10-Q

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, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934


Commission File Number	Exact Name of Registrant as Specified in its Charter, Principal Executive Office Address and Telephone Number	State of Incorporation	I.R.S. Employer Identification No.
001-33401	Cinemark Holdings, Inc. 3900 Dallas Parkway Plano, Texas 75093 (972) 665-1000	Delaware	20-5490327
33-47040	Cinemark USA, Inc. 3900 Dallas Parkway Plano, Texas 75093 (972) 665-1000	Texas	75-2206284

Securities registered pursuant to Section 12(b) of the Act:


	Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Cinemark Holdings, Inc. ("Holdings")	Common stock, par value $.001 per share	CNK	New York Stock Exchange
Cinemark USA, Inc. ("CUSA")	None	None	None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Cinemark Holdings, Inc. Yes ☒ No ☐

Cinemark USA, Inc. Yes ☐ No ☒

(Note: As a voluntary filer, Cinemark USA, Inc. is not subject to the filing requirement of Section 13 or 15(d) of the Exchange Act. Cinemark USA, Inc. has filed all reports pursuant to Section 13 or 15(d) of the Exchange Act during the preceding 12 months as if it was subject to such filing requirements.)

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit files).

Cinemark Holdings, Inc. Yes ☒ No ☐

Cinemark USA, Inc. Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Cinemark Holdings, Inc.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Cinemark USA, Inc.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☐

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 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 outstanding and held by Cinemark Holdings, Inc.

Cinemark USA, Inc. meetS the conditions set forth in General Instructions (H)(1)(a) and (b) of Form 10-Q and IS therefore filing this form with reduced disclosure format pursuant to General Instructions (H)(2).

This combined Form 10-Q is separately filed by Cinemark Holdings, Inc. and Cinemark USA, Inc. 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


			Page
PART I. FINANCIAL INFORMATION			3

	Item 1.	Cinemark Holdings, Inc. and Subsidiaries Financial Statements (unaudited)
		Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	3
		Condensed Consolidated Statements of Loss for the three and nine months ended September 30, 2022 and 2021	4
		Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2022 and 2021	5
		Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2022 and 2021	6
		Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	8
		Cinemark USA, Inc. and Subsidiaries Financial Statements (unaudited)
		Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	9
		Condensed Consolidated Statements of Loss for the three and nine months ended September 30, 2022 and 2021	10
		Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2022 and 2021	11
		Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2022 and 2021	12
		Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	14
		Cinemark Holdings, Inc. and Cinemark USA, Inc. Notes to Condensed Consolidated Financial Statements	15

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	36

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50

	Item 4.	Controls and Procedures	50

PART II. OTHER INFORMATION			52

	Item 1.	Legal Proceedings	52

	Item 1A.	Risk Factors	52

	Item 5.	Other Information	52

	Item 6.	Exhibits	57

SIGNATURES			58

Cautionary Statement Regarding Forward-Looking Statements

Certain matters within this Quarterly Report on Form 10-Q include “forward–looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The “forward-looking statements” may include our current expectations, assumptions, estimates and projections about our business and our industry. They may include statements relating to:

•

future revenues, expenses and profitability;

•

currency exchange rate and inflationary impacts;

•

the future development and expected growth of our business;

•

projected capital expenditures;

•

access to capital resources;

•

attendance at movies generally or in any of the markets in which we operate;

•

the number or diversity of popular movies releases, the length of exclusive theatrical release windows and our ability to successfully license and exhibit popular films;

•

national and international growth in our industry;

•

competition from other exhibitors, alternative forms of entertainment and content delivery via streaming and other formats;

•

determinations in lawsuits in which we are a party; and

•

the impact of the COVID-19 pandemic on us and the motion picture exhibition industry.

Forward-looking statements can be identified by the use of words such as “may,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “anticipates,” “believes,” “plans,” “expects,” “future” and “intends” and similar expressions. These statements are neither historical facts nor guarantees of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions and are, therefore, subject to risks, inherent uncertainties and other factors, some of which are beyond our control and difficult to predict, including, among others, the impacts of the COVID-19 pandemic. 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 of, 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 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.

