UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
or
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. |
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Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class |
Trading Symbol(s) |
Name of each exchange on which registered |
Cinemark Holdings, Inc. ("Holdings") |
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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.
Cinemark USA, Inc. Yes ☐
(Note: As a voluntary filer, Cinemark USA, Inc. is not subject to the filing requirements of Section 13 or 15(d) of the Exchange Act. Cinemark USA, Inc. has filed all reports pursuant to Section 13 or 15(d) of the Exchange Act during the preceding 12 months as if it was subject to such filing requirements.)
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Cinemark Holdings, Inc.
Cinemark USA, Inc.
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.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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Cinemark USA, Inc.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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 25, 2024,
As of October 25, 2024,
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 Holdings and CUSA. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrant. When this Form 10-Q is incorporated by reference into any filings with the SEC made by Holdings or CUSA, as a registrant, the portions of this Form 10-Q that relate to the other registrant are not incorporated by reference therein.
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CINEMARK USA, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
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Item 1. |
Cinemark Holdings, Inc. and Subsidiaries Financial Statements (unaudited) |
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Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 |
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Cinemark USA, Inc. and Subsidiaries Financial Statements (unaudited) |
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Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 |
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Cinemark Holdings, Inc. and Cinemark USA, Inc. Notes to Condensed Consolidated Financial Statements |
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15 |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
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38 |
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Item 3. |
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Item 4. |
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Item 1. |
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54 |
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Item 1A. |
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54 |
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Item 2. |
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54 |
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Item 5. |
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55 |
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Item 6. |
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61 |
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62 |
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1
Cautionary Statement Regarding Forward-Looking Statements
Certain matters within this Quarterly Report on Form 10-Q include “forward–looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The “forward-looking statements” include our current expectations, assumptions, estimates and projections about the respective business and industry of Holdings and CUSA. They include statements relating to:
You can identify forward-looking statements 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. 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 our risk factors, please review the “Risk Factors” section or other sections of, or incorporated by reference to, the Company’s Annual Report on Form 10-K filed February 16, 2024. All forward-looking statements attributable to either Holdings or CUSA or persons acting on our behalf, are expressly qualified in their entirety by such risk factors. Forward-looking statements contained in this Form 10-Q reflect the views of Holdings and CUSA only as of the date of this Form 10-Q. Neither Holdings nor CUSA undertake any 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.
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, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia and Paraguay.
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data, unaudited)
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September 30, |
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December 31, |
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2024 |
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2023 |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Inventories |
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Accounts receivable |
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Current income tax receivable |
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Prepaid expenses and other |
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Total current assets |
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Theatre properties and equipment, net |
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Operating lease right-of-use assets, net |
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Other long-term assets |
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Goodwill |
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Intangible assets, net |
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Investment in NCMI |
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Investments in affiliates |
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Long-term deferred tax asset |
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Deferred charges and other assets, net |
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Total other long-term assets |
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Total assets |
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$ |
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$ |
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Liabilities and equity |
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Current liabilities |
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Current portion of long-term debt |
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$ |
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$ |
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Current portion of operating lease obligations |
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Current portion of finance lease obligations |
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Current income tax payable |
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Accounts payable and accrued expenses |
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Total current liabilities |
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Long-term liabilities |
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Long-term debt, less current portion |
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Operating lease obligations, less current portion |
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Finance lease obligations, less current portion |
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Long-term deferred tax liability |
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Long-term liability for uncertain tax positions |
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NCM screen advertising advances |
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Other long-term liabilities |
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Total long-term liabilities |
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Equity |
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Cinemark Holdings, Inc.'s stockholders' equity: |
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Common stock, $ |
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Additional paid-in-capital |
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Treasury stock, |
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( |
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Accumulated deficit |
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( |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Total Cinemark Holdings, Inc.'s stockholders' equity |
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Noncontrolling interests |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
3
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data, unaudited)
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Three Months Ended September 30, |
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Nine Months Ended |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenue |
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Admissions |
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$ |
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$ |
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$ |
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$ |
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Concession |
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Other |
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Total revenue |
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$ |
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$ |
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$ |
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$ |
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Cost of operations |
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Film rentals and advertising |
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Concession supplies |
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Salaries and wages |
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Facility lease expense |
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Utilities and other |
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General and administrative expenses |
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Depreciation and amortization |
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Impairment of long-lived and other assets |
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(Gain) loss on disposal of assets and other |
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( |
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Total cost of operations |
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Operating income |
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Other income (expense) |
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Interest expense |
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( |
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( |
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( |
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Interest income |
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Loss on debt amendments and extinguishments |
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( |
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( |
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( |
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Foreign currency exchange and other related loss |
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( |
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( |
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( |
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( |
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Interest expense - NCM |
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( |
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( |
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( |
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( |
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Equity in income of affiliates |
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Net gain on investment in NCMI |
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Total other expense |
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( |
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( |
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( |
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Income before income taxes |
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Income tax (benefit) expense |
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( |
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( |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Less: Net income attributable to noncontrolling interests |
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Net income attributable to Cinemark Holdings, Inc. |
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$ |
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$ |
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$ |
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$ |
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Weighted average shares outstanding |
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Basic |
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Diluted |
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Income per share attributable to Cinemark Holdings, Inc.'s common stockholders |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
4
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions, unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss), net of tax |
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Unrealized loss due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
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( |
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( |
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( |
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( |
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Foreign currency translation adjustments |
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( |
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( |
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( |
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Total other comprehensive income (loss), net of tax |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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Total comprehensive income, net of tax |
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Comprehensive income attributable to noncontrolling interests |
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( |
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( |
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( |
) |
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( |
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Comprehensive income attributable to Cinemark Holdings, Inc. |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
5
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(in millions, unaudited)
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Total |
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Accumulated |
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Cinemark |
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Common Stock |
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Additional |
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Other |
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Holdings, Inc.'s |
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Shares |
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Treasury |
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Paid-in- |
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Accumulated |
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Comprehensive |
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Stockholders’ |
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Noncontrolling |
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Total |
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Issued |
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Amount |
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Stock |
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Capital |
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Deficit |
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Loss |
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Equity |
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Interests |
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Equity |
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Balance at January 1, 2024 |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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$ |
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$ |
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Restricted stock forfeitures and stock withholdings related to share-based awards that vested during the three months ended March 31, 2024 |
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— |
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— |
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( |
) |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Issuance of stock upon vesting of performance stock units |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of share-based awards and share-based awards compensation expense |
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— |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Distributions to noncontrolling interests |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Amortization of accumulated gains for amended swap agreements |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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— |
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( |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
) |
|
|
— |
|
|
|
( |
) |
||
Balance at March 31, 2024 |
|
|
|
|
$ |
|
|
|
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Restricted stock forfeitures and stock withholdings related to share-based awards that vested during the three months ended June 30, 2024 |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Issuance of share-based awards and share-based awards compensation expense |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Distributions to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amortization of accumulated gains for amended swap agreements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at June 30, 2024 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Restricted stock forfeitures and stock withholdings related to share-based awards that vested during the three months ended September 30, 2024 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Issuance of share-based awards and share-based awards compensation expense |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Net income |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Distributions to noncontrolling interests |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
Amortization of accumulated gains for amended swap agreements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Balance at September 30, 2024 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
6
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY, CONTINUED
(in millions, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Cinemark |
|
|
|
|
|
|
|
|||||||||
|
|
Common Stock |
|
|
|
|
|
Additional |
|
|
|
|
|
Other |
|
|
Holdings, Inc's |
|
|
|
|
|
|
|
||||||||||||
|
|
Shares |
|
|
|
|
|
Treasury |
|
|
Paid-in- |
|
|
Accumulated |
|
|
Comprehensive |
|
|
Stockholders’ |
|
|
Noncontrolling |
|
|
Total |
|
|||||||||
|
|
Issued |
|
|
Amount |
|
|
Stock |
|
|
Capital |
|
|
Deficit |
|
|
Loss |
|
|
Equity |
|
|
Interests |
|
|
Equity |
|
|||||||||
Balance at January 1, 2023 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Restricted stock forfeitures and stock withholdings related to share-based awards that vested during the three months ended March 31, 2023 |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Issuance of stock upon vesting of performance stock units |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Issuance of share-based awards and share-based awards compensation expense |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Net (loss) income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Amortization of accumulated gains for amended swap agreements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Balance at March 31, 2023 |
|
|
|
|
$ |
|
|
|
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Restricted stock forfeitures and stock withholdings related to share-based awards that vested during the three months ended June 30, 2023 |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Issuance of share-based awards and share-based awards compensation expense |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Distributions to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amortization of accumulated gains for amended swap agreements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Balance at June 30, 2023 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Restricted stock forfeitures and stock withholdings related to share-based awards that vested during the three months ended September 30, 2023 |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Issuance of share-based awards and share-based awards compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Distributions to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amortization of accumulated gains for amended swap agreements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at September 30, 2023 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
7
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, unaudited)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating activities |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
|
||
Amortization of intangible and other assets |
|
|
|
|
|
|
||
Loss on debt amendments and extinguishments |
|
|
|
|
|
|
||
Amortization of original issue discount and debt issuance costs |
|
|
|
|
|
|
||
Interest accrued on NCM screen advertising advances |
|
|
|
|
|
|
||
Amortization of NCM screen advertising advances and other deferred revenue |
|
|
( |
) |
|
|
( |
) |
Amortization of accumulated gains for amended swap agreements |
|
|
( |
) |
|
|
( |
) |
Impairment of long-lived and other assets |
|
|
|
|
|
|
||
Share-based awards compensation expense |
|
|
|
|
|
|
||
Loss (gain) on disposal of assets and other |
|
|
|
|
|
( |
) |
|
Net gains on investment in NCMI |
|
|
( |
) |
|
|
( |
) |
Non-cash rent expense |
|
|
( |
) |
|
|
( |
) |
Equity in income of affiliates |
|
|
( |
) |
|
|
( |
) |
Deferred income tax (benefit) expense |
|
|
( |
) |
|
|
|
|
Distributions from equity investees |
|
|
|
|
|
|
||
Changes in assets and liabilities and other |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Investing activities |
|
|
|
|
|
|
||
Additions to theatre properties and equipment |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of theatre properties and equipment and other |
|
|
|
|
|
|
||
Proceeds from redemption of common units of NCM |
|
|
|
|
|
|
||
Net cash used for investing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Financing activities |
|
|
|
|
|
|
||
Proceeds from amendment of senior secured credit facility |
|
|
|
|
|
|
||
Repayment of term loan upon amendment of senior secured credit facility |
|
|
|
|
|
( |
) |
|
Proceeds from issuance of 7.00% Senior Notes |
|
|
|
|
|
|
||
Redemption of 8.75% Secured Notes |
|
|
( |
) |
|
|
( |
) |
Repayment of 5.875% Senior Notes |
|
|
( |
) |
|
|
|
|
Payment of debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Payment of fees to amend senior secured credit facility and satisfy and discharge the 5.875% Senior Notes |
|
|
( |
) |
|
|
( |
) |
Other repayments of long-term debt |
|
|
( |
) |
|
|
( |
) |
Restricted stock withholdings for payroll taxes |
|
|
( |
) |
|
|
( |
) |
Payments on finance leases |
|
|
( |
) |
|
|
( |
) |
Other financing activities |
|
|
( |
) |
|
|
|
|
Net cash used for financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Effect of exchange rate changes on cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Increase in cash and cash equivalents |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Cash and cash equivalents: |
|
|
|
|
|
|
||
Beginning of period |
|
|
|
|
|
|
||
End of period |
|
$ |
|
|
$ |
|
||
The accompanying notes, as they relate to Cinemark Holdings, Inc., are an integral part of the condensed consolidated financial statements.
* * * * * * * *
8
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data, unaudited)
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
Assets |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Inventories |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
|
||
Current income tax receivable |
|
|
|
|
|
|
||
Prepaid expenses and other |
|
|
|
|
|
|
||
Accounts receivable from parent |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Theatre properties and equipment, net |
|
|
|
|
|
|
||
Operating lease right-of-use assets, net |
|
|
|
|
|
|
||
Other long-term assets |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Investment in NCMI |
|
|
|
|
|
|
||
Investments in affiliates |
|
|
|
|
|
|
||
Long-term deferred tax asset |
|
|
|
|
|
|
||
Deferred charges and other assets, net |
|
|
|
|
|
|
||
Total other long-term assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
Liabilities and equity |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Current portion of long-term debt |
|
$ |
|
|
$ |
|
||
Current portion of operating lease obligations |
|
|
|
|
|
|
||
Current portion of finance lease obligations |
|
|
|
|
|
|
||
Current income tax payable |
|
|
|
|
|
|
||
Accounts payable and accrued expenses |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-term liabilities |
|
|
|
|
|
|
||
Long-term debt, less current portion |
|
|
|
|
|
|
||
Operating lease obligations, less current portion |
|
|
|
|
|
|
||
Finance lease obligations, less current portion |
|
|
|
|
|
|
||
Long-term deferred tax liability |
|
|
|
|
|
|
||
Long-term liability for uncertain tax positions |
|
|
|
|
|
|
||
NCM screen advertising advances |
|
|
|
|
|
|
||
Other long-term liabilities |
|
|
|
|
|
|
||
Total long-term liabilities |
|
|
|
|
|
|
||
Equity |
|
|
|
|
|
|
||
Cinemark USA, Inc.'s stockholder's equity: |
|
|
|
|
|
|
||
Class A common stock, $ |
|
|
|
|
|
|
||
Class B common stock, |
|
|
|
|
|
|
||
Treasury stock, |
|
|
( |
) |
|
|
( |
) |
Additional paid-in-capital |
|
|
|
|
|
|
||
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Total Cinemark USA, Inc.'s stockholder's equity |
|
|
|
|
|
|
||
Noncontrolling interests |
|
|
|
|
|
|
||
Total equity |
|
|
|
|
|
|
||
Total liabilities and equity |
|
$ |
|
|
$ |
|
||
The accompanying notes, as they relate to Cinemark USA, Inc., are an integral part of the condensed consolidated financial statements.
9
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, unaudited)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Admissions |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Concession |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Film rentals and advertising |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Concession supplies |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries and wages |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Facility lease expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Utilities and other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment of long-lived and other assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
(Gain) loss on disposal of assets and other |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Total cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss on debt amendments and extinguishments |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Foreign currency exchange and other related loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest expense - NCM |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Equity in income of affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net gain on investment in NCMI |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total other expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax (benefit) expense |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: Net income attributable to noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Cinemark USA, Inc. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The accompanying notes, as they relate to Cinemark USA, Inc., are an integral part of the condensed consolidated financial statements.
10
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions, unaudited)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized loss due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Foreign currency translation adjustments |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Total other comprehensive income (loss), net of tax |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Total comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Comprehensive income attributable to noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Comprehensive income attributable to Cinemark USA, Inc. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The accompanying notes, as they relate to Cinemark USA, Inc., are an integral part of the condensed consolidated financial statements.
11
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(in millions, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|||||||||||
|
|
Class A |
|
|
Class B |
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Cinemark |
|
|
|
|
|
|
|
|||||||||||||||||
|
|
Common Stock |
|
|
Common Stock |
|
|
|
|
|
Additional |
|
|
|
|
|
Other |
|
|
USA, Inc's |
|
|
|
|
|
|
|
|||||||||||||||||
|
|
Shares |
|
|
|
|
|
Shares |
|
|
|
|
|
Treasury |
|
|
Paid-in- |
|
|
Accumulated |
|
|
Comprehensive |
|
|
Stockholder's |
|
|
Noncontrolling |
|
|
Total |
|
|||||||||||
|
|
Issued |
|
|
Amount |
|
|
Issued |
|
|
Amount |
|
|
Stock |
|
|
Capital |
|
|
Deficit |
|
|
Loss |
|
|
Equity |
|
|
Interests |
|
|
Equity |
|
|||||||||||
Balance at January 1, 2024 |
|
|
|
|
$ |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||||
Share-based awards compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Distributions to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amortization of accumulated gains for amended swap agreements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at March 31, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Share-based awards compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Distributions to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amortization of accumulated gains for amended swap agreements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at June 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Share-based awards compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Distributions to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amortization of accumulated gains for amended swap agreements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Balance at September 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
12
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY, CONTINUED
(in millions, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|||||||||||
|
|
Class A |
|
|
Class B |
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Cinemark |
|
|
|
|
|
|
|
|||||||||||||||||
|
|
Common Stock |
|
|
Common Stock |
|
|
|
|
|
Additional |
|
|
|
|
|
Other |
|
|
USA, Inc's |
|
|
|
|
|
|
|
|||||||||||||||||
|
|
Shares |
|
|
|
|
|
Shares |
|
|
|
|
|
Treasury |
|
|
Paid-in- |
|
|
Accumulated |
|
|
Comprehensive |
|
|
Stockholder's |
|
|
Noncontrolling |
|
|
Total |
|
|||||||||||
|
|
Issued |
|
|
Amount |
|
|
Issued |
|
|
Amount |
|
|
Stock |
|
|
Capital |
|
|
Deficit |
|
|
Loss |
|
|
Equity |
|
|
Interests |
|
|
Equity |
|
|||||||||||
Balance at January 1, 2023 |
|
|
|
|
$ |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||||
Share-based awards compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Amortization of accumulated gains for amended swap agreements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Balance at March 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Share-based awards compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Distributions to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amortization of accumulated gains for amended swap agreements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Balance at June 30, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Share-based awards compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Distributions to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amortization of accumulated gains for amended swap agreements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at September 30, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
The accompanying notes, as they relate to Cinemark USA, Inc., are an integral part of the condensed consolidated financial statements.
