CINEMARK HOLDINGS, INC.
10-Ks and 10-Qs
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Table of Contents
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Fiscal Year Ended December 31,
2010
Commission File Number
001-33401
CINEMARK HOLDINGS,
INC.
(Exact Name of Registrant as
Specified in its Charter)
| Delaware | 20-5490327 | |
|
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
|
|
3900 Dallas Parkway
Suite 500 Plano, Texas |
75093 |
|
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code:
(972) 665-1000
Securities registered pursuant to Section 12(b) of the
Act:
None
Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
o
No
þ
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15
(d) of the
Act. Yes
o
No
þ
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. Yes
þ
No
o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such
files). Yes
o
No
o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
(§ 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant’s
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this
Form 10-K
or any amendment to this
Form 10-K.
o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
“large accelerated filer”, “accelerated
filer” and “smaller reporting company” in
Rule 12b-2
of the Exchange Act. (Check one):
| Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
(Do
not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the
Act). Yes
o
No
þ
The aggregate market value of the voting and non-voting common
equity owned by non-affiliates of the registrant on
June 30, 2010, computed by reference to the closing price
for the registrant’s common stock on the New York Stock
Exchange on such date was $814,952,327 (61,973,561 shares
at a closing price per share of $13.15).
As of February 25, 2011, 113,780,799 shares of common
stock were outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Certain portions of the registrant’s definitive proxy
statement, in connection with its 2011 Annual Meeting of
Stockholders, to be filed within 120 days of
December 31, 2010, are incorporated by reference into
Part III,
Items 10-14,
of this annual report on
Form 10-K.
Table of
Contents
Table of Contents
Cautionary
Statement Regarding Forward-Looking Statements
This annual report on
Form 10-K
includes “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended. The “forward looking statements”
include our current expectations, assumptions, estimates and
projections about our business and our industry. They include
statements relating to:
| • | future revenues, expenses and profitability; | |
| • | the future development and expected growth of our business; | |
| • | projected capital expenditures; | |
| • | attendance at movies generally or in any of the markets in which we operate; | |
| • | the number or diversity of popular movies released and our ability to successfully license and exhibit popular films; | |
| • | national and international growth in our industry; | |
| • | competition from other exhibitors and alternative forms of entertainment; and | |
| • | determinations in lawsuits in which we are defendants. |
You can identify forward-looking statements by the use of words
such as “may,” “should,” “could,”
“estimates,” “predicts,”
“potential,” “continue,”
“anticipates,” “believes,”
“plans,” “expects,” “future” and
“intends” and similar expressions which are intended
to identify forward-looking statements. These statements are not
guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond our
control and difficult to predict and could cause actual results
to differ materially from those expressed or forecasted in the
forward-looking statements. In evaluating forward-looking
statements, you should carefully consider the risks and
uncertainties described in the “Risk Factors” section
in Item 1A of this
Form 10-K
and elsewhere in this
Form 10-K.
All forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety
by the cautionary statements and risk factors contained in this
Form 10-K.
Forward-looking statements contained in this
Form 10-K
reflect our view only as of the date of this
Form 10-K.
We undertake no obligation, other than as required by law, to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
Certain
Definitions
Unless the context otherwise requires, all references to
“we,” “our,” “us,” the
“issuer” or “Cinemark” relate to Cinemark
Holdings, Inc. and its consolidated subsidiaries. Unless
otherwise specified, all operating and other statistical data
for the U.S. include one theatre in Canada (that was sold
during November 2010). All references to Latin America are to
Brazil, Mexico, Chile, Colombia, Argentina, Peru, Ecuador,
Honduras, El Salvador, Nicaragua, Costa Rica, Panama and
Guatemala. Unless otherwise specified, all operating and other
statistical data are as of and for the year ended
December 31, 2010.
1
Table of Contents
| Item 1. | Business |
Our
Company
Cinemark Holdings, Inc. and subsidiaries, or the Company, is a
leader in the motion picture exhibition industry, with theatres
in the United States (“U.S.”), Brazil, Mexico, Chile,
Colombia, Argentina, Peru, Ecuador, Honduras, El Salvador,
Nicaragua, Costa Rica, Panama and Guatemala. We also managed
additional theatres in the U.S., Brazil and Colombia during the
year ended December 31, 2010.
As of December 31, 2010, we managed our business under two
reportable operating segments — U.S. markets and
international markets. See Note 23 to the consolidated
financial statements.
Cinemark Holdings, Inc. is a Delaware corporation incorporated
on August 2, 2006. Our principal executive offices are at
3900 Dallas Parkway, Suite 500, Plano, Texas 75093. Our
telephone number is
(972) 665-1000.
We maintain a corporate website at
www.cinemark.com.
Our
annual reports on
Form 10-K,
quarterly reports on
Form 10-Q
and current reports on
Form 8-K,
and any amendments, are available on our website free of charge
under the heading “Investor Relations — SEC
Filings” as soon as practicable after such reports are
filed or furnished electronically to the Securities and Exchange
Commission.
Description
of Business
We are a leader in the motion picture exhibition industry in
terms of both attendance and the number of screens in operation.
We operated 430 theatres and 4,945 screens in the
U.S. and Latin America as of December 31, 2010, and
approximately 241.2 million patrons attended our theatres
worldwide during the year ended December 31, 2010. Our
circuit is the third largest in the U.S. with
293 theatres and 3,832 screens in 39 states. We
are the most geographically diverse circuit in Latin America
with 137 theatres and 1,113 screens in 13 countries.
Our modern theatre circuit features stadium seating in
approximately 86% of our first-run auditoriums.
We selectively build or acquire new theatres in markets where we
can establish and maintain a strong market position. We believe
our portfolio of modern theatres provides a preferred
destination for moviegoers and contributes to our significant
cash flows from operating activities. Our significant presence
in the U.S. and Latin America has made us an important
distribution channel for movie studios, particularly as they
look to capitalize on the expanding worldwide box office. Our
market leadership is attributable in large part to our senior
executives, whose years of industry experience range from 14 to
52 years and who have successfully navigated us through
multiple industry and economic cycles.
Revenues, operating income and net income attributable to
Cinemark Holdings, Inc. for the year ended December 31,
2010, were $2,141.1 million, $292.8 million and
$146.1 million, respectively. At December 31, 2010 we
had cash and cash equivalents of $465.0 million and
long-term debt of $1,532.5 million. Approximately
$422.8 million, or 27.6%, of our long-term debt accrues
interest at variable rates and approximately $10.8 million
of our long-term debt matures in 2011.
During 2009, we began converting our circuit from film based to
digital projection technology. Digital projection technology
gives us greater flexibility in programming and facilitates the
exhibition of live and pre-recorded alternative entertainment.
We also developed a premium experience auditorium concept
utilizing large screens and the latest in digital projection and
sound technologies, which we call our Cinemark XD Extreme
Digital Cinema, or XD. The XD experience includes
wall-to-wall
and
ceiling-to-floor
screens, wrap-around sound and a maximum comfort entertainment
environment for an intense sensory experience. We charge a
premium price for the XD experience. The XD technology does not
require special format movie prints, which allows us the
flexibility to play any available digital print we choose,
including
3-D
content,
in the XD auditorium. We currently have 47 XD auditoriums in our
theatres and have plans to install 35 to 40 more XD auditoriums
during 2011.
During late 2010, we introduced our NextGen concept, which
features
wall-to-wall
and
ceiling-to-floor
screens and the latest digital projection and sound technologies
in all of the auditoriums of a complex. These theatres generally
also have an XD auditorium, which offers the wall-to-wall and
ceiling-to-floor screen in a larger
2
Table of Contents
auditorium with enhanced sound and seating. Most of our future
domestic theatres will incorporate this NextGen concept. We also
plan to convert our six existing IMAX screens to digital
technology and purchase two additional digital IMAX systems to
convert two of our existing screens during 2011, in conjunction
with our recent settlement with IMAX.
Motion
Picture Exhibition Industry Overview
The motion picture exhibition industry began its transition to
digital projection technology during 2009. Digital projection
technology allows filmmakers the ability to showcase imaginative
works of art exactly as they were intended, with incredible
realism and detail and in a range of up to 35 trillion colors.
Because digital features aren’t susceptible to scratching
and fading, digital presentations will always remain clear and
sharp every time they are shown. A digitally produced or
digitally converted movie can be distributed to theatres via
satellite, physical media, or fiber optic networks. The
digitized movie is stored on a computer/server which
“serves” it to a digital projector for each screening
of the movie and due to its format, it enables us to more
efficiently move films between auditoriums within a theatre as
demand increases or decreases for each film.
Digital projection also allows the presentation of
3-D
content
and alternative entertainment such as live and pre-recorded
concert events, the opera, sports programs and special live
documentaries. Twenty-two films released wide during 2010 were
available in
3-D
format
and at least 34
3-D
films
are expected to be released during 2011. Three-dimensional
technology offers a premium experience with crisp, bright,
ultra-realistic images that immerse the patron into a film. A
premium is generally charged for a
3-D
presentation.
Domestic
Markets
The U.S. motion picture exhibition industry has a track
record of long-term growth, with box office revenues growing at
an estimated CAGR of 3.6% from 2000 to 2010. Against this
background of steady long-term growth, the exhibition industry
has experienced periodic short-term increases and decreases in
attendance, and consequently box office revenues.
The following table represents the results of a survey by Motion
Picture Association of America, or MPAA, published during
February 2011, outlining the historical trends in U.S. box
office performance for the ten year period from 2001 to 2010:
|
U.S. Box
|
Average Ticket
|
|||||||||||
|
Year
|
Office Revenues | Attendance | Price | |||||||||
| ($ in billions) | (In billions) | |||||||||||
|
2001
|
$ | 8.1 | 1.43 | $ | 5.66 | |||||||
|
2002
|
$ | 9.1 | 1.57 | $ | 5.81 | |||||||
|
2003
|
$ | 9.2 | 1.52 | $ | 6.03 | |||||||
|
2004
|
$ | 9.3 | 1.50 | $ | 6.21 | |||||||
|
2005
|
$ | 8.8 | 1.38 | $ | 6.41 | |||||||
|
2006
|
$ | 9.2 | 1.40 | $ | 6.55 | |||||||
|
2007
|
$ | 9.6 | 1.40 | $ | 6.88 | |||||||
|
2008
|
$ | 9.6 | 1.34 | $ | 7.18 | |||||||
|
2009
|
$ | 10.6 | 1.42 | $ | 7.50 | |||||||
|
2010
|
$ | 10.6 | 1.34 | $ | 7.89 | |||||||
Films leading the box office during the year ended
December 31, 2010 included the carryover of
Avatar,
which grossed approximately $475 million in
U.S. box office revenues during 2010 and new releases such
as
Toy Story 3, Alice in Wonderland, Harry Potter and the
Deathly Hallows: Part 1, Iron Man 2, The Twilight Saga:
Eclipse, Inception, Despicable Me, How to Train Your Dragon,
Shrek Forever After, Clash of the Titans, The Karate Kid,
Tangled, Grown Ups, Megamind, Tron: Legacy, Little Fockers, The
Fighter
and
True Grit.
The film slate for 2011 currently includes
Rango, Fast Five,
Thor, Pirates of the Caribbean: On Stranger Tides, Kung Fu Panda
2: The Kaboom of Doom, Cars 2, X Men: First Class, Transformers:
Dark of the Moon, Harry Potter and the Deathly Hollows:
Part 2, Twilight: Breaking Dawn, Captain America: The First
Avenger, Cowboys and Aliens, Puss in Boots, Happy Feet 2,
Sherlock Holmes 2
and
Alvin and the Chipmunks:
Chipwrecked,
among other films.
3
Table of Contents
International
Markets
International box office revenue continues to grow. According to
MPAA, international box office revenues were $21.2 billion
for the year ended December 31, 2010, which is a result of
increasing acceptance of movie going as a popular form of
entertainment throughout the world, ticket price increases and
new theatre construction. According to MPAA, Latin American box
office revenues were $2.1 billion for the year ended
December 31, 2010, representing a 25% increase from 2009.
Growth in Latin America is expected to continue to be fueled by
a combination of robust economies, growing populations,
attractive demographics (i.e., a significant teenage
population), substantial retail development, and quality product
from Hollywood, including an increasing number of 3-D films. In
many Latin American countries, particularly Mexico and Brazil,
successful local film product can also provide incremental
growth opportunities.
We believe many international markets for theatrical exhibition
have historically been underserved and that certain of these
markets, especially those in Latin America, will continue to
experience growth as additional modern stadium-styled theatres
are introduced and film product offerings continue to expand.
Drivers
of Continued Industry Success
We believe the following market trends will drive the continued
growth and strength of our industry:
Importance of Theatrical Success in Establishing Movie Brands
and Subsequent Markets.
Theatrical exhibition is the primary
distribution channel for new motion picture releases. A
successful theatrical release which “brands” a film is
one of the major factors in determining its success in
“downstream” markets, such as DVDs, network and
syndicated television, video on-demand,
pay-per-view
television and the Internet.
Increased Importance of International Markets for Box Office
Success.
International markets continue to be an
increasingly important component of the overall box office
revenues generated by Hollywood films, accounting for
$21.2 billion, or approximately 67% of 2010 total worldwide
box office revenues according to MPAA. With the continued growth
of the international motion picture exhibition industry, we
believe the relative contribution of markets outside North
America will become even more significant. Many of the top
U.S. films released recently also performed exceptionally
well in international markets. Such films included
Avatar
, which grossed approximately $1.5 billion in
international markets and
Harry Potter and the Deathly
Hallows: Part 1
, which grossed approximately
$610 million in international markets.
Stable Long-Term Attendance Trends.
We believe
that long-term trends in motion picture attendance in the
U.S. will continue to benefit the industry. Even during the
recent recessionary period, attendance levels remained stable as
consumers selected the theatre as a preferred value for their
discretionary income. Although domestic attendance declined
slightly in 2010, patronage trends during 2010 reflected
increasing demand for products unique to the exhibition industry
such as 3-D. With the motion picture exhibition industry’s
transition to digital projection technology, the products
offered by motion picture exhibitors continue to expand,
attracting a broader base of patrons.
Convenient and Affordable Form of
Out-Of-Home
Entertainment.
Movie going continues to be one of
the most convenient and affordable forms of
out-of-home
entertainment, with an estimated average ticket price in the
U.S. of $7.89 in 2010. Average prices in 2010 for other
forms of
out-of-home
entertainment in the U.S., including sporting events and theme
parks, range from approximately $25.00 to $77.00 per ticket
according to MPAA.
Innovation with Digital Technology.
Our
industry began its conversion to digital projection technology
during 2009, which has allowed exhibitors to expand their
product offerings. Digital technology allows the presentation of
3-D
content
and alternative entertainment such as live and pre-recorded
sports programs, the opera, concert events and special live
documentaries. These additional programming alternatives may
expand the industry’s customer base and increase patronage
for exhibitors.
4
Table of Contents
Competitive
Strengths
We believe the following strengths allow us to compete
effectively:
Disciplined Operating Philosophy.
We generated
operating income and net income attributable to Cinemark
Holdings, Inc. of $292.8 million and $146.1 million,
respectively, for the year ended December 31, 2010. Our
solid operating performance is a result of our disciplined
operating philosophy that centers on building high quality
assets, while negotiating favorable theatre level economics,
controlling operating costs and effectively reacting to economic
and market changes.
Leading Position in Our U.S. Markets.
We
have a leading market share in the U.S. metropolitan and
suburban markets we serve. For the year ended December 31,
2010, we ranked either first or second based on box office
revenues in 25 out of our top 30 U.S. markets, including
the San Francisco Bay Area, Dallas, Houston and Salt Lake
City.
Strategically Located in Heavily Populated Latin American
Markets.
Since 1993, we have invested throughout
Latin America in response to the continued growth of the region.
We currently operate 137 theatres and 1,113 screens in
13 countries. Our international screens generated revenues of
$564.2 million, or 26.4% of our total revenue, for the year
ended December 31, 2010. We have successfully established a
significant presence in major cities in the region, with
theatres in twelve of the fifteen largest metropolitan areas.
With a geographically diverse circuit, we are an important
distribution channel to the movie studios. Approximately 84% of
our international screens offer stadium seating. We are
well-positioned with our modern, large-format theatres to take
advantage of these factors for further growth and
diversification of our revenues.
State-of-the-Art
Theatre Circuit.
We offer
state-of-the-art
theatres, which we believe makes our theatres a preferred
destination for moviegoers in our markets. We feature stadium
seating in approximately 86% of our first run auditoriums.
During 2010, we increased the size of our circuit by adding
138 state-of-the-art
screens worldwide. We currently have commitments to build 196
additional new screens over the next three years. We plan to
install digital projection technology in 100% of our
U.S. and international auditoriums of which
40-50%
will
be 3-D compatible. We also plan to convert our six existing IMAX
screens to digital technology and purchase two additional
digital IMAX systems to convert two of our existing screens
during 2011. We currently have 47 XD auditoriums in our theatres
and have plans to install 35 to 40 more XD auditoriums during
2011. Our new NextGen theatre concept provides further credence
to our commitment to provide a continuing
state-of-the-art
movie-viewing experience to our patrons.
Solid Balance Sheet with Significant Cash Flow from Operating
Activities.