Where 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.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CINEMARK HOLDINGS, 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	$	631.9		$	707.3
Inventories		19.6			15.5
Accounts receivable		52.4			68.8
Current income tax receivable		45.4			46.6
Prepaid expenses and other		51.6			36.2
Total current assets		800.9			874.4
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	$	4,850.5		$	5,230.6

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		371.5			513.1
Total current liabilities		628.4			769.1
Long-term liabilities
Long-term debt, less current portion		2,473.5			2,476.3
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		39.5			39.8
Long-term liability for uncertain tax positions		47.3			45.9
NCM screen advertising advances		340.5			346.0
Other long-term liabilities		36.7			38.1
Total long-term liabilities		4,016.7			4,127.0
Equity
Cinemark Holdings, Inc.'s stockholders' equity:
Common stock, $0.001 par value: 300.0 shares authorized, 126.08 shares issued and 120.43 shares outstanding at September 30, 2022 and 125.10 shares issued and 119.75 shares outstanding at December 31, 2021		0.1			0.1
Additional paid-in-capital		1,214.1			1,197.8
Treasury stock, 5.66 and 5.35 shares, at cost, at September 30, 2022 and December 31, 2021, respectively		(95.2	)		(91.1	)
Retained deficit		(561.3	)		(389.4	)
Accumulated other comprehensive loss		(362.9	)		(394.5	)
Total Cinemark Holdings, Inc.'s stockholders' equity		194.8			322.9
Noncontrolling interests		10.6			11.6
Total equity		205.4			334.5
Total liabilities and equity	$	4,850.5		$	5,230.6

The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF LOSS

(in millions, except per share data, unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	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		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		631.6			477.3			1,887.8			1,141.2
Operating income (loss)		18.8			(42.5	)		(32.8	)		(297.4	)
Other income (expense)
Interest expense		(38.4	)		(38.0	)		(114.6	)		(111.6	)
Interest income		6.4			0.8			11.1			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		(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	)

The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.

CINEMARK HOLDINGS, 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	$	(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	)

The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(in millions, unaudited)


	Common Stock		Treasury Stock			Additional Paid-In-Capital		Retained Earnings (Deficit)			Accumulated Other Comprehensive Loss			Total Cinemark Holdings, Inc. Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance at January 1, 2022	$	0.1	$	(91.1	)	$	1,197.8	$	(389.4	)	$	(394.5	)	$	322.9		$	11.6		$	334.5
Issuance of share based awards and share based awards compensation expense	—		—				5.1		—			—			5.1			—			5.1
Stock withholdings related to vesting of share based awards	—			(1.6	)		—		—			—			(1.6	)		—			(1.6	)
Net income (loss)	—		—				—		(74.0	)		—			(74.0	)		1.5			(72.5	)
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements	—		—				—		—			18.4			18.4			—			18.4
Amortization of accumulated losses for amended swap agreements	—		—				—		—			1.1			1.1			—			1.1
Foreign currency translation adjustments	—		—				—		—			14.4			14.4			—			14.4
Balance at March 31, 2022	$	0.1	$	(92.7	)	$	1,202.9	$	(463.4	)	$	(360.6	)	$	286.3		$	13.1		$	299.4
Issuance of share based awards and share based awards compensation expense	—			—			6.0		—			—			6.0			—			6.0
Stock withholdings related to vesting of share based awards	—			(0.5	)		—		—			—			(0.5	)		—			(0.5	)
Net income (loss)	—			—			—		(73.4	)		—			(73.4	)		0.6			(72.8	)
Distributions to noncontrolling interests	—			—			—		—			—			—			(3.0	)		(3.0	)
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements	—			—			—		—			4.2			4.2			—			4.2
Amortization of accumulated losses for amended swap agreements	—			—			—		—			1.1			1.1			—			1.1
Foreign currency translation adjustments		—		—			—		—			(15.7	)		(15.7	)		—			(15.7	)
Balance at June 30, 2022	$	0.1	$	(93.2	)	$	1,208.9	$	(536.8	)	$	(371.0	)	$	208.0		$	10.7		$	218.7
Issuance of share based awards and share based awards compensation expense	—			—			5.2		—			—			5.2			—			5.2
Stock withholdings related to vesting of share based awards	—			(2.0	)		—		—			—			(2.0	)		—			(2.0	)
Net income (loss)	—			—			—		(24.5	)		—			(24.5	)		0.6			(23.9	)
Distributions to noncontrolling interests	—			—			—		—			—			—			(0.7	)		(0.7	)
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements	—			—			—		—			11.6			11.6			—			11.6
Amortization of accumulated losses for amended swap agreements	—			—			—		—			1.1			1.1			—			1.1
Foreign currency translation adjustments		—		—			—		—			(4.6	)		(4.6	)		—			(4.6	)
Balance at September 30, 2022	$	0.1	$	(95.2	)	$	1,214.1	$	(561.3	)	$	(362.9	)	$	194.8		$	10.6		$	205.4