13
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, unaudited)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating activities |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
|
||
Amortization of intangible and other assets |
|
|
|
|
|
|
||
Loss on debt amendments and extinguishments |
|
|
|
|
|
|
||
Amortization of original issue discount and debt issuance costs |
|
|
|
|
|
|
||
Interest accrued on NCM screen advertising advances |
|
|
|
|
|
|
||
Amortization of NCM screen advertising advances and other deferred revenue |
|
|
( |
) |
|
|
( |
) |
Amortization of accumulated gains for amended swap agreements |
|
|
( |
) |
|
|
( |
) |
Impairment of long-lived and other assets |
|
|
|
|
|
|
||
Share-based awards compensation expense |
|
|
|
|
|
|
||
Loss (gain) on disposal of assets and other |
|
|
|
|
|
( |
) |
|
Net gains on investment in NCMI |
|
|
( |
) |
|
|
( |
) |
Non-cash rent expense |
|
|
( |
) |
|
|
( |
) |
Equity in income of affiliates |
|
|
( |
) |
|
|
( |
) |
Deferred income tax (benefit) expense |
|
|
( |
) |
|
|
|
|
Distributions from equity investees |
|
|
|
|
|
|
||
Changes in assets and liabilities and other |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Investing activities |
|
|
|
|
|
|
||
Additions to theatre properties and equipment |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of theatre properties and equipment and other |
|
|
|
|
|
|
||
Proceeds from redemption of common units of NCM |
|
|
|
|
|
|
||
Net cash used for investing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Financing activities |
|
|
|
|
|
|
||
Proceeds from amendment of senior secured credit facility |
|
|
|
|
|
|
||
Repayment of term loan upon amendment of senior secured facility |
|
|
|
|
|
( |
) |
|
Proceeds from issuance of 7.00% Senior Notes |
|
|
|
|
|
|
||
Redemption of 8.75% Secured Notes |
|
|
( |
) |
|
|
( |
) |
Repayment of 5.875% Senior Notes |
|
|
( |
) |
|
|
|
|
Payment of debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Payment of fees to amend senior secured credit facility and satisfy and discharge the 5.875% Senior Notes |
|
|
( |
) |
|
|
( |
) |
Repayments of long-term debt |
|
|
( |
) |
|
|
( |
) |
Restricted stock withholdings for payroll taxes |
|
|
( |
) |
|
|
( |
) |
Payments on finance leases |
|
|
( |
) |
|
|
( |
) |
Other financing activities |
|
|
( |
) |
|
|
|
|
Net cash used for financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Effect of exchange rate changes on cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Increase in cash and cash equivalents |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Cash and cash equivalents: |
|
|
|
|
|
|
||
Beginning of period |
|
|
|
|
|
|
||
End of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
The accompanying notes, as they relate to Cinemark USA, Inc., are an integral part of the condensed consolidated financial statements.
14
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
Cinemark Holdings, Inc. (“Holdings”) is a holding company and its wholly-owned subsidiary is Cinemark USA, Inc. (“CUSA”). Holdings consolidates CUSA and its subsidiaries for financial statement purposes, and CUSA’s operating revenue and operating expenses comprise nearly
The accompanying condensed consolidated balance sheets of Holdings and CUSA as of December 31, 2023, each of which were derived from audited financial statements, and the unaudited condensed consolidated financial statements of Holdings and CUSA, respectively, have 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.
The condensed consolidated balance sheets of Holdings and CUSA for the year ended December 31, 2023 reflect the reclassification of the $
These condensed consolidated financial statements of Holdings and CUSA should be read in conjunction with the audited annual consolidated financial statements of Holdings and CUSA and the notes thereto for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 16, 2024. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be achieved for the full year.
ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The purpose of ASU 2023-07 is to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses to enable investors to better understand an entity’s overall performance and assess potential future cash flows. In addition, the amendments of ASU 2023-07 enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The amendments in ASU 2023-07 are effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The adoption of the additional disclosure requirements of ASU 2023-07 will not have a significant impact on the Company’s financial statement disclosures.
ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The purpose of ASU 2023-09 is to enhance the transparency and decision usefulness of income tax disclosures in order to provide information to better assess how an entity’s operations and related tax risks, tax planning, and operational opportunities affect its tax rate and prospects for future cash flows. The amendments in ASU-2023-09 require that public entities, on an annual basis, (i) disclose specific categories in the income tax rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pre-tax income or loss by the applicable statutory income tax rate). The amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is in the process of evaluating the impact of adopting the additional disclosure requirements of ASU 2023-09.
15
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
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 |
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Operating lease costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equipment (1) |
Utilities and other, |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Real Estate (1) |
Facility lease expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating lease costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Finance lease costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of leased assets |
Depreciation and amortization |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest on lease liabilities |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Total finance lease costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
Lease Cost |
Classification |
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Operating lease costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equipment - Short-term and variable lease payments |
Utilities and other |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Real Estate - Variable lease payments (1) |
Facility lease expense |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Office and equipment leases |
General and administrative |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(1) Represents lease payments that are based on a change in index, such as CPI or inflation, variable payments based on revenue or attendance and variable common area maintenance costs.
The following table represents the minimum cash lease payments as 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 |
|
2024 |
|
|
2023 |
|
||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
||
Cash outflows for operating leases |
|
$ |
|
|
$ |
|
||
Cash outflows for finance leases - operating activities |
|
$ |
|
|
$ |
|
||
Cash outflows for finance leases - financing activities |
|
$ |
|
|
$ |
|
||
Non-cash amount of right-of-use assets obtained in exchange for: |
|
|
|
|
|
|
||
Operating lease liability additions, net |
|
$ |
|
|
$ |
|
||
Finance lease liability additions, net |
|
$ |
|
|
$ |
|
||
As of September 30, 2024, the Company had signed lease agreements with total non-cancelable lease payments of approximately $
16
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
The Company’s patrons have the option to purchase movie tickets well in advance of a movie showtime, 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 at the theatre, or if purchased online in advance, once the consumer’s order is fulfilled. Other revenue primarily consists of screen advertising, screen rental revenue, promotional income, studio trailer placements and transactional fees. Except for National CineMedia, LLC (“NCM”) screen advertising advances discussed in Note 8, these revenues are generally recognized when the Company has fulfilled its performance obligations by providing the services specified in each contract.
The Company sells gift cards, and prepaid and discount ticket vouchers, the proceeds from which are recorded as deferred revenue. Deferred revenue for gift cards and ticket vouchers is recognized when they are redeemed for movie tickets and the movie showtime has passed. The Company generally records breakage revenue on unredeemed gift cards and ticket vouchers based on redemption activity and historical experience associated 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 also offers subscription fee programs in several of its international locations where customers can pay a monthly or annual fee to receive benefits such as a free monthly ticket. The Company records subscription program fees as deferred revenue and records admissions revenue when the showtime for a movie ticket purchased with a credit has passed. The Company records breakage revenue for unused credits based upon redemption of subscription credits and historical experience with unused credits.
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 over the annual membership period. 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 for unredeemed loyalty points based upon redemption of loyalty points and historical experience with unused points.
Accounts receivable as of September 30, 2024 and December 31, 2023 included approximately $
17
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
Disaggregation of Revenue
The following tables present revenue for the periods indicated, disaggregated based on major type of good or service and by reportable operating segment.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
September 30, 2024 |
|
|
September 30, 2024 |
|
||||||||||||||||||
|
|
U.S. |
|
|
International |
|
|
|
|
|
U.S. |
|
|
International |
|
|
|
|
||||||
|
|
Operating |
|
|
Operating |
|
|
|
|
|
Operating |
|
|
Operating |
|
|
|
|
||||||
|
|
Segment (1) |
|
|
Segment |
|
|
Consolidated |
|
|
Segment (1) |
|
|
Segment |
|
|
Consolidated |
|
||||||
Admissions revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Concession revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Screen advertising, screen rental and promotional revenue (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
September 30, 2023 |
|
|
September 30, 2023 |
|
||||||||||||||||||
|
|
U.S. |
|
|
International |
|
|
|
|
|
U.S. |
|
|
International |
|
|
|
|
||||||
|
|
Operating |
|
|
Operating |
|
|
|
|
|
Operating |
|
|
Operating |
|
|
|
|
||||||
|
|
Segment (1) |
|
|
Segment |
|
|
Consolidated |
|
|
Segment (1) |
|
|
Segment |
|
|
Consolidated |
|
||||||
Admissions revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Concession revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Screen advertising, screen rental and promotional revenue (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
The following tables present revenue for the periods indicated, disaggregated based on timing of recognition (as discussed above) and by reportable operating segment.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
September 30, 2024 |
|
|
September 30, 2024 |
|
||||||||||||||||||
|
|
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 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Goods and services transferred over time (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
September 30, 2023 |
|
|
September 30, 2023 |
|
||||||||||||||||||
|
|
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 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Goods and services transferred over time (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
18
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
Screen Advertising Advances and Other Deferred Revenue
The following table presents changes in the Company’s deferred revenue for the nine months ended September 30, 2024.
|
|
NCM screen advertising advances (1) |
|
|
Other |
|
||
Balance at January 1, 2024 |
|
$ |
|
|
$ |
|
||
Amounts recognized as accounts receivable |
|
|
|
|
|
|
||
Cash received from customers in advance |
|
|
|
|
|
|
||
Common units received from NCM (see Note 8) |
|
|
|
|
|
|
||
Interest accrued related to significant financing component |
|
|
|
|
|
|
||
Revenue recognized during period |
|
|
( |
) |
|
|
( |
) |
Foreign currency translation adjustments |
|
|
|
|
|
( |
) |
|
Balance at September 30, 2024 |
|
$ |
|
|
$ |
|
||
The table below summarizes the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied as of September 30, 2024 and when the Company expects to recognize this revenue.
|
|
|
Twelve Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
Remaining Performance Obligations |
|
|
|
|
|
|
|
|
Total |
|
|||||||
Other deferred revenue |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
19
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
The following table presents computations of basic and diluted earnings per share for Holdings:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Cinemark Holdings, Inc. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Income allocated to participating share-based awards (1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Basic net income attributable to common stockholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Add: Interest expense on convertible notes, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted net income attributable to common stockholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common equivalent shares for performance stock units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common equivalent shares for convertible notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common equivalent shares for warrants (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per share attributable to common stockholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted earnings per share attributable to common stockholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Share-based awards
Holdings considers its unvested restricted stock awards, which contain non-forfeitable rights to dividends, participating securities and includes such participating securities in its computation of earnings per share pursuant to the two-class method. Basic earnings per share for the two classes of stock (common stock and unvested restricted stock) is calculated by dividing net income by the weighted average number of shares of common stock and unvested restricted stock outstanding during the reporting period. Diluted earnings 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. For the three and nine months ended September 30, 2024 and 2023, diluted earnings per share using the treasury stock method was less dilutive than the two-class method; as such, only the two-class method has been included above.
Convertible notes, hedges and warrants
The 4.50% Convertible Senior Notes, discussed further in Note 14 of the Company’s Annual Report on Form 10-K filed February 16, 2024, may be considered dilutive in periods in which Holdings has net income. The impact of such dilution on earnings per share is 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 earnings per share assuming conversion at the beginning of the reporting period. Also, the interest expense, net of tax, related to the 4.50% Convertible Senior Notes is excluded from the calculation of diluted net income attributable to common stockholders assuming conversion of the 4.50% Convertible Senior Notes at the beginning of the reporting period.
The closing price of Holdings' common stock exceeded $
Holdings entered into hedge transactions with counterparties in connection with the issuance of the 4.50% Convertible Senior Notes. The convertible note hedge transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the
20
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
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
During December 2022, the Company entered into a purchase and sale agreement for the sale of the stock of its Ecuador subsidiary and completed the sale in September 2023. The sale of the Ecuador subsidiary did not qualify as discontinued operations since it did not represent a strategic shift in the Company’s operations that will have a major effect on its results and operations.
|
Three Months Ended September 30, 2023 |
|
|
Nine Months Ended September 30, 2023 |
|
||
Total revenue |
$ |
|
|
$ |
|
||
Operating income |
$ |
|
|
$ |
|
||
21
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
Long-term debt of Holdings and CUSA consisted of the following for the periods presented:
|
September 30, |
|
|
December 31, |
|
||
|
2024 |
|
|
2023 |
|
||
Cinemark Holdings, Inc. 4.50% convertible senior notes due August 2025 |
$ |
|
|
$ |
|
||
Cinemark USA, Inc. term loan due May 2030 |
|
|
|
|
|
||
Cinemark USA, Inc. 8.75% senior secured notes due May 2025 |
|
|
|
|
|
||
Cinemark USA, Inc. 5.875% senior notes due March 2026 |
|
|
|
|
|
||
Cinemark USA, Inc. 5.25% senior notes due July 2028 |
|
|
|
|
|
||
Cinemark USA, Inc. 7.00% senior notes due August 2032 |
|
|
|
|
|
||
Other |
|
|
|
|
|
||
Total long-term debt carrying value (1) |
$ |
|
|
$ |
|
||
Less: Current portion, net of unamortized debt issuance costs |
|
|
|
|
|
||
Less: Debt issuance costs and original issue discount, net of accumulated amortization (1) |
|
|
|
|
|
||
Long-term debt, less current portion, net of unamortized debt issuance costs and original issue discount (1) |
$ |
|
|
$ |
|
||
|
September 30, |
|
|
December 31, |
|
||
|
2024 |
|
|
2023 |
|
||
Total long-term debt carrying value |
$ |
|
|
$ |
|
||
Less: Current portion |
|
|
|
|
|
||
Less: Debt issuance costs and original issue discount, net of accumulated amortization |
|
|
|
|
|
||
Long-term debt, less current portion, net of unamortized debt issuance costs and original issue discount |
$ |
|
|
$ |
|
||
4.50% Convertible Senior Notes
As further discussed in Note 14 to the Company’s consolidated financial statements for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed on February 16, 2024, prior to
Senior Secured Credit Facility
On May 28, 2024, CUSA amended and restated its senior secured credit facility (the “Credit Agreement”) to reduce the rate at which the term loan bears interest by
As of September 30, 2024, there was $
22
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
term loan borrowings under the Credit Agreement as of September 30, 2024 was approximately
8.75% Secured Notes
On May 1, 2024, CUSA redeemed the remaining $
7.00% Senior Notes
On July 18, 2024, CUSA issued $
The notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of CUSA’s subsidiaries, or its guarantors, that guarantee, assume or in any other manner become liable with respect to any of CUSA’s or its guarantors’ other debt. If CUSA cannot make payments on the 7.00% Senior Notes when they are due, CUSA’s guarantors must make them instead. The 7.00% Senior Notes and the guarantees are senior unsecured obligations and rank equally in right of payment with all of CUSA’s and its guarantor’s existing and future senior debt, including the 5.25% senior notes due 2028 and all borrowings under CUSA’s Credit Agreement. The notes and the guarantees will be structurally subordinated to all existing and future debt and other liabilities of CUSA’s non-guarantor subsidiaries. The notes and the guarantees will be structurally senior to the 4.50% convertible senior notes due 2025, and all future debt, if any, issued by Holdings that is not guaranteed by CUSA or any of its subsidiaries.
