76,731 | ) |
| $ | 62,841 |
|
Comprehensive income attributable to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| (475 | ) |
|
| — |
|
|
| (475 | ) |
Comprehensive income attributable to Cinemark USA, Inc. |
| $ | 62,366 |
|
| $ | 53,215 |
|
| $ | 23,516 |
|
| $ | (76,731 | ) |
| $ | 62,366 |
|
29
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME INFORMATION
THREE MONTHS ENDED SEPTEMBER 30, 2017
|
| Parent |
|
| Subsidiary |
|
| Subsidiary |
|
|
|
|
|
|
|
|
| |||
|
| Company |
|
| Guarantors |
|
| Non-Guarantors |
|
| Eliminations |
|
| Consolidated |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Net income |
| $ | 38,403 |
|
| $ | 37,559 |
|
| $ | 21,065 |
|
| $ | (58,223 | ) |
| $ | 38,804 |
|
Other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss of equity method investments |
|
| (11 | ) |
|
| — |
|
|
| (11 | ) |
|
| 11 |
|
|
| (11 | ) |
Foreign currency translation adjustments |
|
| 9,085 |
|
|
| — |
|
|
| 9,085 |
|
|
| (9,085 | ) |
|
| 9,085 |
|
Total other comprehensive income, net of tax |
|
| 9,074 |
|
|
| — |
|
|
| 9,074 |
|
|
| (9,074 | ) |
|
| 9,074 |
|
Total comprehensive income, net of tax |
| $ | 47,477 |
|
| $ | 37,559 |
|
| $ | 30,139 |
|
| $ | (67,297 | ) |
| $ | 47,878 |
|
Comprehensive income attributable to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| (401 | ) |
|
| — |
|
|
| (401 | ) |
Comprehensive income (loss) attributable to Cinemark USA, Inc. |
| $ | 47,477 |
|
| $ | 37,559 |
|
| $ | 29,738 |
|
| $ | (67,297 | ) |
| $ | 47,477 |
|
30
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME INFORMATION
NINE MONTHS ENDED SEPTEMBER 30, 2016
|
| Parent |
|
| Subsidiary |
|
| Subsidiary |
|
|
|
|
|
|
|
|
| |||
|
| Company |
|
| Guarantors |
|
| Non-Guarantors |
|
| Eliminations |
|
| Consolidated |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Net income |
| $ | 179,424 |
|
| $ | 153,458 |
|
| $ | 75,752 |
|
| $ | (227,756 | ) |
| $ | 180,878 |
|
Other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of settlements, net of taxes of $138 |
|
| 234 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 234 |
|
Other comprehensive loss of equity method investments |
|
| (183 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (183 | ) |
Foreign currency translation adjustments |
|
| 34,974 |
|
|
| — |
|
|
| 34,998 |
|
|
| (34,974 | ) |
|
| 34,998 |
|
Total other comprehensive income, net of tax |
|
| 35,025 |
|
|
| — |
|
|
| 34,998 |
|
|
| (34,974 | ) |
|
| 35,049 |
|
Total comprehensive income, net of tax |
| $ | 214,449 |
|
| $ | 153,458 |
|
| $ | 110,750 |
|
| $ | (262,730 | ) |
| $ | 215,927 |
|
Comprehensive income attributable to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| (1,478 | ) |
|
| — |
|
|
| (1,478 | ) |
Comprehensive income attributable to Cinemark USA, Inc. |
| $ | 214,449 |
|
| $ | 153,458 |
|
| $ | 109,272 |
|
| $ | (262,730 | ) |
| $ | 214,449 |
|
31
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME INFORMATION
NINE MONTHS ENDED SEPTEMBER 30, 2017
|
| Parent |
|
| Subsidiary |
|
| Subsidiary |
|
|
|
|
|
|
|
|
| |||
|
| Company |
|
| Guarantors |
|
| Non-Guarantors |
|
| Eliminations |
|
| Consolidated |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Net income |
| $ | 170,228 |
|
| $ | 139,470 |
|
| $ | 69,652 |
|
| $ | (207,684 | ) |
| $ | 171,666 |
|
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income of equity method investments |
|
| 92 |
|
|
| — |
|
|
| 92 |
|
|
| (92 | ) |
|
| 92 |
|
Foreign currency translation adjustments |
|
| 5,578 |
|
|
| — |
|
|
| 5,578 |
|
|
| (5,578 | ) |
|
| 5,578 |
|
Total other comprehensive income, net of tax |
|
| 5,670 |
|
|
| — |
|
|
| 5,670 |
|
|
| (5,670 | ) |
|
| 5,670 |
|
Total comprehensive income, net of tax |
| $ | 175,898 |
|
| $ | 139,470 |
|
| $ | 75,322 |
|
| $ | (213,354 | ) |
| $ | 177,336 |
|
Comprehensive income attributable to noncontrolling interests |
|
| — |
|
|
| — |
|
|
| (1,438 | ) |
|
| — |
|
|
| (1,438 | ) |
Comprehensive income attributable to Cinemark USA, Inc. |
| $ | 175,898 |
|
| $ | 139,470 |
|
| $ | 73,884 |
|
| $ | (213,354 | ) |
| $ | 175,898 |
|
32
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
NINE MONTHS ENDED SEPTEMBER 30, 2016
|
| Parent |
|
| Subsidiary |
|
| Subsidiary |
|
|
|
|
|
|
|
|
| |||
|
| Company |
|
| Guarantors |
|
| Non-Guarantors |
|
| Eliminations |
|
| Consolidated |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| $ | 179,424 |
|
| $ | 153,458 |
|
| $ | 75,752 |
|
| $ | (227,756 | ) |
| $ | 180,878 |
|
Adjustments to reconcile net income to cash provided by operating activities |
|
| (106,960 | ) |
|
| 21,970 |
|
|
| 31,287 |
|
|
| 227,756 |
|
|
| 174,053 |
|
Changes in assets and liabilities |
|
| 29,668 |
|
|
| (87,172 | ) |
|
| (19,677 | ) |
|
| — |
|
|
| (77,181 | ) |
Net cash provided by operating activities |
|
| 102,132 |
|
|
| 88,256 |
|
|
| 87,362 |
|
|
| — |
|
|
| 277,750 |
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to theatre properties and equipment |
|
| (84,633 | ) |
|
| (89,554 | ) |
|
| (56,159 | ) |
|
| — |
|
|
| (230,346 | ) |
Acquisition of theatres in the U.S. |
|
| (15,300 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (15,300 | ) |
Proceeds from sale of theatre properties and equipment and other |
|
| 2,912 |
|
|
| 339 |
|
|
| 147 |
|
|
| — |
|
|
| 3,398 |
|
Proceeds from sale of marketable securities |
|
| 13,451 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 13,451 |
|
Intercompany note issuances |
|
| (4,455 | ) |
|
| — |
|
|
| — |
|
|
| 4,455 |
|
|
|
|
|
Dividends received from subsidiaries |
|
| 25,733 |
|
|
| 8,011 |
|
|
| — |
|
|
| (33,744 | ) |
|
| — |
|
Investment in joint ventures and other |
|
| (1,000 | ) |
|
| — |
|
|
| (703 | ) |
|
| — |
|
|
| (1,703 | ) |
Net cash used for investing activities |
|
| (63,292 | ) |
|
| (81,204 | ) |
|
| (56,715 | ) |
|
| (29,289 | ) |
|
| (230,500 | ) |
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid to parent |
|
| (93,650 | ) |
|
| — |
|
|
| (33,744 | ) |
|
| 33,744 |
|
|
| (93,650 | ) |
Proceeds from issuance of Senior Notes, net of discount |
|
| 222,750 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 222,750 |
|
Retirement of Senior Subordinated Notes |
|
| (200,000 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (200,000 | ) |
Repayments of long-term debt |
|
| (15,201 | ) |
|
| — |
|
|
| (16 | ) |
|
| — |
|
|
| (15,217 | ) |
Payments of debt issue costs |
|
| (4,504 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4,504 | ) |
Intercompany loan proceeds |
|
| - |
|
|
| — |
|
|
| 4,455 |
|
|
| (4,455 | ) |
|
|
|
|
Payments on capital leases |
|
| (4,906 | ) |
|
| (7,829 | ) |
|
| (1,920 | ) |
|
| — |
|
|
| (14,655 | ) |
Other |
|
| 1,797 |
|
|
| (6,828 | ) |
|
| (515 | ) |
|
| — |
|
|
| (5,546 | ) |
Net cash used for financing activities |
|
| (93,714 | ) |
|
| (14,657 | ) |
|
| (31,740 | ) |
|
| 29,289 |
|
|
| (110,822 | ) |
Effect of exchange rate changes on cash and cash equivalents |
|
| — |
|
|
| — |
|
|
| 2,081 |
|
|
| — |
|
|
| 2,081 |
|
Increase (decrease) in cash and cash equivalents |
|
| (54,874 | ) |
|
| (7,605 | ) |
|
| 988 |
|
|
| — |
|
|
| (61,491 | ) |
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year |
|
| 141,364 |
|
|
| 95,865 |
|
|
| 351,274 |
|
|
| — |
|
|
| 588,503 |
|
End of year |
| $ | 86,490 |
|
| $ | 88,260 |
|
| $ | 352,262 |
|
| $ | — |
|
| $ | 527,012 |
|
33
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
NINE MONTHS ENDED SEPTEMBER 30, 2017
|
| Parent |
|
| Subsidiary |
|
| Subsidiary |
|
|
|
|
|
|
|
|
| |||
|
| Company |
|
| Guarantors |
|
| Non-Guarantors |
|
| Eliminations |
|
| Consolidated |
| |||||
|
| (In thousands) |
| |||||||||||||||||
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| $ | 170,228 |
|
| $ | 139,470 |
|
| $ | 69,652 |
|
| $ | (207,684 | ) |
| $ | 171,666 |
|
Adjustments to reconcile net income to cash provided by operating activities |
|
| (93,073 | ) |
|
| 28,387 |
|
|
| 52,671 |
|
|
| 207,684 |
|
|
| 195,669 |
|
Changes in assets and liabilities |
|
| (38,534 | ) |
|
| (26,862 | ) |
|
| 8,997 |
|
|
| — |
|
|
| (56,399 | ) |
Net cash provided by operating activities |
|
| 38,621 |
|
|
| 140,995 |
|
|
| 131,320 |
|
|
| — |
|
|
| 310,936 |
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to theatre properties and equipment |
|
| (89,111 | ) |
|
| (130,816 | ) |
|
| (42,803 | ) |
|
| — |
|
|
| (262,730 | ) |
Acquisition of theatres in the U.S. and international markets |
|
| (12,500 | ) |
|
| — |
|
|
| (28,500 | ) |
|
| — |
|
|
| (41,000 | ) |
Proceeds from sale of theatre properties and equipment and other |
|
| 2,147 |
|
|
| 12,267 |
|
|
| 402 |
|
|
| — |
|
|
| 14,816 |
|
Dividends received from subsidiaries |
|
| 127,600 |
|
|
| 6 |
|
|
| — |
|
|
| (127,606 | ) |
|
| — |
|
Investment in joint ventures and other |
|
| — |
|
|
| (69 | ) |
|
| (1,109 | ) |
|
| — |
|
|
| (1,178 | ) |
Net cash provided by (used for) investing activities |
|
| 28,136 |
|
|
| (118,612 | ) |
|
| (72,010 | ) |
|
| (127,606 | ) |
|
| (290,092 | ) |
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid to parent |
|
| (100,875 | ) |
|
| (127,000 | ) |
|
| (606 | ) |
|
| 127,606 |
|
|
| (100,875 | ) |
Repayments of long-term debt |
|
| (2,855 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,855 | ) |
Payments on capital leases |
|
| (5,745 | ) |
|
| (7,119 | ) |
|
| (2,950 | ) |
|
| — |
|
|
| (15,814 | ) |
Proceeds from financing lease |
|
| - |
|
|
| 10,200 |
|
|
| - |
|
|
| — |
|
|
| 10,200 |
|
Other |
|
| (849 | ) |
|
| (2,943 | ) |
|
| (588 | ) |
|
| — |
|
|
| (4,380 | ) |
Net cash used for financing activities |
|
| (110,324 | ) |
|
| (126,862 | ) |
|
| (4,144 | ) |
|
| 127,606 |
|
|
| (113,724 | ) |
Effect of exchange rate changes on cash and cash equivalents |
|
| — |
|
|
| — |
|
|
| 1,051 |
|
|
| — |
|
|
| 1,051 |
|
Increase (decrease) in cash and cash equivalents |
|
| (43,567 | ) |
|
| (104,479 | ) |
|
| 56,217 |
|
|
| — |
|
|
| (91,829 | ) |
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year |
|
| 146,855 |
|
|
| 281,023 |
|
|
| 133,260 |
|
|
| — |
|
|
| 561,138 |
|
End of year |
| $ | 103,288 |
|
| $ | 176,544 |
|
| $ | 189,477 |
|
| $ | — |
|
| $ | 469,309 |
|
* * * * *
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 our 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. As of September 30, 2017,2022, we managed our business under two reportable operating segments – U.S. markets and international markets. See Note 1316 to our condensed consolidated financial statements.