We generate significant cash flow
from operating activities as a result of several factors,
including a geographically diverse and modern theatre circuit
and management’s ability to control costs and effectively
react to economic and market changes. Additionally, owning land
and buildings for 42 of our theatres is a strategic advantage
that enhances our cash flows. We believe our expected level of
cash flow generation will provide us with the financial
flexibility to continue to pursue growth opportunities, support
our debt payments and continue to make dividend payments to our
stockholders. In addition, as of December 31, 2010, we
owned approximately 16.9 million shares of National
CineMedia and had approximately 1.1 million options to
purchase shares in Real D, both of which offer us an additional
source of cash flows. As of December 31, 2010, we had cash
and cash equivalents of $465.0 million.
Experienced Management.
Led by Chairman and
founder Lee Roy Mitchell, Chief Executive Officer Alan Stock,
President; Chief Operating Officer Timothy Warner, Chief
Financial Officer Robert Copple and President-International
Valmir Fernandes, our management team has many years of theatre
operating experience, ranging from 14 to 52 years,
executing a focused strategy that has led to consistent
operating results. This management team has successfully
navigated us through many industry and economic cycles.
5
Table of Contents
Our
Strategy
We believe our disciplined operating philosophy and experienced
management team will enable us to continue to enhance our
leading position in the motion picture exhibition industry. Key
components of our strategy include:
Establish and Maintain Leading Market
Positions.
We will continue to seek growth
opportunities by building or acquiring modern theatres that meet
our strategic, financial and demographic criteria. We focus on
establishing and maintaining a leading position in the markets
we currently serve. We also monitor economic and market trends
to ensure we offer a broad range of products and prices that
satisfy our patrons.
Continue to Focus on Operational
Excellence.
We will continue to focus on
achieving operational excellence by controlling theatre
operating costs and adequately training our staff while
continuing to provide leading customer service. Our margins
reflect our track record of operating efficiency.
Selectively Build in Profitable, Strategic Latin American
Markets.
Our continued international expansion
will remain focused primarily on Latin America through
construction of modern,
state-of-the-art
theatres in growing urban markets. We have commitments to build
eight new theatres with 51 screens during 2011 and five new
theatres with 34 screens subsequent to 2011, investing an
additional $63 million in our Latin American markets. We
also plan to install digital projection technology in all of our
international auditoriums, which allows us to present
3-D
and
alternative content in these markets. We have also installed
eight of our proprietary XD auditoriums in our international
theatres and have plans to install approximately 20 to 25
additional XD auditoriums internationally during 2011.
Commitment to Digital Innovation.
Our
commitment to technological innovation has resulted in us having
1,363 digital auditoriums in the U.S. as of
December 31, 2010, 1,136 of which are 3-D compatible. We
also had 201 digital auditoriums in our international markets as
of December 31, 2010, all of which are 3-D compatible. See
further discussion of our digital expansion at “Conversion
to Digital Projection Technology”. We are planning to
convert 100% of our worldwide circuit to digital projection
technology, approximately
40-50%
of
which will be 3-D compatible. We also plan to expand our XD
auditorium footprint in various markets throughout the
U.S. and in select international markets, which offers our
patrons a premium movie-viewing experience.
Theatre
Operations
As of December 31, 2010, we operated 430 theatres and
4,945 screens in 39 states and 13 Latin American
countries. Our theatres in the U.S. are primarily located
in mid-sized U.S. markets, including suburbs of major
metropolitan areas. We believe these markets are generally less
competitive and generate high, stable margins. Our theatres in
Latin America are primarily located in major metropolitan
markets, which we believe are generally underscreened. The
following tables summarize the geographic locations of our
theatre circuit as of December 31, 2010.
United
States Theatres
|
Total
|
Total
|
|||||||
|
State
|
Theatres | Screens | ||||||
|
Texas
|
79 | 1,030 | ||||||
|
California
|
61 | 740 | ||||||
|
Ohio
|
19 | 213 | ||||||
|
Utah
|
14 | 177 | ||||||
|
Nevada
|
10 | 154 | ||||||
|
Illinois
|
9 | 128 | ||||||
|
Colorado
|
8 | 127 | ||||||
|
Arizona
|
7 | 106 | ||||||
|
Oregon
|
7 | 102 | ||||||
|
Kentucky
|
7 | 87 | ||||||
|
Pennsylvania
|
6 | 89 | ||||||
|
Oklahoma
|
6 | 71 | ||||||
6
Table of Contents
|
Total
|
Total
|
|||||||
|
State
|
Theatres | Screens | ||||||
|
Florida
|
5 | 98 | ||||||
|
Louisiana
|
5 | 74 | ||||||
|
Indiana
|
5 | 48 | ||||||
|
New Mexico
|
4 | 54 | ||||||
|
Virginia
|
4 | 52 | ||||||
|
North Carolina
|
4 | 41 | ||||||
|
Mississippi
|
3 | 41 | ||||||
|
Iowa
|
3 | 37 | ||||||
|
Arkansas
|
3 | 36 | ||||||
|
Washington
|
2 | 30 | ||||||
|
Georgia
|
2 | 27 | ||||||
|
New York
|
2 | 27 | ||||||
|
South Dakota
|
2 | 26 | ||||||
|
South Carolina
|
2 | 22 | ||||||
|
West Virginia
|
2 | 22 | ||||||
|
Maryland
|
1 | 24 | ||||||
|
Kansas
|
1 | 20 | ||||||
|
Alaska
|
1 | 16 | ||||||
|
Michigan
|
1 | 16 | ||||||
|
New Jersey
|
1 | 16 | ||||||
|
Missouri
|
1 | 15 | ||||||
|
Tennessee
|
1 | 14 | ||||||
|
Wisconsin
|
1 | 14 | ||||||
|
Massachusetts
|
1 | 12 | ||||||
|
Delaware
|
1 | 10 | ||||||
|
Minnesota
|
1 | 8 | ||||||
|
Montana
|
1 | 8 | ||||||
|
Total
|
293 | 3,832 | ||||||
International
Theatres
|
Total
|
Total
|
|||||||
|
Country
|
Theatres | Screens | ||||||
|
Brazil
|
49 | 409 | ||||||
|
Mexico
|
31 | 296 | ||||||
|
Central America(1)
|
12 | 83 | ||||||
|
Colombia
|
12 | 68 | ||||||
|
Chile
|
11 | 87 | ||||||
|
Argentina
|
10 | 80 | ||||||
|
Peru
|
8 | 64 | ||||||
|
Ecuador
|
4 | 26 | ||||||
|
Total
|
137 | 1,113 | ||||||
| (1) | Includes Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala. |
We first entered Latin America when we began operating movie
theatres in Chile in 1993 and Mexico in 1994. Since then,
through our focused international strategy, we have developed
into the most geographically diverse theatre circuit in the
region. We have balanced our risk through a diversified
international portfolio, currently operating theatres in twelve
of the fifteen largest metropolitan areas in Latin America. In
addition, we have achieved significant scale in Brazil and
Mexico, the two largest Latin American economies, with
409 screens in Brazil and 296 screens in Mexico as of
December 31, 2010.
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We believe that certain markets within Latin America continue to
be underserved as penetration of movie screens per capita in
Latin American markets is substantially lower than in the
U.S. and European markets. We will continue to build and
expand our presence in underserved international markets, with
emphasis on Latin America, and fund our expansion primarily with
cash flow generated in those markets. We are able to mitigate
cash flow exposure to currency fluctuations by using local
currencies to collect a majority of our revenues and fund a
majority of the costs of our international operations. Our
geographic diversity throughout Latin America has allowed us to
maintain consistent revenue growth, notwithstanding currency and
economic fluctuations that may affect any particular market. Our
international revenues were approximately $564.2 million
during 2010 compared to $421.8 million during 2009.
Film
Licensing
In the domestic marketplace, the Company’s film department
negotiates with film distributors, which are made up of the
traditional major film companies, specialized and art divisions
of some of these major film companies, and many other
independent film distributors. The film distributors are
responsible for determining film release dates, the related
marketing campaigns and the expenditures related to marketing
materials, television spots and other advertising outlets. The
marketing campaign of each movie may include tours of the actors
in the movies and coordination of articles and features about
each movie. The Company is responsible for booking the films in
negotiated film zones, which are either free zones or
competitive zones. In free zones, movies can be booked without
regard to the location of another exhibitor within that area. In
competitive zones, the distributor allocates their movies to the
exhibitors located in that area generally based on demographics
and grossing potential of that particular area. We are the sole
exhibitor in approximately 91% of the 247 film zones in which
our first run U.S. theatres operate. In film zones where
there is no direct competition from other theatres, we select
those films that we believe will be the most successful from
those offered to us by film distributors.
Internationally, our local film personnel negotiate with local
offices of major film distributors as well as local film
distributors to license films for our international theatres. In
the international marketplace, films are not allocated to a
single theatre in a geographic film zone, but played by
competitive theatres simultaneously. Our theatre personnel focus
on providing excellent customer service, and we provide a modern
facility with the most
up-to-date
sound systems, comfortable stadium style seating and other
amenities typical of modern American-style multiplexes, which we
believe gives us a competitive advantage in markets where
competing theatres play the same films. Of the
1,113 screens we operate in international markets,
approximately 75% have no direct competition from other theatres.
Our film rental fees in the U.S. are generally based on a
film’s box office receipts and either mutually agreed upon
firm terms, a sliding scale formula, or a mutually agreed upon
settlement, subject to the film licensing agreement. Under a
firm terms formula, we pay the distributor a mutually agreed
upon specified percentage of box office receipts. Under a
sliding scale formula, we pay a percentage of box office
revenues using a pre-determined matrix that is based upon box
office performance of the film. The settlement process allows
for negotiation of film rental fees upon the conclusion of the
film run based upon how the film performs. Internationally, our
film rental fees are primarily based on mutually agreed upon
firm terms that are based upon a specified percentage of box
office receipts.
We regularly play art and independent films at many of our U.S.
theatres, providing a variety of film choices to our patrons.
Bringing art and independent films to our theatres allows us to
benefit from the growth in the art and independent market driven
by the more mature patron and increased interest in art, foreign
and documentary films. High profile film festivals, such as the
Sundance Film Festival, have contributed to interest in this
genre. Recent hits such as
The Kids are Alright, Black Swan,
and
The King’s Speech
have demonstrated the box
office potential of art and independent films.
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Food,
Beverages and Amusements
Concession sales are our second largest revenue source,
representing approximately 30% of total revenues for each of the
years ended December 31, 2008, 2009 and 2010. Concession
sales have a much higher margin than admissions sales. We have
devoted considerable management effort to increase concession
sales and improve operating margins. These efforts include
implementation of the following strategies:
| • | Optimization of product mix. We offer concession products that primarily include various sizes and types of popcorn, soft drinks, coffees, juices, candy and quickly-prepared food, such as hot dogs, nachos and ice cream. Different varieties and flavors of candy and drinks are offered at theatres based on preferences in that particular market. Our point of sale system allows us to monitor product sales and make changes to product mix when necessary, which also allows us to take advantage of national product launches. Specially priced combos and promotions are introduced on a regular basis to increase average concession purchases as well as to attract new buyers. We periodically offer our loyal patrons opportunities to receive a discount on certain products by offering reusable popcorn tubs and soft drink cups that can be refilled at a discount off the regular price. | |
| • | Staff training. Employees are continually trained in “suggestive-selling” and “upselling” techniques. Consumer promotions conducted at the concession stand usually include a motivational element that rewards theatre staff for exceptional sales of certain promotional items. | |
| • | Theatre design. Our theatres are designed to optimize efficiencies at the concession stands, which include multiple service stations throughout a theatre to facilitate serving more customers more quickly. We strategically place large concession stands within theatres to heighten visibility, reduce the length of concession lines, and improve traffic flow around the concession stands. We have self-service concession areas in many of our domestic theatres, which allow customers to select their own refreshments and proceed to the cash register when they are ready. This design allows for efficient service, enhanced choices and superior visibility of concession items. Concession designs in many of our new domestic theatres have incorporated the self-service model. | |
| • | Cost control. We negotiate prices for concession supplies directly with concession vendors and manufacturers to obtain volume rates. Concession supplies are distributed through a national distribution network. The concession distributor supplies and distributes inventory to the theatres, who place orders directly with the vendors to replenish stock. We conduct a weekly inventory of all concession products at each theatre to ensure proper stock levels are maintained for business. |
Pre-Feature
Screen Advertising
In our domestic markets, our theatres are part of the in-theatre
digital network operated by National CineMedia, LLC, or NCM.
NCM’s primary activities that impact our theatres include:
advertising through its branded “
First Look
”
pre-feature entertainment program, lobby promotions and
displays; live and pre-recorded networked and single-site
meetings and events; and live and pre-recorded concerts,
sporting events and other non-film entertainment programming. We
believe that the reach, scope and digital delivery capability of
NCM’s network provides an effective platform for national,
regional and local advertisers to reach an engaged audience. We
receive a monthly theatre access fee for participation in the
NCM network. In addition, we are entitled to receive mandatory
quarterly distributions of excess cash from NCM. As of
December 31, 2010, we had an approximate 15% ownership
interest in NCM. See Note 6 to the consolidated financial
statements.
In many of our international markets, we outsource our screen
advertising to local companies who have established
relationships with local advertisers that provide similar
benefits as NCM. The terms of our international screen
advertising contracts vary by country. In some locations, we
earn a percentage of the screen advertising revenues collected
by our partners and in other locations we are paid a fixed
annual fee for access to our screens.
Conversion
to Digital Projection Technology
The motion picture exhibition industry began its conversion to
digital projection technology during 2009.
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Participation
in Digital Cinema Implementation Partners
During 2007, we, AMC Entertainment Inc., or AMC, and Regal
Entertainment Group, or Regal, entered into a joint venture
known as Digital Cinema Implementation Partners LLC, or DCIP, to
facilitate the implementation of digital cinema in our
U.S. theatres and to establish agreements with major motion
picture studios for the financing of digital cinema. Digital
cinema developments are managed by DCIP, subject to certain
approvals by us, AMC and Regal with each of us having an equal
voting interest in DCIP. DCIP’s wholly-owned subsidiary
Kasima executed long-term deployment agreements with all of the
major motion picture studios, under which Kasima receives a
virtual print fee from such studios for each digital
presentation. In accordance with these agreements, the digital
projection systems deployed by Kasima comply with the technology
and security specifications developed by the Digital Cinema
Initiatives studio consortium. Kasima leases digital projection
systems to us, AMC and Regal under master lease agreements that
have an initial term of 12 years.
On March 10, 2010, we signed a master lease agreement and
other related agreements (collectively the
“agreements”) with Kasima. Upon signing these
agreements, we contributed cash and our existing digital
projection systems to DCIP. Subsequent to the contributions, we
continue to have a 33% voting interest in DCIP and have a 24.3%
economic interest in DCIP. As of December 31, 2010, we had
1,363 digital auditoriums in the U.S., 1,136 of which are
capable of exhibiting 3-D content. We ultimately expect to
install digital projection systems in all of our auditoriums,
with approximately
40-50%
being
3-D compatible.
International
Markets
In our international markets, we continue to convert our
auditoriums to digital projection technology. The digital
projection systems we deploy are generally funded with operating
cash flows generated by each international country. As of
December 31, 2010, we had 201 digital auditoriums in our
international markets, all of which are capable of exhibiting
3-D content. Similar to our domestic markets, we expect to
install digital projection systems in all of our international
auditoriums.
Marketing
In the U.S., we rely on Internet advertising and also newspaper
directory film schedules. Radio and television advertising spots
are used to promote certain motion pictures and special events.
We exhibit previews of coming attractions and films we are
currently playing as part of our pre-feature program. We offer
patrons access to movie times, the ability to buy and print
their tickets at home and purchase gift cards at our Web site
www.cinemark.com
. Customers subscribing to our weekly
email receive targeted information about current and upcoming
films at their preferred Cinemark theatre(s), including details
about advanced tickets, special events, concerts and live
broadcasts; as well as contests, promotions, and exclusive
coupons for concession savings. We partner with film
distributors to use monthly web contests to drive traffic to our
Web site and to ensure that customers visit often. In addition,
we work with all of the film distributors on a regular basis to
promote their films with local, regional and national programs
that are exclusive to our theatres. These programs may involve
customer contests, cross-promotions with the media and third
parties and other means to increase patronage for a particular
film showing at one of our theatres. We are also developing an
iPhone application in the U.S. that will allow patrons to
check showtimes and purchase tickets.
Internationally, we exhibit upcoming and current film previews
on screen, we partner with film distributors for certain
promotions and advertise our new locations through various forms
of media and events. We partner with large multi-national
corporations in the large metropolitan areas in which we have
theatres to promote our brand, our image and to increase
attendance levels at our theatres. Our customers are encouraged
to register on our Web site to receive weekly information by
email for showtime information, invitations to special
screenings, sponsored events and promotional information. In
addition, our customers can request to receive showtime
information on their cell phones. We also have loyalty programs
in some of our international markets that allow customers to pay
a nominal fee for a membership card that provides them with
certain admissions and concession discounts. In addition, the
Company has just introduced an iPhone application in Brazil
ranking among the top ten downloads in Brazil’s local Apple
stores. The application allows consumers to check showtimes and
purchase tickets for our Brazil theatres.