CUSA may redeem the 7.00% Senior Notes in whole or in part at any time on or after August 1, 2027 at redemption prices set forth in the indenture governing the 7.00% Senior Notes. Prior to August 1, 2027, CUSA has the option to redeem all or a portion of the 7.00% Senior Notes at a price equal to
The indenture governing the 7.00% Senior Notes contains covenants that limit, among other things, the ability of CUSA and certain of its subsidiaries to (1) incur or guarantee additional indebtedness, (2) pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments, (3) make certain investments, (4) engage in certain transactions with affiliates, (5) incur or assume certain liens, and (6) consolidate, merge or transfer all or substantially all of its assets. Additionally, upon a change in control, as defined in the indenture governing the 7.00% Senior Notes, CUSA would be required to make an offer to repurchase all of the 7.00% Senior Notes at a price equal to
5.875% Secured Notes
Concurrently with the 7.00% Senior Notes bond offering discussed above, on
On September 19, 2024, CUSA, as permitted by the terms of the indenture governing the 5.875% Senior Notes, irrevocably deposited non-callable U.S. government treasury securities with a trustee in an amount sufficient to fund the repayment of the remaining $
23
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
accrued and unpaid interest thereon. After the deposit of such funds with the trustee, CUSA’s obligations under the indenture with respect to the 5.875% Senior Notes were satisfied and discharged and the transaction was accounted for as a debt extinguishment.
As a result of the debt extinguishment, CUSA recognized a loss of $
Interest Rate Swap Agreements
The Company’s interest rate swap agreements are used to hedge a portion of the interest rate risk associated with the variable interest rates on the Company’s term loan and qualify for cash flow hedge accounting.
Effective January 31, 2024, the Company amended and extended one of its then existing $
Below is a summary of the Company's interest rate swap agreements, which are designated as cash flow hedges, as of September 30, 2024:
Notional |
|
|
|
|
|
|
|
|
Estimated |
|
||
Amount |
|
|
Pay Rate |
|
Receive Rate |
|
Expiration Date |
|
Fair Value (1) |
|
||
$ |
|
|
|
|
|
$ |
|
|||||
$ |
|
|
|
|
|
|
|
|||||
$ |
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
Total |
|
$ |
|
||
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 uses projected future interest rates as provided by counterparties to the interest rate swap agreements and the fixed rates that the Company is obligated to pay under the agreement. Therefore, the Company's measurements are based on observable market data, 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 based on observable market prices, which fall under Level 2 of the U.S. GAAP fair value hierarchy as defined by FASB ASC 820-10-35, Fair Value Measurement.
|
|
As of |
|
|||||
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Holdings fair value (1) |
|
$ |
|
|
$ |
|
||
CUSA fair value |
|
$ |
|
|
$ |
|
||
24
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
NCM operates a digital in-theatre network in the U.S. for providing cinema advertising. The Company has an investment in NCM’s parent National CineMedia, Inc. (“NCMI”). The Company entered into an Exhibitor Services Agreement with NCM (“ESA”), pursuant to which NCM primarily provides screen advertising to the Company’s theatres through its branded “Noovie” pre-show entertainment program and also handles lobby promotions and displays for the Company’s theatres. See further discussion below under Exhibitor Services Agreement.
Below is a summary of activity with NCMI and NCM included in each of Holdings' and CUSA's condensed consolidated financial statements:
|
|
Investment |
|
NCM Screen Advertising Advances |
|
Other |
|
Interest |
|
Cash |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at January 1, 2024 |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
|
$ |
|
||||
Screen rental revenue earned under ESA (1) |
|
|
|
|
|
|
( |
) |
|
|
|
|
||||
Interest accrued related to significant financing component |
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Receipt of common units in NCM due to annual common unit adjustment (2) |
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Change in unrealized gain on fair market adjustment of investment in NCMI (3) |
|
|
|
|
|
|
|
|
|
|
|
|||||
Amortization of screen advertising advances |
|
|
|
|
|
|
( |
) |
|
|
|
|
||||
Balance as of and for the nine months ended September 30, 2024 |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
|
|||
Investment in National CineMedia
The Company accounts for its investment in NCMI in accordance with the guidance set forth in FASB ASC Topic 321 Investments - Equity Securities, which requires the Company to measure its investment in common stock of NCMI at fair value and recognize unrealized holding gains and losses on its investment in earnings. The Company recognized an unrealized gain of $
As of September 30, 2024, the Company owned approximately
Common Unit Adjustments
Under the Common Unit Adjustment Agreement, the Company periodically receives consideration in the form of common units from NCM 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. Each common unit from NCM is convertible to one share of NCMI.
During March 2024, NCM performed the annual common unit adjustment calculation for 2023 and as a result of the calculation, the Company received approximately
25
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
received was estimated based on the market price of NCMI’s common stock 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.
On April 10, 2024, the Company delivered a redemption notice to NCM to redeem these common units in NCM for shares of NCMI common stock. On April 12, 2024, NCM delivered a notice to the Company that pursuant to its rights under the operating agreement, NCM would settle the Company’s redemption request with a cash settlement, effective on April 15, 2024, at a redemption price of approximately $
Exhibitor Services Agreement
As previously discussed, 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. 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 9 to the Company’s Annual Report on Form 10-K filed February 16, 2024 for further discussion of the accounting for revenue earned under the ESA as well as the accounting related to NCM screen advertising advances.
The NCM screen advertising advances are recognized as revenue on a straight-line basis over the term of the ESA through
|
|
Twelve Months Ended September 30, |
|
|
|
|
|
|
|
|||||||||||||||||||
Remaining Maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|||||||||||||
NCM screen advertising advances (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Significant Financing Component
As discussed in Note 9 to the Company’s Annual Report on Form 10-K filed February 16, 2024, the Company’s ESA with NCM includes an implied significant financing component, as per the guidance in ASC Topic 606, Revenue from Contracts with Customers. As a result of the significant financing component, the Company recognized incremental screen rental revenue and interest expense of $
26
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
Below is a summary of the activity for each of the Company’s affiliates and corresponding changes to the Company's investment balances during the nine months ended September 30, 2024. See Note 10 to the consolidated financial statements in
|
|
AC JV, |
|
DCDC |
|
FE Concepts |
|
Total |
|
||||
Balance at January 1, 2024 |
|
$ |
|
$ |
|
|
|
$ |
|
||||
Cash distributions received |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Equity income |
|
|
|
|
|
|
|
|
|
||||
Balance at September 30, 2024 |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||
Transactions with Affiliates
Below is a summary of transactions with each of the Company’s affiliates for the three and nine months ended September 30, 2024 and 2023:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
Investee |
Transactions |
September 30, 2024 |
|
|
September 30, 2023 |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
||||
AC JV, LLC |
Event fees paid (1) |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
DCDC |
Content delivery fees paid (1) |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Treasury Stock - Holdings
Treasury stock represents shares of common stock repurchased by Holdings and not yet retired. The Company has applied the cost method in recording its treasury shares.
|
|
Number of |
|
|
|
|
||
|
|
Treasury |
|
|
|
|
||
|
|
Shares |
|
|
Cost |
|
||
Balance at January 1, 2024 |
|
|
|
|
$ |
|
||
Restricted stock withholdings (1) |
|
|
|
|
|
|
||
Restricted stock forfeitures (2) |
|
|
|
|
|
|
||
Balance at September 30, 2024 |
|
|
|
|
$ |
|
||
As of September 30, 2024, 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, 2024:
|
|
Shares of |
|
|
Weighted |
|
||
|
|
Restricted |
|
|
Grant Date |
|
||
|
|
Stock |
|
|
Fair Value |
|
||
Outstanding at January 1, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding and unvested at September 30, 2024 |
|
|
|
|
$ |
|
||
27
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
During the nine months ended September 30, 2024, Holdings granted
Below is a summary of restricted stock award activity recorded for the periods indicated.
|
|
Nine Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Compensation expense recognized during the period: |
|
|
|
|
|
|
||
CUSA employees (1) |
|
$ |
|
|
$ |
|
||
Holdings directors |
|
|
|
|
|
|
||
Total recognized by Holdings |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Fair value of restricted stock that vested during the period: |
|
|
|
|
|
|
||
CUSA employees |
|
$ |
|
|
$ |
|
||
Holdings directors |
|
|
|
|
|
|
||
Holdings total |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Income tax benefit related to vested restricted stock: |
|
|
|
|
|
|
||
CUSA employees |
|
$ |
|
|
$ |
|
||
Holdings directors |
|
|
|
|
|
|
||
Holdings total income tax benefit |
|
$ |
|
|
$ |
|
||
As of September 30, 2024, the estimated remaining unrecognized compensation expense related to unvested restricted stock awards was as follows:
|
|
Estimated |
|
|
|
|
Remaining |
|
|
|
|
Expense |
|
|
CUSA employees (1) |
|
$ |
|
|
Holdings directors |
|
|
|
|
Total remaining - Holdings (1) |
|
$ |
|
|
28
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
Performance Stock Units
During the nine months ended September 30, 2024, Holdings granted performance awards to certain CUSA employees in the form of performance stock units (“PSU”). Each PSU that vests will result in the issuance of one share of Holdings’ common stock. The maximum number of shares issuable under the performance awards granted during 2024 is approximately
Stock units that vest if performance metrics meet the target level |
|
|
Stock units that vest if performance metrics meet the threshold level ( |
|
|
Stock units that vest if performance metrics meet the maximum level ( |
|
|
Performance Measurement Period |
|
Three years |
Service Period |
|
Third anniversary of grant date |
Most likely performance metrics outcome estimated to be achieved at the time performance stock units were issued |
|
Target |
Assumed forfeiture rate for performance stock unit awards |
|
Below is a summary of all performance stock unit activity for the periods presented:
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Number of performance stock units that vested during the period |
|
|
|
|
|
|
||
Fair value of performance stock units that vested during the period |
|
$ |
|
|
$ |
|
||
Accumulated dividends paid upon vesting of performance stock units |
|
$ |
|
|
$ |
|
||
Compensation expense recognized during the period (1) |
|
$ |
|
|
$ |
|
||
Income tax expense related to performance stock units |
|
$ |
( |
) |
|
$ |
( |
) |
As of September 30, 2024, the estimated remaining unrecognized compensation expense related to outstanding performance stock units was $
29
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
A summary of the Company's goodwill is as follows:
|
|
U.S. |
|
|
International |
|
|
Total |
|
|||
Balance at January 1, 2024 (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Foreign currency translation adjustments |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Balance at September 30, 2024 (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
Balance at |
|
Additions (1) |
|
Amortization |
|
Foreign Currency Translation Adjustments |
|
Balance at September 30, 2024 |
|
|||||
Intangible assets with finite lives: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross carrying amount |
|
$ |
|
$ |
— |
|
$ |
|
$ |
( |
) |
$ |
|
|||
Accumulated amortization |
|
|
( |
) |
|
— |
|
|
( |
) |
|
|
|
( |
) |
|
Total net intangible assets with finite lives |
|
$ |
|
$ |
— |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Intangible assets with indefinite lives: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Tradename and other |
|
|
|
|
|
|
|
|
( |
) |
|
|
||||
Total intangible assets, net |
|
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
|||
The estimated aggregate future amortization expense for intangible assets is as follows:
|
|
Estimated |
|
|
|
|
Amortization |
|
|
For the three months ended December 31, 2024 |
|
$ |
|
|
For the twelve months ended December 31, 2025 |
|
|
|
|
Total |
|
$ |
|
|
30
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
The Company performed a qualitative impairment analysis on its long-lived assets, including theatre properties and right of-use assets, goodwill and tradename intangible assets as of September 30, 2024. As a result of the qualitative assessment, the Company noted no impairment indicators related to these assets as of September 30, 2024.
The qualitative impairment analysis, by asset class, is described below:
See Note 1 and Note 12 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed February 16, 2024, for further discussion of the Company’s impairment policy and a description of the qualitative and quantitative impairment assessments performed.
There were
|
|
|
|
|
|
|
||
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||
|
|
2023 |
|
|
2023 |
|
||
U.S. Segment |
|
|
|
|
|
|
||
Theatre properties |
|
$ |
|
|
$ |
|
||
Theatre operating lease right-of-use assets |
|
|
|
|
|
|
||
Investment in NCMI/NCM |
|
|
|
|
|
|
||
U.S. total |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
International segment |
|
|
|
|
|
|
||
Theatre properties |
|
|
|
|
|
|
||
Theatre operating lease right-of-use assets |
|
|
|
|
|
|
||
International total |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Total Impairment |
|
$ |
|
|
$ |
|
||
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.
31
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
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, 2024 and December 31, 2023:
|
|
|
|
Carrying |
|
|
Fair Value Hierarchy |
|
||||||||||
Description |
|
As of |
|
Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Interest rate swap assets (1) |
|
September 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Investment in NCMI (2) |
|
September 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swap assets (1) |
|
December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Investment in NCMI (2) |
|
December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
See additional explanation of fair value measurement techniques used for long-lived assets, goodwill and intangible assets in “Critical Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed February 16, 2024. There were no changes in valuation techniques during the nine months ended September 30, 2024. The Company’s investment in NCMI was transferred out of Level 2 into Level 1 during the first quarter of 2024.
The accumulated other comprehensive loss account in Holdings’ stockholders’ equity of $
As of September 30, 2024, 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
During 2019, the Argentine government instituted exchange controls restricting the ability of entities and individuals to exchange Argentine pesos for foreign currencies and to remit foreign currency out of Argentina. As a result of these currency exchange controls, markets in Argentina developed a legal trading mechanism known as the Blue Chip Swap that allows entities to transfer U.S. dollars out of and into Argentina. In a Blue Chip Swap transaction, an entity buys U.S. dollar denominated securities in Argentina using Argentine pesos, and subsequently sells the securities for U.S. dollars, in Argentina, to access U.S. dollars locally, or outside of Argentina, by transferring the securities abroad, prior to being sold (the latter commonly known as Blue Chip Swap Rate). The Blue Chip Swap rate is the implicit exchange rate resulting from the Blue Chip Swap transaction. The Blue Chip Swap rate can diverge significantly from Argentina’s official exchange rate. During the nine months ended September 30, 2024 and 2023, the Company entered into Blue Chip Swap transactions that resulted in a loss of approximately $
Below is a summary of the impact of translating the September 30, 2024 and September 30, 2023 financial statements of the Company’s international subsidiaries:
|
|
|
|
|
|
|
|
Other Comprehensive Income (Loss) for the |
|
||||||
|
|
Exchange Rate as of |
|
|
Nine Months Ended |
|
|||||||||
Country |
|
September 30, 2024 |
|
|
December 31, 2023 |
|
|
September 30, 2024 |
|
September 30, 2023 |
|
||||
Brazil |
|
|
|
|
|
|
|
$ |
( |
) |
$ |
|
|||
Chile |
|
|
|
|
|
|
|
|
( |
) |
|
( |
) |
||
All other |
|
|
|
|
|
|
|
|
( |
) |
|
|
|||
|
|
|
|
|
|
|
|
$ |
( |
) |
$ |
( |
) |
||
32
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
As noted above, beginning July 1, 2018, Argentina was deemed highly inflationary. For the nine months ended September 30, 2024 and 2023 the Company recorded foreign currency exchange losses of $
The following is provided as supplemental information to the condensed consolidated statements of cash flows:
|
|
Nine Months Ended |
|
|||||
|
|
September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cash paid for interest by Holdings (1) |
|
$ |
|
|
$ |
|
||
Cash paid for interest by CUSA |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes, net |
|
$ |
|
|
$ |
|
||
Cash transferred from restricted accounts (2) |
|
$ |
|
|
$ |
( |
) |
|
Noncash operating activities: |
|
|
|
|
|
|
||
Interest expense - NCM (see Note 8) |
|
$ |
( |
) |
|
$ |
( |
) |
Noncash investing activities: |
|
|
|
|
|
|
||
Change in accounts payable and accrued expenses for the acquisition of theatre properties and equipment (3) |
|
$ |
( |
) |
|
$ |
( |
) |
Theatre and other assets acquired under finance leases |
|
$ |
|
|
$ |
|
||
Investment in NCMI – receipt of common units in NCM (see Note 8) |
|
$ |
|
|
$ |
|
||
33
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 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, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, and Paraguay. The Company closed its one theatre in Curacao in January 2023 and sold the shares of its Ecuador subsidiary in September 2023. Each segment’s revenue is derived from admissions and concession sales and other ancillary revenue. Holdings uses Adjusted EBITDA, as shown in the reconciliation table below, as the primary measure of segment profit and loss to evaluate performance and allocate its resources. The Company does not report total assets by segment because that information is not used to evaluate the performance of, or allocate resources between, segments.