Impact of COVID-19 Pandemic
The COVID-19 pandemic has had an unprecedented impact on the world and the movie exhibition industry with widespread social and economic effects. We temporarily closed our theatres 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 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.
Revenue and Expense
We generate revenuesrevenue primarily from filmed entertainment box office receipts and concession sales with additional revenuesrevenue from screen advertising, salesscreen 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). NCM provides our domestic theatres with various forms of in-theatre advertising. We also offer alternative entertainment, such as live and pre-recorded sports programs, concert events, the Metropolitan Opera, in-theatre gaming and other special events in our theatres through our joint venture, AC JV, LLC. Our Flix Media initiative has also allowed us to expand oursubsidiaries provide screen advertising and alternative content withinfor our international circuit and to other international exhibitors.
Films leading the box office during the nine months ended September 30, 20172022 included the carryover of Rogue One: A Star Wars Story and Hidden Figures andSpider-Man: No Way Home as well as new releases such as Beautyincluding Top Gun: Maverick, Doctor Strange in the Multiverse of Madness, Jurassic World: Dominion, The Batman, Minions: The Rise of Gru, Thor: Love and Thunder, Sonic the Beast, Wonder Woman, Guardians of the Galaxy Vol.Hedgehog 2, Spider Man: Homecoming, It, Despicable Me 3, Logan,Elvis, Uncharted, Nope, Lightyear, The Fate of the Furious, Dunkirk, The LEGO Batman Movie, Get Out, The Boss Baby, Pirates of the Caribbean: Dead Men Tell No Tales, Kong: Skull IslandLost City and other films. Bullet Train. Films scheduled for release during the remainder of 2017three months ending December 31, 2022 include Jumanji: Welcome to the Jungle and Coco and well-known franchise films such as Star Wars:Black Panther: Wakanda Forever, Black Adam, Puss in Boots: The Last Jedi, Justice League, Pitch Perfect 3 Wish, Smile, Ticket to Paradise and Thor: Ragnarok the highly anticipated sequel, Avatar: 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 revenues.revenue. Film rental costs as a percentage of revenuesrevenue 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 campaigns for newreigniting theatrical moviegoing, increasing loyalty to Cinemark and renovated theatres and brand advertising thatbuilding our audiences. These expenses vary depending on the timing and length of such campaigns.
Concession supplies expense is variable in nature and fluctuates with our concession revenues.revenue and 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 negotiate prices for concession supplies directly with concession vendorssource products from a variety of partners around the world to minimize supply chain interruptions and manufacturers to obtain volume rates.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 revenuesrevenue as theatre staffing is adjusted to respond to changes in attendance. Staffing levels may vary based on the amenities offered at a location, such as full-service restaurants, bars or expanded food and beverage options. In somecertain international locations, staffing levels are also subject to local regulations. 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 revenuesrevenue is also affected by the number of theatres under operating leases, the number of theatres under capitalfinance leases and the number of fee-ownedowned theatres.
Utilities and other costs include both fixed and variable costs and primarily consistsconsist of utilities, expenses for projection and sound equipment maintenance and monitoring, property taxes, janitorial costs, credit card fees, third party ticket sales commissions, repairs and maintenance expenses, security services and expenses for the maintenance and security services.monitoring of projection and sound equipment.
General and administrative expense to support the overall management of the Company is 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 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.
37
Results of Operations
The following table sets forth, for the periods indicated, certain operating data and the percentage of revenues represented byamounts for certain items reflected in our condensed consolidated statementsoperating income (loss) of income.Holdings along with each of those items as a percentage of revenue.
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Operating data (in millions): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
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 (1) |
|
| 45.1 |
|
|
| 38.6 |
|
|
| 134.0 |
|
|
| 111.8 |
|
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 (1) |
|
| 631.6 |
|
|
| 477.3 |
|
|
| 1,887.8 |
|
|
| 1,141.2 |
|
Operating income (loss) (1) |
| $ | 18.8 |
|
| $ | (42.5 | ) |
| $ | (32.8 | ) |
| $ | (297.4 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating data as a percentage of total revenue: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Admissions |
|
| 49.9 | % |
|
| 51.9 | % |
|
| 50.8 | % |
|
| 51.6 | % |
Concession |
|
| 39.0 | % |
|
| 37.8 | % |
|
| 38.4 | % |
|
| 37.2 | % |
Other |
|
| 11.1 | % |
|
| 10.3 | % |
|
| 10.8 | % |
|
| 11.2 | % |
Total revenue |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
Cost of operations (2) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Film rentals and advertising |
|
| 55.7 | % |
|
| 51.9 | % |
|
| 56.4 | % |
|
| 49.8 | % |
Concession supplies |
|
| 18.3 | % |
|
| 17.2 | % |
|
| 18.1 | % |
|
| 17.3 | % |
Salaries and wages |
|
| 14.9 | % |
|
| 15.5 | % |
|
| 14.9 | % |
|
| 17.7 | % |
Facility lease expense |
|
| 11.9 | % |
|
| 15.8 | % |
|
| 12.5 | % |
|
| 23.8 | % |
Utilities and other |
|
| 17.0 | % |
|
| 18.8 | % |
|
| 16.4 | % |
|
| 22.8 | % |
General and administrative expense |
|
| 6.9 | % |
|
| 8.9 | % |
|
| 7.2 | % |
|
| 13.2 | % |
Depreciation and amortization |
|
| 9.0 | % |
|
| 15.5 | % |
|
| 9.8 | % |
|
| 24.0 | % |
Impairment of long-lived and other assets |
|
| 2.3 | % |
|
| 1.7 | % |
|
| 5.8 | % |
|
| 0.9 | % |
Restructuring costs |
|
| — | % |
|
| (0.1 | )% |
|
| — | % |
|
| (0.2 | )% |
(Gain) loss on disposal of assets and other |
|
| 0.2 | % |
|
| 0.3 | % |
|
| (0.3 | )% |
|
| 0.9 | % |
Total cost of operations |
|
| 97.1 | % |
|
| 109.8 | % |
|
| 101.8 | % |
|
| 135.2 | % |
Operating income (loss) |
|
| 2.9 | % |
|
| (9.8 | )% |
|
| (1.8 | )% |
|
| (35.2 | )% |
Average screen count (month end average) |
|
| 5,843 |
|
|
| 5,876 |
|
|
| 5,850 |
|
|
| 5,890 |
|
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
Operating data (in millions): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
| ||||
General and administrative expense |
| $ | 44.4 |
|
| $ | 37.9 |
|
| $ | 131.8 |
|
| $ | 109.7 |
|
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 | ) |
38
|
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Operating data (in millions): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Admissions |
| $ | 425.1 |
|
| $ | 472.9 |
|
| $ | 1,351.5 |
|
| $ | 1,364.8 |
|
Concession |
|
| 247.1 |
|
|
| 261.4 |
|
|
| 777.6 |
|
|
| 752.8 |
|
Other |
|
| 38.6 |
|
|
| 34.3 |
|
|
| 112.5 |
|
|
| 100.3 |
|
Total revenues |
| $ | 710.8 |
|
| $ | 768.6 |
|
| $ | 2,241.6 |
|
| $ | 2,217.9 |
|
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Film rentals and advertising |
|
| 226.2 |
|
|
| 249.8 |
|
|
| 725.6 |
|
|
| 733.1 |
|
Concession supplies |
|
| 40.2 |
|
|
| 41.9 |
|
|
| 124.1 |
|
|
| 117.0 |
|
Salaries and wages |
|
| 87.3 |
|
|
| 84.4 |
|
|
| 261.3 |
|
|
| 243.8 |
|
Facility lease expense |
|
| 82.0 |
|
|
| 82.8 |
|
|
| 248.6 |
|
|
| 241.9 |
|
Utilities and other |
|
| 92.4 |
|
|
| 95.0 |
|
|
| 271.8 |
|
|
| 265.5 |
|
General and administrative expenses |
|
| 36.5 |
|
|
| 34.7 |
|
|
| 111.2 |
|
|
| 107.0 |
|
Depreciation and amortization |
|
| 58.1 |
|
|
| 54.2 |
|
|
| 174.5 |
|
|
| 155.9 |
|
Impairment of long-lived assets |
|
| 5.0 |
|
|
| 0.4 |
|
|
| 9.6 |
|
|
| 2.3 |
|
Loss on sale of assets and other |
|
| 8.6 |
|
|
| 7.0 |
|
|
| 9.5 |
|
|
| 11.0 |
|
Total cost of operations |
|
| 636.3 |
|
|
| 650.2 |
|
|
| 1,936.2 |
|
|
| 1,877.5 |
|
Operating income |
| $ | 74.5 |
|
| $ | 118.4 |
|
| $ | 305.4 |
|
| $ | 340.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating data as a percentage of total revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Admissions |
|
| 59.8 | % |
|
| 61.5 | % |
|
| 60.3 | % |
|
| 61.5 | % |
Concession |
|
| 34.8 | % |
|
| 34.0 | % |
|
| 34.7 | % |
|
| 33.9 | % |
Other |
|
| 5.4 | % |
|
| 4.5 | % |
|
| 5.0 | % |
|
| 4.6 | % |
Total revenues |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
Cost of operations (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Film rentals and advertising |
|
| 53.2 | % |
|
| 52.8 | % |
|
| 53.7 | % |
|
| 53.7 | % |
Concession supplies |
|
| 16.3 | % |
|
| 16.0 | % |
|
| 16.0 | % |
|
| 15.5 | % |
Salaries and wages |
|
| 12.3 | % |
|
| 11.0 | % |
|
| 11.7 | % |
|
| 11.0 | % |
Facility lease expense |
|
| 11.5 | % |
|
| 10.8 | % |
|
| 11.1 | % |
|
| 10.9 | % |
Utilities and other |
|
| 13.0 | % |
|
| 12.4 | % |
|
| 12.1 | % |
|
| 12.0 | % |
General and administrative expenses |
|
| 5.1 | % |
|
| 4.5 | % |
|
| 5.0 | % |
|
| 4.8 | % |
Depreciation and amortization |
|
| 8.2 | % |
|
| 7.1 | % |
|
| 7.8 | % |
|
| 7.0 | % |
Impairment of long-lived assets |
|
| 0.7 | % |
|
| 0.1 | % |
|
| 0.4 | % |
|
| 0.1 | % |
Loss on sale of assets and other |
|
| 1.2 | % |
|
| 0.9 | % |
|
| 0.4 | % |
|
| 0.5 | % |
Total cost of operations |
|
| 89.5 | % |
|
| 84.6 | % |
|
| 86.4 | % |
|
| 84.7 | % |
Operating income |
|
| 10.5 | % |
|
| 15.4 | % |
|
| 13.6 | % |
|
| 15.3 | % |
Average screen count (month end average) |
|
| 5,939 |
|
|
| 5,880 |
|
|
| 5,914 |
|
|
| 5,846 |
|
Average operating screen count (month end average) |
|
| 5,749 |
|
|
| 5,785 |
|
|
| 5,764 |
|
|
| 5,771 |
|
Revenues per average screen (dollars) |
| $ | 119,675 |
|
| $ | 130,710 |
|
| $ | 379,025 |
|
| $ | 379,379 |
|
|
|
Three months ended September 30, 20172022 (the “third quarter of 2022”) versus September 30, 2016
Revenues. Total revenues decreased $57.8 million to $710.8 million for the three months ended September 30, 2017 (“2021 (the “third quarter of 2021”).