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Our domestic and international marketing departments also focus
on maximizing ancillary revenue, which includes the sale of our
gift cards and our SuperSaver discount tickets. We market these
programs to such business representatives as realtors, human
resource managers, incentive program managers and hospital and
pharmaceutical personnel. Gift cards can be purchased for
certain of our locations at our theatres or online through our
Web site,
www.cinemark.com
. SuperSavers are also sold
online at
www.cinemark.com
or via phone, fax or email by
our local corporate offices and are also available at certain
retailers in the U.S.
Online
Sales
Our patrons may purchase advance tickets for all of our domestic
screens and approximately seventy-five percent of our
international screens by accessing our corporate Web site at
www.cinemark.com.
Advance tickets may also be purchased
for our domestic screens at
www.fandango.com.
Our iPhone
application in Brazil currently offers, and the iPhone
application we are developing in the U.S. will offer,
patrons the ability to purchase tickets. Our Internet
initiatives help improve customer satisfaction, allowing patrons
who purchase tickets over the Internet to often bypass lines at
the box office by printing their tickets at home or picking up
their tickets at kiosks located at the theatre.
Point of
Sale Systems
We have developed our own proprietary point of sale system to
enhance our ability to maximize revenues, control costs and
efficiently manage operations. The system is currently installed
in all of our U.S. theatres. The point of sale system
provides corporate management with real-time admissions and
concession revenues data and reports to allow for timely changes
to movie schedules, including extending film runs, increasing
the number of screens on which successful movies are being
played, or substituting films when gross receipts do not meet
expectations. Real-time seating, as well as Reserved Seating,
and box office information is available to box office personnel,
preventing overselling of a particular film and providing faster
and more accurate responses to customer inquiries regarding
showtimes and available seating. The system tracks concession
sales by product, provides in-theatre inventory reports for
efficient inventory management and control, offers numerous
ticket pricing options, connects with digital concession signage
for real-time pricing modifications, integrates Internet ticket
sales and processes credit card transactions. Barcode scanners,
pole displays, touch screens, credit card readers and other
equipment are integrated with the system to enhance its
functions and provide print at home and mobile ticketing. In our
international locations, we currently use other point of sale
systems that have been developed by third parties, which have
been certified as compliant with applicable governmental
regulations and provide generally the same capabilities as our
proprietary point of sale system.
Competition
We are a leader in the motion picture exhibition industry in
terms of both attendance and the number of screens in operation.
We compete against local, regional, national and international
exhibitors with respect to attracting patrons, licensing films
and developing new theatre sites.
We are the sole exhibitor in approximately 91% of the 247 film
zones in which our first run U.S. theatres operate. In film
zones where there is no direct competition from other theatres,
we select those films that we believe will be the most
successful from those offered to us by film distributors. Where
there is competition, the distributor allocates their movies to
the exhibitors located in that area generally based on
demographics and grossing potential of that particular area. Of
the 1,113 screens we operate outside of the U.S.,
approximately 75% of those screens have no direct competition
from other theatres. In areas where we face direct competition,
our success in attracting patrons depends on location, theatre
capacity, quality of projection and sound equipment, film
showtime availability, customer service quality, and ticket
prices. The competition for film licensing in the U.S. is
dependent upon factors such as the theatre’s location and
its demographics, the condition, capacity and revenue potential
of each theatre, and licensing terms.
We compete for new theatre sites with other movie theatre
exhibitors as well as other entertainment venues, with securing
a potential site being dependent upon factors such as committed
investment and resources, theatre design and capacity, revenue
and patron potential, and financial stability.
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We also face competition from a number of other motion picture
exhibition delivery systems, such as DVDs, network and
syndicated television, video on-demand,
pay-per-view
television and the Internet. We also face competition from other
forms of entertainment competing for the public’s leisure
time and disposable income, such as concerts, theme parks and
sporting events.
Corporate
Operations
Our corporate headquarters is located in Plano, Texas. Personnel
at our corporate headquarters provide oversight for our domestic
and international theatres. Domestic personnel at our corporate
headquarters include our executive team and department heads in
charge of film licensing, concessions, theatre operations,
theatre construction and maintenance, real estate, human
resources, legal, finance and accounting, audit, information
systems support and marketing. Our U.S. operations are
divided into sixteen regions, primarily organized
geographically, each of which is headed by a region leader.
International personnel at our corporate headquarters include
our President of Cinemark International, L.L.C. and department
heads in charge of film licensing, concessions, theatre
operations, theatre construction, real estate, legal, audit,
information systems and accounting. We have eight regional
offices in Latin America responsible for the local management of
theatres in thirteen individual countries (Honduras, El
Salvador, Nicaragua, Costa Rica, Panama and Guatemala are
operated out of one Central American regional office). Each
regional office is headed by a general manager and includes
personnel in film licensing, marketing, human resources,
information systems, operations and accounting. We have a chief
financial officer in both Brazil and Mexico, which are our two
largest international markets. The regional offices are staffed
with experienced personnel from the region to mitigate cultural
and operational barriers.
Employees
We have approximately 14,600 employees in the U.S.,
approximately 10% of whom are full time employees and 90% of
whom are part time employees. We have approximately
7,400 employees in our international markets, approximately
63% of whom are full time employees and approximately 37% of
whom are part time employees. Some of our U.S. employees
are represented by unions under collective bargaining
agreements, and some of our international locations are subject
to union regulations. We regard our relations with our employees
to be satisfactory.
Regulations
The distribution of motion pictures is largely regulated by
federal and state antitrust laws and has been the subject of
numerous antitrust cases. The manner in which we can license
films from certain major film distributors is subject to consent
decrees resulting from these cases. Consent decrees bind certain
major film distributors and require the films of such
distributors to be offered and licensed to exhibitors, including
us, on a
theatre-by-theatre
and
film-by-film
basis. Consequently, exhibitors cannot enter into long-term
arrangements with major distributors, but must negotiate for
licenses on a
theatre-by-theatre
and
film-by-film
basis.
We are subject to various general regulations applicable to our
operations including the Americans with Disabilities Act of
1990, or the ADA. We develop new theatres to be accessible to
the disabled and we believe we are substantially compliant with
current regulations relating to accommodating the disabled.
Although we believe that our theatres comply with the ADA, we
have been a party to lawsuits which claim that our handicapped
seating arrangements do not comply with the ADA or that we are
required to provide captioning for patrons who are deaf or are
severely hearing impaired.
Our theatre operations are also subject to federal, state and
local laws governing such matters as wages, working conditions,
citizenship, health and sanitation requirements and licensing.
Financial
Information About Geographic Areas
We currently have operations in the U.S., Brazil, Mexico, Chile,
Colombia, Argentina, Peru, Ecuador, Honduras, El Salvador,
Nicaragua, Costa Rica, Panama and Guatemala, which are reflected
in the consolidated
12
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financial statements. See Note 23 to the consolidated
financial statements for segment information and financial
information by geographic area.
| Item 1A. | Risk Factors |
Our
business depends on film production and
performance.
Our business depends on both the availability of suitable films
for exhibition in our theatres and the success of those films in
our markets. Poor performance of films, the disruption in the
production of films due to events such as a strike by directors,
writers or actors, a reduction in financing options for the film
distributors, or a reduction in the marketing efforts of the
film distributors to promote their films could have an adverse
effect on our business by resulting in fewer patrons and reduced
revenues.
A
deterioration in relationships with film distributors could
adversely affect our ability to obtain commercially successful
films.
We rely on the film distributors to supply the films shown in
our theatres. The film distribution business is highly
concentrated, with six major film distributors accounting for
approximately 82.7% of U.S. box office revenues and 47 of
the top 50 grossing films during 2010. Numerous antitrust
cases and consent decrees resulting from these antitrust cases
impact the distribution of films. The consent decrees bind
certain major film distributors to license films to exhibitors
on a
theatre-by-theatre
and
film-by-film
basis. Consequently, we cannot guarantee a supply of films by
entering into long-term arrangements with major distributors. We
are therefore required to negotiate licenses for each film and
for each theatre. A deterioration in our relationship with any
of the six major film distributors could adversely affect our
ability to obtain commercially successful films and to negotiate
favorable licensing terms for such films, both of which could
adversely affect our business and operating results.
Our
results of operations vary from period to period based upon the
quantity and quality of the motion pictures that we show in our
theatres.
Our results of operations vary from period to period based upon
the quantity and quality of the motion pictures that we show in
our theatres. The major film distributors generally release the
films they anticipate will be most successful during the summer
and holiday seasons. Consequently, we typically generate higher
revenues during these periods. Due to the dependency on the
success of films released from one period to the next, results
of operations for one period may not be indicative of the
results for the following period or the same period in the
following year.
We
face intense competition for patrons and films which may
adversely affect our business.
The motion picture industry is highly competitive. We compete
against local, regional, national and international exhibitors.
We compete for both patrons and licensing of films. The
competition for patrons is dependent upon such factors as
location, theatre capacity, quality of projection and sound
equipment, film showtime availability, customer service quality,
and ticket prices. The principal competitive factors with
respect to film licensing include the theatre’s location
and its demographics, the condition, capacity and revenue
potential of each theatre and licensing terms. If we are unable
to attract patrons or to license successful films, our business
may be adversely affected.
An
increase in the use of alternative or “downstream”
film distribution channels and other competing forms of
entertainment may reduce movie theatre attendance and limit
revenue growth.
We face competition for patrons from a number of alternative
film distribution channels, such as DVDs, network and syndicated
television, video on-demand,
pay-per-view
television and the Internet. We also compete with other forms of
entertainment, such as concerts, theme parks and sporting
events, for our patrons’ leisure time and disposable
income. A significant increase in popularity of these
alternative film distribution channels or competing forms of
entertainment could have an adverse effect on our business and
results of operations.
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Our
results of operations may be impacted by shrinking video release
windows.
Over the last decade, the average video release window, which
represents the time that elapses from the date of a film’s
theatrical release to the date a film is available on DVD, an
important downstream market, has decreased from approximately
six months to approximately three to four months. If patrons
choose to wait for a DVD release rather than attend a theatre
for viewing the film, it may adversely impact our business and
results of operations, financial condition and cash flows. Film
studios have announced their intention to offer consumers a
premium video on demand option for certain films 60 days
following the theatrical release, which would also cause the
release window to shrink further. We cannot assure you that
these release windows, which are determined by the film studios,
will not shrink further or be eliminated altogether, which could
have an adverse impact on our business and results of operations.
We
have substantial long-term lease and debt obligations, which may
restrict our ability to fund current and future operations and
that restrict our ability to enter into certain
transactions.
We have, and will continue to have, significant long-term debt
service obligations and long-term lease obligations. As of
December 31, 2010, we had $1,532.5 million in
long-term debt obligations, $140.2 million in capital lease
obligations and $1,795.2 million in long-term operating
lease obligations. We incurred interest expense of
$112.4 million for the year ended December 31, 2010.
We incurred $255.7 million of facility lease expense under
operating leases for the year ended December 31, 2010 (the
terms under these operating leases, excluding optional renewal
periods, range from one to 27 years). Our substantial lease
and debt obligations pose risk to you by:
| • | making it more difficult for us to satisfy our obligations; | |
| • | requiring us to dedicate a substantial portion of our cash flows to payments on our lease and debt obligations, thereby reducing the availability of our cash flows from operations to fund working capital, capital expenditures, acquisitions and other corporate requirements and to pay dividends; | |
| • | impeding our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions and general corporate purposes; | |
| • | subjecting us to the risk of increased sensitivity to interest rate increases on our variable rate debt, including our borrowings under our senior secured credit facility; and | |
| • | making us more vulnerable to a downturn in our business and competitive pressures and limiting our flexibility to plan for, or react to, changes in our industry or the economy. |
Our ability to make scheduled payments of principal and interest
with respect to our indebtedness will depend on our ability to
generate positive cash flows and on our future financial
results. Our ability to generate positive cash flows is subject
to general economic, financial, competitive, regulatory and
other factors that are beyond our control. We cannot assure you
that we will continue to generate cash flows at current levels,
or that future borrowings will be available under our senior
secured credit facility, in an amount sufficient to enable us to
pay our indebtedness. If our cash flows and capital resources
are insufficient to fund our lease and debt service obligations,
we may be forced to reduce or delay capital expenditures, sell
assets or operations, seek additional capital or restructure or
refinance our indebtedness. We may not be able to take any of
these actions, and these actions may not be successful or permit
us to meet our scheduled debt service obligations and these
actions may be restricted under the terms of our existing or
future debt agreements, including our senior secured credit
facility. The senior secured credit facility restricts our
ability to dispose of assets and use the proceeds from the
disposition. We may not be able to consummate those dispositions
or the proceeds may not be adequate to meet our debt service
obligations.
If we fail to make any required payment under the agreements
governing our leases and indebtedness or fail to comply with the
financial and operating covenants contained in them, we would be
in default, and as a result, our debt holders would have the
ability to require that we immediately repay our outstanding
indebtedness and the lenders under our senior secured credit
facility could terminate their commitments to lend us money and
foreclose against the assets securing their borrowings. We could
be forced into bankruptcy or liquidation, which could result in
the loss of your investment. The acceleration of our
indebtedness under one agreement may permit acceleration
14
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of indebtedness under other agreements that contain
cross-default and cross-acceleration provisions. If our
indebtedness is accelerated, we may not be able to repay our
indebtedness or borrow sufficient funds to refinance it. Even if
we are able to obtain new financing, it may not be on
commercially reasonable terms or on terms that are acceptable to
us. If our debt holders require immediate payment, we may not
have sufficient assets to satisfy our obligations under our
indebtedness.
General
political, social and economic conditions can adversely affect
our attendance.
Our results of operations are dependent on general political,
social and economic conditions, and the impact of such
conditions on our theatre operating costs and on the willingness
of consumers to spend money at movie theatres. If
consumers’ discretionary income declines as a result of an
economic downturn, our operations could be adversely affected.
If theatre operating costs, such as utility costs, increase due
to political or economic changes, our results of operations
could be adversely affected. Political events, such as terrorist
attacks, and health-related epidemics, such as flu outbreaks,
could cause people to avoid our theatres or other public places
where large crowds are in attendance. In addition, a natural
disaster, such as a hurricane or an earthquake, could impact our
ability to operate certain of our theatres, which could
adversely affect our results of operations.
Our
foreign operations are subject to adverse regulations, economic
instability and currency exchange risk.
We have 137 theatres with 1,113 screens in thirteen
countries in Latin America. Brazil and Mexico represented
approximately 14.8% and 3.3% of our consolidated 2010 revenues,
respectively. Governmental regulation of the motion picture
industry in foreign markets differs from that in the United
States. Changes in regulations affecting prices, quota systems
requiring the exhibition of locally-produced films and
restrictions on ownership of property may adversely affect our
international operations. Our international operations are
subject to certain political, economic and other uncertainties
not encountered by our domestic operations, including risks of
severe economic downturns and high inflation. We also face risks
of currency fluctuations, hard currency shortages and controls
of foreign currency exchange and transfers abroad, all of which
could have an adverse effect on the results of our international
operations.
We may
not be able to generate additional revenues or continue to
realize value from our investment in NCM.
In 2005, we joined Regal and AMC as founding members of NCM, a
provider of digital advertising content and digital non-film
event content. As of December 31, 2010, we had an ownership
interest in NCM of approximately 15%. We receive a monthly
theatre access fee under our Exhibitor Services Agreement with
NCM and we are entitled to receive mandatory quarterly
distributions of excess cash from NCM. During the years ended
December 31, 2009 and 2010, the Company received
approximately $5.7 million and $5.0 in other revenues from
NCM, respectively, and $20.8 million and $23.4 million
in cash distributions in excess of our investment in NCM,
respectively. Cinema advertising is a small component of the
U.S. advertising market and therefore, NCM competes with
larger, established and well known media platforms such as
broadcast radio and television, cable and satellite television,
outdoor advertising and Internet portals. NCM also competes with
other cinema advertising companies and with hotels, conference
centers, arenas, restaurants and convention facilities for its
non-film related events to be shown or held in our auditoriums.
In-theatre advertising may not continue to attract advertisers
or NCM’s in-theatre advertising format may not continue to
be received favorably by theatre patrons. If NCM is unable to
continue to generate consistent advertising revenues, its
results of operations may be adversely affected and our
investment in and distributions and revenues from NCM may be
adversely impacted.
We are
subject to uncertainties related to digital cinema, including
insufficient financing to obtain digital projectors and
insufficient supply of digital projectors.
We, along with some of our competitors, began a roll-out of
digital projection equipment for exhibiting feature films during
2009 and plan to continue our domestic roll-out through our
joint venture DCIP. However, significant obstacles may exist
that impact such a roll-out plan including the cost of digital
projectors and the supply of projectors by manufacturers. During
2010, DCIP completed its formation and a $660 million
financing to facilitate
15
Table of Contents
the deployment of digital projectors in approximately 71% of our
domestic theatres. We cannot assure you that DCIP will be able
to obtain sufficient additional financing to be able to purchase
and lease to us the number of digital projectors needed for our
domestic roll-out or that the manufacturers will be able to
supply the volume of projectors needed for our worldwide
roll-out. As a result, our roll-out of digital equipment could
be delayed. Additionally, there is no local financing available
to finance the deployment of digital projectors for our
international theatres. Accordingly, the cost of digital
projection systems and manufacturer limitations may delay our
international deployment.