Below is a breakdown of selected financial information by reportable operating segment for Holdings:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Eliminations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total capital expenditures |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
34
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
The following table sets forth a reconciliation of net income to Adjusted EBITDA for Holdings:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax (benefit) expense |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Interest expense (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income, net (2) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Cash distributions from equity investees (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment of long-lived and other assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
(Gain) loss on disposal of assets and other |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Loss on debt amendments and extinguishments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-cash rent expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Share-based awards compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Financial Information About Geographic Areas
Below is a breakdown of selected financial information for Holdings by geographic area:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
Revenue |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
U.S. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Brazil |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other international countries |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Eliminations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
As of |
|
|
As of |
|
||
Theatre properties and equipment, net |
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
U.S. |
|
$ |
|
|
$ |
|
||
Brazil |
|
|
|
|
|
|
||
Other international countries |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
35
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
A subsidiary of the Company manages a theatre for Laredo Theatre, Ltd. (“Laredo”). The Company is the sole general partner and owns
Kevin Mitchell, a director of the Company, owns ShowBiz Direct, LLC (“ShowBiz Direct”). ShowBiz Direct distributes and markets motion pictures through itself or independent third parties, and most recently distributed and marketed the film, Reagan. The Company conducted arms-length negotiations with an independent third party for film licensing terms and agreed to film licensing terms for Reagan substantially similar to film licensing terms agreed to with other similarly sized independent distributors. The Audit Committee reviewed the film licensing rates for Reagan and found that such rates were fair to the Company. During the three months ended September 30, 2024, the Company recorded film rental expense of $
A subsidiary of the Company leases
A subsidiary of the Company has a
From time to time, the Company is involved in various legal proceedings arising from the ordinary course of its business operations, such as personal injury claims, employment matters, patent claims, landlord-tenant disputes, contractual disputes with landlords over certain termination rights and other contractual disputes, some of which are covered by insurance. The Company believes its potential liability with respect to proceedings currently pending is not material, individually or in the aggregate, to the Company’s financial position, results of operations and cash flows.
Cinemark Holdings, Inc., et al vs Factory Mutual Insurance Company. The Company filed suit on November 18, 2020, in the District Court, 471st Judicial District, Collin County, Texas. On December 22, 2020, the case was moved to the US District Court for the Eastern District of Texas, Sherman Division. The Company submitted a claim under its property insurance policy issued by Factory Mutual Insurance Company (the “FM Policy”) for losses sustained as a result of the closure of the Company’s theatres due to the COVID-19 pandemic. Factory Mutual Insurance Company (“FM”) denied the Company’s claim. The Company was seeking damages resulting from FM’s breach of contract, FM’s bad faith conduct and a declaration of the parties’ rights under the FM Policy. The District Court granted FM’s motion for summary judgment. The Company appealed the District Court’s decision. The U.S. Fifth Circuit Court of Appeals affirmed the District Court's decision. The Company had not recorded any income or receivable related to this case.
Gerardo Rodriguez, individually and on behalf of a class of all others similarly situated vs Cinemark USA, Inc. and Cinemark Holdings, Inc., et al. This class action lawsuit was filed against the Company on February 24, 2023 in the Cook County Circuit Court in Illinois alleging violation of the Fair and Accurate Credit Transactions Act. The Company firmly maintains that the allegations are without merit and will vigorously defend itself against the lawsuit. The Company cannot predict the outcome of this litigation.
36
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES AND
CINEMARK USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except per share data, unaudited)
National CineMedia LLC Bankruptcy. On June 3, 2023, NCM filed an Emergency Motion for Entry of an Order (1) approving and Authorizing Debtor to Enter into and Perform Under (a) the Termination and Settlement Agreement and (b) the Network Affiliate Transaction Agreement with Regal Cinemas, Inc. (the “9019 Motion”). The 9019 Motion requested an order, among other things, that the most favored nations clause (the “MFN”) in Cinemark’s Exhibitor Services Agreement was not triggered by the Network Affiliate Transaction Agreement with Regal Cinemas, Inc. On June 14, 2023, Cinemark filed an objection to the 9019 Motion. On June 26, 2023, the bankruptcy court entered a confirmation order, which among other things, approves NCM’s assumption of Cinemark’s Exhibitor Services Agreement but fails to preserve or recognize Cinemark’s rights under the MFN with respect to the Network Affiliate Transaction Agreement. Cinemark appealed the confirmation order in the United States District Court for the Southern District of Texas, Houston Division which affirmed the bankruptcy court's order. The Company has appealed the District Court's order with the U.S. Fifth Circuit Court of Appeals. The Company cannot predict the outcome of this appeal.
Shane Waldrop, individually and on behalf of all other similarly situated, vs. Cinemark USA, Inc. This putative nationwide class action lawsuit was filed against the Company on April 16, 2024, in the United States District Court for the Eastern District of Texas, Sherman Division, alleging violations of the Federal Food Drug & Cosmetics Act, violations of the Texas Deceptive Trade Practices Act, negligent misrepresentation, fraud and unjust enrichment based on the Company’s alleged mislabeling of twenty-four ounce draft beer cups used at certain theatres. The Company denies the allegations and will vigorously defend itself against the lawsuit. The Company cannot predict the outcome of this litigation.
19. Income Taxes
An income tax benefit of $
During the three months ended September 30, 2024, the Company recorded a discrete deferred tax benefit of $
The remaining valuation allowance as of September 30, 2024 was $
The Company is currently under IRS audit for tax years 2019 and 2020. On October 21, 2024, the IRS issued a Revenue Agent Report (“RAR”) proposing an adjustment of approximately $
37
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes and schedules included elsewhere in this report. Amounts included in the following discussion, except for theatres, screens, average screens, average ticket price and concessions revenue per patron, are rounded in millions.
We are a leader in the motion picture exhibition industry, with theatres in the U.S., Brazil, Argentina, Chile, Colombia, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, and Paraguay. As of September 30, 2024, we managed our business under two reportable operating segments – U.S. markets and international markets. See Note 16 to the condensed consolidated financial statements.
The success of the theatrical exhibition industry is contingent upon several key factors, including the volume of new film content available, which has been impacted by the effects of the COVID-19 pandemic and last year’s writers’ and actors’ guilds strikes (the “Hollywood strikes”), the box office performance of new film content released, the duration of the exclusive theatrical release window, and evolving consumer behavior with competition from other forms of in-and-out-of-home entertainment.
Revenue and Expense
We generate revenue primarily from filmed entertainment box office receipts and concession sales with additional revenue from screen advertising, screen rental and other revenue streams, such as transactional fees, vendor marketing promotions, studio trailer placements, meeting rentals and electronic video games located in some of our theatres. Filmed entertainment box office receipts include traditional content from studios as well as alternative entertainment, such as the Metropolitan Opera, concert events, live and pre-recorded sports programs and other special events in our theatres. NCM provides our domestic theatres with various forms of in-theatre advertising. Our Flix Media subsidiaries provide screen advertising and alternative content for our international circuit and for other international exhibitors.
Films leading the box office during the nine months ended September 30, 2024 included Inside Out 2, Deadpool & Wolverine, Despicable Me 4, Dune: Part Two, Twisters, and Beetlejuice Beetlejuice.
Film rental costs are variable in nature and fluctuate with our admissions revenue. Film rental costs as a percentage of revenue are generally higher for periods in which more blockbuster films are released. Advertising costs, which are expensed as incurred, are primarily related to expanding our customer base, increasing the frequency of visits and growing loyalty. These expenses vary depending on the timing and length of such campaigns.
Concession supplies expense is variable in nature and fluctuates with our concession revenue and also product mix. Inflationary pressures have impacted, and may continue to impact, product costs in the near term. We source products from a variety of partners around the world to minimize supply chain interruptions and price increases, wherever possible.
Although salaries and wages include a fixed cost component (i.e., the minimum staffing costs to operate a theatre facility during non-peak periods), salaries and wages tend to move in relation to anticipated changes in attendance. Staffing levels may vary based on the amenities offered at each location, such as full-service restaurants, bars or expanded food and beverage options. In certain international locations, staffing levels are also subject to local regulations, including minimum hour requirements. Inflationary pressures have driven increases in wage rates across our labor base and increases may continue in the future.
Facility lease expense is primarily a fixed cost at the theatre level as most of our facility leases require a fixed monthly minimum rent payment. Certain leases are subject to percentage rent only, while others are subject to percentage rent in addition to their fixed monthly rent if a target annual performance level is achieved. Facility lease expense as a percentage of revenue is also affected by the number of theatres under operating leases, the number of theatres under finance leases and the number of owned theatres.
Utilities and other costs include both fixed and variable costs and primarily consist of utilities, property taxes, janitorial costs, credit card fees, third party ticket sales commissions, gift card commissions, repairs and maintenance expenses, security services, and projection and sound equipment maintenance expenses.
General and administrative expenses to support the overall management of the Company are primarily fixed in nature. Fixed expenses include salaries, wages and benefits costs for our corporate office personnel, facility expenses for our corporate and other offices, software license and maintenance costs and audit fees. General and administrative expenses also include some variable expenses such as incentive compensation, consulting and legal fees, supplies, and other costs that are not specifically associated with the operations of our theatres.
38
Results of Operations
The following table sets forth, for the periods indicated, the amounts for certain items reflected in the operating income of Holdings along with each of those items as a percentage of revenue.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Operating data (in millions): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Admissions |
|
$ |
460.4 |
|
|
$ |
443.8 |
|
|
$ |
1,116.0 |
|
|
$ |
1,233.2 |
|
Concession |
|
|
367.3 |
|
|
|
339.8 |
|
|
|
884.4 |
|
|
|
949.0 |
|
Other |
|
|
94.1 |
|
|
|
91.2 |
|
|
|
234.8 |
|
|
|
245.6 |
|
Total revenue |
|
$ |
921.8 |
|
|
$ |
874.8 |
|
|
$ |
2,235.2 |
|
|
$ |
2,427.8 |
|
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Film rentals and advertising |
|
|
265.6 |
|
|
|
248.2 |
|
|
|
623.9 |
|
|
|
692.9 |
|
Concession supplies |
|
|
64.5 |
|
|
|
63.0 |
|
|
|
165.1 |
|
|
|
174.0 |
|
Salaries and wages |
|
|
109.9 |
|
|
|
107.9 |
|
|
|
294.1 |
|
|
|
306.2 |
|
Facility lease expense |
|
|
85.9 |
|
|
|
84.4 |
|
|
|
244.7 |
|
|
|
250.9 |
|
Utilities and other |
|
|
127.0 |
|
|
|
129.5 |
|
|
|
332.1 |
|
|
|
353.5 |
|
General and administrative expenses (1) |
|
|
56.4 |
|
|
|
48.2 |
|
|
|
161.0 |
|
|
|
144.7 |
|
Depreciation and amortization |
|
|
49.1 |
|
|
|
51.9 |
|
|
|
148.3 |
|
|
|
159.6 |
|
Impairment of long-lived and other assets |
|
|
— |
|
|
|
2.0 |
|
|
|
— |
|
|
|
12.1 |
|
(Gain) loss on disposal of assets and other |
|
|
(0.1 |
) |
|
|
(6.1 |
) |
|
|
2.0 |
|
|
|
(8.8 |
) |
Total cost of operations (1) |
|
|
758.3 |
|
|
|
729.0 |
|
|
|
1,971.2 |
|
|
|
2,085.1 |
|
Operating income (1) |
|
$ |
163.5 |
|
|
$ |
145.8 |
|
|
$ |
264.0 |
|
|
$ |
342.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating data as a percentage of total revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Admissions |
|
|
50.0 |
% |
|
|
50.7 |
% |
|
|
49.9 |
% |
|
|
50.8 |
% |
Concession |
|
|
39.8 |
% |
|
|
38.8 |
% |
|
|
39.6 |
% |
|
|
39.1 |
% |
Other |
|
|
10.2 |
% |
|
|
10.5 |
% |
|
|
10.5 |
% |
|
|
10.1 |
% |
Total revenue |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of operations (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Film rentals and advertising |
|
|
57.7 |
% |
|
|
55.9 |
% |
|
|
55.9 |
% |
|
|
56.2 |
% |
Concession supplies |
|
|
17.6 |
% |
|
|
18.5 |
% |
|
|
18.7 |
% |
|
|
18.3 |
% |
Salaries and wages |
|
|
11.9 |
% |
|
|
12.3 |
% |
|
|
13.2 |
% |
|
|
12.6 |
% |
Facility lease expense |
|
|
9.3 |
% |
|
|
9.6 |
% |
|
|
10.9 |
% |
|
|
10.3 |
% |
Utilities and other |
|
|
13.8 |
% |
|
|
14.8 |
% |
|
|
14.9 |
% |
|
|
14.6 |
% |
General and administrative expenses |
|
|
6.1 |
% |
|
|
5.5 |
% |
|
|
7.2 |
% |
|
|
6.0 |
% |
Depreciation and amortization |
|
|
5.3 |
% |
|
|
5.9 |
% |
|
|
6.6 |
% |
|
|
6.6 |
% |
Impairment of long-lived and other assets |
|
|
— |
% |
|
|
0.2 |
% |
|
|
— |
% |
|
|
0.5 |
% |
(Gain) loss on disposal of assets and other |
|
|
— |
% |
|
|
(0.7 |
)% |
|
|
0.1 |
% |
|
|
(0.4 |
)% |
Total cost of operations |
|
|
82.3 |
% |
|
|
83.3 |
% |
|
|
88.2 |
% |
|
|
85.9 |
% |
Operating income |
|
|
17.7 |
% |
|
|
16.7 |
% |
|
|
11.8 |
% |
|
|
14.1 |
% |
Average screen count (3) |
|
|
5,698 |
|
|
|
5,802 |
|
|
|
5,706 |
|
|
|
5,822 |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Operating data (in millions): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative expenses |
|
$ |
55.5 |
|
|
$ |
47.5 |
|
|
$ |
158.2 |
|
|
$ |
142.2 |
|
Total cost of operations |
|
$ |
757.4 |
|
|
$ |
728.3 |
|
|
$ |
1,968.4 |
|
|
$ |
2,082.6 |
|
Operating income |
|
$ |
164.4 |
|
|
$ |
146.5 |
|
|
$ |
266.8 |
|
|
$ |
345.2 |
|
39
Three months ended September 30, 2024 (the “third quarter of 2024”) versus the three months ended September 30, 2023 (the “third quarter of 2023”)
Third quarter of 2024 - The North American Industry box office generated approximately $2.7 billion during the third quarter of 2024, which included Deadpool & Wolverine, Despicable Me 4, Twisters, Beetlejuice Beetlejuice, and the carryover of Inside Out 2.
Third quarter of 2023 - The North American Industry box office was approximately $2.7 billion during the third quarter of 2023, which included Barbie, Oppenheimer, Sound of Freedom, Mission: Impossible - Dead Reckoning Part One, and Indiana Jones and the Dial of Destiny.