The COVID-19 pandemic has had an ongoing impact on the movie exhibition industry. When comparing the results for the third quarter of 2017”) from $768.6 million for2022 with the three months ended September 30, 2016 (“third quarter of 2016”), representing2021, 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 |
| |||||||||||||||||||
|
| 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 |
| |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Constant Currency (3) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
| 2017 |
|
| 2016 |
|
| % Change |
|
| 2017 |
|
| 2016 |
|
| % Change |
|
| 2017 |
|
| % Change |
|
| 2017 |
|
| 2016 |
|
| % Change |
| |||||||||||
Admissions revenues (1) |
| $ | 312.3 |
|
| $ | 354.9 |
|
|
| (12.0 | )% |
| $ | 112.8 |
|
| $ | 118.0 |
|
|
| (4.4 | )% |
| $ | 115.4 |
|
|
| (2.2 | )% |
| $ | 425.1 |
|
| $ | 472.9 |
|
|
| (10.1 | )% |
Concession revenues (1) |
| $ | 181.5 |
|
| $ | 197.5 |
|
|
| (8.1 | )% |
| $ | 65.6 |
|
| $ | 63.9 |
|
|
| 2.7 | % |
| $ | 67.0 |
|
|
| 4.9 | % |
| $ | 247.1 |
|
| $ | 261.4 |
|
|
| (5.5 | )% |
Other revenues (1)(2) |
| $ | 16.9 |
|
| $ | 16.7 |
|
|
| 1.2 | % |
| $ | 21.7 |
|
| $ | 17.6 |
|
|
| 23.3 | % |
| $ | 22.2 |
|
|
| 26.1 | % |
| $ | 38.6 |
|
| $ | 34.3 |
|
|
| 12.5 | % |
Total revenues (1)(2) |
| $ | 510.7 |
|
| $ | 569.1 |
|
|
| (10.3 | )% |
| $ | 200.1 |
|
| $ | 199.5 |
|
|
| 0.3 | % |
| $ | 204.6 |
|
|
| 2.6 | % |
| $ | 710.8 |
|
| $ | 768.6 |
|
|
| (7.5 | )% |
Attendance (1) |
|
| 40.6 |
|
|
| 48.0 |
|
|
| (15.4 | )% |
|
| 26.7 |
|
|
| 28.2 |
|
|
| (5.3 | )% |
|
|
|
|
|
|
|
|
|
| 67.3 |
|
|
| 76.2 |
|
|
| (11.7 | )% |
Average ticket price (1) |
| $ | 7.69 |
|
| $ | 7.39 |
|
|
| 4.1 | % |
| $ | 4.22 |
|
| $ | 4.18 |
|
|
| 1.0 | % |
| $ | 4.32 |
|
|
| 3.3 | % |
| $ | 6.32 |
|
| $ | 6.21 |
|
|
| 1.8 | % |
Concession revenues per patron (1) |
| $ | 4.47 |
|
| $ | 4.11 |
|
|
| 8.8 | % |
| $ | 2.46 |
|
| $ | 2.27 |
|
|
| 8.4 | % |
| $ | 2.51 |
|
|
| 10.6 | % |
| $ | 3.67 |
|
| $ | 3.43 |
|
|
| 7.0 | % |
|
|
|
|
|
|
U.S.Admissions revenues decreased $42.6 million primarily due to a 15.4% decrease in attendance, partially offset by a 4.1% increase in average ticket price. The decrease in concession revenues of $16.0 million was primarily due to the 15.4% decreasenext can result in attendance, partially offset by an 8.8% increasemeaningful variations in concession revenues per patron. The decrease in attendance was duereported results. We are providing constant currency amounts for our international operating segment to present a weaker slateperiod-to-period comparison of films inbusiness performance that excludes the impact of foreign currency fluctuations.
International.Admissions revenues decreased $5.2strategic pricing actions and higher purchase incidence. Other revenue for the third quarter of 2022 increased 152.0% to $18.9 million as reported primarily due to a 5.3% decrease in attendance, partially offset by a 1.0% increase in average ticket price. Admissions revenues decreased $2.6compared with $7.5 million in constant currency,during the third period of 2021 primarily due to the 5.3% decreasegrowth in attendance, partially offset by a 3.3%which drove an increase in screen advertising, transaction fees and promotional revenue.
39
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 |
| |||||||||||||||||||
|
| Three Months Ended September 30, |
|
| Three Months Ended September 30, |
|
| Three Months Ended September 30, |
| |||||||||||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| Constant |
|
| 2022 |
|
| 2021 |
| |||||||
Film rentals and advertising |
| $ | 147.1 |
|
| $ | 101.9 |
|
| $ | 33.8 |
|
| $ | 15.1 |
|
| $ | 38.9 |
|
| $ | 180.9 |
|
| $ | 117.0 |
|
Concession supplies |
| $ | 34.8 |
|
| $ | 23.0 |
|
| $ | 11.5 |
|
| $ | 5.2 |
|
| $ | 13.2 |
|
| $ | 46.3 |
|
| $ | 28.2 |
|
Salaries and wages |
| $ | 81.9 |
|
| $ | 58.0 |
|
| $ | 15.1 |
|
| $ | 9.6 |
|
| $ | 17.3 |
|
| $ | 97.0 |
|
| $ | 67.6 |
|
Facility lease expense |
| $ | 61.9 |
|
| $ | 58.8 |
|
| $ | 15.3 |
|
| $ | 10.0 |
|
| $ | 17.3 |
|
| $ | 77.2 |
|
| $ | 68.8 |
|
Utilities and other |
| $ | 85.4 |
|
| $ | 68.1 |
|
| $ | 25.0 |
|
| $ | 13.6 |
|
| $ | 28.0 |
|
| $ | 110.4 |
|
| $ | 81.7 |
|
Cost of Operations. The table below summarizes our theatre operating costs (in millions) by reportable operating segment for the three months ended September 30, 2017 and 2016.
|
| U.S. Operating Segment |
|
| International Operating Segment |
|
| Consolidated |
| |||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| Constant Currency 2017 (1) |
|
| 2017 |
|
| 2016 |
| |||||||
Film rentals and advertising |
| $ | 171.5 |
|
| $ | 193.6 |
|
| $ | 54.7 |
|
| $ | 56.2 |
|
| $ | 56.2 |
|
| $ | 226.2 |
|
| $ | 249.8 |
|
Concession supplies |
|
| 26.2 |
|
|
| 28.2 |
|
|
| 14.0 |
|
|
| 13.7 |
|
|
| 14.2 |
|
|
| 40.2 |
|
|
| 41.9 |
|
Salaries and wages |
|
| 64.6 |
|
|
| 63.2 |
|
|
| 22.7 |
|
|
| 21.2 |
|
|
| 23.5 |
|
|
| 87.3 |
|
|
| 84.4 |
|
Facility lease expense |
|
| 59.8 |
|
|
| 60.5 |
|
|
| 22.2 |
|
|
| 22.3 |
|
|
| 22.4 |
|
|
| 82.0 |
|
|
| 82.8 |
|
Utilities and other |
|
| 64.0 |
|
|
| 66.9 |
|
|
| 28.4 |
|
|
| 28.1 |
|
|
| 29.0 |
|
|
| 92.4 |
|
|
| 95.0 |
|
|
|
Salaries and wages increased to $64.6$81.9 million for the third quarter of 2017 from $63.22022 compared with $58.0 million for the third quarter of 2016 primarily due to staffing at new2021 as a result of significantly higher attendance, expanded operating hours, wage rate increases with average hourly rates up 11% compared with the third quarter of 2021 and recently remodeled theatres, increases in minimum wages and staffingadditional labor required for expanded food and beverage initiatives.offerings. These increases were partially offset by efficiencies and streamlined operations. Facility lease expense, decreasedwhich is primarily fixed in nature, increased to $59.8$61.9 million for the third quarter of 2017 from $60.52022 due to new theatres and an increase in common area maintenance costs. Utilities and other costs increased to $85.4 million for the third quarter of 2016 due to decreased percentage rent2022, 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 increased due to the declineexpansion of operating hours, a significant increase in revenues.attendance and inflationary pressures.
Salaries and wages increased to $15.1 million as reported for the third quarter of 2022 due to the significantly higher attendance, expanded operating hours and wage rate increases. Facility lease expense increased to $15.3 million as reported for the third quarter of 2022. The increase was due to higher percentage rent driven by higher revenue and the return of minimum rent thresholds compared with the third quarter of 2021. Utilities and other costs decreasedincreased to $64.0$25.0 million as reported as many of these costs are variable in nature, such as utilities, screen advertising commissions, credit card fees, janitorial costs and repairs and maintenance, and were impacted by the significant increase in attendance in the third quarter of 2022. These expenses, as reported, were also impacted by exchange rates in each of the countries in which we operate.
General and Administrative Expense. General and administrative expense for Holdings increased to $45.1 million for the third quarter of 2017 from $66.92022 compared with $38.6 million for the third quarter of 2016 primarily due2021. General and administrative expense attributable to decreased equipment lease expenses for 3-D presentations.
International. Film rentals and advertising costs were $54.7 million ($56.2 million in constant currency), or 48.5% of admissions revenues, for the third quarter of 2017 compared to $56.2 million, or 47.6% of admissions revenues, for the third quarter of 2016. The increase in the film rental and advertising rate was primarily due to the mix of film product during the third quarter of 2017 compared to the third quarter of 2016 and increased advertising costs during the third quarter of 2017. Concession supplies expense was $14.0 million ($14.2 million in constant currency), or 21.3% of concession revenues, for the third quarter of 2017 compared to $13.7 million, or 21.4% of concession revenues, for the third quarter of 2016.