We are
subject to uncertainties relating to future expansion plans,
including our ability to identify suitable acquisition
candidates or site locations, and to obtain financing for such
activities on favorable terms or at all.
We have greatly expanded our operations over the last decade
through targeted worldwide theatre development and acquisitions.
We will continue to pursue a strategy of expansion that will
involve the development of new theatres and may involve
acquisitions of existing theatres and theatre circuits both in
the U.S. and internationally. There is significant
competition for new site locations and for existing theatre and
theatre circuit acquisition opportunities. As a result of such
competition, we may not be able to acquire attractive site
locations, existing theatres or theatre circuits on terms we
consider acceptable. Acquisitions and expansion opportunities
may divert a significant amount of management’s time away
from the operation of our business. Growth by acquisition also
involves risks relating to difficulties in integrating the
operations and personnel of acquired companies and the potential
loss of key employees of acquired companies. We cannot assure
you that our expansion strategy will result in improvements to
our business, financial condition, profitability, or cash flows.
Further, our expansion programs may require financing above our
existing borrowing capacity and operating cash flows. We cannot
assure you that we will be able to obtain such financing or that
such financing will be available to us on acceptable terms or at
all.
If we
do not comply with the Americans with Disabilities Act of 1990
and the safe harbor framework included in the consent order we
entered into with the Department of Justice, or the DOJ, we
could be subject to further litigation.
Our theatres must comply with Title III of the ADA and
analogous state and local laws. Compliance with the ADA requires
among other things that public facilities “reasonably
accommodate” individuals with disabilities and that new
construction or alterations made to “commercial
facilities” conform to accessibility guidelines unless
“structurally impracticable” for new construction or
technically infeasible for alterations. In March 1999, the
Department of Justice, or DOJ, filed suit against us in Ohio
alleging certain violations of the ADA relating to wheelchair
seating arrangements in certain of our stadium-style theatres
and seeking remedial action. We and the DOJ have resolved this
lawsuit and a consent order was entered by the
U.S. District Court for the Northern District of Ohio,
Eastern Division, on November 15, 2004. Under the consent
order, we were required to make modifications to wheelchair
seating locations in fourteen stadium-style movie theatres and
spacing and companion seating modifications in 67 auditoriums at
other stadium-styled movie theatres. These modifications were
completed by November 2009. Upon completion of these
modifications, these theatres comply with wheelchair seating
requirements, and no further modifications will be required to
our other stadium-style movie theatres in the United States
existing on the date of the consent order. In addition, under
the consent order, the DOJ approved the seating plans for nine
stadium-styled movie theatres then under construction and also
created a safe harbor framework for us to construct all of our
future stadium-style movie theatres. The DOJ has stipulated that
all theatres built in compliance with the consent order will
comply with the wheelchair seating requirements of the ADA. If
we fail to comply with the ADA, remedies could include
imposition of injunctive relief, fines, awards for damages to
private litigants and additional capital expenditures to remedy
non-compliance. Imposition of significant fines, damage awards
or capital expenditures to cure non-compliance could adversely
affect our business and operating results.
We
depend on key personnel for our current and future
performance.
Our current and future performance depends to a significant
degree upon the continued contributions of our senior management
team and other key personnel. The loss or unavailability to us
of any member of our senior
16
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management team or a key employee could significantly harm us.
We cannot assure you that we would be able to locate or employ
qualified replacements for senior management or key employees on
acceptable terms.
We are
subject to impairment losses due to potential declines in the
fair value of our assets.
We review long-lived assets for impairment indicators on a
quarterly basis or whenever events or changes in circumstances
indicate the carrying amount of the assets may not be fully
recoverable. We assess many factors when determining whether to
impair individual theatre assets, including actual theatre level
cash flows, future years budgeted theatre level cash flows,
theatre property and equipment carrying values, amortizing
intangible asset carrying values, the age of a recently built
theatre, competitive theatres in the marketplace, the impact of
recent ticket price changes, available lease renewal options and
other factors considered relevant in our assessment of
impairment of individual theatre assets. Long-lived assets are
evaluated for impairment on an individual theatre basis, which
we believe is the lowest applicable level for which there are
identifiable cash flows. When estimated fair value is determined
to be lower than the carrying value of the theatre assets, the
theatre assets are written down to their estimated fair value.
Fair value is determined based on a multiple of cash flows,
which was eight times for the evaluations performed during the
first, second and third quarters of 2008 and six and a half
times for the evaluation performed during the fourth quarter of
2008 and the evaluations performed during 2009 and 2010.
Significant judgment is involved in estimating cash flows and
fair value. Management’s estimates, which fall under
Level 3 of the U.S. GAAP fair value hierarchy as
defined by Financial Accounting Standards Board, or FASB,
Accounting Standards Codification, or ASC, Topic
820-10-35,
are based on historical and projected operating performance,
recent market transactions and current industry trading
multiples. Since we evaluate long-lived assets for impairment at
the theatre level, if a theatre is directly and individually
impacted by increased competition, adverse changes in market
demographics or adverse changes in the development or condition
of the areas surrounding the theatre, we may record impairment
charges to reflect the decline in estimated fair value of that
theatre.
We have a significant amount of goodwill. We evaluate goodwill
for impairment at the reporting unit level at least annually
during the fourth quarter or whenever events or changes in
circumstances indicate the carrying value of goodwill may not be
fully recoverable. Goodwill impairment is evaluated using a
two-step approach requiring us to compute the fair value of a
reporting unit and compare it with its carrying value. If the
carrying value of the reporting unit exceeds its fair value, a
second step would be performed to measure the potential goodwill
impairment. Fair values are determined based on a multiple of
cash flows, which was six and a half times for the evaluations
performed during 2008, 2009 and 2010. Significant judgment is
involved in estimating cash flows and fair value.
Management’s estimates, which fall under Level 3 of
the U.S. GAAP fair value hierarchy as defined by FASB ASC
Topic
820-10-35,
are based on historical and projected operating performance,
recent market transactions and current industry trading
multiples. Declines in our stock price or market capitalization,
declines in our attendance due to increased competition in
certain regions
and/or
countries or economic factors that lead to a decline in
attendance in any given region or country could negatively
affect our estimated fair values and could result in further
impairments of goodwill. As of December 31, 2010, the
carrying value of goodwill allocated to reporting units where
the estimated fair value was less than 10% more than the
carrying value was approximately $77 million.
We also have a significant amount of tradename intangible
assets. Tradename intangible assets are tested for impairment at
least annually during the fourth quarter or whenever events or
changes in circumstances indicate the carrying value may not be
fully recoverable. We estimate the fair value of our tradenames
by applying an estimated market royalty rate that could be
charged for the use of our tradename to forecasted future
revenues, with an adjustment for the present value of such
royalties. If the estimated fair value is less than the carrying
value, the tradename intangible asset is written down to its
estimated fair value. Significant judgment is involved in
estimating market royalty rates and long-term revenue forecasts.
Management’s estimates, which fall under Level 3 of
the U.S. GAAP fair value hierarchy as defined by FASB ASC
Topic
820-10-35,
are based on historical and projected revenue performance and
industry trends. As of December 31, 2010, the carrying
value of tradename intangible assets where the estimated fair
value was less than 10% more than the carrying value was
approximately $136 million.
17
Table of Contents
We recorded asset impairment charges, including goodwill and
intangible asset impairment charges, of $113.5 million,
$11.8 million and $12.5 million for the years ended
December 31, 2008, 2009 and 2010, respectively. We cannot
assure you that additional impairment charges will not be
required in the future, and such charges may have an adverse
effect on our financial condition and results of operations. See
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and Notes 10 and
11 to the consolidated financial statements.
The
impairment or insolvency of other financial institutions could
adversely affect us.
We have exposure to different counterparties with regard to our
interest rate swap agreements. These transactions expose us to
credit risk in the event of a default by one or more of our
counterparties to such agreements. We also have exposure to
financial institutions used as depositories of our corporate
cash balances. If our counterparties or financial institutions
become impaired or insolvent, this could have an adverse impact
on our results of operations or impair our ability to access our
cash.
A
credit market crisis may adversely affect our ability to raise
capital and may materially impact our operations.
Severe dislocations and liquidity disruptions in the credit
markets could materially impact our ability to obtain debt
financing on reasonable terms or at all. The inability to access
debt financing on reasonable terms could materially impact our
ability to make acquisitions or significantly expand our
business in the future.
We may
be subject to liability under environmental laws and
regulations.
We own and operate a large number of theatres and other
properties within the United States and internationally, which
may be subject to various foreign, federal, state and local laws
and regulations relating to the protection of the environment or
human health. Such environmental laws and regulations include
those that impose liability for the investigation and
remediation of spills or releases of hazardous materials. We may
incur such liability, including for any currently or formerly
owned, leased or operated property, or for any site, to which we
may have disposed, or arranged for the disposal of, hazardous
materials or wastes. Certain of these laws and regulations may
impose liability, including on a joint and several liability,
which can result in a liable party being obliged to pay for
greater than its share, regardless of fault or the legality of
the original disposal. Environmental conditions relating to our
properties or operations could have an adverse effect on our
business and results of operations and cash flows.
The
interests of Madison Dearborn Capital Partners IV, L.P., or
MDCP, may not be aligned with yours.
MDCP beneficially owns approximately 21% of our common stock and
under a director nomination agreement, is entitled to designate
nominees for five members of our board of directors.
Accordingly, MDCP has influence and effectively controls our
corporate and management policies and has significant influence
over the outcome of any corporate transaction or other matters
submitted to our stockholders for approval, including potential
mergers or acquisitions, asset sales and other significant
corporate transactions. MDCP could seek to take other actions
that might be desirable to MDCP but that might not be desirable
for other stockholders.
Our
ability to pay dividends may be limited or otherwise
restricted.
Our ability to pay dividends is limited by our status as a
holding company and the terms of our senior notes indenture and
our senior secured credit facility, which restrict our ability
to pay dividends and the ability of certain of our subsidiaries
to pay dividends, directly or indirectly, to us. Under our debt
instruments, we may pay a cash dividend up to a specified
amount, provided we have satisfied certain financial covenants
in, and are not in default under, our debt instruments. The
declaration of future dividends on our common stock will be at
the discretion of our board of directors and will depend upon
many factors, including our results of operations, financial
condition, earnings, capital requirements, limitations in our
debt agreements and legal requirements.
18
Table of Contents
Provisions
in our corporate documents and certain agreements, as well as
Delaware law, may hinder a change of control.
Provisions in our amended and restated certificate of
incorporation and bylaws, as well as provisions of the Delaware
General Corporation Law, could discourage unsolicited proposals
to acquire us, even though such proposals may be beneficial to
you. These provisions include:
| • | authorization of our board of directors to issue shares of preferred stock without stockholder approval; | |
| • | a board of directors classified into three classes of directors with the directors of each class, subject to shorter initial terms for some directors, having staggered, three-year terms; | |
| • | provisions regulating the ability of our stockholders to nominate directors for election or to bring matters for action at annual meetings of our stockholders; and | |
| • | provisions of Delaware law that restrict many business combinations and provide that directors serving on classified boards of directors, such as ours, may be removed only for cause. |
Certain provisions of our 8.625% senior notes indenture and
our senior secured credit facility may have the effect of
delaying or preventing future transactions involving a
“change of control.” A “change of control”
would require us to make an offer to the holders of our
8.625% senior notes to repurchase all of the outstanding
notes at a purchase price equal to 101% of the aggregate
principal amount outstanding plus accrued unpaid interest to the
date of the purchase. A “change of control” would also
be an event of default under our senior secured credit facility.
The
market price of our common stock may be volatile.
There can be no assurance that an active trading market for our
common stock will continue. The securities markets have
experienced extreme price and volume fluctuations in recent
years and the market prices of the securities of companies have
been particularly volatile. This market volatility, as well as
general economic or political conditions, could reduce the
market price of our common stock regardless of our operating
performance. In addition, our operating results could be below
the expectations of investment analysts and investors and, in
response, the market price of our common stock may decrease
significantly and prevent investors from reselling their shares
of our common stock at or above a market price that is favorable
to other stockholders. In the past, companies that have
experienced volatility in the market price of their stock have
been the subject of securities class action litigation. If we
were the subject of securities class action litigation, it could
result in substantial costs, liabilities and a diversion of
management’s attention and resources.
Future
sales of our common stock may adversely affect the prevailing
market price.
If a large number of shares of our common stock is sold in the
open market, or if there is a perception that such sales will
occur, the trading price of our common stock could decrease. In
addition, the sale of these shares could impair our ability to
raise capital through the sale of additional common stock. As of
December 31, 2010, we had an aggregate of
182,889,297 shares of our common stock authorized but
unissued and not reserved for specific purposes. In general, we
may issue all of these shares without any action or approval by
our stockholders. We may issue shares of our common stock in
connection with acquisitions.
As of December 31, 2010, we had 113,750,844 shares of
our common stock outstanding. Of these shares, approximately
75,573,390 shares were freely tradable. The remaining
shares of our common stock were “restricted
securities” as that term is defined in Rule 144 under
the Securities Act. Restricted securities may not be resold in a
public distribution except in compliance with the registration
requirements of the Securities Act or pursuant to an exemption
therefrom, including the exemptions provided by
Regulation S and Rule 144 promulgated under the
Securities Act.
We cannot predict whether substantial amounts of our common
stock will be sold in the open market in anticipation of, or
following, any divestiture by any of our existing stockholders,
our directors or executive officers of their shares of common
stock.
As of December 31, 2010, there were 9,786,673 shares
of our common stock reserved for issuance under our Amended and
Restated 2006 Long Term Incentive Plan, of which
140,356 shares of common stock were issuable
19
Table of Contents
upon exercise of options outstanding as of December 31,
2010. The sale of shares issued upon the exercise of stock
options could further dilute your investment in our common stock
and adversely affect our stock price.
Legislative
or regulatory initiatives related to global warming/climate
change concerns may negatively impact our
business.
Recently, there has been an increasing focus and continuous
debate on global climate change including increased attention
from regulatory agencies and legislative bodies. This increased
focus may lead to new initiatives directed at regulating an as
yet unspecified array of environmental matters. Legislative,
regulatory or other efforts in the United States to combat
climate change could result in future increases in the cost of
raw materials, taxes, transportation and utilities for our
vendors and for us which would result in higher operating costs
for the Company. Also, compliance of our theatres and
accompanying real estate with new and revised environmental,
zoning, land-use or building codes, laws, rules or regulations,
could have a material and adverse effect on our business.
However, we are unable to predict at this time, the potential
effects, if any, that any future environmental initiatives may
have on our business.
| Item 1B. | Unresolved Staff Comments |
None.
| Item 2. | Properties |
United
States
As of December 31, 2010, in the U.S., we operated
251 theatres with 3,241 screens pursuant to leases and
own the land and building for 42 theatres with
591 screens. Our leases are generally entered into on a
long-term basis with terms, including optional renewal periods,
generally ranging from 20 to 45 years. As of
December 31, 2010, approximately 10% of our theatre leases
in the U.S., covering 24 theatres with 198 screens,
have remaining terms, including optional renewal periods, of
less than six years. Approximately 10% of our theatre leases in
the U.S., covering 24 theatres with 199 screens, have
remaining terms, including optional renewal periods, of between
six and 15 years and approximately 80% of our theatre
leases in the U.S., covering 203 theatres with
2,844 screens, have remaining terms, including optional
renewal periods, of more than 15 years. The leases
generally provide for a fixed monthly minimum rent payment, with
certain leases also subject to additional percentage rent if a
target annual revenue level is achieved. We also lease an office
building in Plano, Texas for our corporate headquarters.
International
As of December 31, 2010, internationally, we operated
137 theatres with 1,113 screens, all of which are
leased. Our international leases are generally entered into on a
long term basis with terms, including optional renewal periods,
generally ranging from 5 to 40 years. The leases generally
provide for contingent rental based upon operating results with
an annual minimum. As of December 31, 2010, approximately
6% of our international theatre leases, covering eight theatres
with 62 screens, have a remaining term, including optional
renewal periods, of less than six years. Approximately 39% of
our international theatre leases, covering 54 theatres and
446 screens, have remaining terms, including optional
renewal periods, of between six and 15 years and
approximately 55% of our international theatre leases, covering
75 theatres and 605 screens, have remaining terms,
including optional renewal periods, of more than 15 years.
We also lease office space in eight regions in Latin America for
our local management.
See Note 22 to the consolidated financial statements for
information regarding our minimum lease commitments. We
periodically review the profitability of each of our theatres,
particularly those whose lease terms are nearing expiration, to
determine whether to continue its operations.
| Item 3. | Legal Proceedings |
On December 10, 2010, we were made a party to a putative
class action claim in the United States District Court for the
Northern District of California. The claim has been filed by a
disability rights group and two individuals for injunctive
relief, damages and attorney’s fees concerning captioning
the movie exhibitions at our
20
Table of Contents
theatres in California. Monetary damages are also sought on
behalf of all hearing-disabled patrons of our theatres in
California. This case is in an early pretrial phase. We intend
to vigorously defend this suit. We are currently unable to
estimate a possible loss or range of loss related to this matter.