The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.

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.

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.

* * * * * * * *

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.

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.

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.

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.

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.

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.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data, unaudited)

The Company and Basis of Presentation

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 operating 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. 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 sheets of Holdings and CUSA as of December 31, 2021, each of which were derived from audited financial statements, and the unaudited condensed consolidated financial statements of 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 over which the Company has control are consolidated while those investments in entities of which Holdings or CUSA, as applicable, owns between 20% and 50% and does not control are accounted for under the equity method. Investments in entities of which Holdings or CUSA, as applicable, owns less than 20% are generally accounted for under the cost method, unless Holdings or CUSA, as applicable, is deemed to have the ability to exercise significant influence over the entities, in which case Holdings or CUSA, as applicable, would account for its investment under the equity method. The results of these subsidiaries and entities 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, 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 9, 2022 by CUSA, 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, 2022 are not necessarily indicative of the results to be achieved for the full year.

Amounts included in the condensed consolidated financial statements of this Quarterly Report on Form 10-Q are rounded in millions with the exception of per share data. The amounts reported in the consolidated financial statements, and the notes thereto, of the Annual Report on Form 10-K for the year ended December 31, 2021 filed by Holdings on February 25, 2022 and by CUSA on March 9, 2022 are rounded in thousands.

Impact of the 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. The Company temporarily closed its theatres in the U.S. and Latin America during March of 2020 at the onset of the COVID-19 outbreak. During that time, the Company implemented various cash preservation strategies, including, but not limited to, temporary personnel and salary reductions, halting non-essential operating and capital expenditures, negotiating modified timing and/or abatement of contractual payments with landlords and other major suppliers, and suspending quarterly dividends paid by Holdings to its shareholders.

Throughout 2020 and 2021 the Company reopened theatres as local restrictions and the status of the COVID-19 pandemic would allow. All of the Company's domestic and international theatres were reopened by the end of the fourth quarter of 2021. The industry’s recovery from the COVID-19 pandemic is still underway and is contingent upon the volume of new film content available, as well as the box office performance of new film content released, consumer sentiment around movie-going and government restrictions. The industry is also adjusting to the evolution of the exclusive theatrical window, competition from streaming platforms, supply chain constraints, inflationary impacts and other economic factors.

Restructuring Charges

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data, unaudited)

During June 2020, Company management approved and announced a restructuring plan to realign its operations to create a more efficient cost structure (referred to herein as the “Restructuring Plan”) in response to the COVID-19 pandemic. The Restructuring Plan primarily included a headcount reduction at its domestic corporate office and the permanent closure of certain domestic and international theatres. The Company paid approximately $0.9 related to previously accrued restructuring costs during the nine months ended September 30, 2022. The Company recorded a $0.2 reduction to previously accrued restructuring costs during the nine months ended September 30, 2022 related to the settlement of facility closure costs for certain theatres. The remaining accrued restructuring costs of $0.4, which are primarily related to facility closure costs, are reflected in accounts payable and accrued expenses on the condensed consolidated balance sheet as of September 30, 2022.

New Accounting Pronouncements

Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, (“ASU 2020-04”) and ASU 2021-01, Reference Rate Reform (Topic 848): Scope, (“ASU 2021-01”). The purpose of ASU 2020-04 is to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. More specifically, the amendments in ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2021-01 clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The amendments in ASU 2020-04 and ASU 2021-01 are effective as of March 12, 2020 through December 31, 2022. The Company does not expect ASU 2020-04 and ASU 2021-01 to have a material impact on the condensed consolidated financial statements of Holdings or CUSA.

ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, (“ASU 2021-10”). The purpose of ASU 2021-10 is to provide annual 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 Accounting

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.

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

(1)

Includes approximately $0.8 and $0.6 of short-term lease payments for the three months ended September 30, 2022 and 2021, respectively. Includes approximately $2.2 and $1.2 of short-term lease payments for the nine months ended September 30, 2022 and 2021, respectively.

(2)

Includes approximately $9.4 and $1.9 of variable lease payments based on a change in index, such as CPI or inflation, variable payments based on revenue or attendance and variable common area maintenance costs for the three months ended September 30, 2022 and 2021, respectively. Includes approximately $27.5 and $(0.1) of variable lease payments based on a change in index, such as CPI or inflation, variable payments based on revenue or attendance and variable common area maintenance costs for the nine months ended September 30, 2022 and 2021, respectively.

(3)

Approximately $0.3 and $0.3 of lease payments are included in general and administrative expense primarily related to office leases for the three months ended September 30, 2022 and 2021, respectively. Approximately $1.0 and $1.0 of lease payments are included in general and administrative expense primarily related to office leases for the nine months ended September 30, 2022 and 2021, respectively.

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.

Revenue Recognition

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

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

(1)

U.S. segment revenue excludes intercompany transactions with the international operating segment. See Note 16 for the amount of intercompany eliminations for the periods presented.

(2)

Amount includes amortization of NCM screen advertising advances. See NCM Screen Advertising Advances and Other Deferred Revenue below.

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

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

(1)

U.S. segment revenue excludes intercompany transactions with the international operating segment. See Note 16 for the amount of intercompany eliminations for the periods presented.

(2)

Amount includes amortization of NCM screen advertising advances. See NCM Screen Advertising Advances and Other Deferred Revenue below.

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 Deferred Revenues (2)
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

(1)

See Note 8 for the maturity of NCM screen advertising advances as of September 30, 2022.

(2)

Includes liabilities associated with outstanding gift cards and discount ticket vouchers, points or rebates outstanding under the Company’s loyalty and membership programs and revenue collected but not yet earned for screen advertising, screen rental and other promotional activities. Amounts are classified as accounts payable and accrued expenses or other long-term liabilities on the condensed consolidated balance sheet.

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

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data, unaudited)

Earnings Per Share

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	)

(1)

For the three months ended September 30, 2022 and 2021, a weighted average of approximately 1.90 shares and 2.34 shares of restricted stock, respectively, were considered participating securities. For the nine months ended September 30, 2022 and 2021, a weighted average of approximately 1.69 shares and 2.11 shares of restricted stock, respectively, were considered participating securities.

(2)

For the three months ended September 30, 2022 and 2021, approximately 0.18 and 0.10 common equivalent shares for restricted stock units, respectively, were excluded because they were anti-dilutive. For the nine months ended September 30, 2022 and 2021, approximately 0.39 and 0.10 common equivalent shares for restricted stock units, respectively, were excluded because they were anti-dilutive.

(3)

For the three and nine months ended September 30, 2022 and 2021, diluted loss per share excludes the conversion of the 4.50% Convertible Senior Notes into 32.0 shares of common stock, as well as outstanding warrants, as they would be anti-dilutive. See further discussion below.

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

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

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

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data, unaudited)

(1)

Approximately $9.9 of the total is included in prepaid expenses and other and $10.3 is included in deferred charges and other assets, net on the condensed consolidated balance sheet as of September 30, 2022.

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 quoted market prices, which fall under Level 2 of the U.S. GAAP fair value hierarchy as defined by ASC 820, Fair Value Measurement (“ASC Topic 820”). The table below presents the fair value of the Company's long-term debt as of the periods presented:


	As of
	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

(1)

Includes the fair value of the 4.500% convertible senior notes of $527.5 and $691.9 as of September 30, 2022 and December 31, 2021, respectively.

Investment in National CineMedia LLC

Below is a summary of activity with NCM included in each of Holdings' and CUSA's condensed consolidated financial statements:


	Investment in NCM			NCM Screen Advertising Advances			Equity in Loss		Other Revenue			Interest Expense - NCM		Cash Received (2)


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

(1)

Amounts include the per patron and per digital screen theatre access fees due to CUSA, net of amounts due to NCM for on-screen advertising time provided to the Company's beverage concessionaire of approximately $5.9.