Salaries and wagesCUSA increased to $22.7 million ($23.5 million in constant currency) for the third quarter of 2017 compared to $21.2 for the third quarter of 2016. The as reported increase was due to new theatres and growth in wages as a result of inflation. Facility lease expense decreased to $22.2 million (increased to $22.4 million in constant currency) for the third quarter of 2017 compared to $22.3$44.4 million for the third quarter of 2016. The as reported decrease was due to decreased percentage rent due to the decline in revenues. Utilities and other costs increased to $28.4 million ($29.0 million in constant currency) for the third quarter of 20172022 compared to $28.1with $37.9 million for the third quarter of 2016.2021. The as reported increase wasfor both Holdings and CUSA is primarily due to increases in utility expenseshigher staffing levels, wages and the impact of new theatres. benefits inflation, professional fees and a shift to cloud-based software.
GeneralDepreciation and Administrative Expenses. GeneralAmortization. Depreciation and administrative expenses increasedamortization expense decreased to $36.5$58.3 million for the third quarter of 2017 from $34.72022 compared with $67.2 million for the third quarter of 2016. The increase was2021 primarily due to increased salaries, professional fees and share based award compensation expense.the impairment of theatre assets during 2021.
Depreciation and Amortization. Depreciation and amortization expense increased to $58.1 million during the third quarter of 2017 compared to $54.2 million during the third quarter of 2016. The increase was primarily due to theatre remodels and new theatres.
Impairment of Long-Lived and Other Assets.We recorded asset impairment charges on assets held and used of $5.0$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 of
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.
Loss on Disposal of Assets and Other. A loss on disposal of assets and other of $1.2 million was recorded during the third quarter of 2022 compared with a loss of $1.1 million during the third quarter of 2017 compared2021. Activity for the third quarter of 2022 was primarily related to $0.4the write-off 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.
Interest Expense. Interest expense for Holdings, which includes amortization of debt issuance costs and amortization of accumulated losses for swap amendments, increased to $38.4 million during the third quarter of 2016. The long-lived asset impairment charges recorded during each of the periods presented were specific to theatres that were directly and individually impacted by increased competition, adverse changes in market demographics or adverse changes in the development or the conditions of the areas surrounding the theatre. Impairment charges2022 compared with $38.0 million for the third quarter of 2017 impacted nine2021. Interest expense attributable to CUSA, which includes amortization of our twenty-six reporting units. See Note 9debt issuance costs and amortization of accumulated losses for swap amendments, increased to our condensed consolidated financial statements.
Loss on Sale of Assets and Other. We recorded a loss on sale of assets and other of $8.6$32.4 million during the third quarter of 20172022 compared with $31.9 million for the third quarter of 2021. The increase for both Holdings and CUSA was primarily due to $7.0the increase in variable interest rates. See further discussion at Financing Activities below.
Equity in Income (Loss) of Affiliates. Equity in income of affiliates of $0.2 million was recorded during the third quarter of 2022 compared with a loss of $(7.2) million during the third quarter of 2016. Activity for the third quarter2021. The improvement in equity in income (loss) of 2017 and the third quarter of 2016 was primarilyaffiliates is due to the retirement of assets related to theatre remodels.
Interest Expense. Interest costs incurred, including amortization of debt issue costs, were $26.3 million during the third quarter of 2017 compared to $26.7 million during the third quarter of 2016. The decrease was due to amendments to our senior secured credit facility completed during June and December of 2016 and June of 2017 which, in the aggregate, reduced the rate at which our term loan accrues interest by 100 basis points.
Distributions from NCM. We recorded a distribution from NCM of $2.1 million during the third quarter of 2017 compared to $1.4 million recorded during the third quarter of 2016, which were in excess of the carrying valueongoing recovery of our Tranche 1 investment. See Note 5equity investees’ performance as the industry continues to our condensed consolidated financial statements.
Equity in Income of Affiliates. We recorded equity in income of affiliates of $10.9 million during the third quarter of 2017 compared to $12.4 million during the third quarter of 2016.recover. See Notes 58 and 69 to our condensed consolidated financial statements for information about our equity investments.
Income Taxes. IncomeTaxes - Holdings. An income tax expense of $24.8$3.4 million was recorded for the third quarter of 20172022 compared with an income tax benefit of $(8.9) million for the third quarter of 2021. The effective tax rate was approximately (16.6)% for the third quarter of 2022 compared with 10.3% for the third quarter of 2021. The effective tax rate for the third quarter of 2022 was impacted by valuation allowances related to $41.2certain 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.
Income Taxes - CUSA. An income tax benefit of $(0.4) million was recorded for the third quarter of 2016.2022 compared with an income tax benefit of $(7.4) million for the third quarter of 2021. The effective tax rate was approximately 39.0%2.7% for the third quarter of 20172022 compared to 38.2%with 9.3% for the third quarter of 2016.2021. 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.
41
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.
Nine months ended September 30, 2017 versus September 30, 2016
Revenues. Total revenues increased $23.7 million to $2,241.6 million for the nine months ended September 30, 2017 (“the 2017 period”) from $2,217.9 million for the nine months ended September 30, 2016 (“the 2016 period”), representing a 1.1% increase. The table below, presented by reportable operating segment, summarizes our revenue performance and certain key performance indicators for the nine months ended September 30, 2017 and 2016.
|
| U.S. Operating Segment |
|
| International Operating Segment |
|
| Consolidated |
| |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Constant Currency (3) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
| 2017 |
|
| 2016 |
|
| % Change |
|
| 2017 |
|
| 2016 |
|
| % Change |
|
| 2017 |
|
| % Change |
|
| 2017 |
|
| 2016 |
|
| % Change |
| |||||||||||
Admissions revenues (1) |
| $ | 1,003.5 |
|
| $ | 1,037.7 |
|
|
| (3.3 | )% |
| $ | 348.0 |
|
| $ | 327.1 |
|
|
| 6.4 | % |
| $ | 336.4 |
|
|
| 2.8 | % |
| $ | 1,351.5 |
|
| $ | 1,364.8 |
|
|
| (1.0 | )% |
Concession revenues (1) |
| $ | 582.2 |
|
| $ | 575.3 |
|
|
| 1.2 | % |
| $ | 195.4 |
|
| $ | 177.5 |
|
|
| 10.1 | % |
| $ | 190.0 |
|
|
| 7.0 | % |
| $ | 777.6 |
|
| $ | 752.8 |
|
|
| 3.3 | % |
Other revenues (1)(2) |
| $ | 53.8 |
|
| $ | 53.6 |
|
|
| 0.4 | % |
| $ | 58.7 |
|
| $ | 46.7 |
|
|
| 25.7 | % |
| $ | 57.2 |
|
|
| 22.5 | % |
| $ | 112.5 |
|
| $ | 100.3 |
|
|
| 12.2 | % |
Total revenues (1)(2) |
| $ | 1,639.5 |
|
| $ | 1,666.6 |
|
|
| (1.6 | )% |
| $ | 602.1 |
|
| $ | 551.3 |
|
|
| 9.2 | % |
| $ | 583.6 |
|
|
| 5.9 | % |
| $ | 2,241.6 |
|
| $ | 2,217.9 |
|
|
| 1.1 | % |
Attendance (1) |
|
| 130.1 |
|
|
| 138.0 |
|
|
| (5.7 | )% |
|
| 80.9 |
|
|
| 83.7 |
|
|
| (3.3 | )% |
|
|
|
|
|
|
|
|
|
| 211.0 |
|
|
| 221.7 |
|
|
| (4.8 | )% |
Average ticket price (1) |
| $ | 7.71 |
|
| $ | 7.52 |
|
|
| 2.5 | % |
| $ | 4.30 |
|
| $ | 3.91 |
|
|
| 10.0 | % |
| $ | 4.16 |
|
|
| 6.4 | % |
| $ | 6.41 |
|
| $ | 6.16 |
|
|
| 4.1 | % |
Concession revenues per patron (1) |
| $ | 4.48 |
|
| $ | 4.17 |
|
|
| 7.4 | % |
| $ | 2.42 |
|
| $ | 2.12 |
|
|
| 14.2 | % |
| $ | 2.35 |
|
|
| 10.8 | % |
| $ | 3.69 |
|
| $ | 3.40 |
|
|
| 8.5 | % |
|
|
|
|
|
|
U.S.Admissions revenues decreased $34.2 million primarily due to a 5.7% decrease in attendance, partially offset by a 2.5% increase in average ticket price. Concession revenues increased $6.9 million primarily due to a 7.4% increase in concession revenues per patron, partially offset by the 5.7% decrease in attendance. The decrease in attendance was due to a weaker slateIncome Taxes - CUSA. An income tax benefit of films in the 2017 period compared to the 2016 period, partially offset by the favorable impact of luxury lounger conversions and new theatres. The increase in average ticket price was primarily due to price increases. The increase in concession revenues per patron was primarily due to incremental sales, price increases and new theatres.
International.Admissions revenues increased $20.9 million as reported primarily due to a 10.0% increase in average ticket price, partially offset by a 3.3% decrease in attendance. Admissions revenues increased $9.3 million in constant currency, primarily due to a 6.4% increase in constant currency average ticket price, partially offset by the 3.3% decrease in attendance. Concession revenues increased $17.9 million as reported primarily due to a 14.2% increase in concession revenues per patron, partially offset by the 3.3% decrease in attendance. Concession revenues increased $12.5 million in constant currency, primarily due to a 10.8% increase in constant currency concession revenues per patron, partially offset by the 3.3% decrease in attendance. The decrease in attendance was driven by a weaker slate of films during the 2017 period compared to the 2016 period, partially offset by the impact of new theatres. Average ticket price and concession revenues per patron increased primarily due to price increases, which were predominantly driven by local inflation. Other revenues increased primarily due to incremental screen advertising generated by an expansion of our Flix Media services to affiliates in various countries and increased promotional income.
Cost of Operations. The table below summarizes our theatre operating costs (in millions) by reportable operating segment for the nine months ended September 30, 2017 and 2016.
|
| U.S. Operating Segment |
|
| International Operating Segment |
|
| Consolidated |
| |||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| Constant Currency 2017 (1) |
|
| 2017 |
|
| 2016 |
| |||||||
Film rentals and advertising |
| $ | 558.3 |
|
| $ | 578.2 |
|
| $ | 167.3 |
|
| $ | 154.9 |
|
| $ | 162.2 |
|
| $ | 725.6 |
|
| $ | 733.1 |
|
Concession supplies |
|
| 82.1 |
|
|
| 79.9 |
|
|
| 42.0 |
|
|
| 37.1 |
|
|
| 40.8 |
|
|
| 124.1 |
|
|
| 117.0 |
|
Salaries and wages |
|
| 194.5 |
|
|
| 183.1 |
|
|
| 66.8 |
|
|
| 60.7 |
|
|
| 65.9 |
|
|
| 261.3 |
|
|
| 243.8 |
|
Facility lease expense |
|
| 181.1 |
|
|
| 179.7 |
|
|
| 67.5 |
|
|
| 62.2 |
|
|
| 64.9 |
|
|
| 248.6 |
|
|
| 241.9 |
|
Utilities and other |
|
| 185.1 |
|
|
| 188.0 |
|
|
| 86.7 |
|
|
| 77.5 |
|
|
| 84.4 |
|
|
| 271.8 |
|
|
| 265.5 |
|
|
|
U.S. Film rentals and advertising costs were $558.3 million, or 55.6% of admissions revenues for the 2017 period compared to $578.2 million, or 55.7% of admissions revenues for the 2016 period. The decrease in the film rentals and advertising rate was primarily due to a higher concentration of blockbuster films during the 2016 period. Concession supplies expense was $82.1 million, or 14.1% of concession revenues, for the 2017 period compared to $79.9 million, or 13.9% of concession revenues, for the 2016 period. The increase in the concession supplies rate was primarily due to the impact of our expanded concession offerings.