Revenue. The table below, presented by reportable operating segment, summarizes our year-over-year revenue performance and certain key performance indicators that impact our revenue.
|
|
U.S. Operating Segment |
|
|
International Operating Segment |
|
|
Consolidated |
|
|||||||||||||||||||
|
|
Three Months Ended September 30, |
|
|
Three Months Ended September 30, |
|
|
Three Months Ended September 30, |
|
|||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Constant |
|
|
2024 |
|
|
2023 |
|
|||||||
Admissions revenue |
|
$ |
375.2 |
|
|
$ |
350.4 |
|
|
$ |
85.2 |
|
|
$ |
93.4 |
|
|
$ |
131.8 |
|
|
$ |
460.4 |
|
|
$ |
443.8 |
|
Concession revenue |
|
|
299.6 |
|
|
|
268.0 |
|
|
|
67.7 |
|
|
|
71.8 |
|
|
|
103.0 |
|
|
|
367.3 |
|
|
|
339.8 |
|
Other revenue (1) |
|
|
66.6 |
|
|
|
64.1 |
|
|
|
27.5 |
|
|
|
27.1 |
|
|
|
42.3 |
|
|
|
94.1 |
|
|
|
91.2 |
|
Total revenue (1) |
|
$ |
741.4 |
|
|
$ |
682.5 |
|
|
$ |
180.4 |
|
|
$ |
192.3 |
|
|
$ |
277.1 |
|
|
$ |
921.8 |
|
|
$ |
874.8 |
|
Attendance |
|
|
37.6 |
|
|
|
37.5 |
|
|
|
22.8 |
|
|
|
24.4 |
|
|
|
|
|
|
60.4 |
|
|
|
61.9 |
|
|
Average ticket price (2) |
|
$ |
9.98 |
|
|
$ |
9.34 |
|
|
$ |
3.74 |
|
|
$ |
3.83 |
|
|
$ |
5.78 |
|
|
$ |
7.62 |
|
|
$ |
7.17 |
|
Concession revenue per patron (2) |
|
$ |
7.97 |
|
|
$ |
7.15 |
|
|
$ |
2.97 |
|
|
$ |
2.94 |
|
|
$ |
4.52 |
|
|
$ |
6.08 |
|
|
$ |
5.49 |
|
40
Cost of Operations. The table below, presented by reportable operating segment, summarizes our year-over-year theatre operating costs.
|
|
U.S. Operating Segment |
|
|
International Operating Segment |
|
|
Consolidated |
|
|||||||||||||||||||
|
|
Three Months Ended September 30, |
|
|
Three Months Ended September 30, |
|
|
Three Months Ended September 30, |
|
|||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Constant |
|
|
2024 |
|
|
2023 |
|
|||||||
Film rentals and advertising |
|
$ |
222.3 |
|
|
$ |
201.1 |
|
|
$ |
43.3 |
|
|
$ |
47.1 |
|
|
$ |
67.7 |
|
|
$ |
265.6 |
|
|
$ |
248.2 |
|
Concession supplies |
|
$ |
49.3 |
|
|
$ |
47.7 |
|
|
$ |
15.2 |
|
|
$ |
15.3 |
|
|
$ |
23.0 |
|
|
$ |
64.5 |
|
|
$ |
63.0 |
|
Salaries and wages |
|
$ |
91.1 |
|
|
$ |
89.0 |
|
|
$ |
18.8 |
|
|
$ |
18.9 |
|
|
$ |
29.4 |
|
|
$ |
109.9 |
|
|
$ |
107.9 |
|
Facility lease expense |
|
$ |
63.5 |
|
|
$ |
61.0 |
|
|
$ |
22.4 |
|
|
$ |
23.4 |
|
|
$ |
31.0 |
|
|
$ |
85.9 |
|
|
$ |
84.4 |
|
Utilities and other |
|
$ |
97.3 |
|
|
$ |
98.9 |
|
|
$ |
29.7 |
|
|
$ |
30.6 |
|
|
$ |
46.3 |
|
|
$ |
127.0 |
|
|
$ |
129.5 |
|
Salaries and wages increased 2.4% to $91.1 million for the third quarter of 2024 compared with $89.0 million for the third quarter of 2023 due to higher wage rates and expanded operating hours, partially offset by the impact of labor productivity initiatives. Facility lease expense, which is predominantly fixed in nature, increased 4.1% to $63.5 million primarily due to higher percentage rent. Utilities and other costs decreased 1.6% to $97.3 million, driven by lower repairs and maintenance and janitorial costs.
Film rentals and advertising costs were 50.8% of admissions revenue as reported for the third quarter of 2024 compared with 50.4% for the third quarter of 2023 driven by the overall mix of films. Concession supplies expense was 22.5% of concessions revenue as reported for the third quarter of 2024 compared with 21.3% for the third quarter of 2023. The increase in the concession supplies rate was in part driven by product mix.
Salaries and wages, facility lease expense and utilities and other expenses, as reported, were lower for the third quarter of 2024 as a result of favorable exchange rate fluctuations. In constant currency, salaries and wages increased to $29.4 million for the third quarter of 2024 primarily due to wage rate inflation, partially offset by labor productivity initiatives and lower attendance. Facility lease expense increased to $31.0 million in constant currency for the third quarter of 2024 driven by inflationary increases and the return of certain minimum rent thresholds, partially offset by lower percentage rent. Utilities and other costs increased to $46.3 million in constant currency for the third quarter of 2024 primarily due to inflationary pressures and higher utility costs.
General and Administrative Expense. General and administrative expense for Holdings increased to $56.4 million for the third quarter of 2024 compared with $48.2 million for the third quarter of 2023. General and administrative expense for CUSA increased to $55.5 million for the third quarter of 2024 compared with $47.5 million for the third quarter of 2023. The increase for both Holdings and CUSA is primarily due to wages and benefits inflation, higher incentive and share-based compensation and higher professional fees, partially offset by the favorable impact of exchange rate fluctuations.
Depreciation and Amortization. Depreciation and amortization expense decreased to $49.1 million for the third quarter of 2024 compared with $51.9 million for the third quarter of 2023 due in part to lower levels of capital expenditures post-pandemic and the favorable impact of exchange rate fluctuations.
Gain on Disposal of Assets and Other. A gain on disposal of assets and other of $0.1 million was recorded for the third quarter of 2024 compared with a gain of $6.1 million for the third quarter of 2023. Activity for the third quarter of 2023 was primarily related to the sale of our Ecuador subsidiary in September 2023.
Interest Expense. Interest expense for Holdings, which includes amortization of debt issuance costs and original issue discount and amortization of accumulated gains for swap amendments, was $36.7 million during the third quarter of 2024 compared with $38.1 million during the third quarter of 2023. The interest expense attributable to CUSA, which includes amortization of debt issuance costs
41
and original issue discount and amortization of accumulated gains for swap amendments, was $30.6 million during the third quarter of 2024 compared with $32.1 million during the third quarter of 2023. The decrease in interest expense was primarily due to the redemption of the remaining 8.75% Secured Notes, the extinguishment of the 5.875% Senior Notes, and the amendment and extension of our interest rate swaps, partially offset by the impact of the issuance of the 7.00% Senior Notes. See further discussion in Liquidity and Capital Resources below.
Interest Income. Interest income for Holdings was $14.2 million during the third quarter of 2024 compared with $15.3 million during the third quarter of 2023. The interest income attributable to CUSA was $11.1 million during the third quarter of 2024 compared with $12.2 million during the third quarter of 2023. The decrease in interest income primarily reflects the impact of interest rate fluctuations on our cash balances.
Loss on Debt Amendments and Extinguishments. We recorded a loss on amendment and extinguishment of debt of $3.0 million during the third quarter of 2024 related to the early extinguishment of the 5.875% Senior Notes. See Note 7 to the condensed consolidated financial statements for additional information.
Foreign Currency Exchange and Other Related Loss. We recorded a foreign currency exchange loss of $3.0 million during the third quarter of 2024 compared with a loss of $11.0 million during the third quarter of 2023. Activity for the third quarter of 2024 and 2023 includes losses of $0.9 million and $5.2 million, respectively, associated with Blue Chip Swap transactions. Excluding the impact of Blue Chip Swap transactions, the loss on foreign currency exchange is primarily related to currency exchange fluctuations from original transaction dates until settlement. See Note 14 to the condensed consolidated financial statements for a discussion of Blue Chip Swap transactions.
Equity in Income of Affiliates. Equity in income of affiliates of $5.0 million was recorded during the third quarter of 2024 compared with $1.5 million during the third quarter of 2023 driven by higher income earned from our investment in AC JV LLC during the third quarter of 2024. See Note 9 to the condensed consolidated financial statements for information about our equity investments.
Net Gain on Investment in NCMI. We recorded a net gain on our investment in NCMI of $11.6 million during the third quarter of 2024 compared with $4.7 million during the third quarter of 2023, related to the mark-to-market adjustment of our investment in NCMI under the fair value basis of accounting. See Note 8 to the condensed consolidated financial statements for information about our investment in NCMI.
Income Taxes - Holdings. An income tax benefit of $42.7 million was recorded for the third quarter of 2024 compared with income tax expense of $21.4 million for the third quarter of 2023. The effective tax rate was approximately (29.2)% for the third quarter of 2024 compared with 19.0% for the third quarter of 2023. The effective tax rate for the third quarter of 2024 was favorably impacted by changes in valuation allowances previously recorded against certain foreign tax credits, other federal deferred tax assets, certain state net operating losses and other state deferred tax assets. The effective tax rate for the third quarter of 2023 was favorably impacted by the use of certain foreign tax credits for which valuation allowances had been established in prior periods as well as the release of valuation allowances previously recorded against the net deferred tax assets in various jurisdictions. Income tax provisions for interim periods are generally based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.
Income Taxes - CUSA. An income tax benefit of $39.7 million was recorded for the third quarter of 2024 compared with income tax expense of $17.4 million for the third quarter of 2023. The effective tax rate was approximately (26.4)% for the third quarter of 2024 compared with 15.0% for the third quarter of 2023. The effective tax rate for the third quarter of 2024 was favorably impacted by changes in valuation allowances previously recorded against certain foreign tax credits, other federal deferred tax assets, certain state net operating losses and other state deferred tax assets. The effective tax rate for the third quarter of 2023 was favorably impacted by the use of certain foreign tax credits for which valuation allowances had been established in prior periods as well as the release of valuation allowances previously recorded against the net deferred tax assets in various jurisdictions. Income tax provisions for interim periods are generally based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.
42
Nine months ended September 30, 2024 (the “2024 period”) versus the nine months ended September 30, 2023 (the “2023 period”)
2024 Period - The North American Industry box office generated approximately $6.4 billion during the 2024 period, which included Inside Out 2, Deadpool & Wolverine, Despicable Me 4, Dune: Part Two, and Twisters.
2023 Period - The North American Industry box office was approximately $7.2 billion during the 2023 period, which included the carryover of Avatar: The Way of Water as well as new releases including Barbie, The Super Mario Bros. Movie, Spider-Man: Across the Spider-Verse, Guardians of the Galaxy Vol. 3, and Oppenheimer.
Revenue. The table below, presented by reportable operating segment, summarizes our year-over-year revenue performance and certain key performance indicators that impact our revenue.
|
|
U.S. Operating Segment |
|
|
International Operating Segment |
|
|
Consolidated |
|
|||||||||||||||||||
|
|
Nine Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Constant |
|
|
2024 |
|
|
2023 |
|
|||||||
Admissions revenue |
|
$ |
894.4 |
|
|
$ |
968.5 |
|
|
$ |
221.6 |
|
|
$ |
264.7 |
|
|
$ |
340.9 |
|
|
$ |
1,116.0 |
|
|
$ |
1,233.2 |
|
Concession revenue |
|
|
709.6 |
|
|
|
751.1 |
|
|
|
174.8 |
|
|
|
197.9 |
|
|
|
265.2 |
|
|
|
884.4 |
|
|
|
949.0 |
|
Other revenue (1) |
|
|
166.4 |
|
|
|
176.9 |
|
|
|
68.4 |
|
|
|
68.7 |
|
|
|
104.0 |
|
|
|
234.8 |
|
|
|
245.6 |
|
Total revenue (1) |
|
$ |
1,770.4 |
|
|
$ |
1,896.5 |
|
|
$ |
464.8 |
|
|
$ |
531.3 |
|
|
$ |
710.1 |
|
|
$ |
2,235.2 |
|
|
$ |
2,427.8 |
|
Attendance |
|
|
90.3 |
|
|
|
101.5 |
|
|
|
59.8 |
|
|
|
67.7 |
|
|
|
|
|
|
150.1 |
|
|
|
169.2 |
|
|
Average ticket price (2) |
|
$ |
9.90 |
|
|
$ |
9.54 |
|
|
$ |
3.71 |
|
|
$ |
3.91 |
|
|
$ |
5.70 |
|
|
$ |
7.44 |
|
|
$ |
7.29 |
|
Concession revenue per patron (2) |
|
$ |
7.86 |
|
|
$ |
7.40 |
|
|
$ |
2.92 |
|
|
$ |
2.92 |
|
|
$ |
4.43 |
|
|
$ |
5.89 |
|
|
$ |
5.61 |
|
43
Cost of Operations. The table below, presented by reportable operating segment, summarizes our year-over-year theatre operating costs.
|
|
U.S. Operating Segment |
|
|
International Operating Segment |
|
|
Consolidated |
|
|||||||||||||||||||
|
|
Nine Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Constant |
|
|
2024 |
|
|
2023 |
|
|||||||
Film rentals and advertising |
|
$ |
513.2 |
|
|
$ |
558.6 |
|
|
$ |
110.7 |
|
|
$ |
134.3 |
|
|
$ |
173.0 |
|
|
$ |
623.9 |
|
|
$ |
692.9 |
|
Concession supplies |
|
$ |
126.8 |
|
|
$ |
131.0 |
|
|
$ |
38.3 |
|
|
$ |
43.0 |
|
|
$ |
57.8 |
|
|
$ |
165.1 |
|
|
$ |
174.0 |
|
Salaries and wages |
|
$ |
244.4 |
|
|
$ |
253.0 |
|
|
$ |
49.7 |
|
|
$ |
53.2 |
|
|
$ |
80.4 |
|
|
$ |
294.1 |
|
|
$ |
306.2 |
|
Facility lease expense |
|
$ |
184.0 |
|
|
$ |
184.9 |
|
|
$ |
60.7 |
|
|
$ |
66.0 |
|
|
$ |
81.4 |
|
|
$ |
244.7 |
|
|
$ |
250.9 |
|
Utilities and other |
|
$ |
255.7 |
|
|
$ |
269.7 |
|
|
$ |
76.4 |
|
|
$ |
83.8 |
|
|
$ |
120.6 |
|
|
$ |
332.1 |
|
|
$ |
353.5 |
|
Salaries and wages decreased 3.4% to $244.4 million for the 2024 period compared with $253.0 million for the 2023 period due to lower attendance and the impact of labor productivity initiatives, partially offset by higher wage rates and expanded operating hours. Facility lease expense, which is predominantly fixed in nature, decreased to $184.0 million primarily due to theatre closures and lease renegotiations, partially offset by higher percentage rent. Utilities and other costs decreased 5.2% to $255.7 million, as many of these costs are variable or semi-variable in nature and were impacted by the decrease in attendance. A decrease in property taxes also contributed to the decline in utilities and other costs.
Film rentals and advertising costs were 50.0% of admissions revenue as reported for the 2024 period compared with 50.7% for the 2023 period due to the overall mix of film releases. Concession supplies expense was 21.9% of concessions revenue as reported for the 2024 period compared with 21.7% for the 2023 period. The increase in the concession supplies rate was primarily driven by inflationary pressures offset by the impact of strategic pricing actions.
Salaries and wages, facility lease expense and utilities and other expenses, as reported, were lower for the 2024 period as a result of favorable exchange rate fluctuations. In constant currency, salaries and wages increased to $80.4 million for the 2024 period primarily driven by wage rate inflation, partially offset by labor productivity initiatives and lower attendance. Facility lease expense increased to $81.4 million in constant currency for the 2024 period primarily due to inflationary increases and the return of certain minimum rent thresholds, partially offset by lower percentage rent. Utilities and other costs increased to $120.6 million in constant currency for the 2024 period due to inflationary pressures and higher utility costs.
General and Administrative Expense. General and administrative expense for Holdings increased to $161.0 million for the 2024 period compared with $144.7 million for the 2023 period. General and administrative expense for CUSA increased to $158.2 million for the 2024 period compared with $142.2 million for the 2023 period. The increase for both Holdings and CUSA is primarily due to wages and benefits inflation, as well as higher incentive and share-based compensation and related payroll taxes, partially offset by the favorable impact of exchange rate fluctuations.
Depreciation and Amortization. Depreciation and amortization expense decreased to $148.3 million for the 2024 period compared with $159.6 million for the 2023 period due in part to lower levels of capital expenditures post-pandemic, the impairment of assets during 2023 and the favorable impact of exchange rate fluctuations.
Loss (Gain) on Disposal of Assets and Other. A loss on disposal of assets and other of $2.0 million was recorded for the 2024 period compared with a gain of $8.8 million for the 2023 period. Activity for the 2024 period was primarily related to the removal and disposal of equipment at closed theatres. Activity for the 2023 period was primarily related to the sale of our Ecuador subsidiary in September 2023 and the write-off of operating lease obligations for theatres that were closed during the 2023 period.