(2)

The Company had a receivable from NCM of $5.1 as of September 30, 2022.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data, unaudited)

Investment in National CineMedia

NCM operates a digital in-theatre network in the U.S. for providing cinema advertising. The Company entered into an Exhibitor Services Agreement with NCM (“ESA”), pursuant to which NCM primarily provides advertising to our theatres. See Note 8 to Holdings' Annual Report on Form 10-K filed February 25, 2022 and Note 6 to CUSA's Annual Report on From 10-K filed March 9, 2022 for additional discussion of the Company's investment in NCM as well as the accounting for its original NCM membership units and subsequent common unit adjustments.

Common Unit Adjustments

The Company also periodically receives consideration in the form of common units from NCM. Annual adjustments to the common membership units are made primarily based on increases or decreases in the number of theatre screens operated and the impact of these theatres on total attendance. The common units received are recorded at estimated fair value as an increase in the Company's investment in NCM with an offset to NCM screen advertising advances.

During March 2022, NCM performed its annual common unit adjustment calculation under the Common Unit Adjustment Agreement. As a result of the calculation, the Company received an additional 0.5 common units of NCM during April 2022 and recorded the additional common units received at their estimated fair value of $1.3 with a corresponding adjustment to NCM screen advertising advances. The fair value of the common units received was estimated based on the market price of National Cinemedia, Inc. ("NCMI") common stock (Level 1 input as defined 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.

Impairment of NCM Investment

As of September 30, 2022, the Company owned a total of 43.7 common units of NCM representing an ownership interest of approximately 25.5%. Each of the Company’s common units in NCM is convertible into one share of NCMI common stock. As of September 30, 2022, the estimated fair value of the Company’s investment in NCM was approximately $28.4 based on NCMI's stock price as of September 30, 2022 of $0.65 per share (Level 1 input as defined in FASB ASC Topic 820). Because the share price of NCMI was significantly below the Company’s carrying value of NCM per common unit and due to the prolonged recovery of NCM's business, the Company wrote down its investment in NCM to its estimated fair value during the nine months ended September 30, 2022. See Note 12 for impairment expense recorded during the three and nine months ended September 30, 2022 and 2021.

Exhibitor Services Agreement

As discussed above, the Company’s domestic theatres are part of the in-theatre digital network operated by NCM, the terms of which are defined in the ESA. NCM provides advertising to its theatres through its branded “Noovie” pre-show entertainment program and also handles lobby promotions and displays for our theatres. The Company receives a monthly theatre access fee for participation in the NCM network and also earns screen advertising or screen rental revenue on a per patron basis. See Note 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

(1)

Amounts are net of the estimated interest to be accrued for the periods presented. See discussion of significant financing component below.

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%.

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 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	)

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data, unaudited)

Other Investments

Digital Cinema Implementation Partners LLC (“DCIP”)

On February 12, 2007, the Company, AMC and Regal (the “Exhibitors”) entered into a joint venture known as DCIP to facilitate the implementation of digital cinema in the Company’s theatres and to establish agreements with major motion picture studios for the financing of digital cinema. As of September 30, 2022, the Company had a 33% voting interest in DCIP and a 24.3% economic interest in DCIP. DCIP also entered into long-term Digital Cinema Deployment Agreements (“DCDAs”) with six major motion picture studios pursuant to which Kasima LLC, one of DCIP’s subsidiaries, received a virtual print fee ("VPF") each time the studio booked a film or certain other content on the leased digital projection systems. Other content distributors entered into similar DCDAs that provided for the payment of VPFs for bookings of the distributor's content on a leased digital projection system. The DCDAs expired in October 2021. Pursuant to the operating agreement between the Exhibitors and DCIP, DCIP began to distribute excess cash generated from their operations to the Exhibitors during 2019. As the DCDAs have expired and the MELA (as defined below) has been terminated, as discussed below, DCIP and its subsidiaries no longer have regular operations, and a final distribution was made during July 2022.