Salaries and wages increased to $194.5 million for the 2017 period from $183.1 million for the 2016 period primarily due to staffing at new and recently remodeled theatres, increases in minimum wages and staffing for food and beverage initiatives. Facility lease expense increased to $181.1 million for the 2017 period from $179.7 million for the 2016 period due to the impact of new theatres. Utilities and other costs decreased to $185.1 million for the 2017 period from $188.0 million for the 2016 period primarily due to decreases in equipment lease expenses for 3-D presentations, partially offset by increased utilities, repairs and maintenance, and janitorial services expenses.
International. Film rentals and advertising costs were $167.3 million ($162.2 million in constant currency), or 48.1% of admissions revenues, for the 2017 period compared to $154.9 million, or 47.4% of admissions revenues, for the 2016 period. The increase in the film rentals and advertising rate was primarily due to higher advertising costs during the 2017 period. Concession supplies expense was $42.0 million ($40.8 million in constant currency), or 21.5% of concession revenues, for the 2017 period compared to $37.1 million, or 20.9% of concession revenues, for the 2016 period. The increase in the concession supplies rate was primarily due to the mix of concession products sold.
Salaries and wages increased to $66.8 million ($65.9 million in constant currency) for the 2017 period compared to $60.7 million for the 2016 period. The as reported increase was due to new theatres, increased local currency wage rates, limited flexibility in scheduling staff caused by shifting government regulations and the impact of changes in foreign currency exchange rates in certain countries in which we operate. Facility lease expense increased to $67.5 million ($64.9 million in constant currency) for the 2017 period compared to $62.2 million for the 2016 period. The as reported increase was due to the impact of changes in foreign currency exchange rates in certain countries in which we operate and new theatres. Utilities and other costs increased to $86.7 million ($84.4 million in constant currency) for the 2017 period compared to $77.5 million for the 2016 period. The as reported increase was due to the impact of changes in foreign currency exchange rates in certain countries in which we operate, increases in repairs and maintenance expenses and utility expenses and the impact of new theatres.
General and Administrative Expenses. General and administrative expenses increased to $111.2 million for the 2017 period from $107.0 million for the 2016 period. The increase was primarily due to increased salaries and wages, professional fees and the impact of changes in foreign currency exchange rates in certain countries in which we operate, partially offset by a decrease in share based award compensation expense.
Depreciation and Amortization. Depreciation and amortization expense was $174.5 million for the 2017 period compared to $155.9 million for the 2016 period. The increase was primarily due to theatre remodels and new theatres.
Impairment of Long-Lived Assets. We recorded asset impairment charges on assets held and used of $9.6 million for the 2017 period compared to $2.3 million for the 2016 period. The long-lived asset impairment charges recorded during each of the periods presented were specific to theatres that were directly and individually impacted by increased competition, adverse changes in market
demographics or adverse changes in the development or the conditions of the areas surrounding the theatre. Impairment charges for the 2017 period impacted thirteen of our twenty-six reporting units. See Note 9 to our condensed consolidated financial statements.
Loss on Sale of Assets and Other. We recorded a loss on sale of assets and other of $9.5 million during the 2017 period compared to $11.0 million during the 2016 period. The loss recorded during the 2017 period included the retirement of assets due to theatre remodels and closures, partially offset by gains related to the sale of excess land parcels and a gain on a landlord buyout of a theatre lease. The loss recorded during the 2016 period was primarily related to the retirement of assets due to theatre remodels and closures, partially offset by a gain on the sale of our investment in RealD stock.
Interest Expense. Interest costs incurred, including amortization of debt issue costs, were $79.2 million for the 2017 period compared to $82.0 million for the 2016 period. The decrease was due to the redemption of our previously outstanding $200.0 million 7.375% senior subordinated notes (the “7.375% Senior Subordinated Notes”) funded by a $225.0 million add-on to our 4.875% senior notes (the “4.875% Senior Notes), which occurred on March 21, 2016, as well as amendments to our senior secured credit facility completed during June and December of 2016 and June of 2017, which, in the aggregate, reduced the rate at which our term loan accrues interest by 100 basis points.
Loss On Debt Amendments and Refinancing. We recorded a loss of $0.2 million during the 2017 period related to an amendment to our senior secured credit facility that included a reduction in the interest rate at which our term loan accrues interest and revisions to certain definitions within the agreement. See Note 3 to our condensed consolidated financial statements. We recorded a loss of $13.3 million during the 2016 period primarily related to the early redemption of our $200.0 million 7.375% Senior Subordinated Notes.
Foreign Currency Exchange Gain. We recorded a foreign currency exchange gain of $2.0 million during the 2017 period compared to a foreign currency exchange gain of $2.9 million during the 2016 period. These amounts primarily represent the impact of changes in foreign currency exchange rates on intercompany transactions between our domestic subsidiaries and our international subsidiaries. See Note 11 to the condensed consolidated financial statements for further discussion.
Distributions from NCM. We recorded distributions from NCM of $11.7 million during the 2017 period and $10.1 million during the 2016 period, which were in excess of the carrying value of our Tranche 1 investment. See Note 5 to our condensed consolidated financial statements.
Equity in Income of Affiliates. We recorded equity in income of affiliates of $26.8 million during the 2017 period compared to $24.6 million during the 2016 period. See Notes 5 and 6 for information about the equity investments to our condensed consolidated financial statements.
Income Taxes. Income tax expense of $99.2$(3.3) million was recorded for the 20172022 period compared to $106.8with an income tax benefit of $(11.3) million recorded for the 20162021 period. The effective tax rate was 36.6%approximately 2.3% for the 20172022 period compared to 37.1%with 2.7% for the 20162021 period. TaxThe 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 revenuesrevenue in cash, mainly through box office receipts and the sale of concessions. In addition, nearly all of our theatres provide the patron a choice of using a credit card, debit card or advanced-sale type certificates such as a gift card, in place of cash. Because our revenues areOur revenue is generally received in cash prior to the payment of related expenses,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 $310.9$27.7 million for Holdings and $47.0 million for CUSA for the nine months ended September 30, 20172022, compared to $277.8with cash used for operating activities of $(42.2) million for Holdings and $(31.7) million for CUSA for the nine months ended September 30, 2016.2021. The increase in cash provided by (used for) operating activities was primarily a result of 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
Our investingInvesting 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 $290.1 $(53.3) million for the nine months ended September 30, 20172022 compared to $230.5 with $(55.0) million for the nine months ended September 30, 2016. The increase was primarily due to an increase in
capital expenditures for the remodel of certain of our existing domestic theatres and the acquisition of one theatre in the U.S. and two theatres in Brazil. 2021.
Capital expenditures, fordisaggregated by new and existing theatres, during the nine months ended September 30, 20172022 and 20162021 were as follows (in millions):
|
| Nine Months Ended September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
New theatres |
| $ | 24.8 |
|
| $ | 24.1 |
|
Existing theatres |
|
| 40.5 |
|
|
| 33.1 |
|
Total capital expenditures |
| $ | 65.3 |
|
| $ | 57.2 |
|
Period |
| New Theatres |
|
| Existing Theatres (1) |
|
| Total |
| |||
Nine Months Ended September 30, 2017 |
| $ | 42.5 |
|
| $ | 220.2 |
|
| $ | 262.7 |
|
Nine Months Ended September 30, 2016 |
| $ | 65.6 |
|
| $ | 164.7 |
|
| $ | 230.3 |
|
|
|
Capital expenditures for existing properties in the table above includes the costsWe operated 517 theatres with 5,835 screens worldwide as of remodeling certain of our existing theatres to include Luxury LoungersSeptember 30, 2022. Theatres and expanded concession offerings. Duringscreens built and closed during the nine months ended September 30, 2017 and 2016, we had an average2022 are shown below:
|
| January 1, 2022 |
|
| Built |
|
| Closed |
|
| September 30, 2022 |
| ||||
U.S (42 states) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Theatres |
|
| 321 |
|
|
| 1 |
|
|
| (4 | ) |
|
| 318 |
|
Screens |
|
| 4,408 |
|
|
| 14 |
|
|
| (30 | ) |
|
| 4,392 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
International (15 countries) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Theatres |
|
| 201 |
|
|
| 1 |
|
|
| (3 | ) |
|
| 199 |
|
Screens |
|
| 1,460 |
|
|
| 19 |
|
|
| (36 | ) |
|
| 1,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Worldwide |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Theatres |
|
| 522 |
|
|
| 2 |
|
|
| (7 | ) |
|
| 517 |
|
Screens |
|
| 5,868 |
|
|
| 33 |
|
|
| (66 | ) |
|
| 5,835 |
|
45
As of 151 and 75 of our domestic screens, respectively, temporarily closed for such remodels.
Our U.S. theatre circuit consisted of 339 theatres with 4,562 screens at September 30, 2017. During2022, the nine months ended September 30, 2017, we built two new theatres with 18 screens, acquired one new theatre with 12 screens and closed three theatres and 27 screens. At September 30, 2017, we hadfollowing signed commitments were outstanding:
|
| Theatres |
| Screens |
| Estimated |
| |
Remainder of 2022 |
|
|
|
|
|
|
| |
U.S. |
| 1 |
| 14 |
| $ | 5.1 |
|
International |
| 1 |
| 5 |
|
| 0.6 |
|
Total |
| 2 |
| 19 |
| $ | 5.7 |
|
|
|
|
|
|
|
|
| |
Subsequent to 2022 |
|
|
|
|
|
|
| |
U.S. |
| 3 |
| 34 |
| $ | 23.7 |
|
International |
| 4 |
| 21 |
|
| 8.5 |
|
Total |
| 7 |
| 55 |
| $ | 32.2 |
|
|
|
|
|
|
|
|
| |
Total commitments at September 30, 2022 |
| 9 |
| 74 |
| $ | 37.9 |
|
Our international theatre circuit consisted of 194 theatres with 1,395 screens at September 30, 2017. During the nine months ended September 30, 2017, we built five new theatres with 37 screens and acquired two theatres with 14 screens. At September 30, 2017, we had signed commitments to open one new theatre and six screens in international markets during the remainder of 2017 and open seven new theatres and 34 screens subsequent to 2017. We estimate the remaining capital expenditures for the development of these 40 international screens will be approximately $20.0 million.
Actual expenditures for continued theatre development, remodels and acquisitions are subject to change based upon the availability of attractive opportunities. We plan to fundDuring the next twelve months and the foreseeable future, capital expenditures for our continued development will be funded with cash flow from operations and, if needed, borrowings under our senior secured credit facility, and proceeds from debt issuances, sale leaseback transactions and/or sales of excess real estate.
Financing Activities
Cash used for financing activities for Holdings was $113.7$(32.6) million for the nine months ended September 30, 20172022 compared to $110.8with cash used for financing activities of $(12.9) million for the nine months ended September 30, 2016. Financing2021. Cash used for financing activities for CUSA was $(32.6) million for the nine months ended September 30, 2016 included2022 compared with cash provided by financing activities of $107.1 million for the redemptionnine 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 our $200.0 million 7.375%which were used to redeem the 5.125% Senior Subordinated Notes with proceeds fromand the issuance of a $225.0 million add-on to our existing 4.875% Senior Notes.Notes as discussed further below.
At the discretion of the 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, subjectseek to compliance withretire or repurchase our debt instruments, purchase ouroutstanding debt securities on thethrough cash purchases or exchanges for other securities, in open market depending uponpurchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on the availability and prices of such securities. Long-term debt consistedsecurities, prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
See Note 7 for a summary of the followinglong-term debt outstanding as of September 30, 2017 (in millions):2022 for Holdings and CUSA.