From time to time, we are involved in other various legal
proceedings arising from the ordinary course of our business
operations, such as personal injury claims, employment matters,
landlord-tenant disputes, patent claims and contractual
disputes, some of which are covered by insurance or by
indemnification from vendors. We believe our potential
liability, with respect to these types of proceedings currently
pending, is not material, individually or in the aggregate, to
our financial position, results of operations and cash flows.
| Item 4. | Reserved |
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Table of Contents
| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Market
Information and Holders of Our Common Stock
Our common equity consists of common stock, which has traded on
the New York Stock Exchange since April 24, 2007 under the
symbol “CNK.” The following table sets forth the
historical high and low sales prices per share of our common
stock as reported by the New York Stock Exchange for the fiscal
periods indicated.
| Fiscal 2009 | Fiscal 2010 | |||||||||||||||
| High | Low | High | Low | |||||||||||||
|
First Quarter (January 1 — March 31)
|
$ | 10.26 | $ | 6.75 | $ | 18.47 | $ | 14.08 | ||||||||
|
Second Quarter (April 1 — June 30)
|
$ | 11.49 | $ | 8.63 | $ | 19.80 | $ | 13.09 | ||||||||
|
Third Quarter (July 1 — September 30)
|
$ | 11.65 | $ | 9.50 | $ | 16.89 | $ | 12.73 | ||||||||
|
Fourth Quarter (October 1 — December 31)
|
$ | 14.85 | $ | 10.08 | $ | 18.81 | $ | 15.95 | ||||||||
On February 25, 2011, there were 117 stockholders of
record of our common stock.
Dividend
Policy
In August 2007, we initiated a quarterly dividend policy, which
was amended in November 2010. Below is a summary of dividends
paid for the fiscal periods indicated:
|
Amount per
|
||||||||
|
Date
|
Date of
|
Date
|
Common
|
Total
|
||||
| Declared | Record | Paid | Share(1) | Dividends | ||||
|
02/13/09
|
03/05/09 | 03/20/09 | $0.18 | $19.6 million | ||||
|
05/13/09
|
06/02/09 | 06/18/09 | $0.18 | $19.7 million | ||||
|
07/29/09
|
08/17/09 | 09/01/09 | $0.18 | $19.7 million | ||||
|
11/04/09
|
11/25/09 | 12/10/09 | $0.18 | $19.7 million | ||||
|
02/25/10
|
03/05/10 | 03/19/10 | $0.18 | $20.1 million | ||||
|
05/13/10
|
06/04/10 | 06/18/10 | $0.18 | $20.2 million | ||||
|
07/29/10
|
08/17/10 | 09/01/10 | $0.18 | $20.4 million | ||||
|
11/02/10
|
11/22/10 | 12/07/10 | $0.21 | $23.8 million |
| (1) | Beginning with the dividend declared on November 2, 2010, our board of directors raised the quarterly dividend to $0.21 per common share. |
We, at the discretion of the board of directors and subject to
applicable law, anticipate paying regular quarterly dividends on
our common stock. The amount, if any, of the dividends to be
paid in the future will depend upon our then available cash,
anticipated cash needs, overall financial condition, loan
agreement restrictions, future prospects for earnings and cash
flows, as well as other relevant factors. See Item 7
.
Management’s Discussion and Analysis of Financial Condition
and Results of Operation — Liquidity and Capital
Resources — Financing Activities
for a discussion
of dividend restrictions under our debt agreements.
Performance
Graph
The following graph compares the cumulative total stockholder
return on our common stock for the period December 31, 2007
through December 31, 2010 (our fiscal year end) with the
Standard and Poor’s Corporation Composite 500 Index and a
self-determined peer group of two public companies engaged in
the motion picture exhibition industry. The peer group consists
of Regal Entertainment Group and Carmike Cinemas, Inc.
22
Table of Contents
CUMULATIVE
TOTAL RETURN
Based upon initial investment of $100 on December 31, 2007
with dividends reinvested
Based upon initial investment of $100 on December 31, 2007
with dividends reinvested
Source:
Yahoo! Finance & Company
| 12/31/2007 | 3/31/2008 | 6/30/2008 | 9/30/2008 | 12/31/2008 | 3/31/2009 | 6/30/2009 | 9/30/2009 | 12/31/2009 | 3/31/2010 | 6/30/2010 | 9/30/2010 | 12/31/2010 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Cinemark Holdings, Inc.
|
$ | 100 | $ | 75 | $ | 77 | $ | 81 | $ | 44 | $ | 56 | $ | 68 | $ | 62 | $ | 86 | $ | 110 | $ | 79 | $ | 97 | $ | 104 | |||||||||||||||||||||||||||||||||||||||
|
S&P
©
500
|
100 | 90 | 87 | 79 | 62 | 54 | 63 | 72 | 76 | 80 | 70 | 78 | 86 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Peer Group (2 Stocks)*
|
100 | 105 | 84 | 78 | 56 | 65 | 89 | 92 | 91 | 80 | 79 | 91 | 81 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| * | The 2-Stock Peer Group consists of Regal Entertainment Group and Carmike Cinemas Inc. |
Securities
Authorized for Issuance under Equity Compensation
Plans
The following table provides information about the securities
authorized for issuance under the Company’s equity
compensation plans as of December 31, 2010:
|
Number of
|
Weighted Average
|
Number of Securities
|
||||||||||
|
Securities to be
|
Exercise
|
Remaining Available for
|
||||||||||
|
Issued upon
|
Price of
|
Future Issuance Under
|
||||||||||
|
Exercise of
|
Outstanding
|
Equity Compensation Plans
|
||||||||||
|
Outstanding
|
Options, Warrants
|
(Excluding Securities
|
||||||||||
|
Options, Warrants
|
and
|
Reflected in the First
|
||||||||||
|
Plan Category
|
and Rights | Rights | Column) | |||||||||
|
Equity compensation plans approved by security holders
|
140,356 | $ | 7.63 | 9,786,673 | ||||||||
|
Equity compensation plans not approved by security holders
|
— | — | — | |||||||||
|
Total
|
140,356 | $ | 7.63 | 9,786,673 | ||||||||
23
Table of Contents
| Item 6. | Selected Financial Data |
The following table provides our selected consolidated financial
and operating data for the periods and at the dates indicated
for each of the five most recent years ended December 31,
2010. On October 5, 2006, we completed our acquisition of
Century Theatres, Inc., or Century. Results of operations
reflect the inclusion of the Century theatres beginning on the
date of acquisition. You should read the selected consolidated
financial and operating data set forth below in conjunction with
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and our audited
consolidated financial statements and related notes appearing
elsewhere in this report.
| Year Ended December 31, | ||||||||||||||||||||
| 2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||||||
|
Statement of Operations Data:
|
||||||||||||||||||||
|
Revenues:
|
||||||||||||||||||||
|
Admissions
|
$ | 760,275 | $ | 1,087,480 | $ | 1,126,977 | $ | 1,293,378 | $ | 1,405,389 | ||||||||||
|
Concession
|
375,798 | 516,509 | 534,836 | 602,880 | 642,326 | |||||||||||||||
|
Other
|
84,521 | 78,852 | 80,474 | 80,242 | 93,429 | |||||||||||||||
|
Total revenues
|
$ | 1,220,594 | $ | 1,682,841 | $ | 1,742,287 | $ | 1,976,500 | $ | 2,141,144 | ||||||||||
|
Film rental and advertising
|
405,987 | 589,717 | 612,248 | 708,160 | 769,698 | |||||||||||||||
|
Concession supplies
|
59,020 | 81,074 | 86,618 | 91,918 | 97,484 | |||||||||||||||
|
Salaries and wages
|
118,616 | 173,290 | 180,950 | 203,437 | 221,246 | |||||||||||||||
|
Facility lease expense
|
161,374 | 212,730 | 225,595 | 238,779 | 255,717 | |||||||||||||||
|
Utilities and other
|
144,808 | 191,279 | 205,814 | 222,660 | 239,470 | |||||||||||||||
|
General and administrative expenses
|
67,768 | 79,518 | 90,788 | 96,497 | 109,045 | |||||||||||||||
|
Termination of profit participation agreement
|
— | 6,952 | — | — | — | |||||||||||||||
|
Total depreciation and amortization
|
99,470 | 151,716 | 158,034 | 149,515 | 143,508 | |||||||||||||||
|
Impairment of long-lived assets
|
28,537 | 86,558 | 113,532 | 11,858 | 12,538 | |||||||||||||||
|
(Gain) loss on sale of assets and other
|
7,645 | (2,953 | ) | 8,488 | 3,202 | (431 | ) | |||||||||||||
|
Total cost of operations
|
1,093,225 | 1,569,881 | 1,682,067 | 1,726,026 | 1,848,275 | |||||||||||||||
|
Operating income
|
$ | 127,369 | $ | 112,960 | $ | 60,220 | $ | 250,474 | $ | 292,869 | ||||||||||
|
Interest expense
|
$ | 109,328 | $ | 145,596 | $ | 116,058 | $ | 102,505 | $ | 112,444 | ||||||||||
|
Net income (loss)
|
$ | 2,310 | $ | 89,712 | $ | (44,430 | ) | $ | 100,756 | $ | 149,663 | |||||||||
|
Net income (loss) attributable to Cinemark Holdings, Inc.
|
$ | 841 | $ | 88,920 | $ | (48,325 | ) | $ | 97,108 | $ | 146,120 | |||||||||
|
Net income (loss) attributable to Cinemark Holdings, Inc. per
share:
|
||||||||||||||||||||
|
Basic
|
$ | 0.01 | $ | 0.87 | $ | (0.45 | ) | $ | 0.89 | $ | 1.30 | |||||||||
|
Diluted
|
$ | 0.01 | $ | 0.85 | $ | (0.45 | ) | $ | 0.87 | $ | 1.29 | |||||||||
24
Table of Contents
| Year Ended December 31, | ||||||||||||||||||||
| 2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||
|
Other Financial Data:
|
||||||||||||||||||||
|
Ratio of earnings to fixed charges(1)
|
1.09 | x | 1.96 | x | — | 1.84 | x | 2.10 | x | |||||||||||
|
Cash flow provided by (used for):
|
||||||||||||||||||||
|
Operating activities
|
$ | 155,662 | $ | 276,036 | $ | 257,294 | $ | 176,763 | $ | 264,751 | ||||||||||
|
Investing activities(2)
|
(631,747 | ) | 93,178 | (94,942 | ) | (183,130 | ) | (136,067 | ) | |||||||||||
|
Financing activities
|
439,977 | (183,715 | ) | (135,091 | ) | 78,299 | (106,650 | ) | ||||||||||||
|
Capital expenditures
|
(107,081 | ) | (146,304 | ) | (106,109 | ) | (124,797 | ) | (156,102 | ) | ||||||||||
| As of December 31, | ||||||||||||||||||||
| 2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
|
Balance Sheet Data:
|
||||||||||||||||||||
|
Cash and cash equivalents
|
$ | 147,099 | $ | 338,043 | $ | 349,603 | $ | 437,936 | $ | 464,997 | ||||||||||
|
Theatre properties and equipment, net
|
1,324,572 | 1,314,066 | 1,208,283 | 1,219,588 | 1,215,446 | |||||||||||||||
|
Total assets
|
3,171,582 | 3,296,892 | 3,065,708 | 3,276,448 | 3,421,478 | |||||||||||||||
|
Total long-term debt and capital lease obligations, including
current portion
|
2,027,480 | 1,644,915 | 1,632,174 | 1,684,073 | 1,672,601 | |||||||||||||||
|
Equity
|
705,910 | 1,035,385 | 824,227 | 914,628 | 1,033,152 | |||||||||||||||
| Year Ended December 31, | ||||||||||||||||||||
| 2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||
|
Operating Data:
|
||||||||||||||||||||
|
United States(3)
|
||||||||||||||||||||
|
Theatres operated (at period end)
|
281 | 287 | 293 | 294 | 293 | |||||||||||||||
|
Screens operated (at period end)
|
3,523 | 3,654 | 3,742 | 3,830 | 3,832 | |||||||||||||||
|
Total attendance (in 000s)
|
118,714 | 151,712 | 147,897 | 165,112 | 161,174 | |||||||||||||||
|
International(4)
|
||||||||||||||||||||
|
Theatres operated (at period end)
|
115 | 121 | 127 | 130 | 137 | |||||||||||||||
|
Screens operated (at period end)
|
965 | 1,011 | 1,041 | 1,066 | 1,113 | |||||||||||||||
|
Total attendance (in 000s)
|
59,550 | 60,958 | 63,413 | 71,622 | 80,026 | |||||||||||||||
|
Worldwide(3)(4)
|
||||||||||||||||||||
|
Theatres operated (at period end)
|
396 | 408 | 420 | 424 | 430 | |||||||||||||||
|
Screens operated (at period end)
|
4,488 | 4,665 | 4,783 | 4,896 | 4,945 | |||||||||||||||
|
Total attendance (in 000s)
|
178,264 | 212,670 | 211,310 | 236,734 | 241,200 | |||||||||||||||
| (1) | For the purposes of calculating the ratio of earnings to fixed charges, earnings consist of income (loss) before income taxes plus fixed charges excluding capitalized interest. Fixed charges consist of interest expense, capitalized interest, amortization of debt issue costs and that portion of rental expense which we believe to be representative of the interest factor. For the year ended December 31, 2008, earnings were insufficient to cover fixed charges by $27.1 million. | |
| (2) | Includes the cash portion of the Century acquisition purchase price of $531.2 million during the year ended December 31, 2006. | |
| (3) | The data excludes certain theatres operated by us in the U.S. pursuant to management agreements that are not part of our consolidated operations. | |
| (4) | The data excludes certain theatres operated internationally through our affiliates that are not part of our consolidated operations. |
25
Table of Contents
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion and analysis should be read in
conjunction with the financial statements and accompanying notes
included in this report. This discussion contains
forward-looking statements. See “Cautionary Statement
Regarding Forward-Looking Statements” and “Risk
Factors” for a discussion of the uncertainties and risk
associated with these statements.
Overview
As of December 31, 2010, we managed our business under two
reportable operating segments — U.S. markets and
international markets. See Note 23 to the consolidated
financial statements.
Revenues
and Expenses
We generate revenues primarily from box office receipts and
concession sales with additional revenues from screen
advertising sales and other revenue streams, such as vendor
marketing promotions and electronic video games located in some
of our theatres. Our contracts with NCM have assisted us in
expanding our offerings to domestic advertisers and broadening
ancillary revenue sources such as digital video monitor
advertising, third party branding, and the use of our domestic
theatres for alternative entertainment, such as live and
pre-recorded concert events, the opera, sports programs, and
other cultural events. Films leading the box office during the
year ended December 31, 2010 included the carryover of
Avatar,
which grossed approximately $475 million in
U.S. box office revenues during 2010 and new releases such
as
Toy Story 3, Alice in Wonderland, Harry Potter and the
Deathly Hallows: Part 1, Iron Man 2, The Twilight Saga:
Eclipse, Inception, Despicable Me, How to Train Your Dragon,
Shrek Forever After, Clash of the Titans, The Karate Kid,
Tangled, Grown Ups, Megamind, Tron: Legacy, Little Fockers, The
Fighter
and
True Grit.
Our revenues are affected by
changes in attendance and concession revenues per patron.
Attendance is primarily affected by the quality and quantity of
films released by motion picture studios. Films currently
scheduled for release in 2011 include
Rango, Fast Five, Thor,
Pirates of the Caribbean: On Stranger Tides, Kung Fu Panda 2:
The Kaboom of Doom, Cars 2, X Men: First Class, Transformers:
Dark of the Moon, Harry Potter and the Deathly Hollows:
Part 2, Twilight: Breaking Dawn, Captain America: The First
Avenger, Cowboys and Aliens, Puss in Boots, Happy Feet 2,
Sherlock Holmes 2
and
Alvin and the Chipmunks:
Chipwrecked
, among other films.
Film rental costs are variable in nature and fluctuate with our
admissions revenues. Film rental costs as a percentage of
revenues are generally higher for periods in which more
blockbuster films are released. Film rental costs can also vary
based on the length of a film’s run. Film rental rates are
generally negotiated on a
film-by-film
and
theatre-by-theatre
basis. Advertising costs, which are expensed as incurred, are
primarily fixed at the theatre level as daily movie directories
placed in newspapers represent the largest component of
advertising costs. The monthly cost of these advertisements is
based on, among other things, the size of the directory and the
frequency and size of the newspaper’s circulation.
Concession supplies expense is variable in nature and fluctuates
with our concession revenues. We purchase concession supplies to
replace units sold. We negotiate prices for concession supplies
directly with concession vendors and manufacturers to obtain
volume rates.
Although salaries and wages include a fixed cost component (i.e.
the minimum staffing costs to operate a theatre facility during
non-peak periods), salaries and wages move in relation to
revenues as theatre staffing is adjusted to respond to changes
in attendance.
Facility lease expense is primarily a fixed cost at the theatre
level as most of our facility leases require a fixed monthly
minimum rent payment. Certain of our leases are subject to
percentage rent only while others are subject to percentage rent
in addition to their fixed monthly rent if a target annual
revenue level is achieved. Facility lease expense as a
percentage of revenues is also affected by the number of
theatres under operating leases, the number of theatres under
capital leases and the number of fee-owned theatres.