Interest Expense. Interest expense for Holdings, which includes amortization of debt issuance costs and original issue discount and amortization of accumulated gains for swap amendments, was $109.0 million during the 2024 period compared with $112.0 million during the 2023 period. The interest expense attributable to CUSA, which includes amortization of debt issuance costs and original issue
44
discount and amortization of accumulated gains for swap amendments, was $90.8 million during the 2024 period compared with $93.9 million during the 2023 period. The decrease in interest expense was primarily due to the redemption of the remaining 8.75% Secured Notes, the extinguishment of the 5.875% Senior Notes, and the amendment and extension of our interest rate swaps, partially offset by a higher average interest rate on our term loan and the impact of the issuance of the 7.00% Senior Notes. See further discussion in Liquidity and Capital Resources below.
Interest Income. Interest income for Holdings was $40.3 million during the 2024 period compared with $40.2 million during the 2023 period. The interest income attributable to CUSA was $30.8 million during the 2024 period compared with $31.5 million during the 2023 period.
Loss on Debt Amendments and Extinguishments. We recorded a loss on amendments and extinguishments of debt of $5.5 million during the 2024 period related to the amendment of our Senior Secured Credit Facility, the redemption of the remaining 8.75% Secured Notes, and the extinguishment of the 5.875% Senior Notes. We recorded a loss on amendments and extinguishments of debt of $10.7 million during the 2023 period related to the amendment of our Senior Secured Credit Facility and the partial redemption of the 8.75% Secured Notes. See Note 7 to the condensed consolidated financial statements for additional information.
Foreign currency exchange and other related loss. We recorded a foreign currency exchange loss of $7.9 million during the 2024 period compared with a loss of $19.4 million during the 2023 period. Activity for the 2024 and 2023 period includes losses of $0.9 million and $10.1 million, respectively, associated with Blue Chip Swap transactions. Excluding the impact of Blue Chip Swap transactions, the loss on foreign exchange is primarily related to currency exchange fluctuations from original transaction dates until settlement. See note 14 to the condensed consolidated financial statements for a discussion of Blue Chip Swap transactions.
Equity in Income of Affiliates. Equity in income of affiliates of $11.3 million was recorded during the 2024 period compared with $1.2 million during the 2023 period driven by higher income earned from our investment in AC JV, LLC during the 2024 period and the absence of a loss from our investment in NCMI, which is now accounted for under the fair value basis of accounting. See Note 8 and Note 9, respectively, to the condensed consolidated financial statements for information about our investment in NCMI and our equity investments.
Net Gain on Investment in NCMI. We recorded a net gain on our investment in NCMI of $12.8 million during the 2024 period compared with $13.9 million during the 2023 period, primarily related to the mark-to-market adjustment of our investment in NCMI under the fair value basis of accounting. See Note 8 to the condensed consolidated financial statements for information about our investment in NCMI.
Income Taxes - Holdings. An income tax benefit of $71.3 million was recorded for the 2024 period compared with income tax expense of $29.8 million for the 2023 period. The effective tax rate was approximately (37.6)% for the 2024 period compared with 12.5% for the 2023 period. During the 2024 period, a deferred tax benefit of $116.3 million was recorded discretely related to the release of valuation allowances previously recorded against certain foreign tax credits, other federal deferred tax assets, certain state net operating losses and other state deferred tax assets as well as deferred tax assets in certain foreign jurisdictions. The release of these valuation allowances was the result of the availability of positive evidence related to sustained taxable income in the relevant jurisdictions to support the future realizability of deferred tax assets. This discrete benefit favorably impacted the effective tax rate for the 2024 period, causing the income tax benefit to vary significantly from the tax expense derived by applying the statutory tax rate to the pre-tax income for the period. The effective tax rate for the 2023 period was favorably impacted by the use of certain foreign tax credits for which valuation allowances had been established in prior periods as well as the release of valuation allowances previously recorded against the net deferred tax assets in certain foreign jurisdictions. Income tax provisions for interim periods are generally based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.
Income Taxes - CUSA. An income tax benefit of $67.6 million was recorded for the 2024 period compared with income tax expense of $24.2 million for the 2023 period. The effective tax rate was approximately (33.7)% for the 2024 period compared with 9.7% for the 2023 period. During the 2024 period, a deferred tax benefit of 112.4 million was recorded discretely related to the release of valuation allowances previously recorded against certain foreign tax credits, other federal deferred tax assets, certain state net operating losses and other state deferred tax assets as well as deferred tax assets in certain foreign jurisdictions. The release of these valuation allowances was the result of the availability of positive evidence related to sustained taxable income in the relevant jurisdictions to support the future realizability of deferred tax assets. This discrete benefit favorably impacted the effective tax rate for the 2024 period, causing the income tax benefit to vary significantly from the tax expense derived by applying the statutory tax rate to the pre-tax income for the period. The effective tax rate for the 2023 period was favorably impacted by the use of certain foreign tax credits for which valuation allowances had been established in prior periods as well as the release of valuation allowances previously recorded against the net deferred tax assets in certain foreign jurisdictions. Income tax provisions for interim periods are generally based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.
45
Liquidity and Capital Resources
Operating Activities
We primarily collect our revenue in cash, mainly through box office receipts and the sale of concessions. Our revenue is generally received in cash prior to the payment of related expenses; therefore, we have an operating “float” and historically have not required traditional working capital financing. However, our working capital position will continue to fluctuate based on seasonality, the timing and volume of new film content, the timing of interest payments on our long-term debt as well as timing of payment of other operating expenses that are paid annually or semi-annually, such as property and other taxes and incentive bonuses. We believe our existing cash and expected cash flows from operations will be sufficient to meet our working capital, capital expenditures, and expected cash requirements from known contractual obligations for the next twelve months and beyond.
Cash provided by operating activities was $269.6 million for Holdings and $279.5 million for CUSA for the nine months ended September 30, 2024, compared with cash provided by operating activities of $335.8 million for Holdings and $347.9 million for CUSA for the nine months ended September 30, 2023. The decrease in cash provided by operating activities was primarily driven by the timing and level of revenue earned during each period partially offset by the timing of payments to vendors for expenses incurred during each period.
Investing Activities
Investing activities have been principally related to the development and remodel of theatres. New theatre openings and remodels historically have been financed with internally generated cash and by debt financing, including borrowings under our senior secured credit facility. Cash used for investing activities was $89.1 million and $74.9 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in cash used for investing activities was primarily due to the proceeds from the sale of our Ecuador subsidiary during the nine months ended September 30, 2023.
Below is a summary of capital expenditures, disaggregated by new and existing theatres, for the nine months ended September 30, 2024 and 2023 (in millions):
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
New theatres |
|
$ |
16.5 |
|
|
$ |
5.4 |
|
Existing theatres |
|
|
73.7 |
|
|
|
84.3 |
|
Total capital expenditures |
|
$ |
90.2 |
|
|
$ |
89.7 |
|
We operated 499 theatres with 5,680 screens worldwide as of September 30, 2024. Theatres and screens opened and closed during the nine months ended September 30, 2024 were as follows:
|
|
January 1, 2024 |
|
|
Built |
|
|
Closed |
|
|
September 30, 2024 |
|
||||
U.S. (42 states) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Theatres |
|
|
309 |
|
|
|
— |
|
|
|
(3 |
) |
|
|
306 |
|
Screens |
|
|
4,324 |
|
|
|
— |
|
|
|
(42 |
) |
|
|
4,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
International (13 countries) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Theatres |
|
|
192 |
|
|
|
2 |
|
|
|
(1 |
) |
|
|
193 |
|
Screens |
|
|
1,395 |
|
|
|
10 |
|
|
|
(7 |
) |
|
|
1,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Worldwide |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Theatres |
|
|
501 |
|
|
|
2 |
|
|
|
(4 |
) |
|
|
499 |
|
Screens |
|
|
5,719 |
|
|
|
10 |
|
|
|
(49 |
) |
|
|
5,680 |
|
46
As of September 30, 2024, the following signed commitments were outstanding:
|
|
Theatres (1) |
|
|
Screens (1) |
|
|
Estimated |
|
|||
Remainder of 2024 |
|
|
|
|
|
|
|
|
|
|||
U.S. |
|
|
— |
|
|
|
— |
|
|
$ |
— |
|
International |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
|
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|||
Subsequent to 2024 |
|
|
|
|
|
|
|
|
|
|||
U.S. |
|
|
2 |
|
|
|
22 |
|
|
$ |
14.3 |
|
International |
|
|
— |
|
|
|
2 |
|
|
|
2.7 |
|
Total |
|
2 |
|
|
24 |
|
|
$ |
17.0 |
|
||
|
|
|
|
|
|
|
|
|
|
|||
Total commitments at September 30, 2024 |
|
2 |
|
|
24 |
|
|
$ |
17.0 |
|
||
Actual expenditures for continued theatre development, remodels and acquisitions are subject to change based upon the availability of attractive opportunities. During the next twelve months and the foreseeable future, we plan to fund capital expenditures for our continued development with cash flow from operations and, if needed, borrowings under our senior secured credit facility, proceeds from debt issuances, sale leaseback transactions and/or sales of excess real estate.
Financing Activities
Cash used for financing activities was $94.7 million and $118.0 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease in cash used for financing activities was primarily due to the repayment of the 5.875% Senior Notes and the redemption of the remaining 8.75% secured notes, partially offset by the issuance of the 7.00% Senior Notes during the nine months ended September 30, 2024.
Holdings, at the discretion of its board of directors and subject to applicable law, may pay dividends on its common stock. The amount of the dividends to be paid in the future, if any, will depend upon available cash balances, anticipated cash needs, overall financial condition, loan agreement restrictions as discussed below, and future prospects for earnings and cash flows, as well as other relevant factors. As a result of the impact of the COVID-19 pandemic, Holdings’ Board of Directors has suspended the quarterly dividend to shareholders.
We may, from time to time, seek to retire or repurchase our outstanding debt securities through cash purchases or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on the availability and prices of such debt securities, prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
We expect to repay the principal amount of our 4.50% Convertible Senior Notes upon their maturity in August 2025 with cash on hand, and could fund the remainder with a combination of cash, shares or a combination thereof. See “4.50% Convertible Senior Notes” below. Also see Note 7 to the condensed consolidated financial statements for a summary of long-term debt outstanding as of September 30, 2024 for Holdings and CUSA.
Contractual Obligations
There have been no material changes in the contractual obligations previously disclosed in “Liquidity and Capital Resources” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed February 16, 2024.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
4.50% Convertible Senior Notes
On August 21, 2020, Holdings issued $460.0 million 4.50% convertible senior notes (the “4.50% Convertible Senior Notes”). The notes will mature on August 15, 2025, unless earlier repurchased or converted. Interest on the notes is payable on February 15 and August 15 of each year.
47
Holders of the 4.50% Convertible Senior Notes may convert their 4.50% Convertible Senior Notes at their option at any time prior to the close of business on the business day immediately preceding May 15, 2025 only under the following circumstances: (1) during the five business day period after any five consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of Holdings’ common stock and the conversion rate on each such trading day; (2) if Holdings distributes to all or substantially all stockholders (i) rights, options or warrants entitling them to purchase shares at a discount to the recent average trading price of Holdings’ common stock (including due to a stockholder rights plan) or (ii) Holdings’ assets or securities or rights, options or warrants to purchase the same with a per share value exceeding 10% of the trading price of Holdings’ common stock; or (3) upon the occurrence of specified corporate events as described further in the indenture. Prior to May 15, 2025, holders may convert their notes during any calendar quarter (and only during such calendar quarter), if the last reported sale price of Holdings’ common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to $18.66 per share (130% of the initial conversion price of $14.35 per share), on each applicable trading day. The closing price of Holdings' common stock exceeded $18.66 per share (130% of the initial conversion price of $14.35 per share) during at least 20 of the last 30 trading days of the quarter ended September 30, 2024 and, therefore, the 4.50% Convertible Senior Notes will be convertible during the fourth quarter of 2024. Beginning May 15, 2025, holders may convert their notes at any time prior to the close of business on the third scheduled trading day immediately preceding the maturity date. Upon conversion of the 4.50% Convertible Senior Notes, Holdings will pay or deliver cash, shares of its common stock or a combination of cash and shares of its common stock, at its election.
The current conversion rate is 69.6767 shares of Holdings’ common stock per one thousand dollars principal amount of the 4.50% Convertible Senior Notes. The conversion rate will be subject to adjustment upon the occurrence of certain events. If a make-whole fundamental change as defined in the indenture occurs prior to the maturity date, Holdings will, in certain circumstances, increase the conversion rate for a holder who elects to convert its notes in connection with such make-whole fundamental change.
Holdings entered into hedge transactions with counterparties in connection with the issuance of the 4.50% Convertible Senior Notes. The convertible note hedge transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the 4.50% Convertible Senior Notes, the number of shares of Holdings' common stock underlying the 4.50% Convertible Notes, which initially gives Holdings the option to purchase approximately 32.0 shares of its common stock at a price of approximately $14.35 per share. Concurrently with entering into the convertible note hedge transactions, Holdings also entered into warrant transactions with each option counterparty whereby Holdings sold to such option counterparty warrants to purchase, subject to customary anti-dilution adjustments, up to the same number of shares of Holdings' common stock, which initially gives the option counterparties the option to purchase approximately 32.0 shares at a price of approximately $22.08 per share. The economic effect of these transactions is to effectively raise the strike price of the 4.50% Convertible Senior Notes to approximately $22.08 per share of Holdings’ common stock. The warrants expire 1/80th per trading day between November 15, 2025 and March 12, 2026.
The 4.50% Convertible Notes are effectively subordinated to any of Holdings’, or its subsidiaries’, existing and future secured debt to the extent of the value of the assets securing such indebtedness, including obligations under the Credit Agreement. The 4.50% Convertible Notes are structurally subordinated to all existing and future debt and other liabilities, including trade payables, and including CUSA’s 5.25% Senior Notes due 2028 and 7.00% Senior Notes due 2032, or, collectively, CUSA’s senior notes (but excluding all obligations under the Credit Agreement, as defined below, which are guaranteed by Holdings). The 4.50% Convertible Notes rank equally in right of payment with all existing and future unsubordinated debt, including all obligations under the Credit Agreement, which is guaranteed by Holdings, and senior in right of payment to any future debt that is expressly subordinated in right of payment to the 4.50% Convertible Notes. The 4.50% Convertible Notes are not guaranteed by any of Holdings' subsidiaries.
Senior Secured Credit Facility
On May 26, 2023, CUSA amended and restated its senior secured credit facility (the “Credit Agreement”) to provide for an aggregate principal amount of $775.0 million, consisting of a $650.0 million term loan with a maturity date of May 24, 2030 and a $125.0 million revolving credit facility with a maturity date of May 26, 2028. The term loan and revolving credit facility are subject to a springing maturity date of April 15, 2028 if CUSA’s 5.25% Senior Notes due 2028 have not been paid or refinanced as required under the Credit Agreement prior to such date, as more specifically described in the Credit Agreement.
On May 28, 2024, CUSA amended and restated its senior secured credit facility to reduce the rate at which the term loan bears interest by 0.50% and reset the 101% soft call for another six months (the “2024 Amendment”). See below for additional discussion of interest rates on the term loan, and Note 7 to the condensed consolidated financial statements for additional information on the 2024 Amendment.
Under the Credit Agreement, principal payments of $1.6 million are due on the term loan quarterly through March 31, 2030, with a final principal payment of the remaining unpaid principal due on May 24, 2030.
Pursuant to the 2024 Amendment noted above, interest on the term loan accrues, at CUSA's option, at either (i) a rate determined by reference to the secured overnight financing rate (“SOFR”) as published by CME Group Benchmark Administration Limited and identified by Barclay's Bank PLC (the Administrative Agent) as the forward-looking term rate based on SOFR for a period of 1, 3, or 6
48
months (depending upon the Interest Period (as defined in the Credit Agreement) chosen by CUSA) (the “Term SOFR Rate”), subject to a floor of 0.50% per annum, plus an applicable margin of 3.25% per annum, or (ii) for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Reserve Bank of New York Rate in effect on such day, plus 1/2 of 1.00% and (c) the Term SOFR Rate for a one month Interest Period, as published two U.S. Government Securities Business Days prior to such day (or if such day is not a U.S. Government Securities Business Day, the immediately preceding U.S. Government Securities Business Day), plus 1.00% (this clause (ii), the "Alternate Base Rate"), subject in the case of this clause (ii) to a floor of 1.50% per annum, plus, in the case of this clause (ii), an applicable margin of 2.25% per annum effective.