Cinemark USA, Inc. term loan |
| $ | 660.9 |
|
Cinemark USA, Inc. 5.125% senior notes due 2022 |
|
| 400.0 |
|
Cinemark USA, Inc. 4.875% senior notes due 2023 |
|
| 755.0 |
|
Other |
| 4.2 |
| |
Total long-term debt |
| $ | 1,820.1 |
|
Less current portion |
|
| 7.1 |
|
Subtotal long-term debt, less current portion |
| $ | 1,813.0 |
|
Less: Debt discounts and debt issuance costs, net of accumulated amortization |
|
| 31.0 |
|
Long-term debt, less current portion, net of debt issuance costs |
| $ | 1,782.0 |
|
As of September 30, 2017, we had $100.02022, $100 million inwas available for borrowing capacity on ourunder the revolving credit line.line of credit.
There have been no material changes in ourthe contractual obligations previously disclosed in “Liquidity and Capital Resources” in ourthe Holdings Annual Report on Form 10-K for the year ended December 31, 20162021 filed March 3, 2017.
Off-Balance Sheet Arrangements
Other thanFebruary 25, 2022 or in the operating leases and purchase commitments disclosed in ourCUSA Annual Report on Form 10-K for the year ended December 31, 20162021 filed March 3, 2017, we9, 2022.
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 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 be payable on February 15 and August 15 of each year, beginning on February 15, 2021.
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 our common stock and the conversion rate on each such trading day; (2) if we distribute to all or substantially all stockholders (i) rights options or warrants entitling them to purchase shares at a discount to the recent average trading price of our common stock (including due to a stockholder rights plan) or (ii) our assets or securities or rights, options or warrants to purchase the same with a per share value exceeding 10% of the trading price of our common stock, (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 our 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 per share (130% of the initial conversion price of $14.35 per share), on each applicable trading day. Upon conversion of the notes, we will pay or deliver cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.
The initial conversion rate is 69.6767 shares of our 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, we 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, 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, 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 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. The 4.50% Convertible Notes are not guaranteed by any of Holdings' subsidiaries.
Senior Secured Credit Facility
Cinemark USA, Inc.CUSA has a senior secured credit facility that includes a $700.0 million term loan with a maturity date of May 2022, and a $100.0 million revolving credit line with a maturity date of December 2017 (collectively referred to as the(the “Credit Agreement”).
On May 16, 2016, Cinemark USA, Inc. made a principal pre-payment of $13,451 using Under the proceeds received from the sale of shares of RealD. In accordance with the terms of theamended Credit Agreement, the pre-payment was applied first to the next fourquarterly principal installments, and second, to the remaining installments pro-rata based on the remaining outstanding principal amount of such installments. Therefore, quarterly payments of $1.4$1.6 million are due on the term loan through MarchDecember 31, 2022,2024, with the remaininga final principal payment of $635.3$613.4 million due on May 8,March 29, 2025. CUSA had $100.0 million of available borrowing capacity on the revolving credit line as of September 30, 2022. The Company did not incur any fees as a result of the pre-payment.
On June 13, 2016 and December 15, 2016, Cinemark USA, Inc. amended its Credit Agreement to reduce the rate at which the term loan bears interest by 0.25% and then an additional 0.50%, respectively. On June 16, 2017, Cinemark USA, Inc. amended its Credit Agreement to further reduce the rate at which the term loan bears interest by 0.25% and also to modify certain definitions and other provisions within the Credit Agreement.
Interest on the term loan accrues at Cinemark USA, Inc.’sCUSA'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 1.00%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 2.00%1.75% per annum. Interest on the revolving 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 1.00%0.50% to 1.75%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 2.00%1.50% to 2.75%2.25% per annum. The margin of the revolving credit line is determined by the consolidated net senior secured leverage ratio as defined in the Credit Agreement.
At September 30, 2017, there was $660.9 million outstanding under the term loan and no borrowings outstanding under the revolving credit line. Cinemark USA, Inc. had $100.0 million in available borrowing capacity on the revolving credit line. The average interest rate on outstanding term loan borrowings under the Credit Agreement at September 30, 2017 was approximately 3.3% per annum.
Cinemark USA, Inc.’sCUSA's obligations under the Credit Agreement are guaranteed by Cinemark Holdings, Inc. andas well as certain of Cinemark USA, Inc.’sCUSA’s domestic subsidiaries, and are secured by mortgages on certain fee and leasehold properties and security interests in substantially all of Cinemark USA, Inc.’sCUSA’s and the guarantors’ personal property, including, without limitation, pledges of all of Cinemark USA, Inc.’sCUSA’s capital stock and, all of the capital stock of certain of Cinemark USA, Inc.’sCUSA’s domestic subsidiaries and 65% of the voting stock of certain of its foreign subsidiaries.
The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on Cinemark USA, Inc.’sCUSA’s ability, and in certain instances, its subsidiaries’ and ourHoldings' 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 Cinemark USA, Inc.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.Agreement, not to exceed 4.25 to 1. See below for discussion of recent covenant waivers.
The dividend restriction contained in the Credit Agreement prevents the CompanyHoldings and anycertain of its subsidiaries from paying a dividend or otherwise distributing cash to its stockholders unless (1) the CompanyHoldings is not in default, and the distribution would not cause Cinemark USA, Inc.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 Cinemark Holdings Inc.
or Cinemark USA, Inc.CUSA as common equity since December 18, 2012, (b) Cinemark USA, Inc.’sCUSA's consolidated EBITDA minus 1.75 times its consolidated interest expense, each as defined in the Credit Agreement, and (c) certain other defined amounts.amounts, or collectively, the Applicable Amount. As of September 30, 2017, Cinemark USA, Inc.2022, CUSA could have distributed up to approximately $2,551.1 million$3.0 billion to its parent company and sole stockholder, CinemarkHoldings.
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 has 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 our condensed consolidated financial statements for discussion of the interest rate swaps.
As of September 30, 2022, there was $628.2 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, 2022 was approximately 4.0% per annum, after giving effect to the interest rate swap agreements discussed above.
5.875% Senior Notes
On March 16, 2021, CUSA issued $405 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. 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 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 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 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.
Borrowings of International Subsidiaries
As of September 30, 2022, certain of the Company’s international subsidiaries have an aggregate borrowing of $21.9 million outstanding under various local bank loans. A subsidiary of CUSA has deposited cash into a collateral account to support the issuance of letters of credit to the lenders for certain of these international bank loans. The total amount deposited as of September 30, 2022 was $22.9 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, CUSA could have distributed up to approximately $3.1 billion to its parent company and sole stockholder, Holdings, under the terms of the Credit Agreement,indentures, subject to its available cash and other borrowing restrictions outlined in the agreement.
Cinemark USA, Inc. 5.125%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,
On December 18, 2012, Cinemark USA, Inc. issued $400.0 million 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 5.125% senior notes due 2022, at par value (the “5.125% Senior Notes”). Interest on the 5.125% Senior Notes is payable on June 15 and December 15 of each year, beginning June 15, 2013.repurchase. The 5.125% Senior Notes mature on December 15, 2022.
The indenture to the 5.125% Senior Notes contains covenants including limitations on the amount of dividends that could be paid by Cinemark USA, Inc. As of September 30, 2017, Cinemark USA, Inc. could have distributed up to approximately $2,529.3 million to its parent company and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the 5.125% Senior Notes, subject to its available cash and other borrowing restrictions outlined in the indenture. The indenture allows Cinemark USA, Inc.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, 20172022 was approximately 5.9 to 1.3.2.
Cinemark USA, Inc. 4.875% Senior Notes
On May 24, 2013, Cinemark USA, Inc. issued $530.0 million aggregate principal amount of the 4.875% Senior Notes due 2023, at par value (the “4.875% Senior Notes”). On March 21, 2016, Cinemark USA, Inc. issued an additional $225.0 million aggregate principal amount of the 4.875% Senior Notes at 99.0% of the principal amount plus accrued and unpaid interest from December 1, 2015. Proceeds, after payment of fees, were used to finance the redemption of Cinemark, USA, Inc.’s $200.0 million 7.375% Senior Subordinated Notes, as discussed below. These additional notes have identical terms, other than the issue date, the issue price and the first interest payment date, and constitute part of the same series as the Company’s existing 4.875% Senior Notes. Interest on the 4.875% Senior Notes is payable on June 1 and December 1 of each year. The 4.875% Senior Notes mature on June 1, 2023.
The indenture to the 4.875% Senior Notes contains covenants that include limitations on the amount of dividends that Cinemark USA, Inc. can pay. As of September 30, 2017, Cinemark USA, Inc. could have distributed up to approximately $2,524.4 million to its parent company2022, each of Holdings and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the 4.875% Senior Notes, subject to its available cash and other borrowing restrictions outlined in the indenture. The indenture allows Cinemark USA, Inc. to incur additional indebtedness ifCUSA believes 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, 2017 was approximately 5.9 to 1.
Cinemark USA, Inc. 7.375% Senior Subordinated Notes
On June 3, 2011, Cinemark USA, Inc. issued $200.0 million aggregate principal amount of 7.375% Senior Subordinated Notes due 2021, at par value. On March 21, 2016, Cinemark USA, Inc. redeemed the 7.375% Senior Subordinated Notes at a make-whole premium of approximately 104% plus accrued and unpaid interest, utilizing the proceeds from the issuance of the additional $225.0 million 4.875% Senior Notes discussed above. As a result of the redemption, the Company wrote-off approximately $2.4 million in unamortized debt issue costs, paid the make-whole premium of approximately $9.4 million and paid other fees of $1.2 million, all of which are reflected in loss on debt amendments and refinancing during the nine months ended September 30, 2016.
Covenant Compliance
As of September 30, 2017, we believe we were in full compliance with all agreements, including all related covenants, governing our outstanding debt.
Seasonality49
Our revenues have historically been seasonal, coinciding with the timing of releases of motion pictures by the major distributors. Generally, the most successful motion pictures have been released during the summer, extending from May to July, and during the holiday season, extending from early November through year-end. The unexpected emergence of a hit film during other periods can alter this seasonality trend. The timing of such film releases can have a significant effect on our results of operations, and the results of one quarter are not necessarily indicative of results for the next quarter or for the same period in the following year.
Item 3. Quantitative and Qualitativeand Qualitative Disclosures About Market Risk
WeHoldings and CUSA have exposure to financial market risks, including changes in interest rates, foreign currency exchange rates and other relevant market prices.
Interest Rate Risk
We areThe Company currently party to ahas variable rate debt facility.debt. An increase or decrease in interest rates would affect ourits interest expense relatingrelated to ourthis 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, 2017,2022, we had an aggregate of approximately $660.9$200.1 million of variable rate debt outstanding. Based on the interest rates in effect on the variable rate debt outstanding, at September 30, 2017,and a 100 basis point increase in market interest rates would increase our annual interest expense by approximately $6.6$2.0 million.