Effective November 1, 2020, the Company amended the master equipment lease agreement (“MELA”) with Kasima LLC, which is an indirect subsidiary of DCIP, resulting in the termination of the MELA. Upon termination of the MELA, the Company received a distribution of the digital projection equipment that it previously leased. As the fair value of the distributed projectors was greater than the Company's investment in DCIP at the time of the distribution, the investment in DCIP was reduced to zero at the time of the distribution. The Company does not recognize undistributed equity in the earnings or loss of its investment in DCIP until such time that future net earnings, less distributions received, surpass the amount of the excess distribution. The investment in DCIP on the condensed consolidated balance sheets of Holdings and CUSA as of December 31, 2021 and September 30, 2022 was $0. DCIP ceased operations at the end of the second quarter of 2022.

The Company received distributions and warranty reimbursements from DCIP for the three and nine months ended September 30, 2022 and 2021 as follows:


	Three Months Ended					Nine Months Ended
Transactions	September 30, 2022		September 30, 2021			September 30, 2022		September 30, 2021
Warranty reimbursements (1)	$	—	$	(0.1	)	$	—	$	(0.8	)
Distributions from DCIP (2)	$	3.7	$	6.5		$	3.7	$	6.5

(1)

Recorded as a reduction of utilities and other costs on the condensed consolidated statements of loss.

(2)

Cash distributions received from DCIP are not treated as a reduction of the investment balance because, as discussed above, the Company's equity investment in DCIP is zero. Reflected as distributions from DCIP on the condensed consolidated statements of loss.

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, LLC			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

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data, unaudited)

Transactions with Other Investees

Below is a summary of transactions with each of the Company’s other investees for the three and nine months ended September 30, 2022 and 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

(1)

Included in film rentals and advertising costs on the condensed consolidated statements of loss.

10.

Treasury Stock and Share Based Awards

Treasury Stock - Holdings

Treasury stock represents shares of common stock repurchased or withheld by Holdings and not yet retired. The Company has applied the cost method in recording its treasury shares. Below is a summary of treasury stock activity for the nine 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

(1)

Holdings withheld shares as a result of the election by certain employees to satisfy their tax liabilities upon vesting of restricted stock and restricted stock units. Holdings determined the number of shares to be withheld based upon market values of the common stock of Holdings on the vest dates, which ranged from $15.18 to $18.33 per share.

As of September 30, 2022, Holdings had no plans to retire any shares of treasury stock.

Restricted Stock

Below is a summary of restricted stock activity for the nine months ended September 30, 2022:


	Shares of			Weighted Average
	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

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data, unaudited)


	Nine Months Ended September 30,
	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	)

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data, unaudited)

During the nine months ended September 30, 2022, Holdings granted 0.88 shares of its restricted stock to certain CUSA employees and its directors. The fair value of the restricted stock granted was determined based on the closing price of Holdings' common stock on the grant dates, which ranged from $13.36 to $17.07 per share. Holdings assumed forfeiture rates for the restricted stock awards that ranged from 0% to 12%. The restricted stock granted during the nine months ended September 30, 2022 vests over periods ranging from one to three years. The recipients of restricted stock are entitled to receive non-forfeitable dividends and to vote their respective shares, however, the sale and transfer of the restricted shares is prohibited during the restriction period.

As of September 30, 2022, the estimated remaining unrecognized compensation expense related to unvested restricted stock awards was as follows:


	Estimated
	Remaining
	Expense
CUSA employees (1)	$	23.0
Holdings directors		0.8
Total remaining - Holdings (1)	$	23.8

(1)

The weighted average period over which this remaining compensation expense will be recognized by both Holdings and CUSA is approximately 2 years.

Restricted Stock Units

Below is a summary of restricted stock unit activity for the periods presented:


	Nine Months Ended September 30,
	2022		2021
Number of restricted stock units that vested during the period		0.10		0.01
Fair value of restricted stock units that vested during the period	$	1.7	$	0.3
Accumulated dividends paid upon vesting of restricted stock units	$	0.3	$	0.1
Compensation expense recognized during the period	$	4.2	$	2.8
Income tax benefit (cost) related to restricted stock units	$	0.1	$	(0.5	)