Interest on revolving credit loans accrues, at CUSA's option, at either (i) the Term SOFR Rate plus an applicable margin that ranges from 3.00% to 3.50% per annum, or (ii) the Alternate Base Rate, subject, in the case of this clause (ii) to a floor of 1.00% per annum, plus, in the case of this clause (ii), an applicable margin that ranges from 2.00% to 2.50%. The applicable margin with respect to revolving credit loans is a function of the Consolidated Net Senior Secured Leverage Ratio as defined in the Credit Agreement. As of September 30, 2024, the applicable margin was 3.00%, however, there were no borrowings outstanding under the revolving line of credit. In addition, CUSA is required to pay a commitment fee on the revolving line of credit that accrues at a rate ranging from 0.20% to 0.375% per annum of the daily unused portion of the revolving line of credit. The commitment fee rate is a function of the Consolidated Net Senior Secured Leverage Ratio and was 0.20% at September 30, 2024.
CUSA’s obligations under the Credit Agreement are guaranteed by Holdings and certain subsidiaries of Holdings other than CUSA (the “Other Guarantors”) and are secured by security interests in all of CUSA, and substantially all of Holdings’ and the Other Guarantors’ personal property.
The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on the ability of Holdings, CUSA and their subsidiaries to: merge, consolidate, liquidate, or dissolve; sell, transfer or otherwise dispose of assets; create, incur or permit to exist certain indebtedness and liens; pay dividends, repurchase stock and make other Restricted Payments (as defined in the Credit Agreement); prepay certain indebtedness; make investments; enter into transactions with affiliates; and change the nature of their business. At any time that CUSA has revolving credit loans outstanding, it is not permitted to allow the Consolidated Net Senior Secured Leverage Ratio to exceed 3.5 to 1.0. As of September 30, 2024, there were no revolving credit loans outstanding, and CUSA’s Consolidated Net Senior Secured Leverage Ratio was below zero.
The Credit Agreement also includes customary events of default, including, among other things, payment default, covenant default, breach of representation or warranty, bankruptcy, cross-default, material ERISA events, a change of control, material money judgments and failure to maintain security interests. If an event of default occurs, all commitments under the Credit Agreement may be terminated and all obligations under the Credit Agreement could be accelerated by the Lenders, causing all loans outstanding (including accrued interest and fees payable thereunder) to be declared immediately due and payable.
The Restricted Payments covenant, as defined in the Credit Agreement generally does not limit the ability of Holdings and its subsidiaries to pay dividends and make other Restricted Payments if the Consolidated Net Total Leverage Ratio (as defined in the Credit Agreement) is less than or equal to 2.75 to 1.00. If the Consolidated Net Total Leverage Ratio is greater than 2.75 to 1.00, but not greater than 5.00 to 1.00, Restricted Payments generally may be made in an aggregate amount not to exceed the Available Amount (as defined in the Credit Agreement), which is a function of CUSA’s Consolidated EBITDA minus 1.75 times its Consolidated Interest Expense (as such terms are defined in the Credit Agreement) and certain other factors as specified in the Credit Agreement. As of September 30, 2024, the Consolidated Net Total Leverage Ratio was 2.14 to 1.00 and the Available Amount was $752.8 million. In addition, the Credit Agreement contains other baskets that allow certain Restricted Payments in excess of the Applicable Amount.
We have three interest rate swap agreements that are used to hedge a portion of the interest rate risk associated with the variable interest rates on the term loan outstanding. See Note 7 to the condensed consolidated financial statements for discussion of the interest rate swaps.
As of September 30, 2024, there was $640.3 million outstanding under the term loan and no borrowings were outstanding under the $125.0 million revolving line of credit. The average interest rate on outstanding term loan borrowings under the Credit Agreement as of September 30, 2024 was approximately 6.9% per annum, after giving effect to the interest rate swap agreements.
7.00% Senior Notes
On July 18, 2024, CUSA issued $500.0 million 7.00% senior unsecured notes, at par (the “7.00% Senior Notes”). The notes will mature on August 1, 2032. Interest on the 7.00% Senior Notes will be payable on February 1 and August 1 of each year, beginning on February 1, 2025. CUSA incurred debt issuance costs of approximately $8.7 million in connection with the issuance, which were recorded as a reduction of long-term debt on the Company’s consolidated balance sheet. Proceeds, net of fees, were used to repay CUSA’s 5.875% $405.0 million aggregate principal amount of Senior Notes due March 2026 (the “5.875% Senior Notes”), as discussed below under 5.875% Secured Notes. The remainder of the net proceeds will be used for general corporate purposes.
The notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of CUSA’s subsidiaries, or its guarantors, that guarantee, assume or in any other manner become liable with respect to any of CUSA’s or its guarantors’ other
49
debt. If CUSA cannot make payments on the 7.00% Senior Notes when they are due, CUSA’s guarantors must make them instead. The 7.00% Senior Notes and the guarantees are senior unsecured obligations and rank equally in right of payment with all of CUSA’s and its guarantor’s existing and future senior debt, including the 5.25% senior notes due 2028 and all borrowings under CUSA’s Credit Agreement. The notes and the guarantees will be structurally subordinated to all existing and future debt and other liabilities of CUSA’s non-guarantor subsidiaries. The notes and the guarantees will be structurally senior to the 4.50% convertible senior notes due 2025, and all future debt, if any, issued by Holdings that is not guaranteed by CUSA or any of its subsidiaries.
CUSA may redeem the 7.00% Senior Notes in whole or in part at any time on or after August 1, 2027 at redemption prices set forth in the indenture governing the 7.00% Senior Notes, plus accrued and unpaid interest, if any, on the 7.00% Senior Notes redeemed, to the applicable redemption date, if redeemed during the 12-month period beginning on August 1 of the years indicated below:
|
Percentage of Principal Amount |
2027 |
103.50% |
2028 |
101.75% |
2029 and Thereafter |
100.00% |
Prior to August 1, 2027, CUSA has the option to redeem all or a portion of the 7.00% Senior Notes at a price equal to 100.0% of the principal amount thereof, plus accrued and unpaid interest, if any, plus a make-whole premium. In addition, prior to August 1, 2027, CUSA may redeem up to 40% of the aggregate principal amount of the 7.00% Senior Notes with funds in an amount equal to the net proceeds of certain equity offerings at a redemption price equal to 107.0% of the principal amount of the 7.00% Senior Notes redeemed, plus accrued and unpaid interest, if any, as long as (i) at least 60% of the principal amount of the 7.00% Senior Notes outstanding issued under the indenture governing the 7.00% Senior Notes (including any additional notes) remains outstanding immediately after each such redemption and (ii) the redemption occurs within 120 days of the date of the closing of such equity offerings.
The indenture governing the 7.00% Senior Notes contains covenants that limit, among other things, the ability of CUSA and certain of its subsidiaries to (1) incur or guarantee additional indebtedness, (2) pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments, (3) make certain investments, (4) engage in certain transactions with affiliates, (5) incur or assume certain liens, and (6) consolidate, merge or transfer all or substantially all of its assets. Additionally, upon a change in control, as defined in the indenture governing the 7.00% Senior Notes, CUSA would be required to make an offer to repurchase all of the 7.00% Senior Notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, through the date of repurchase.
5.875% Senior Notes
On March 16, 2021, CUSA issued $405.0 million aggregate principal amount of 5.875% senior notes due 2026, at par value (the “5.875% Senior Notes”). Interest on the 5.875% Senior Notes was payable on March 15 and September 15 of each year. The 5.875% Senior Notes were scheduled to mature on March 15, 2026.
Concurrently with the 7.00% Senior Notes bond offering discussed above, on July 9, 2024, CUSA commenced a cash tender offer to purchase any and all of CUSA’s 5.875% Senior Notes. On July 18, 2024, CUSA completed the tender of $345.3 aggregate principal amount of the notes. After the expiration of the tender offer, $59.7 million aggregate principal amount of the 5.875% Senior Notes remained outstanding.
On September 19, 2024, CUSA, as permitted by the terms of the indenture governing the 5.875% Senior Notes, irrevocably deposited non-callable U.S. government treasury securities with a trustee in an amount sufficient to fund the repayment of the remaining $59.7 million principal amount of the 5.875% Senior Notes on March 15, 2025 (the “Redemption Date”) at 100% of the principal amount plus accrued and unpaid interest thereon. After the deposit of such funds with the trustee, CUSA’s obligations under the indenture with respect to the 5.875% Senior Notes were satisfied and discharged and the transaction was accounted for as a debt extinguishment.
As a result of the debt extinguishment CUSA recognized a loss of $3.0 related to the write-off of unamortized debt issuance costs as well as legal and other fees incurred in connection with the transactions, which is reflected in “Loss on debt amendments and extinguishments” in the Company’s condensed consolidated statement of income for the three and nine months ended September 30, 2024. See Note 7 to the condensed consolidated financial statements for a discussion of the satisfaction and discharge of the 5.875% Senior Notes completed on September 19, 2024.
5.25% Senior Notes
On June 15, 2021, CUSA issued $765.0 million aggregate principal amount of 5.25% senior notes due 2028, at par value (the “5.25% Senior Notes”). Interest on the 5.25% Senior Notes is payable on January 15 and July 15 of each year. The 5.25% Senior Notes mature on July 15, 2028.
The 5.25% Senior Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of CUSA’s subsidiaries that guarantee, assume or become liable with respect to any of CUSA's or a guarantor’s debt. The 5.25% Senior Notes and the guarantees will be CUSA’s and the guarantors’ senior unsecured obligations and (i) rank equally in right of payment to
50
CUSA’s and the guarantors’ existing and future senior debt, including borrowings under CUSA's Credit Agreement (as defined below) and CUSA’s existing senior notes, (ii) rank senior in right of payment to CUSA’s and the guarantors’ future subordinated debt, (iii) are effectively subordinated to all of CUSA’s and the guarantors’ existing and future secured debt, including all obligations under the Credit Agreement, to the extent of the value of the collateral securing such debt, (iv) are structurally subordinated to all existing and future debt and other liabilities of CUSA’s non-guarantor subsidiaries, and (v) are structurally senior to the 4.50% convertible senior notes due 2025 issued by Holdings.
CUSA may redeem the 5.25% Senior Notes in whole or in part at redemption prices specified in the indenture.
8.75% Secured Notes
On April 20, 2020, CUSA issued $250.0 million 8.75% senior secured notes (the “8.75% Secured Notes”) with a maturity date of May 1, 2025. Interest on the 8.75% Secured Notes was payable on May 1 and November 1 of each year. CUSA could redeem the 8.75% Secured Notes in whole or in part at redemption prices specified in the indenture.
On May 1, 2023, CUSA redeemed $100.0 million in principal amount of the 8.75% Secured Notes plus accrued interest thereon for $106.6 million in cash. Following the redemption, $150.0 million in aggregate principal amount of the 8.75% Secured Notes remained outstanding.
On May 1, 2024, CUSA redeemed the remaining $150.0 million in outstanding principal amount of the 8.75% Secured Notes at par plus accrued interest thereon for $156.6 million in cash. Upon redemption, the indenture governing the 8.75% Secured Notes was fully satisfied and discharged. See Note 7 to the condensed consolidated financial statements for additional information on the redemption.
Borrowing of International Subsidiaries
In August, 2024, one of the Company’s international subsidiaries paid off its outstanding bank loan. The bank loan was scheduled to mature in January 2029.
Covenant Compliance
The indentures governing the 7.00% Senior Notes and the 5.25% Senior Notes ("the indentures") contain covenants that limit, among other things, the ability of CUSA and certain of its subsidiaries to (1) make investments or other restricted payments, including paying dividends, making other distributions or repurchasing subordinated debt or equity, (2) incur additional indebtedness and issue preferred stock, (3) enter into transactions with affiliates, (4) enter new lines of business, (5) merge or consolidate with, or sell all or substantially all of its assets to, another person and (6) create liens. As of September 30, 2024, CUSA could have distributed up to approximately $3.9 billion to its parent company and sole stockholder, Holdings, under the terms of the indentures, subject to its available cash and other borrowing restrictions outlined in the indentures. Upon a change of control, as defined in the indentures, CUSA would be required to make an offer to repurchase the 7.00% Senior Notes and the 5.25% Senior Notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, through the date of repurchase. The indentures allow CUSA to incur additional indebtedness if it satisfies the coverage ratio specified in the indenture, after giving effect to the incurrence of the additional indebtedness, and in certain other circumstances. The required minimum coverage ratio is 2 to 1 and our actual ratio as of September 30, 2024 was 5.1 to 1.
See discussion of dividend restrictions and the net senior secured leverage ratio under the Credit Agreement at Senior Secured Credit Facility above.
As of September 30, 2024, we believe we were in full compliance with all agreements, including all related covenants, governing our outstanding debt.
51
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We have exposure to financial market risks, including changes in interest rates and foreign currency exchange rates.
Interest Rate Risk
The Company currently has variable rate debt. An increase or decrease in interest rates would affect its interest expense related to this variable rate debt. At September 30, 2024, we had an aggregate of $190.3 million of variable rate debt outstanding, after giving effect to the interest rate swaps. Based on the interest rates in effect on the variable rate debt outstanding at September 30, 2024, a 100 basis point increase in market interest rates would increase our annual interest expense by $1.9 million.
The tables below provide information about Holdings' and CUSA’s fixed rate and variable rate long-term debt agreements as of September 30, 2024. The Company has three interest rate swap agreements that are used to hedge a portion of the interest rate risk associated with the variable interest rates on the Company’s term loan debt. See Interest Rate Swap Agreements below. Holdings’ long-term debt agreements include fixed rate and variable rate long-term debt of CUSA, which is guaranteed by Holdings.
Holdings Debt
|
|
Expected Maturity for the Twelve Months Ending September 30, |
|
|
Average |
|
||||||||||||||||||||||||
|
|
(in millions) |
|
|
Interest |
|
||||||||||||||||||||||||
|
|
2025 |
|
2026 |
|
2027 |
|
2028 |
|
2029 |
|
Thereafter |
|
Total |
|
|
Fair Value |
|
|
Rate |
|
|||||||||
Fixed rate |
|
$ |
460.0 |
|
$ |
— |
|
$ |
— |
|
$ |
765.0 |
|
$ |
— |
|
$ |
950.0 |
|
$ |
2,175.0 |
|
|
$ |
2,643.0 |
|
|
|
5.7 |
% |
Variable rate |
|
|
6.4 |
|
|
6.4 |
|
|
6.4 |
|
|
6.4 |
|
|
6.5 |
|
|
158.2 |
|
|
190.3 |
|
|
|
191.0 |
|
|
|
7.9 |
% |
Total debt (1) |
|
$ |
466.4 |
|
$ |
6.4 |
|
$ |
6.4 |
|
$ |
771.4 |
|
$ |
6.5 |
|
$ |
1,108.2 |
|
$ |
2,365.3 |
|
|
$ |
2,834.0 |
|
|
|
5.9 |
% |
CUSA Debt
|
|
Expected Maturity for the Twelve Months Ending September 30, |
|
|
Average |
|
||||||||||||||||||||||||
|
|
(in millions) |
|
|
Interest |
|
||||||||||||||||||||||||
|
|
2025 |
|
2026 |
|
2027 |
|
2028 |
|
2029 |
|
Thereafter |
|
Total |
|
|
Fair Value |
|
|
Rate |
|
|||||||||
Fixed rate |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
765.0 |
|
$ |
— |
|
$ |
950.0 |
|
$ |
1,715.0 |
|
|
$ |
1,729.1 |
|
|
|
6.1 |
% |
Variable rate |
|
|
6.4 |
|
|
6.4 |
|
|
6.4 |
|
|
6.4 |
|
|
6.5 |
|
|
158.2 |
|
|
190.3 |
|
|
|
191.0 |
|
|
|
7.9 |
% |
Total debt (1) |
|
$ |
6.4 |
|
$ |
6.4 |
|
$ |
6.4 |
|
$ |
771.4 |
|
$ |
6.5 |
|
$ |
1,108.2 |
|
$ |
1,905.3 |
|
|
$ |
1,920.1 |
|
|
|
6.3 |
% |
Interest Rate Swap Agreements
All of the interest rate swap agreements qualify for cash flow hedge accounting. The fair values of the interest rate swaps are recorded on each of Holdings’ and CUSA’s condensed consolidated balance sheet as an asset or liability with the related gains or losses reported as a component of accumulated other comprehensive loss. See Note 7 to the condensed consolidated financial statements for further discussion of the interest rate swap agreements.
Foreign Currency Exchange Rate Risk
There have been no material changes in foreign currency exchange rate risk previously disclosed in “Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed February 16, 2024.