The tabletables below providesprovide information about ourHoldings' fixed rate and variable rate long-term debt agreements as of September 30, 2017:2022, which includes 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 |
| ||||||||||||||||||||||||
|
| (in millions) |
|
| Interest |
| ||||||||||||||||||||||||
|
| 2023 |
| 2024 |
| 2025 |
| 2026 |
| 2027 |
| Thereafter |
| Total |
|
| Fair Value |
|
| Rate |
| |||||||||
Fixed rate |
| $ | — |
| $ | — |
| $ | 1,160.0 |
| $ | 405.0 |
| $ | — |
| $ | 765.0 |
| $ | 2,330.0 |
|
| $ | 2,135.8 |
|
|
| 5.3 | % |
Variable rate |
|
| 21.9 |
|
| 8.2 |
|
| 166.1 |
|
| 1.1 |
|
| 1.1 |
|
| 1.7 |
|
| 200.1 |
|
|
| 190.4 |
|
|
| 5.1 | % |
Total debt (1) |
| $ | 21.9 |
| $ | 8.2 |
| $ | 1,326.1 |
| $ | 406.1 |
| $ | 1.1 |
| $ | 766.7 |
| $ | 2,530.1 |
|
| $ | 2,326.2 |
|
|
|
|
|
| Expected Maturity for the Twelve-Month Periods Ending September 30, |
|
| Average |
| ||||||||||||||||||||||||||||||
|
| (in millions) |
|
| Interest |
| ||||||||||||||||||||||||||||||
|
| 2018 |
|
| 2019 |
|
| 2020 |
|
| 2021 |
|
| 2022 |
|
| Thereafter |
|
| Total |
|
| Fair Value |
|
| Rate |
| |||||||||
Fixed rate |
| $ | 1.4 |
|
| $ | 1.4 |
|
| $ | 1.4 |
|
| $ | — |
|
| $ | — |
|
| $ | 1,155.0 |
|
| $ | 1,159.2 |
|
| $ | 1,177.2 |
|
|
| 5.0 | % |
Variable rate |
|
| 5.7 |
|
|
| 5.7 |
|
|
| 5.7 |
|
|
| 5.7 |
|
|
| 638.1 |
|
|
| — |
|
|
| 660.9 |
|
| 663.4 |
|
|
| 3.3 | % | |
Total debt |
| $ | 7.1 |
|
| $ | 7.1 |
|
| $ | 7.1 |
|
| $ | 5.7 |
|
| $ | 638.1 |
|
| $ | 1,155.0 |
|
| $ | 1,820.1 |
|
| $ | 1,840.6 |
|
|
|
|
|
CUSA Debt
|
| Expected Maturity for the Twelve Months Ending September 30, |
|
| Average |
| ||||||||||||||||||||||||
|
| (in millions) |
|
| Interest |
| ||||||||||||||||||||||||
|
| 2023 |
| 2024 |
| 2025 |
| 2026 |
| 2027 |
| Thereafter |
| Total |
|
| Fair Value |
|
| Rate |
| |||||||||
Fixed rate |
| $ | — |
| $ | — |
| $ | 700.0 |
| $ | 405.0 |
| $ | — |
| $ | 765.0 |
| $ | 1,870.0 |
|
| $ | 1,608.3 |
|
|
| 5.5 | % |
Variable rate |
|
| 21.9 |
|
| 8.2 |
|
| 166.1 |
|
| 1.1 |
|
| 1.1 |
|
| 1.7 |
|
| 200.1 |
|
|
| 190.4 |
|
|
| 5.1 | % |
Total debt (1) |
| $ | 21.9 |
| $ | 8.2 |
| $ | 866.1 |
| $ | 406.1 |
| $ | 1.1 |
| $ | 766.7 |
| $ | 2,070.1 |
|
| $ | 1,798.7 |
|
|
|
|
Interest Rate Swap Agreements
Foreign Currency Exchange Rate Risk
Other than the devaluationAll of the Argentine peso, discussed ininterest rate swap agreements qualify for cash flow hedge accounting. The fair values of the interest rate swaps are recorded on each of Holdings' and CUSA'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 117 to the condensed consolidated financial statements therefor 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 ourHoldings' Annual Report on Form 10-K for the year ended December 31, 20162021 filed February 25, 2022 or CUSA's Annual Report on Form 10-K for the year ended December 31, 2021 filed March 3, 2017.9, 2022.
Item 4. Controls and Procedures
Evaluation of the Effectiveness of Disclosure Controls and Procedures
As of September 30, 2017, we2022, each of Holdings and CUSA carried out an evaluation required by the Exchange Act, under the supervision and with the participation of ourtheir respective principal executive officer and principal financial officer, of the effectiveness of the design and operation of ourtheir respective disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act. Based on this evaluation, ourthe respective principal executive officer and principal financial officer of Holdings and CUSA concluded that, as of September 30, 2017, our2022, their respective disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by useach of them in the reports that we fileare filed or submitsubmitted 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 ourtheir respective management, including ourthe principal
50
executive officer and principal financial officer of Holdings and CUSA, as appropriate to allow timely decisions regarding required disclosures.
Changes in Internal Control Over Financial Reporting
There have been no changes in ourthe 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, 20172022 that materially affected, oraffect the are reasonably likely to materially affect, our internal control over financial reporting.reporting for Holdings or CUSA.
PART II - OTHEROTHER INFORMATION
ThereOther than the discussion at Note 18, there have been no material changes from legal proceedings previously reported under “Business – Legal Proceedings” in ourHoldings' Annual Report on Form 10-K for the year ended December 31, 20162021 filed March 3, 2017.
There have been no material changes from risk factors previously disclosed in “Risk Factors” in ourFebruary 25, 2022 or CUSA's Annual Report on Form 10-K for the year ended December 31, 20162021 filed March 3, 2017.9, 2022.
See discussion in “Risk Factors” in Holdings' Annual Report on Form 10-K for 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.
Item 5. Other Information
Supplemental Schedules Specified by the Senior Notes Indentures
As required by the indentures governing the Company’s 5.125%CUSA 5.875% Senior Notes, 5.25% Senior Notes and 4.875%8.75% Senior Secured Notes, the Companycollectively “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, the CompanyCUSA has included an unaudited condensed consolidating balance sheet and unaudited condensed consolidating statements of income,loss, comprehensive incomeloss and cash flows for the CompanyCUSA and its subsidiaries. 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 the Company’sCUSA’s restricted subsidiaries and unrestricted subsidiaries as required by the indentures.
|
| Page |
Unaudited Condensed Consolidating Balance Sheet |
|
|
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
|
CINEMARK USA, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
SEPTEMBER 30, 20172022
(In thousands)in millions, unaudited)
|
| Restricted |
|
| Unrestricted |
|
|
|
|
|
|
| ||||
|
| Group |
|
| Group |
|
| Eliminations |
|
| Consolidated |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Current assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
| $ | 281.1 |
|
| $ | 105.5 |
|
| $ | — |
|
| $ | 386.6 |
|
Other current assets |
|
| 346.1 |
|
|
| (109.0 | ) |
|
| (7.9 | ) |
|
| 229.2 |
|
Total current assets |
|
| 627.2 |
|
|
| (3.5 | ) |
|
| (7.9 | ) |
|
| 615.8 |
|
Theatre properties and equipment, net |
|
| 1,260.0 |
|
|
| — |
|
|
| — |
|
|
| 1,260.0 |
|
Operating lease right-of-use assets, net |
|
| 1,144.0 |
|
|
| — |
|
|
| — |
|
|
| 1,144.0 |
|
Other assets |
|
| 1,736.6 |
|
|
| 280.5 |
|
|
| (371.5 | ) |
|
| 1,645.6 |
|
Total assets |
| $ | 4,767.8 |
|
| $ | 277.0 |
|
| $ | (379.4 | ) |
| $ | 4,665.4 |
|
Liabilities and equity |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Current portion of long-term debt |
| $ | 22.0 |
|
| $ | — |
|
| $ | — |
|
| $ | 22.0 |
|
Current portion of operating lease obligations |
|
| 217.9 |
|
|
| — |
|
|
| — |
|
|
| 217.9 |
|
Current portion of finance lease obligations |
|
| 14.6 |
|
|
| — |
|
|
| — |
|
|
| 14.6 |
|
Current income tax payable |
|
| 2.3 |
|
|
| 0.1 |
|
|
| — |
|
|
| 2.4 |
|
Accounts payable and accrued expenses |
|
| 376.4 |
|
|
| — |
|
|
| (7.9 | ) |
|
| 368.5 |
|
Total current liabilities |
|
| 633.2 |
|
|
| 0.1 |
|
|
| (7.9 | ) |
|
| 625.4 |
|
Long-term liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Long-term debt, less current portion |
|
| 2,287.9 |
|
|
| — |
|
|
| (264.5 | ) |
|
| 2,023.4 |
|
Operating lease obligations, less current portion |
|
| 987.6 |
|
|
| — |
|
|
| — |
|
|
| 987.6 |
|
Finance lease obligations, less current portion |
|
| 91.6 |
|
|
| — |
|
|
| — |
|
|
| 91.6 |
|
Other long-term liabilities and deferrals |
|
| 470.8 |
|
|
| 12.0 |
|
|
| — |
|
|
| 482.8 |
|
Total long-term liabilities |
|
| 3,837.9 |
|
|
| 12.0 |
|
|
| (264.5 | ) |
|
| 3,585.4 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Equity |
|
| 296.7 |
|
|
| 264.9 |
|
|
| (107.0 | ) |
|
| 454.6 |
|
Total liabilities and equity |
| $ | 4,767.8 |
|
| $ | 277.0 |
|
| $ | (379.4 | ) |
| $ | 4,665.4 |
|
|
| Restricted |
|
| Unrestricted |
|
|
|
|
|
|
|
|
| ||
|
| Group |
|
| Group |
|
| Eliminations |
|
| Consolidated |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 443,688 |
|
| $ | 25,621 |
|
| $ | — |
|
| $ | 469,309 |
|
Other current assets |
|
| 254,600 |
|
|
| (98,574 | ) |
|
| (20,952 | ) |
|
| 135,074 |
|
Total current assets |
|
| 698,288 |
|
|
| (72,953 | ) |
|
| (20,952 | ) |
|
| 604,383 |
|
Theatre properties and equipment, net |
|
| 1,791,606 |
|
|
| — |
|
|
| — |
|
|
| 1,791,606 |
|
Other assets |
|
| 1,832,437 |
|
|
| 484,293 |
|
|
| (327,017 | ) |
|
| 1,989,713 |
|
Total assets |
| $ | 4,322,331 |
|
| $ | 411,340 |
|
| $ | (347,969 | ) |
| $ | 4,385,702 |
|
Liabilities and equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt |
| $ | 5,710 |
|
| $ | 1,389 |
|
| $ | — |
|
| $ | 7,099 |
|
Current portion of capital lease obligations |
|
| 24,836 |
|
|
| — |
|
|
| — |
|
|
| 24,836 |
|
Accounts payable and accrued expenses |
|
| 380,445 |
|
|
| 518 |
|
|
| (20,952 | ) |
|
| 360,011 |
|
Total current liabilities |
|
| 410,991 |
|
|
| 1,907 |
|
|
| (20,952 | ) |
|
| 391,946 |
|
Long-term liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, less current portion |
|
| 1,999,174 |
|
|
| 2,778 |
|
|
| (220,000 | ) |
|
| 1,781,952 |
|
Capital lease obligations, less current portion |
|
| 252,047 |
|
|
| — |
|
|
| — |
|
|
| 252,047 |
|
Other long-term liabilities and deferrals |
|
| 492,397 |
|
|
| 100,127 |
|
|
| — |
|
|
| 592,524 |
|
Total long-term liabilities |
|
| 2,743,618 |
|
|
| 102,905 |
|
|
| (220,000 | ) |
|
| 2,626,523 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
| 1,167,722 |
|
|
| 306,528 |
|
|
| (107,017 | ) |
|
| 1,367,233 |
|
Total liabilities and equity |
| $ | 4,322,331 |
|
| $ | 411,340 |
|
| $ | (347,969 | ) |
| $ | 4,385,702 |
|
Note: “Restricted Group” and “Unrestricted Group” are defined in the indentures for the senior notes.