Utilities and other costs include certain costs that have both
fixed and variable components such as utilities, property taxes,
janitorial costs, repairs and maintenance and security services.
26
Table of Contents
Critical
Accounting Policies
We prepare our consolidated financial statements in conformity
with U.S. GAAP. As such, we are required to make certain
estimates and assumptions that we believe are reasonable based
upon the information available. These estimates and assumptions
affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of
revenues and expenses during the periods presented. The
significant accounting policies, which we believe are the most
critical to aid in fully understanding and evaluating our
reported consolidated financial results, include the following:
Revenue
and Expense Recognition
Revenues are recognized when admissions and concession sales are
received at the box office. Other revenues primarily consist of
screen advertising. Screen advertising revenues are recognized
over the period that the related advertising is delivered
on-screen or in-theatre. We record proceeds from the sale of
gift cards and other advanced sale-type certificates in current
liabilities and recognize admissions and concession revenue when
a holder redeems the card or certificate. We recognize
unredeemed gift cards and other advanced sale-type certificates
as revenue only after such a period of time indicates, based on
historical experience, the likelihood of redemption is remote,
and based on applicable laws and regulations. In evaluating the
likelihood of redemption, we consider the period outstanding,
the level and frequency of activity, and the period of
inactivity.
Film rental costs are accrued based on the applicable box office
receipts and either mutually agreed upon firm terms or a sliding
scale formula, which are generally established prior to the
opening of the film, or estimates of the final mutually agreed
upon settlement, which occurs at the conclusion of the film run,
subject to the film licensing arrangement. Under a firm terms
formula, we pay the distributor a mutually agreed upon specified
percentage of box office receipts, which reflects either a
mutually agreed upon aggregate rate for the life of the film or
rates that decline over the term of the run. Under a sliding
scale formula, we pay a percentage of box office revenues using
a pre-determined matrix that is based upon box office
performance of the film. The settlement process allows for
negotiation of film rental fees upon the conclusion of the film
run based upon how the film performs. Estimates are based on the
expected success of a film. The success of a film can typically
be determined a few weeks after a film is released when initial
box office performance of the film is known. Accordingly, final
settlements typically approximate estimates since box office
receipts are known at the time the estimate is made and the
expected success of a film can typically be estimated early in
the film’s run. If actual settlements are different than
those estimates, film rental costs are adjusted at that time.
Our advertising costs are expensed as incurred.
Facility lease expense is primarily a fixed cost at the theatre
level as most of our facility leases require a fixed monthly
minimum rent payment. Certain of our leases are subject to
monthly percentage rent only, which is accrued each month based
on actual revenues. Certain of our other theatres require
payment of percentage rent in addition to fixed monthly rent if
a target annual revenue level is achieved. Percentage rent
expense is recorded for these theatres on a monthly basis if the
theatre’s historical performance or forecasted performance
indicates that the annual target will be reached. The estimate
of percentage rent expense recorded during the year is based on
historical and forecasted annual revenues. Once annual revenues
are known, which is generally at the end of the year, the
percentage rent expense is adjusted based on actual revenues. We
record the fixed minimum rent payments on a straight-line basis
over the lease term.
Theatre properties and equipment are depreciated using the
straight-line method over their estimated useful lives. In
estimating the useful lives of our theatre properties and
equipment, we have relied upon our experience with such assets
and our historical replacement period. We periodically evaluate
these estimates and assumptions and adjust them as necessary.
Adjustments to the expected lives of assets are accounted for on
a prospective basis through depreciation expense. Leasehold
improvements for which we pay and to which we have title are
amortized over the lease term.
27
Table of Contents
Impairment
of Long-Lived Assets
We review long-lived assets for impairment indicators on a
quarterly basis or whenever events or changes in circumstances
indicate the carrying amount of the assets may not be fully
recoverable. We assess many factors including the following to
determine whether to impair individual theatre assets:
| • | actual theatre level cash flows; | |
| • | future years budgeted theatre level cash flows; | |
| • | theatre property and equipment carrying values; | |
| • | amortizing intangible asset carrying values; | |
| • | the age of a recently built theatre; | |
| • | competitive theatres in the marketplace; | |
| • | the impact of recent ticket price changes; | |
| • | available lease renewal options; and | |
| • | other factors considered relevant in our assessment of impairment of individual theatre assets. |
Long-lived assets are evaluated for impairment on an individual
theatre basis, which we believe is the lowest applicable level
for which there are identifiable cash flows. The impairment
evaluation is based on the estimated undiscounted cash flows
from continuing use through the remainder of the theatre’s
useful life. The remainder of the useful life correlates with
the available remaining lease period, which includes the
probability of renewal periods for leased properties and a
period of approximately twenty years for fee owned properties.
If the estimated undiscounted cash flows are not sufficient to
recover a long-lived asset’s carrying value, we then
compare the carrying value of the asset group (theatre) with its
estimated fair value. When estimated fair value is determined to
be lower than the carrying value of the asset group (theatre),
the asset group (theatre) is written down to its estimated fair
value. Significant judgment is involved in estimating cash flows
and fair value. Management’s estimates, which fall under
Level 3 of the U.S. GAAP fair value hierarchy as
defined by FASB ASC Topic
820-10-35,
are based on historical and projected operating performance,
recent market transactions and current industry trading
multiples. Fair value is determined based on a multiple of cash
flows, which was eight times for the evaluations performed
during the first, second and third quarters of 2008 and six and
a half times for the evaluation performed during the fourth
quarter of 2008 and the evaluations performed during 2009 and
2010. We reduced the multiple we used to determine fair value
during the fourth quarter of 2008 due to the dramatic decline in
estimated market values that resulted from a significant
decrease in our stock price and the declines in our and our
competitors’ market capitalizations that occurred during
the fourth quarter of 2008. The long-lived asset impairment
charges related to theatre properties recorded during each of
the periods presented are specific to theatres that were
directly and individually impacted by increased competition,
adverse changes in market demographics or adverse changes in the
development or the conditions of the areas surrounding the
theatre.
Impairment
of Goodwill and Intangible Assets
We evaluate goodwill for impairment annually during the fourth
quarter or whenever events or changes in circumstances indicate
the carrying value of the goodwill may not be fully recoverable.
We evaluate goodwill for impairment at the reporting unit level
and have allocated goodwill to the reporting unit based on an
estimate of its relative fair value. Management considers the
reporting unit to be each of our sixteen regions in the
U.S. and each of our eight international countries
(Honduras, El Salvador, Nicaragua, Costa Rica, Panama and
Guatemala are considered one reporting unit). The evaluation is
a two-step approach requiring us to compute the fair value of a
reporting unit and compare it with its carrying value. If the
carrying value of the reporting unit exceeds its estimated fair
value, a second step is performed to measure the potential
goodwill impairment. Significant judgment is involved in
estimating cash flows and fair value. Management’s
estimates, which fall under Level 3 of the U.S. GAAP
fair value hierarchy as defined by FASB ASC Topic
820-10-35,
are based on historical and projected operating performance,
recent market transactions and current industry trading
multiples. Fair value is determined based on a multiple of cash
flows, which was six and a half times for the evaluations
performed during 2008, 2009
28
Table of Contents
and 2010. As of December 31, 2010, the carrying value of
goodwill allocated to reporting units where the estimated fair
value was less than 10% more than the carrying value was
approximately $77 million. Declines in our stock price or
market capitalization, declines in our attendance due to
increased competition in certain regions
and/or
countries or economic factors that lead to a decline in
attendance in any given region or country could negatively
affect our estimated fair values and could result in further
impairments of goodwill.
Tradename intangible assets are tested for impairment at least
annually during the fourth quarter or whenever events or changes
in circumstances indicate the carrying value may not be fully
recoverable. We estimate the fair value of our tradenames by
applying an estimated market royalty rate that could be charged
for the use of our tradename to forecasted future revenues, with
an adjustment for the present value of such royalties. If the
estimated fair value is less than the carrying value, the
tradename intangible asset is written down to its estimated fair
value. Significant judgment is involved in estimating market
royalty rates and long-term revenue forecasts. Management’s
estimates, which fall under Level 3 of the U.S. GAAP
fair value hierarchy as defined by FASB ASC Topic
820-10-35,
are based on historical and projected revenue performance and
industry trends. As of December 31, 2010, the carrying
value of tradename intangible assets where the estimated fair
value was less than 10% more than the carrying value was
approximately $136 million.
Income
Taxes
We use an asset and liability approach to financial accounting
and reporting for income taxes. Deferred income taxes are
provided when tax laws and financial accounting standards differ
with respect to the amount of income for a year and the basis of
assets and liabilities. A valuation allowance is recorded to
reduce the carrying amount of deferred tax assets unless it is
more likely than not that such assets will be realized. Income
taxes are provided on unremitted earnings from foreign
subsidiaries unless such earnings are expected to be
indefinitely reinvested. Income taxes have also been provided
for potential tax assessments. The evaluation of an uncertain
tax position is a two-step process. The first step is
recognition: We determine whether it is more likely than not
that a tax position will be sustained upon examination,
including resolution of any related appeals or litigation
processes, based on the technical merits of the position. In
evaluating whether a tax position has met the
more-likely-than-not recognition threshold, we presume that the
position would be examined by the appropriate taxing authority
that would have full knowledge of all relevant information. The
second step is measurement: A tax position that meets the
more-likely-than-not recognition threshold is measured to
determine the amount of benefit to recognize in the financial
statements. The tax position is measured at the largest amount
of benefit that is greater than 50 percent likely of being
realized upon ultimate settlement. Differences between tax
positions taken in a tax return and amounts recognized in the
financial statements result in (1) a change in a liability
for income taxes payable or (2) a change in an income tax
refund receivable, a deferred tax asset or a deferred tax
liability or both (1) and (2). We accrue interest and
penalties on uncertain tax positions.
Recent
Developments
Dividend
Declaration
On February 24, 2011 our board of directors declared a cash
dividend in the amount of $0.21 per common share payable to
stockholders of record on March 4, 2011. The dividend will
be paid on March 16, 2011.
29
Table of Contents
Results
of Operations
The following table sets forth, for the periods indicated, the
percentage of revenues represented by certain items reflected in
our consolidated statements of operations:
| Year Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
|
Operating data (in millions):
|
||||||||||||
|
Revenues
|
||||||||||||
|
Admissions
|
$ | 1,127.0 | $ | 1,293.4 | $ | 1,405.4 | ||||||
|
Concession
|
534.8 | 602.9 | 642.3 | |||||||||
|
Other
|
80.5 | 80.2 | 93.4 | |||||||||
|
Total revenues
|
1,742.3 | 1,976.5 | 2,141.1 | |||||||||
|
Cost of operations
|
||||||||||||
|
Film rentals and advertising
|
612.2 | 708.2 | 769.7 | |||||||||
|
Concession supplies
|
86.6 | 91.9 | 97.5 | |||||||||
|
Salaries and wages
|
181.0 | 203.4 | 221.2 | |||||||||
|
Facility lease expense
|
225.6 | 238.8 | 255.7 | |||||||||
|
Utilities and other
|
205.8 | 222.7 | 239.5 | |||||||||
|
General and administrative expenses
|
90.8 | 96.5 | 109.1 | |||||||||
|
Depreciation and amortization
|
158.1 | 149.5 | 143.5 | |||||||||
|
Impairment of long-lived assets
|
113.5 | 11.8 | 12.5 | |||||||||
|
(Gain) loss on sale of assets and other
|
8.5 | 3.2 | (0.4 | ) | ||||||||
|
Total cost of operations
|
1,682.1 | 1,726.0 | 1,848.3 | |||||||||
|
Operating income
|
$ | 60.2 | $ | 250.5 | $ | 292.8 | ||||||
|
Operating data as a percentage of total revenues:
|
||||||||||||
|
Revenues
|
||||||||||||
|
Admissions
|
64.7 | % | 65.4 | % | 65.6 | % | ||||||
|
Concession
|
30.7 | % | 30.5 | % | 30.0 | % | ||||||
|
Other
|
4.6 | % | 4.1 | % | 4.4 | % | ||||||
|
Total revenues
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
|
Cost of operations(1)
|
||||||||||||
|
Film rentals and advertising
|
54.3 | % | 54.8 | % | 54.8 | % | ||||||
|
Concession supplies
|
16.2 | % | 15.2 | % | 15.2 | % | ||||||
|
Salaries and wages
|
10.4 | % | 10.3 | % | 10.3 | % | ||||||
|
Facility lease expense
|
12.9 | % | 12.1 | % | 11.9 | % | ||||||
|
Utilities and other
|
11.8 | % | 11.3 | % | 11.2 | % | ||||||
|
General and administrative expenses
|
5.2 | % | 4.9 | % | 5.1 | % | ||||||
|
Depreciation and amortization
|
9.1 | % | 7.6 | % | 6.7 | % | ||||||
|
Impairment of long-lived assets
|
6.5 | % | 0.6 | % | 0.6 | % | ||||||
|
(Gain) loss on sale of assets and other
|
0.5 | % | 0.2 | % | (0.0 | )% | ||||||
|
Total cost of operations
|
96.5 | % | 87.3 | % | 86.3 | % | ||||||
|
Operating income
|
3.5 | % | 12.7 | % | 13.7 | % | ||||||
|
Average screen count (month end average)
|
4,703 | 4,860 | 4,909 | |||||||||
|
Revenues per average screen (dollars)
|
$ | 370,469 | $ | 406,681 | $ | 436,181 | ||||||
| (1) | All costs are expressed as a percentage of total revenues, except film rentals and advertising, which are expressed as a percentage of admissions revenues and concession supplies, which are expressed as a percentage of concession revenues. |
30
Table of Contents
Comparison
of Years Ended December 31, 2010 and December 31,
2009
Revenues.
Total revenues increased
$164.6 million to $2,141.1 million for 2010 from
$1,976.5 million for 2009, representing an 8.3% increase.
The table below, presented by reportable operating segment,
summarizes our year-over-year revenue performance and certain
key performance indicators that impact our revenues.
|
U.S. Operating
|
International Operating
|
|||||||||||||||||||||||||||||||||||
| Segment | Segment | Consolidated | ||||||||||||||||||||||||||||||||||
|
Year Ended
|
Year Ended
|
Year Ended
|
||||||||||||||||||||||||||||||||||
| December 31, | December 31, | December 31, | ||||||||||||||||||||||||||||||||||
|
%
|
%
|
%
|
||||||||||||||||||||||||||||||||||
| 2010 | 2009 | Change | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||||||||||||||||
|
Admissions revenues(1)
|
$ | 1,044.7 | $ | 1,025.9 | 1.8 | % | $ | 360.7 | $ | 267.5 | 34.8 | % | $ | 1,405.4 | $ | 1,293.4 | 8.7 | % | ||||||||||||||||||
|
Concession revenues(1)
|
$ | 487.9 | $ | 485.2 | 0.6 | % | $ | 154.4 | $ | 117.7 | 31.2 | % | $ | 642.3 | $ | 602.9 | 6.5 | % | ||||||||||||||||||
|
Other revenues(1)(2)
|
$ | 44.3 | $ | 43.6 | 1.6 | % | $ | 49.1 | $ | 36.6 | 34.2 | % | $ | 93.4 | $ | 80.2 | 16.5 | % | ||||||||||||||||||
|
Total revenues(1)(2)
|
$ | 1,576.9 | $ | 1,554.7 | 1.4 | % | $ | 564.2 | $ | 421.8 | 33.8 | % | $ | 2,141.1 | $ | 1,976.5 | 8.3 | % | ||||||||||||||||||
|
Attendance(1)
|
161.2 | 165.1 | (2.4 | )% | 80.0 | 71.6 | 11.7 | % | 241.2 | 236.7 | 1.9 | % | ||||||||||||||||||||||||
|
Revenues per average screen(2)
|
$ | 411,708 | $ | 408,017 | 0.9 | % | $ | 523,078 | $ | 401,828 | 30.2 | % | $ | 436,181 | $ | 406,681 | 7.3 | % | ||||||||||||||||||
| (1) | Amounts in millions. | |
| (2) | U.S. operating segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 23 of our consolidated financial statements. |
| • | Consolidated. The increase in admissions revenues of $112.0 million was primarily attributable to a 1.9% increase in attendance and a 6.8% increase in average ticket price from $5.46 for 2009 to $5.83 for 2010. The increase in concession revenues of $39.4 million was primarily attributable to the 1.9% increase in attendance and a 4.3% increase in concession revenues per patron from $2.55 for 2009 to $2.66 for 2010. The increase in average ticket price was primarily due to incremental 3-D and premium pricing and other price increases and the favorable impact of exchange rates in certain countries in which we operate. The increase in concession revenues per patron was primarily due to price increases and the favorable impact of exchange rates in certain countries in which we operate. The 16.5% increase in other revenues was primarily due to increases in ancillary revenue. | |
| • | U.S. The increase in admissions revenues of $18.8 million was primarily attributable to a 4.3% increase in average ticket price from $6.21 for 2009 to $6.48 for 2010, partially offset by a 2.4% decrease in attendance for 2010. The increase in concession revenues of $2.7 million was primarily attributable to a 3.1% increase in concession revenues per patron from $2.94 for 2009 to $3.03 for 2010, partially offset by the 2.4% decrease in attendance for 2010. The increase in average ticket price was primarily due to incremental 3-D and premium pricing and other price increases, and the increase in concession revenues per patron was primarily due to price increases. | |
| • | International. The increase in admissions revenues of $93.2 million was primarily attributable to an 11.7% increase in attendance and a 20.6% increase in average ticket price from $3.74 for 2009 to $4.51 for 2010. The increase in concession revenues of $36.7 million was primarily attributable to the 11.7% increase in attendance and a 17.7% increase in concession revenues per patron from $1.64 for 2009 to $1.93 for 2010. The increase in average ticket price was primarily due to incremental 3-D and premium pricing and other price increases and the favorable impact of exchange rates in certain countries in which we operate. The increase in concession revenues per patron was primarily due to price increases and the favorable impact of exchange rates in certain countries in which we operate. The 34.2% increase in other revenues was primarily due to increases in ancillary revenue. |
31
Table of Contents
Cost of Operations.