During the nine months ended September 30, 2022, Holdings granted performance awards in the form of restricted stock units. The maximum number of shares issuable under the performance awards is 0.8 shares of Holdings' common stock. The performance metrics for these awards are based upon the achievement of pre-established criteria that consists of revenue and consolidated cash flows as defined in the award agreement. The performance measurement period for these performance awards is one year with an additional service requirement to the third anniversary of the date of grant. Each performance target underlying the performance award has a threshold, target and maximum level, with the maximum level equal to 175% of the target award. If the performance metrics meet the threshold level, approximately 29% of the maximum restricted stock units vest. If the performance metrics for the one-year period are at target, approximately 57% of the maximum restricted stock units vest. If the performance metrics are at the maximum, 100% of the maximum restricted stock units vest. Grantees are eligible to receive a ratable portion of the common stock issuable if the achievement of the performance goals is within the targets previously noted. All restricted stock units granted during 2022 will be paid in the form of Holdings' common stock if the participant continues to provide services through the third anniversary of the grant date. Restricted stock unit award participants are eligible to receive dividend equivalent payments from the grant date to the extent declared by Holdings if, and at the time that, the restricted stock unit awards vest.

When the performance awards were issued, the Company estimated that the most likely outcome is the achievement of the target level. The fair value of the restricted stock unit awards was determined based on the closing price of Holdings' common stock on the date of grant, which was $16.65 per share. The Company assumed a forfeiture rate of 5% for the restricted stock unit awards. Based on updated performance expectations, the Company determined that the maximum performance level was more likely to be achieved. The Company recorded incremental compensation expense of approximately $0.6 related to the change in estimated performance level during the nine months ended September 30, 2022.

As of September 30, 2022, the estimated remaining unrecognized compensation expense related to outstanding restricted stock units was $12.0. The weighted average period over which this remaining compensation expense will be recognized is approximately two years. As of September 30, 2022, Holdings had restricted stock units outstanding that represented a total of 1.0 hypothetical shares

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data, unaudited)

of 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.

11.

Goodwill and Other Intangible Assets

A summary of the Company's goodwill is as follows:


	U.S. Operating Segment		International Operating Segment		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

(1)

Balances are presented net of accumulated impairment losses of $214.0 for the U.S. operating segment and $43.8 for the international operating segment. See discussion of the qualitative impairment analysis performed by the Company as of September 30, 2022 at Note 12.

A summary of the Company's intangible assets is as follows:


	Balance at January 1, 2022			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

(1)

Amounts represent the write-off of non-compete agreements that expired during the nine months ended September 30, 2022.

The estimated aggregate future amortization expense for intangible assets is as follows:


	Estimated
	Amortization
For the three months ended December 31, 2022	$	0.6
For the twelve months ended December 31, 2023		2.5
For the twelve months ended December 31, 2024		2.5
For the twelve months ended December 31, 2025		1.9
For the twelve months ended December 31, 2026		1.5
Thereafter		—
Total	$	9.0

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data, unaudited)

12.

Impairment of Long-Lived Assets

The Company performed 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:

•

Goodwill – The qualitative assessment of goodwill for each reporting unit considers economic and market conditions, industry trading multiples and the impact of recent developments and events on estimated fair values as compared with its most recent quantitative assessment.

•

Tradename Intangible Assets – The qualitative assessment considers recent developments that may impact revenue forecasts and other estimates as compared with its most recent quantitative assessment.

•

Other Long-lived Assets – The qualitative assessment considers relevant market transactions, industry trading multiples and recent developments that would impact the estimates of future cash flows, which are the primary measure of estimated fair value, as compared with its most recent quantitative impairment assessment.

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 a theatre 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 the building’s remaining useful life for owned properties. If the estimated undiscounted cash flows are not sufficient to recover a long-lived asset’s carrying value, the carrying value of the asset group (theatre) is compared with its estimated fair value. Significant judgment is involved in estimating fair value, including management’s estimate of future theatre level cash flows for each of the theatres based on projected box office. Fair value is estimated based on a multiple of cash flows. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy, as defined by FASB ASC Topic 820-10-35, are based on projected operating performance, market transactions and industry trading multiples.

Below is a summary 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

(1)

See discussion at Impairment of NCM Investment in Note 8.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data, unaudited)

13.