CINEMARK USA, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF INCOME INFORMATIONLOSS
NINE MONTHS ENDED SEPTEMBER, 30, 20172022
(In thousands)in millions, unaudited)
|
| Restricted |
|
| Unrestricted |
|
|
|
|
|
|
| ||||
|
| Group |
|
| Group |
|
| Eliminations |
|
| Consolidated |
| ||||
Revenue |
| $ | 1,855.0 |
|
| $ | — |
|
| $ | — |
|
| $ | 1,855.0 |
|
Cost of operations |
|
|
|
|
|
|
|
|
|
|
| — |
| |||
Theatre operating costs |
|
| 1,471.9 |
|
|
| — |
|
|
| — |
|
|
| 1,471.9 |
|
General and administrative expense |
|
| 131.8 |
|
|
| — |
|
|
| — |
|
|
| 131.8 |
|
Depreciation and amortization |
|
| 181.0 |
|
|
| — |
|
|
| — |
|
|
| 181.0 |
|
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 | ) |
Total cost of operations |
|
| 1,850.1 |
|
|
| 35.5 |
|
|
| — |
|
|
| 1,885.6 |
|
Operating income (loss) |
|
| 4.9 |
|
|
| (35.5 | ) |
|
| — |
|
|
| (30.6 | ) |
Other income (expense) |
|
| (118.0 | ) |
|
| 4.4 |
|
|
| — |
|
|
| (113.6 | ) |
Loss before income taxes |
|
| (113.1 | ) |
|
| (31.1 | ) |
|
| — |
|
|
| (144.2 | ) |
Income tax expense (benefit) |
|
| 3.3 |
|
|
| (6.6 | ) |
|
| — |
|
|
| (3.3 | ) |
Net loss |
|
| (116.4 | ) |
|
| (24.5 | ) |
|
| — |
|
|
| (140.9 | ) |
Less: Net income attributable to noncontrolling interests |
|
| 2.7 |
|
|
| — |
|
|
| — |
|
|
| 2.7 |
|
Net loss attributable to Cinemark USA, Inc. |
| $ | (119.1 | ) |
| $ | (24.5 | ) |
| $ | — |
|
| $ | (143.6 | ) |
|
| Restricted |
|
| Unrestricted |
|
|
|
|
|
|
|
|
| ||
|
| Group |
|
| Group |
|
| Eliminations |
|
| Consolidated |
| ||||
Revenues |
| $ | 2,241,553 |
|
| $ | — |
|
| $ | — |
|
| $ | 2,241,553 |
|
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Theatre operating costs |
|
| 1,631,358 |
|
|
| — |
|
|
| — |
|
|
| 1,631,358 |
|
General and administrative expenses |
|
| 111,177 |
|
|
| 2 |
|
|
| — |
|
|
| 111,179 |
|
Depreciation and amortization |
|
| 174,545 |
|
|
| — |
|
|
| — |
|
|
| 174,545 |
|
Impairment of long-lived assets |
|
| 9,600 |
|
|
| — |
|
|
| — |
|
|
| 9,600 |
|
Loss on sale of assets and other |
|
| 9,464 |
|
|
| — |
|
|
| — |
|
|
| 9,464 |
|
Total cost of operations |
|
| 1,936,144 |
|
|
| 2 |
|
|
| — |
|
|
| 1,936,146 |
|
Operating income (loss) |
|
| 305,409 |
|
|
| (2 | ) |
|
| — |
|
|
| 305,407 |
|
Other income (expense) |
|
| (91,316 | ) |
|
| 56,742 |
|
|
| — |
|
|
| (34,574 | ) |
Income before income taxes |
|
| 214,093 |
|
|
| 56,740 |
|
|
| — |
|
|
| 270,833 |
|
Income taxes |
|
| 64,215 |
|
|
| 34,952 |
|
|
| — |
|
|
| 99,167 |
|
Net income |
|
| 149,878 |
|
|
| 21,788 |
|
|
| — |
|
|
| 171,666 |
|
Less: Net income attributable to noncontrolling interests |
|
| 1,438 |
|
|
| — |
|
|
| — |
|
|
| 1,438 |
|
Net income attributable to Cinemark USA, Inc. |
| $ | 148,440 |
|
| $ | 21,788 |
|
| $ | — |
|
| $ | 170,228 |
|
Note: “Restricted Group” and “Unrestricted Group” are defined in the indentures for the senior notes.
CINEMARK USA, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME INFORMATIONLOSS
NINE MONTHS ENDED SEPTEMBER, 30, 20172022
(In thousands)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 |
| $ | 149,878 |
|
| $ | 21,788 |
|
| $ | — |
|
| $ | 171,666 |
|
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income in equity method investments |
|
| — |
|
|
| 92 |
|
|
| — |
|
|
| 92 |
|
Foreign currency translation adjustments |
|
| 5,578 |
|
|
| — |
|
|
| — |
|
|
| 5,578 |
|
Total other comprehensive income , net of tax |
|
| 5,578 |
|
|
| 92 |
|
|
| — |
|
|
| 5,670 |
|
Total comprehensive income, net of tax |
|
| 155,456 |
|
|
| 21,880 |
|
|
| — |
|
|
| 177,336 |
|
Comprehensive income attributable to noncontrolling interests |
|
| (1,438 | ) |
|
| — |
|
|
| — |
|
|
| (1,438 | ) |
Comprehensive income attributable to Cinemark USA, Inc. |
| $ | 154,018 |
|
| $ | 21,880 |
|
| $ | — |
|
| $ | 175,898 |
|
Note: “Restricted Group” and “Unrestricted Group” are defined in the indentures for the senior notes.
CINEMARK USA, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
NINE MONTHS ENDED SEPTEMBER, 30, 20172022
(In thousands)in millions, unaudited)
|
| Restricted |
|
| Unrestricted |
|
|
|
|
|
|
| ||||
|
| 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 |
|
Changes in assets and liabilities |
|
| (100.9 | ) |
|
| (9.0 | ) |
|
| — |
|
|
| (109.9 | ) |
Net cash provided by (used for) operating activities |
|
| 41.6 |
|
|
| 5.4 |
|
|
| — |
|
|
| 47.0 |
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Additions to theatre properties and equipment |
|
| (65.3 | ) |
|
| — |
|
|
| — |
|
|
| (65.3 | ) |
Proceeds from sale of theatre properties and equipment and other |
|
| 12.0 |
|
|
| — |
|
|
| — |
|
|
| 12.0 |
|
Net cash used for investing activities |
|
| (53.3 | ) |
|
| — |
|
|
| — |
|
|
| (53.3 | ) |
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Restricted stock withholdings for payroll taxes |
|
| (4.1 | ) |
|
| — |
|
|
| — |
|
|
| (4.1 | ) |
Repayments on long-term debt |
|
| (14.0 | ) |
|
| — |
|
|
| — |
|
|
| (14.0 | ) |
Payments on finance leases |
|
| (10.8 | ) |
|
| — |
|
|
| — |
|
|
| (10.8 | ) |
Other financing activities |
|
| (3.7 | ) |
|
| — |
|
|
| — |
|
|
| (3.7 | ) |
Net cash provided by (used for) financing activities |
|
| (32.6 | ) |
|
| — |
|
|
| — |
|
|
| (32.6 | ) |
Effect of exchange rate changes on cash and cash |
|
| (17.2 | ) |
|
| — |
|
|
| — |
|
|
| (17.2 | ) |
Decrease in cash and cash equivalents |
|
| (61.5 | ) |
|
| 5.4 |
|
|
| — |
|
|
| (56.1 | ) |
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Beginning of year |
|
| 342.6 |
|
|
| 100.1 |
|
|
| — |
|
|
| 442.7 |
|
End of year |
| $ | 281.1 |
|
| $ | 105.5 |
|
| $ | — |
|
| $ | 386.6 |
|
|
| Restricted |
|
| Unrestricted |
|
|
|
|
|
|
|
|
| ||
|
| Group |
|
| Group |
|
| Eliminations |
|
| Consolidated |
| ||||
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| $ | 149,878 |
|
| $ | 21,788 |
|
| $ | — |
|
| $ | 171,666 |
|
Adjustments to reconcile net income to cash provided by operating activities |
|
| 205,699 |
|
|
| (10,030 | ) |
|
| — |
|
|
| 195,669 |
|
Changes in assets and liabilities |
|
| (70,198 | ) |
|
| 13,799 |
|
|
| — |
|
|
| (56,399 | ) |
Net cash provided by operating activities |
|
| 285,379 |
|
|
| 25,557 |
|
|
| — |
|
|
| 310,936 |
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to theatre properties and equipment and other |
|
| (262,730 | ) |
|
| — |
|
|
| — |
|
|
| (262,730 | ) |
Acquisition of theatres in the U.S. and international markets |
|
| (41,000 | ) |
|
| — |
|
|
| — |
|
|
| (41,000 | ) |
Proceeds from sale of theatre properties and equipment and other |
|
| 14,816 |
|
|
| — |
|
|
| — |
|
|
| 14,816 |
|
Investment in joint ventures and other |
|
| (68 | ) |
|
| (1,110 | ) |
|
| — |
|
|
| (1,178 | ) |
Net cash used for investing activities |
|
| (288,982 | ) |
|
| (1,110 | ) |
|
| — |
|
|
| (290,092 | ) |
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid to parent |
|
| (100,875 | ) |
|
| — |
|
|
| — |
|
|
| (100,875 | ) |
Repayments of long-term debt |
|
| (2,855 | ) |
|
| — |
|
|
| — |
|
|
| (2,855 | ) |
Payments on capital leases |
|
| (15,814 | ) |
|
| — |
|
|
| — |
|
|
| (15,814 | ) |
Other |
|
| 5,820 |
|
|
| — |
|
|
| — |
|
|
| 5,820 |
|
Net cash used for financing activities |
|
| (113,724 | ) |
|
| — |
|
|
| — |
|
|
| (113,724 | ) |
Effect of exchange rate changes on cash and cash equivalents |
|
| 1,051 |
|
|
| — |
|
|
| — |
|
|
| 1,051 |
|
Increase in cash and cash equivalents |
|
| (116,276 | ) |
|
| 24,447 |
|
|
| — |
|
|
| (91,829 | ) |
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year |
|
| 559,964 |
|
|
| 1,174 |
|
|
| — |
|
|
| 561,138 |
|
End of year |
| $ | 443,688 |
|
| $ | 25,621 |
|
| $ | — |
|
| $ | 469,309 |
|
Note: “Restricted Group” and “Unrestricted Group” are defined in the indentures for the senior notes.
56
*31.1 |
| |
*31.2 | ||
|
| |
*31.3 |
| |
* |
| |
**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 September 30, (i) Cinemark Holdings, Inc. Condensed Consolidated Balance Sheets (ii) Cinemark Holdings, Inc. Condensed Consolidated Statements of (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 Loss (viii) Cinemark USA, Inc. Condensed Consolidated Statements of Comprehensive Loss (ix) Cinemark USA, Inc. Condensed Consolidated Statements of Cash Flows (x) Cinemark USA, Inc. Condensed Consolidated Statements of Cash Equity (xi) Notes to Condensed Consolidated Financial Statements | |
* 104 | Cover Page Interactive Data File (formatted as |
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* filed herewith.
** furnished herewith.
57
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.
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| CINEMARK HOLDINGS, INC. CINEMARK USA, INC. |
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| November |
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| Chief Executive Officer |
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| Chief Financial Officer |
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