The table below summarizes
certain of our theatre operating costs by reportable operating
segment (in millions).
|
U.S.
|
International Operating
|
|||||||||||||||||||||||
| Operating Segment | Segment | Consolidated | ||||||||||||||||||||||
|
Year Ended
|
Year Ended
|
Year Ended
|
||||||||||||||||||||||
| December 31, | December 31, | December 31, | ||||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||
|
Film rentals and advertising
|
$ | 586.6 | $ | 572.3 | $ | 183.1 | $ | 135.9 | $ | 769.7 | $ | 708.2 | ||||||||||||
|
Concession supplies
|
59.1 | 61.9 | 38.4 | 30.0 | 97.5 | 91.9 | ||||||||||||||||||
|
Salaries and wages
|
174.1 | 168.8 | 47.1 | 34.6 | 221.2 | 203.4 | ||||||||||||||||||
|
Facility lease expense
|
181.9 | 178.8 | 73.8 | 60.0 | 255.7 | 238.8 | ||||||||||||||||||
|
Utilities and other
|
161.5 | 163.5 | 78.0 | 59.2 | 239.5 | 222.7 | ||||||||||||||||||
| • | Consolidated. Film rentals and advertising costs were $769.7 million for 2010 compared to $708.2 million for 2009, both of which represented 54.8% of admissions revenues. The increase in film rentals and advertising costs of $61.5 million was primarily due to the $112.0 million increase in admissions revenues. Concession supplies expense was $97.5 million for 2010 compared to $91.9 million for 2009, both of which represent 15.2% of concession revenues. The increase in concession supplies expense of $5.6 million was primarily due to the $39.4 million increase in concession revenues. |
Salaries and wages increased to $221.2 million for 2010
from $203.4 million for 2009 primarily due to increased
minimum wages in both our U.S. and international segments,
increased staffing levels to support the 1.9% increase in
attendance, new theatre openings and the impact of exchange
rates in certain countries in which we operate. Facility lease
expense increased to $255.7 million for 2010 from
$238.8 million for 2009 primarily due to new theatres,
increased percentage rent related to the 8.3% increase in
revenues and the impact of exchange rates in certain countries
in which we operate. Utilities and other costs increased to
$239.5 million for 2010 from $222.7 million for 2009
primarily due to increased variable costs related to the 1.9%
increase in attendance, increased costs related to new theatres,
increased
3-D
equipment rental fees and the impact of exchange rates in
certain countries in which we operate.
| • | U.S. Film rentals and advertising costs were $586.6 million, or 56.2% of admissions revenues, for 2010 compared to $572.3 million, or 55.8% of admissions revenues, for 2009. The increase in film rentals and advertising costs of $14.3 million was primarily due to the $18.8 million increase in admissions revenues and an increase in our film rentals and advertising rate. The increase in the film rentals and advertising rate was primarily due to higher film rental rates associated with certain blockbuster films released in 2010, including the carryover of Avatar . Concession supplies expense was $59.1 million, or 12.1% of concession revenues, for 2010, compared to $61.9 million, or 12.8% of concession revenues, for 2009. The decrease in concession supplies expense was primarily due to a decrease in the concession supplies rate due to favorable inventory procurement costs along with the successful implementation of sales price increases. |
Salaries and wages increased to $174.1 million for 2010
from $168.8 million for 2009 primarily due to increased
minimum wage rates and new theatre openings. Facility lease
expense increased to $181.9 million for 2010 from
$178.8 million for 2009 primarily due to new theatres.
Utilities and other costs decreased to $161.5 million for
2010 from $163.5 million for 2009 primarily due to lower
utility costs and property taxes, offset by increased
3-D
equipment rental fees.
| • | International. Film rentals and advertising costs were $183.1 million for 2010 compared to $135.9 million for 2009, both of which represented 50.8% of admissions revenues. The increase in film rentals and advertising costs of $47.2 million was primarily due to the $93.2 million increase in admissions revenues. Concession supplies expense was $38.4 million, or 24.9% of concession revenues, for 2010 compared to $30.0 million, or 25.5% of concession revenues, for 2009. The increase in concession supplies expense of $8.4 million was primarily due to the $36.7 million increase in concession revenues, partially offset by a lower concession supplies rate. |
32
Table of Contents
Salaries and wages increased to $47.1 million for 2010 from
$34.6 million for 2009 primarily due to increased staffing
levels to support the 11.7% increase in attendance, increased
minimum wage rates, new theatre openings and the impact of
exchange rates in certain countries in which we operate.
Facility lease expense increased to $73.8 million for 2010
from $60.0 million for 2009 primarily due to new theatres,
increased percentage rent related to the 33.8% increase in
revenues and the impact of exchange rates in certain countries
in which we operate. Utilities and other costs increased to
$78.0 million for 2010 from $59.2 million for 2009
primarily due to increased variable costs related to the 11.7%
increase in attendance, increased costs related to new theatres,
increased
3-D
equipment rental fees and the impact of exchange rates in
certain countries in which we operate.
General and Administrative Expenses.
General
and administrative expenses increased to $109.1 million for
2010 from $96.5 million for 2009. The increase was
primarily due to increased service charges of $4.1 million
related to increased credit card activity, increased share based
awards compensation expense of $4.1 million, increased
professional fees of $2.2 million and the impact of
exchange rates in certain countries in which we operate.
Depreciation and Amortization.
Depreciation
and amortization expense, including amortization of favorable/
unfavorable leases, was $143.5 million for 2010 compared to
$149.5 million for 2009. The decrease was primarily due to
a significant amount of the equipment acquired in the Century
Acquisition becoming fully depreciated during the fourth quarter
of 2009, partially offset by the impact of accelerated
depreciation taken on our domestic 35 millimeter projection
systems that will be replaced with digital projection systems.
We recorded approximately $9.4 million of depreciation
expense related to these 35 millimeter projection systems during
2010.
Impairment of Long-Lived Assets.
We recorded
asset impairment charges on assets held and used of
$12.5 million for 2010 compared to $11.8 million for
2009. Impairment charges for 2010 consisted of
$10.8 million of theatre properties and $1.5 million
of intangible assets, impacting eighteen of our twenty-four
reporting units, and $0.2 million related to an equity
investment that was written down to its estimated fair value.
Impairment charges for 2009 consisted of $11.4 million of
theatre properties and $0.3 million of intangible assets
associated with theatre properties, impacting nineteen of our
twenty-four reporting units, and $0.1 million related to an
equity investment that was written down to its estimated fair
value. The long-lived asset impairment charges recorded during
each of the periods presented were specific to theatres that
were directly and individually impacted by increased
competition, adverse changes in market demographics, or adverse
changes in the development or the conditions of the areas
surrounding the theatre. See Notes 10 and 11 to our
consolidated financial statements.
(Gain) Loss on Sale of Assets and Other.
We
recorded a gain on sale of assets and other of $0.4 million
during 2010 compared to a loss on sale of assets and other of
$3.2 million during 2009. The gain recorded during 2010
included a gain of $7.0 million related to the sale of a
theatre in Canada and a gain of $8.5 million related to the
sale of our interest in a profit sharing agreement related to
another previously sold property in Canada, which were partially
offset by a loss of $5.8 million for the write-off of an
intangible asset associated with a vendor contract in Mexico
that was terminated, a loss of $2.3 million for the
write-off of intangible assets associated with our original IMAX
license agreement that was terminated, a loss of
$2.0 million that was recorded upon the contribution and
sale of digital projection systems to DCIP and a loss of
$0.9 million related to storm damage to a
U.S. theatre. See Note 7 to our consolidated financial
statements for discussion of DCIP. The loss recorded during 2009
was primarily related to the write-off of theatre equipment that
was replaced.
Interest Expense.
Interest costs incurred,
including amortization of debt issue costs, were
$112.4 million for 2010 compared to $102.5 million for
2009. The increase was primarily due to increases in interest
rates on our variable rate debt related to the amendment and
extension of our senior secured credit facility. See
Note 13 to our consolidated financial statements for
further discussion of our long-term debt.
Interest Income.
We recorded interest income
of $6.1 million during 2010 compared to interest income of
$4.9 million during 2009. The increase in interest income
was primarily due to higher interest rates earned on our cash
investments.
Loss on Early Retirement of Debt.
During 2009,
we recorded a loss on early retirement of debt of
$27.9 million as a result of the tender and call premiums
paid and other fees related to the repurchase of
33
Table of Contents
approximately $419.4 million aggregate principal amount at
maturity of Cinemark, Inc.’s
9
3
/
4
% senior
discount notes and the write-off of unamortized debt issue costs
associated with these notes. See Note 13 to our
consolidated financial statements.
Distributions from NCM.
We recorded
distributions received from NCM of $23.4 million during
2010 and $20.8 million during 2009, which were in excess of
the carrying value of our investment. See Note 6 to our
consolidated financial statements.
Equity in Loss of Affiliates.
We recorded
equity in loss of affiliates of $3.4 million during 2010
compared to $0.9 million during 2009. The equity in loss of
affiliates recorded during 2010 included a loss of approximately
$7.9 million related to our equity investment in DCIP (see
Note 7 to our consolidated financial statements) offset by
income of approximately $4.5 million related to our equity
investment in NCM (see Note 6 to our consolidated financial
statements). The equity in loss of affiliates recorded during
2009 included a loss of approximately $2.8 million related
to our equity investment in DCIP offset by income of
approximately $1.9 million related to our equity investment
in NCM.
Income Taxes.
Income tax expense of
$57.8 million was recorded for 2010 compared to
$44.8 million recorded for 2009. The effective tax rate for
2010 was 27.9%. The effective tax rate for 2009 was 30.8%. See
Note 21 to our consolidated financial statements.
Comparison
of Years Ended December 31, 2009 and December 31,
2008
Revenues.
Total revenues increased
$234.2 million to $1,976.5 million for 2009 from
$1,742.3 million for 2008, representing a 13.4% increase.
The table below, presented by reportable operating segment,
summarizes our year-over-year revenue performance and certain
key performance indicators that impact our revenues.
|
U.S. Operating
|
International Operating
|
|||||||||||||||||||||||||||||||||||
| Segment | Segment | Consolidated | ||||||||||||||||||||||||||||||||||
|
Year Ended
|
Year Ended
|
Year Ended
|
||||||||||||||||||||||||||||||||||
| December 31, | December 31, | December 31, | ||||||||||||||||||||||||||||||||||
|
%
|
%
|
%
|
||||||||||||||||||||||||||||||||||
| 2009 | 2008 | Change | 2009 | 2008 | Change | 2009 | 2008 | Change | ||||||||||||||||||||||||||||
|
Admissions revenues(1)
|
$ | 1,025.9 | $ | 889.1 | 15.4 | % | $ | 267.5 | $ | 237.9 | 12.4 | % | $ | 1,293.4 | $ | 1,127.0 | 14.8 | % | ||||||||||||||||||
|
Concession revenues(1)
|
$ | 485.2 | $ | 426.5 | 13.8 | % | $ | 117.7 | $ | 108.3 | 8.7 | % | $ | 602.9 | $ | 534.8 | 12.7 | % | ||||||||||||||||||
|
Other revenues(1)(2)
|
$ | 43.6 | $ | 40.9 | 6.6 | % | $ | 36.6 | $ | 39.6 | (7.6 | )% | $ | 80.2 | $ | 80.5 | (0.4 | )% | ||||||||||||||||||
|
Total revenues(1)(2)
|
$ | 1,554.7 | $ | 1,356.5 | 14.6 | % | $ | 421.8 | $ | 385.8 | 9.3 | % | $ | 1,976.5 | $ | 1,742.3 | 13.4 | % | ||||||||||||||||||
|
Attendance(1)
|
165.1 | 147.9 | 11.6 | % | 71.6 | 63.4 | 12.9 | % | 236.7 | 211.3 | 12.0 | % | ||||||||||||||||||||||||
|
Revenues per average screen(2)
|
$ | 408,017 | $ | 368,313 | 10.8 | % | $ | 401,828 | $ | 378,252 | 6.2 | % | $ | 406,681 | $ | 370,469 | 9.8 | % | ||||||||||||||||||
| (1) | Amounts in millions. | |
| (2) | U.S. operating segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 23 of our consolidated financial statements. |
| • | Consolidated. The increase in admissions revenues of $166.4 million was primarily attributable to a 12.0% increase in attendance and a 2.4% increase in average ticket price from $5.33 for 2008 to $5.46 for 2009. The increase in concession revenues of $68.1 million was primarily attributable to the 12.0% increase in attendance and a 0.8% increase in concession revenues per patron from $2.53 for 2008 to $2.55 for 2009. The increase in average ticket price was primarily due to incremental 3-D and premium pricing and other price increases, and the increase in concession revenues per patron was primarily due to price increases. | |
| • | U.S. The increase in admissions revenues of $136.8 million was primarily attributable to an 11.6% increase in attendance and a 3.3% increase in average ticket price from $6.01 for 2008 to $6.21 for 2009. The increase in concession revenues of $58.7 million was primarily attributable to the 11.6% increase in attendance and a 2.1% increase in concession revenues per patron from $2.88 for 2008 to $2.94 for 2009. The |
34
Table of Contents
| increase in average ticket price was primarily due to incremental 3-D and premium pricing and other price increases, and the increase in concession revenues per patron was primarily due to price increases. |
| • | International. The increase in admissions revenues of $29.6 million was primarily attributable to a 12.9% increase in attendance, partially offset by a 0.3% decrease in average ticket price from $3.75 for 2008 to $3.74 for 2009. The increase in concession revenues of $9.4 million was primarily attributable to the 12.9% increase in attendance, partially offset by a 4.1% decrease in concession revenues per patron from $1.71 for 2008 to $1.64 for 2009. The decreases in average ticket price and concession revenues per patron were due to the unfavorable impact of exchange rates during most of the year in certain countries in which we operate. The 7.6% decrease in other revenues was primarily due to the unfavorable impact of exchange rates during most of the year in certain countries in which we operate. |
Cost of Operations.
The table below summarizes
certain of our theatre operating costs by reportable operating
segment (in millions).
|
U.S.
|
International Operating
|
|||||||||||||||||||||||
| Operating Segment | Segment | Consolidated | ||||||||||||||||||||||
|
Year Ended
|
Year Ended
|
Year Ended
|
||||||||||||||||||||||
| December 31, | December 31, | December 31, | ||||||||||||||||||||||
| 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
|
Film rentals and advertising
|
$ | 572.3 | $ | 494.6 | $ | 135.9 | $ | 117.6 | $ | 708.2 | $ | 612.2 | ||||||||||||
|
Concession supplies
|
61.9 | 58.5 | 30.0 | 28.1 | 91.9 | 86.6 | ||||||||||||||||||
|
Salaries and wages
|
168.8 | 149.5 | 34.6 | 31.5 | 203.4 | 181.0 | ||||||||||||||||||
|
Facility lease expense
|
178.8 | 166.8 | 60.0 | 58.8 | 238.8 | 225.6 | ||||||||||||||||||
|
Utilities and other
|
163.5 | 151.8 | 59.2 | 54.0 | 222.7 | 205.8 | ||||||||||||||||||
| • | Consolidated. Film rentals and advertising costs were $708.2 million, or 54.8% of admissions revenues, for 2009 compared to $612.2 million, or 54.3% of admissions revenues, for 2008. The increase in film rentals and advertising costs of $96.0 million was primarily due to the $166.4 million increase in admissions revenues. The increase in the film rentals and advertising rate was primarily due to higher film rental rates associated with the increased number of blockbuster films released in 2009. Concession supplies expense was $91.9 million, or 15.2% of concession revenues, for 2009, compared to $86.6 million, or 16.2% of concession revenues, for 2008. The decrease in the concession supplies rate was primarily related to the benefit of our new U.S. beverage agreement that was effective at the beginning of 2009. |
Salaries and wages increased to $203.4 million for 2009
from $181.0 million for 2008 primarily due to increased
staffing levels to support the 12.0% increase in attendance,
increased minimum wage rates and new theatre openings. Facility
lease expense increased to $238.8 million for 2009 from
$225.6 million for 2008 primarily due to new theatres and
increased percentage rent related to the 13.4% increase in
revenues. Utilities and other costs increased to
$222.7 million for 2009 from $205.8 million for 2008
primarily due to increased variable costs related to the 12.0%
increase in attendance, increased costs related to new theatres,
increased repairs and maintenance expense and increased
3-D
equipment rental fees.
| • | U.S. Film rentals and advertising costs were $572.3 million, or 55.8% of admissions revenues, for 2009 compared to $494.6 million, or 55.6% of admissions revenues, for 2008. The increase in film rentals and advertising costs of $77.7 million was primarily due to the $136.8 million increase in admissions revenues. The increase in the film rentals and advertising rate was primarily due to higher film rental rates associated with the increased number of blockbuster films released in 2009. Concession supplies expense was $61.9 million, or 12.8% of concession revenues, for 2009, compared to $58.5 million, or 13.7% of concession revenues, for 2008. The decrease in the concession supplies rate was primarily related to the benefit of our new U.S. beverage agreement that was effective at the beginning of 2009. |
Salaries and wages increased to $168.8 million for 2009
from $149.5 million for 2008 primarily due to increased
staffing levels to support the 11.6% increase in attendance,
increased minimum wage rates and new theatre openings. Facility
lease expense increased to $178.8 million for 2009 from
$166.8 million for 2008 primarily due to new theatres and
increased percentage rent related to the 14.6% increase in
revenues.