Fair Value Measurements

The Company determines fair value measurements in accordance with ASC Topic 820, which establishes a fair value hierarchy under which an asset or liability is categorized based on the lowest level of input significant to its fair value measurement. The levels of input defined by ASC Topic 820 are as follows:

Level 1 – quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date;

Level 2 – other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3 – unobservable and should be used to measure fair value to the extent that observable inputs are not available.

Below is a summary of assets and liabilities measured at fair value on a recurring basis under FASB ASC Topic 820 as of September 30, 2022 and December 31, 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	$	—

(1)

See further discussion of interest rate swaps at Note 7.

The market approach is used for fair value measurements on a nonrecurring basis in the impairment evaluations of its goodwill, intangible assets and long-lived assets (see Note 11 and Note 12). See additional explanation of fair value measurement techniques used for long-lived assets, goodwill and intangible assets in “Critical Accounting Policies” in the Holdings' Annual Report on Form 10-K for the year ended December 31, 2021, filed February 25, 2022 and the CUSA's Annual Report on Form 10-K for the year ended December 31, 2021, filed March 9, 2022. There were no changes in valuation techniques. There were no transfers into or out of Level 1, Level 2 or Level 3 during the nine months ended September 30, 2022.

14.

Foreign Currency Translation

The accumulated other comprehensive loss account in Holdings stockholders’ equity of $362.9 and $394.5 and CUSA stockholder's equity of $368.2 and $397.0, each as of September 30, 2022 and December 31, 2021, respectively, primarily includes cumulative foreign currency net losses of $400.4 and $394.5, respectively, from translating the financial statements of the Company's international subsidiaries and the cumulative changes in fair value of the interest rate swap agreements that are designated as hedges.

As of September 30, 2022, all foreign countries where the Company has operations are non-highly inflationary, other than Argentina. In non-highly inflationary countries, the local currency is the same as the functional currency and any fluctuation in the currency results in a cumulative foreign currency translation adjustment recorded to accumulated other comprehensive loss. The Company deemed Argentina to be highly inflationary beginning July 1, 2018. A highly inflationary economy is defined as an economy with a cumulative inflation rate of 100 percent or more over a three-year period. If a country’s economy is classified as highly inflationary, the financial statements of the foreign entity operating in that country must be remeasured to the functional currency of the reporting entity. The financial information of the Company’s Argentina subsidiaries was remeasured in U.S. dollars in accordance with ASC Topic 830, Foreign Currency Matters, effective July 1, 2018.

Below is a summary of the impact of translating the September 30, 2022 and September 30, 2021 financial statements of the Company’s international subsidiaries:


					Other Comprehensive Income (Loss) for
	Exchange Rate as of				Nine Months Ended
Country	September 30, 2022		December 31, 2021		September 30, 2022			September 30, 2021
Brazil		5.40		5.57	$	0.4		$	(3.4	)
Chile		965.80		852.00		(7.7	)		(7.9	)
Peru		3.99		4.02		0.2			(3.6	)
All other						1.2			(0.1	)
					$	(5.9	)	$	(15.0	)

As 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, 2022 and 2021, respectively, as a result of translating Argentina's financial results to U.S. dollars.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND

CINEMARK USA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data, unaudited)

15.

Supplemental Cash Flow Information

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

(1)

Includes the cash interest paid by CUSA.

(2)

Represents cash deposited in a collateral account during the period to support the issuance of letters of credit to lenders, net of deposits withdrawn from such accounts upon the repayment of related debt.

(3)

Additions to theatre properties and equipment included in accounts payable as of September 30, 2022 and December 31, 2021 were $12.4 and $8.2, respectively.

16.

Segments - Holdings

The international market and U.S. market are managed as separate reportable operating segments, with the international segment consisting of operations in Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao and Paraguay. Each segment’s revenue is derived from admissions and concession sales and other ancillary revenue. Holdings uses Adjusted EBITDA, as shown in the reconciliation table below, as the primary measure of segment profit and loss to evaluate performance and allocate its resources. The Company does not report total assets by segment because that information is not used to evaluate the performance of or allocate resources between segments.

Holdings revenue, Adjusted EBITDA and capital expenditures by reportable operating segment

Below is a breakdown of selected financial information by reportable operating segment for Holdings:

Three Months Ended