Item 4. Controls and Procedures
Evaluation of the Effectiveness of Disclosure Controls and Procedures
As of September 30, 2024, under the supervision and with the participation of Holdings’ and CUSA’s principal executive officer and principal financial officer, Holdings and CUSA carried out an evaluation required by the Exchange Act of the effectiveness of the design and operation of their respective disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act. Based on this evaluation, Holdings’ and CUSA’s principal executive officer and principal financial officer concluded that, as of September 30, 2024, each of Holdings’ and CUSA’s respective disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by each of Holdings and CUSA in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and were effective to provide reasonable assurance that such information is accumulated and communicated to Holdings’ and CUSA’s management, including Holdings’ and CUSA’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
52
Changes in Internal Control Over Financial Reporting
There have been no changes in Holdings’ and CUSA’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 that occurred during the quarter ended September 30, 2024 that materially affected, or are reasonably likely to materially affect, Holdings’ and CUSA’s internal control over financial reporting.
53
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Other than the discussion at Note 18, there have been no material changes from legal proceedings previously reported under “Business – Legal Proceedings” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed February 16, 2024.
Item 1A. Risk Factors
We believe there have been no material changes in our risk factors from those disclosed in “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed February 16, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) In the third quarter of 2024, Holdings purchased shares of its common stock as follows:
|
|
Total Number of Shares Purchased (1) |
|
Average Price Paid per Share |
|
Total Number of Shares Purchased As Part of Publicly Announced Plans |
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Plan |
|
||||
July 1 through July 31 |
|
|
1.27 |
|
$ |
21.13 |
|
|
— |
|
|
— |
|
August 1 through August 31 |
|
|
— |
|
$ |
— |
|
|
— |
|
|
— |
|
September 1 through September 30 |
|
|
— |
|
$ |
— |
|
|
— |
|
|
— |
|
Total |
|
|
1.27 |
|
|
|
|
— |
|
|
— |
|
|
(1) Represents shares of Holdings’ common stock (in thousands) repurchased in July, August and September of 2024 to satisfy employee tax-withholding obligations upon vesting in restricted stock and performance stock units. See Note 10 to the condensed consolidated financial statements.
For a description of limitations on the payment of Holdings’ dividends, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.”
54
Item 5. Other Information
Adoption of Rule 10b5-1 Trading Plans
On August 22, 2024, Mark Zoradi, a member of our Board of Directors,
The plan is intended to comply with Rule 10b5-1 and provides for the sale of shares at predetermined intervals and prices.
On September 4, 2024, Michael Cavalier, our Executive Vice President – General Counsel and Business Affairs,
The plan is intended to comply with Rule 10b5-1 and provides for the sale of shares at predetermined intervals and prices.
On September 6, 2024, Melissa Thomas, our Executive Vice President-Chief Financial Officer,
The plan is intended to comply with Rule 10b5-1 and provides for the sale of shares at predetermined intervals and prices.
On September 6, 2024, Sean Gamble, our President and Chief Executive Officer,
The plan is intended to comply with Rule 10b5-1 and provides for the sale of shares at predetermined intervals and prices.
55
Supplemental Schedules Specified by the Senior Notes Indentures
As required by the indentures governing CUSA’s 7.00% Senior Notes and 5.25% Senior Notes, collectively “the senior notes”, CUSA has included in this filing interim financial information for its subsidiaries that have been designated as unrestricted subsidiaries, as defined by the indentures. As required by these indentures, CUSA has included an unaudited condensed consolidating balance sheet and unaudited condensed consolidating statements of income, comprehensive income and cash flows for CUSA. See Liquidity and Capital Resources at Part I - Item 2 for discussion of the senior notes, including relevant covenants and restrictions. The following supplementary schedules separately identify CUSA’s restricted subsidiaries and unrestricted subsidiaries as required by the indentures.
|
|
Page |
Unaudited Condensed Consolidating Balance Sheet as of September 30, 2024 |
|
57 |
|
|
|
Unaudited Condensed Consolidating Statement of Income for the nine months ended September 30, 2024 |
|
58 |
|
|
|
|
59 |
|
|
|
|
|
60 |
56
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF SEPTEMBER 30, 2024
(in millions, unaudited)
|
|
Restricted |
|
|
Unrestricted |
|
|
|
|
|
|
|
||||
|
|
Group |
|
|
Group |
|
|
Eliminations |
|
|
Consolidated |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
575.6 |
|
|
$ |
125.9 |
|
|
$ |
— |
|
|
$ |
701.5 |
|
Other current assets |
|
|
404.8 |
|
|
|
(120.0 |
) |
|
|
(12.9 |
) |
|
|
271.9 |
|
Total current assets |
|
|
980.4 |
|
|
|
5.9 |
|
|
|
(12.9 |
) |
|
|
973.4 |
|
Theatre properties and equipment, net |
|
|
1,121.2 |
|
|
|
— |
|
|
|
— |
|
|
|
1,121.2 |
|
Operating lease right-of-use assets, net |
|
|
969.6 |
|
|
|
— |
|
|
|
— |
|
|
|
969.6 |
|
Other long-term assets |
|
|
1,776.5 |
|
|
|
303.4 |
|
|
|
(375.2 |
) |
|
|
1,704.7 |
|
Total assets |
|
$ |
4,847.7 |
|
|
$ |
309.3 |
|
|
$ |
(388.1 |
) |
|
$ |
4,768.9 |
|
Liabilities and equity |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current portion of long-term debt |
|
$ |
6.4 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
6.4 |
|
Current portion of operating lease obligations |
|
|
211.9 |
|
|
|
— |
|
|
|
— |
|
|
|
211.9 |
|
Current portion of finance lease obligations |
|
|
16.4 |
|
|
|
— |
|
|
|
— |
|
|
|
16.4 |
|
Current income tax payable |
|
|
1.8 |
|
|
|
— |
|
|
|
— |
|
|
|
1.8 |
|
Accounts payable and accrued expenses |
|
|
472.3 |
|
|
|
— |
|
|
|
(12.9 |
) |
|
|
459.4 |
|
Total current liabilities |
|
|
708.8 |
|
|
|
— |
|
|
|
(12.9 |
) |
|
|
695.9 |
|
Long-term liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt, less current portion |
|
|
2,132.6 |
|
|
|
— |
|
|
|
(262.2 |
) |
|
|
1,870.4 |
|
Operating lease obligations, less current portion |
|
|
825.7 |
|
|
|
— |
|
|
|
— |
|
|
|
825.7 |
|
Finance lease obligations, less current portion |
|
|
94.1 |
|
|
|
— |
|
|
|
— |
|
|
|
94.1 |
|
Other long-term liabilities and deferrals |
|
|
421.6 |
|
|
|
0.6 |
|
|
|
— |
|
|
|
422.2 |
|
Total long-term liabilities |
|
|
3,474.0 |
|
|
|
0.6 |
|
|
|
(262.2 |
) |
|
|
3,212.4 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity |
|
|
664.9 |
|
|
|
308.7 |
|
|
|
(113.0 |
) |
|
|
860.6 |
|
Total liabilities and equity |
|
$ |
4,847.7 |
|
|
$ |
309.3 |
|
|
$ |
(388.1 |
) |
|
$ |
4,768.9 |
|
Note: “Restricted Group” and “Unrestricted Group” are defined in the indentures for the senior notes.
57
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2024
(in millions, unaudited)
|
|
Restricted |
|
|
Unrestricted |
|
|
|
|
|
|
|
||||
|
|
Group |
|
|
Group |
|
|
Eliminations |
|
|
Consolidated |
|
||||
Revenue |
|
$ |
2,235.2 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,235.2 |
|
Cost of operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Theatre operating costs |
|
|
1,659.9 |
|
|
|
— |
|
|
|
— |
|
|
|
1,659.9 |
|
General and administrative expenses |
|
|
158.2 |
|
|
|
— |
|
|
|
— |
|
|
|
158.2 |
|
Depreciation and amortization |
|
|
148.3 |
|
|
|
— |
|
|
|
— |
|
|
|
148.3 |
|
Loss on disposal of assets and other |
|
|
2.0 |
|
|
|
— |
|
|
|
— |
|
|
|
2.0 |
|
Total cost of operations |
|
|
1,968.4 |
|
|
|
— |
|
|
|
— |
|
|
|
1,968.4 |
|
Operating income |
|
|
266.8 |
|
|
|
— |
|
|
|
— |
|
|
|
266.8 |
|
Interest expense |
|
|
(92.9 |
) |
|
|
— |
|
|
|
2.1 |
|
|
|
(90.8 |
) |
Equity in income of affiliates |
|
|
1.3 |
|
|
|
10.0 |
|
|
|
— |
|
|
|
11.3 |
|
Interest expense - NCM |
|
|
(16.5 |
) |
|
|
— |
|
|
|
— |
|
|
|
(16.5 |
) |
Other income |
|
|
12.7 |
|
|
|
19.6 |
|
|
|
(2.1 |
) |
|
|
30.2 |
|
Total other expense |
|
|
(95.4 |
) |
|
|
29.6 |
|
|
|
— |
|
|
|
(65.8 |
) |
Income before income taxes |
|
|
171.4 |
|
|
|
29.6 |
|
|
|
— |
|
|
|
201.0 |
|
Income tax (benefit) expense |
|
|
(73.9 |
) |
|
|
6.3 |
|
|
|
— |
|
|
|
(67.6 |
) |
Net income |
|
|
245.3 |
|
|
|
23.3 |
|
|
|
— |
|
|
|
268.6 |
|
Less: Net income attributable to noncontrolling interests |
|
|
2.4 |
|
|
|
— |
|
|
|
— |
|
|
|
2.4 |
|
Net income attributable to Cinemark USA, Inc. |
|
$ |
242.9 |
|
|
$ |
23.3 |
|
|
$ |
— |
|
|
$ |
266.2 |
|
Note: “Restricted Group” and “Unrestricted Group” are defined in the indentures for the senior notes.
58
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2024
(in millions, unaudited)
|
|
Restricted |
|
|
Unrestricted |
|
|
|
|
|
|
|
||||
|
|
Group |
|
|
Group |
|
|
Eliminations |
|
|
Consolidated |
|
||||
Net income |
|
$ |
245.3 |
|
|
$ |
23.3 |
|
|
$ |
— |
|
|
$ |
268.6 |
|
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements |
|
|
(4.0 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4.0 |
) |
Foreign currency translation adjustments |
|
|
(14.4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(14.4 |
) |
Total other comprehensive loss, net of tax |
|
|
(18.4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(18.4 |
) |
Total comprehensive income, net of tax |
|
|
226.9 |
|
|
|
23.3 |
|
|
|
— |
|
|
|
250.2 |
|
Comprehensive income attributable to noncontrolling interests |
|
|
(2.4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2.4 |
) |
Comprehensive income attributable to Cinemark USA, Inc. |
|
$ |
224.5 |
|
|
$ |
23.3 |
|
|
$ |
— |
|
|
$ |
247.8 |
|
Note: “Restricted Group” and “Unrestricted Group” are defined in the indentures for the senior notes.
59
CINEMARK USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2024
(in millions, unaudited)
|
|
Restricted |
|
|
Unrestricted |
|
|
|
|
|
|
|
||||
|
|
Group |
|
|
Group |
|
|
Eliminations |
|
|
Consolidated |
|
||||
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
245.3 |
|
|
$ |
23.3 |
|
|
$ |
— |
|
|
$ |
268.6 |
|
Adjustments to reconcile net income to cash used for operating activities |
|
|
41.6 |
|
|
|
(5.0 |
) |
|
|
— |
|
|
|
36.6 |
|
Changes in assets and liabilities |
|
|
(16.6 |
) |
|
|
(9.1 |
) |
|
|
— |
|
|
|
(25.7 |
) |
Net cash provided by operating activities |
|
|
270.3 |
|
|
|
9.2 |
|
|
|
— |
|
|
|
279.5 |
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Additions to theatre properties and equipment |
|
|
(90.2 |
) |
|
|
— |
|
|
|
— |
|
|
|
(90.2 |
) |
Proceeds from sale of assets and other |
|
|
0.5 |
|
|
|
— |
|
|
|
— |
|
|
|
0.5 |
|
Proceeds from redemption of common units of NCM |
|
|
— |
|
|
|
0.6 |
|
|
|
— |
|
|
|
0.6 |
|
Net cash used for investing activities |
|
|
(89.7 |
) |
|
|
0.6 |
|
|
|
— |
|
|
|
(89.1 |
) |
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proceeds from issuance of 7.00% Senior Notes |
|
|
500.0 |
|
|
|
— |
|
|
|
— |
|
|
|
500.0 |
|
Redemption of 8.75% Secured Notes |
|
|
(150.0 |
) |
|
|
— |
|
|
|
— |
|
|
|
(150.0 |
) |
Repayment of 5.875% Senior Notes |
|
|
(405.0 |
) |
|
|
— |
|
|
|
— |
|
|
|
(405.0 |
) |
Payment of debt issuance costs |
|
|
(9.5 |
) |
|
|
— |
|
|
|
— |
|
|
|
(9.5 |
) |
Payment of fees to amend senior secured credit facility and satisfy and discharge the 5.875% Senior Notes |
|
|
(1.3 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1.3 |
) |
Repayments of long-term debt |
|
|
(11.0 |
) |
|
|
— |
|
|
|
— |
|
|
|
(11.0 |
) |
Restricted stock withholdings for payroll taxes |
|
|
(4.4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4.4 |
) |
Payments on finance leases |
|
|
(11.4 |
) |
|
|
— |
|
|
|
— |
|
|
|
(11.4 |
) |
Other financing activities |
|
|
(2.1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2.1 |
) |
Net cash used for financing activities |
|
|
(94.7 |
) |
|
|
— |
|
|
|
— |
|
|
|
(94.7 |
) |
Effect of exchange rate changes on cash and cash |
|
|
(6.6 |
) |
|
|
— |
|
|
|
— |
|
|
|
(6.6 |
) |
Increase in cash and cash equivalents |
|
|
79.3 |
|
|
|
9.8 |
|
|
|
— |
|
|
|
89.1 |
|
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Beginning of year |
|
|
496.3 |
|
|
|
116.1 |
|
|
|
— |
|
|
|
612.4 |
|
End of year |
|
$ |
575.6 |
|
|
$ |
125.9 |
|
|
$ |
— |
|
|
$ |
701.5 |
|
Note: “Restricted Group” and “Unrestricted Group” are defined in the indentures for the senior notes.
60
Item 6. Exhibits
10.1 |
|
|
*31.1 |
|
|
*31.2 |
|
|
*31.3 |
|
|
*31.4 |
|
|
**32.1 |
|
|
**32.2 |
|
|
**32.3 |
|
|
**32.4 |
|
|
**101 |
|
The following material from the combined Cinemark Holdings, Inc. and Cinemark USA, Inc. Form 10-Q for the quarter ended September 30, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language), filed herewith: (i) Cinemark Holdings, Inc. Condensed Consolidated Balance Sheets (ii) Cinemark Holdings, Inc. Condensed Consolidated Statements of Income (iii) Cinemark Holdings, Inc. Condensed Consolidated Statements of Comprehensive Income (iv) Cinemark Holdings, Inc. Condensed Consolidated Statements of Equity (v) Cinemark Holdings, Inc. Condensed Consolidated Statements of Cash Flows (vi) Cinemark USA, Inc. Condensed Consolidated Balance Sheets (vii) Cinemark USA, Inc. Condensed Consolidated Statements of Income (viii) Cinemark USA, Inc. Condensed Consolidated Statements of Comprehensive Income (ix) Cinemark USA, Inc. Condensed Consolidated Statements of Equity (x) Cinemark USA, Inc. Condensed Consolidated Statements of Cash Flows (xi) Notes to Condensed Consolidated Financial Statements of Cinemark Holdings, Inc. and Cinemark USA, Inc. |
* 104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* filed herewith.
** furnished herewith.
61
CINEMARK HOLDINGS, INC. AND
CINEMARK USA, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
CINEMARK HOLDINGS, INC. CINEMARK USA, INC. |
|
|
|
|
Registrants |
|
|
|
|
|
DATE: |
|
October 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
/s/ Sean Gamble |
|
|
|
|
Sean Gamble |
|
|
|
|
Chief Executive Officer |
|
|
|
|
|
|
|
|
|
/s/ Melissa Thomas |
|
|
|
|
Melissa Thomas |
|
|
|
|
Chief Financial Officer |
62