35
Table of Contents
Utilities and other costs increased to $163.5 million for
2009 from $151.8 million for 2008 primarily due to
increased variable costs related to the 11.6% increase in
attendance, increased costs related to new theatres, increased
repairs and maintenance expense and increased
3-D
equipment rental fees.
| • | International. Film rentals and advertising costs were $135.9 million, or 50.8% of admissions revenues, for 2009 compared to $117.6 million, or 49.4% of admissions revenues, for 2008. The increase in the film rentals and advertising rate was primarily due to higher film rental rates associated with the increased number of blockbuster films released in 2009. Concession supplies expense was $30.0 million, or 25.5% of concession revenues, for 2009 compared to $28.1 million, or 25.9% of concession revenues, for 2008. |
Salaries and wages increased to $34.6 million for 2009 from
$31.5 million for 2008 primarily due to increased staffing
levels to support the 12.9% increase in attendance, increases in
minimum wage rates and new theatre openings. Facility lease
expense increased to $60.0 million for 2009 from
$58.8 million for 2008 primarily due to new theatres and
increased percentage rent related to the 9.3% increase in
revenues. Utilities and other costs increased to
$59.2 million for 2009 from $54.0 million for 2008
primarily due to increased variable costs related to the 12.9%
increase in attendance, increased costs related to new theatres,
increased repairs and maintenance expense and increased
3-D
equipment rental fees.
General and Administrative Expenses.
General
and administrative expenses increased to $96.5 million for
2009 from $90.8 million for 2008. The increase was
primarily due to increased salaries and incentive compensation
expense of $4.3 million and increased service charges of
$1.7 million related to increased credit card activity.
Depreciation and Amortization.
Depreciation
and amortization expense, including amortization of favorable/
unfavorable leases, was $149.5 million for 2009 compared to
$158.1 million for 2008. The decrease was primarily due to
a reduction in the depreciable basis of certain of our
U.S. assets in 2009 due to a significant amount of the
equipment acquired in the Century Acquisition becoming fully
depreciated in 2009, the impact on current depreciation from
prior impairment charges and the impact of exchange rates in
certain countries in which we operate.
Impairment of Long-Lived Assets.
We recorded
asset impairment charges on assets held and used of
$11.8 million for 2009 compared to $113.5 million for
2008. Impairment charges for 2009 consisted of
$11.4 million of theatre properties and $0.3 million
of intangible assets associated with theatre properties,
impacting nineteen of our twenty-four reporting units, and
$0.1 million related to an equity investment that was
written down to estimated fair value. Impairment charges for
2008 consisted of $34.6 million of theatre properties,
$78.6 million of goodwill associated with theatre
properties, and $0.3 million of intangible assets
associated with theatre properties, impacting twenty of our
twenty-four reporting units. The long-lived asset impairment
charges recorded during each of the periods presented were
specific to theatres that were directly and individually
impacted by increased competition, adverse changes in market
demographics, or adverse changes in the development or the
conditions of the areas surrounding the theatre. The goodwill
impairment charges taken during the year ended December 31,
2008 were primarily a result of our determination that the
multiple used to estimate the fair value of our reporting units
should be reduced to reflect the dramatic decline in the market
value of our stock price and the declines in our and our
competitors’ market capitalizations that occurred during
the fourth quarter of 2008. We reduced the multiple from eight
times cash flows to six and a half times cash flows, which
significantly reduced our estimated fair values. See
Notes 10 and 11 to our consolidated financial statements.
Loss on Sale of Assets and Other.
We recorded
a loss on sale of assets and other of $3.2 million during
2009 compared to $8.5 million during 2008. The loss
recorded during 2009 was primarily related to the write-off of
theatre equipment that was replaced. The loss recorded during
2008 was primarily related to the write-off of theatre equipment
that was replaced, the write-off of prepaid rent for an
international theatre, and damages to certain of our theatres in
Texas related to Hurricane Ike.
Interest Expense.
Interest costs incurred,
including amortization of debt issue costs, were
$102.5 million for 2009 compared to $116.1 million for
2008. The decrease was primarily due to decreases in interest
rates on our debt. See Note 13 to our consolidated
financial statements for further discussion of our long term
debt. In addition, during the 2008 period, we recorded a gain of
approximately $5.4 million as a component of interest
expense related to the
36
Table of Contents
change in fair value of one of our interest rate swap agreements
that was deemed not highly effective. See Note 14 to our
consolidated financial statements for further discussion of our
interest rate swap agreements.
Interest Income.
We recorded interest income
of $4.9 million during 2009 compared to interest income of
$13.3 million during 2008. The decrease in interest income
was primarily due to lower interest rates earned on our cash
investments.
(Gain) Loss on Early Retirement of
Debt.
During 2009, we recorded a loss on early
retirement of debt of $27.9 million as a result of the
tender and call premiums paid and other fees related to the
repurchase of approximately $419.4 million aggregate
principal amount at maturity of Cinemark, Inc.’s
9
3
/
4
% senior
discount notes and the write-off of unamortized debt issue costs
associated with these notes. During 2008, we recorded a gain on
early retirement of debt of $1.7 million as a result of the
repurchase of $47.0 million aggregate principal amount at
maturity of Cinemark, Inc.’s
9
3
/
4
% senior
discount notes partially offset by the write-off of unamortized
debt issue costs. See Note 13 to our consolidated financial
statements.
Distributions from NCM.
We recorded
distributions received from NCM of $20.8 million during
2009 and $18.8 million during 2008, which were in excess of
the carrying value of our investment. See Note 6 to our
consolidated financial statements.
Income Taxes.
Income tax expense of
$44.8 million was recorded for 2009 compared to
$21.1 million recorded for 2008. The effective tax rate for
2009 was 30.8%, which reflects the benefit of a capital loss.
The effective tax rate of (90.1)% for 2008 reflects the impact
of our 2008 goodwill impairment charges, which are not
deductible for income tax purposes. The effective tax rate in
2008 net of the impact from the goodwill impairment charges
would have been approximately 41.0%. See Note 21 to our
consolidated financial statements.
Liquidity
and Capital Resources
Operating
Activities
We primarily collect our revenues in cash, mainly through box
office receipts and the sale of concessions. In addition, a
majority of our theatres provide the patron a choice of using a
credit card or debit card in place of cash. Because our revenues
are received in cash prior to the payment of related expenses,
we have an operating “float” and historically have not
required traditional working capital financing. Cash provided by
operating activities amounted to $257.3 million,
$176.8 million and $264.8 million for the years ended
December 31, 2008, 2009 and 2010, respectively. The
decrease in the level of cash provided by operating activities
for the year ended December 31, 2009 was primarily due to
the repurchase of approximately $419.4 million of our
9
3
/
4
% senior
discount notes, which included payment of $158.3 million of
interest that had accreted on the senior discount notes since
issuance during 2004. The principal portion of the repurchase is
reflected as a financing activity.
Investing
Activities
We plan to fund capital expenditures for our continued
development with cash flow from operations, borrowings under our
senior secured credit facility, and proceeds from debt
issuances, sale leaseback transactions
and/or
sales
of excess real estate.
Our investing activities have been principally related to the
development and acquisition of theatres. New theatre openings
and acquisitions historically have been financed with internally
generated cash and by debt financing, including borrowings under
our senior secured credit facility. Cash used for investing
activities amounted to $94.9 million, $183.1 million
and $136.1 million for the years ended December 31,
2008, 2009 and 2010, respectively. The increase in cash used for
investing activities for the year ended December 31, 2009
was primarily due to the acquisition of four theatres in the
U.S. for approximately $49.0 million (see Note 5
to the consolidated financial statements) and the acquisition of
one theatre in Brazil for approximately $9.1 million.
37
Table of Contents
Capital expenditures for the years ended December 31, 2008,
2009 and 2010 were as follows (in millions):
|
New
|
Existing
|
|||||||||||
|
Period
|
Theatres | Theatres | Total | |||||||||
|
Year Ended December 31, 2008
|
$ | 69.9 | $ | 36.2 | $ | 106.1 | ||||||
|
Year Ended December 31, 2009
|
$ | 36.5 | $ | 88.3 | $ | 124.8 | ||||||
|
Year Ended December 31, 2010
|
$ | 54.5 | $ | 101.6 | $ | 156.1 | ||||||
We continue to invest in our U.S. theatre circuit. We built
five new theatres and 63 screens, acquired one theatre with
eight screens and closed seven theatres with 69 screens
during the year ended December 31, 2010, bringing our total
domestic screen count to 3,832. At December 31, 2010, we
had signed commitments to open four new theatres and
51 screens in domestic markets during 2011 and open four
new theatres with 60 screens subsequent to 2011. We
estimate the remaining capital expenditures for the development
of these 111 domestic screens will be approximately
$48 million. Actual expenditures for continued theatre
development and acquisitions are subject to change based upon
the availability of attractive opportunities.
We also continue to expand our international theatre circuit. We
built nine new theatres and 67 screens and closed two
theatres and 20 screens during the year ended
December 31, 2010, bringing our total international screen
count to 1,113. At December 31, 2010, we had signed
commitments to open eight new theatres with 51 screens in
international markets during 2011 and open five new theatres
with 34 screens subsequent to 2011. We estimate the
remaining capital expenditures for the development of these 85
international screens will be approximately $63 million.
Actual expenditures for continued theatre development and
acquisitions are subject to change based upon the availability
of attractive opportunities.
Financing
Activities
Cash provided by (used for) financing activities was
$(135.1) million, $78.3 million and
$(106.7) million during the years ended December 31,
2008, 2009 and 2010, respectively. Cash provided by financing
activities for the year ended December 31, 2009 includes
the net proceeds of $458.5 million from the issuance of our
$470 million 8.625% senior notes, partially offset by
$261.1 million used for the repurchase of approximately
$419.4 million of our
9
3
/
4
% senior
discount notes. The accreted interest portion of the repurchase
of $158.3 million is reflected as an operating activity.
Below is a summary of dividends paid during 2008, 2009 and 2010:
|
Date of
|
Date
|
Amount per
|
Total
|
|||||
|
Date Declared
|
Record | Paid | Common Share(1) | Dividends | ||||
|
02/26/08
|
03/06/08 | 03/14/08 | $0.18 | $19.3 million | ||||
|
05/09/08
|
05/30/08 | 06/12/08 | $0.18 | $19.3 million | ||||
|
08/07/08
|
08/25/08 | 09/12/08 | $0.18 | $19.3 million | ||||
|
11/06/08
|
11/26/08 | 12/11/08 | $0.18 | $19.6 million | ||||
|
02/13/09
|
03/05/09 | 03/20/09 | $0.18 | $19.6 million | ||||
|
05/13/09
|
06/02/09 | 06/18/09 | $0.18 | $19.7 million | ||||
|
07/29/09
|
08/17/09 | 09/01/09 | $0.18 | $19.7 million | ||||
|
11/04/09
|
11/25/09 | 12/10/09 | $0.18 | $19.7 million | ||||
|
02/25/10
|
03/05/10 | 03/19/10 | $0.18 | $20.1 million | ||||
|
05/13/10
|
06/04/10 | 06/18/10 | $0.18 | $20.2 million | ||||
|
07/29/10
|
08/17/10 | 09/01/10 | $0.18 | $20.4 million | ||||
|
11/02/10
|
11/22/10 | 12/07/10 | $0.21 | $23.8 million |
| (1) | Beginning with the dividend declared on November 2, 2010, the Company’s board of directors raised the quarterly dividend to $0.21 per common share. |
We, at the discretion of the board of directors and subject to
applicable law, anticipate paying regular quarterly dividends on
our common stock. The amount, if any, of the dividends to be
paid in the future will depend upon our
38
Table of Contents
then available cash, anticipated cash needs, overall financial
condition, loan agreement restrictions, future prospects for
earnings and cash flows, as well as other relevant factors.
We may from time to time, subject to compliance with our debt
instruments, purchase our debt securities on the open market
depending upon the availability and prices of such securities.
Long-term debt consisted of the following as of
December 31, 2009 and 2010:
| December 31, 2009 | December 31, 2010 | |||||||
|
Cinemark USA, Inc. term loan
|
$ | 1,083.6 | $ | 1,072.8 | ||||
|
Cinemark USA, Inc.
8
5
/
8
% senior
notes due 2019(1)
|
458.9 | 459.7 | ||||||
|
Cinemark USA, Inc. 9% senior subordinated notes due 2013
|
0.2 | — | ||||||
|
Other long-term debt
|
1.0 | — | ||||||
|
Total long-term debt
|
$ | 1,543.7 | $ | 1,532.5 | ||||
|
Less current portion
|
12.2 | 10.8 | ||||||
|
Long-term debt, less current portion
|
$ | 1,531.5 | $ | 1,521.7 | ||||
| (1) | Includes the $470.0 million aggregate principal amount of the 8.625% senior notes net of the original issue discount, which was $11.1 million and $10.3 million as of December 31, 2009 and 2010, respectively. |
As of December 31, 2010, we had $150.0 million in
available borrowing capacity on our revolving credit line.
As of December 31, 2010, our long-term debt obligations,
scheduled interest payments on long-term debt, future minimum
lease obligations under non-cancelable operating and capital
leases, scheduled interest payments under capital leases and
other obligations for each period indicated are summarized as
follows:
| Payments Due by Period | ||||||||||||||||||||
|
Less than
|
After
|
|||||||||||||||||||
|
Contractual Obligations
|
Total | One Year | 1 - 3 Years | 4 - 5 Years | 5 Years | |||||||||||||||
| (In millions) | ||||||||||||||||||||
|
Long-term debt(1)
|
$ | 1,542.8 | $ | 10.8 | $ | 174.6 | $ | 18.4 | $ | 1,339.0 | ||||||||||
|
Scheduled interest payments on long-term debt(2)
|
580.7 | 91.4 | 175.8 | 164.7 | 148.8 | |||||||||||||||
|
Operating lease obligations
|
1,795.2 | 200.1 | 396.5 | 370.9 | 827.7 | |||||||||||||||
|
Capital lease obligations
|
140.2 | 7.3 | 17.6 | 22.5 | 92.8 | |||||||||||||||
|
Scheduled interest payments on capital leases
|
100.4 | 13.9 | 25.3 | 21.3 | 39.9 | |||||||||||||||
|
Employment agreements
|
11.4 | 3.8 | 7.6 | — | — | |||||||||||||||
|
Purchase commitments(3)
|
121.8 | 44.8 | 75.1 | 0.5 | 1.4 | |||||||||||||||
|
Current liability for uncertain tax positions(4)
|
1.9 | 1.9 | — | — | — | |||||||||||||||
|
Total obligations
|
$ | 4,294.4 | $ | 374.0 | $ | 872.5 | $ | 598.3 | $ | 2,449.6 | ||||||||||
| (1) | Includes the 8.625% senior notes in the aggregate principal amount of $470.0 million excluding the discount of $10.3 million. | |
| (2) | Amounts include scheduled interest payments on fixed rate and variable rate debt agreements. Estimates for the variable rate interest payments were based on interest rates in effect on December 31, 2010. The average interest rates in effect on our fixed rate and variable rate debt are 7.0% and 3.1%, respectively, as of December 31, 2010. | |
| (3) | Includes estimated capital expenditures associated with the construction of new theatres to which we were committed as of December 31, 2010. | |
| (4) | The contractual obligations table excludes the long-term portion of our liability for uncertain tax positions of $17.8 million because we cannot make a reliable estimate of the timing of the related cash payments. |
39
Table of Contents
Cinemark
USA, Inc. Senior Secured Credit Facility
On October 5, 2006, in connection with the Century
Acquisition, Cinemark USA, Inc. entered into a senior secured
credit facility that provided for a $1.12 billion term loan
and a $150 million revolving credit line. On March 2,
2010, Cinemark USA, Inc. completed an amendment and extension to
the senior secured credit facility to primarily extend the
maturities of the facility and make certain other modifications.
Approximately $924.4 million of Cinemark USA, Inc.’s
then remaining outstanding $1,083.6 million term loan debt
was extended from an original maturity date of October 2013 to a
maturity date of April 2016. The remaining term loan debt of
$159.2 million that was not extended matures on the
original maturity date of October 2013. Payments on the
extended amount are due in equal quarterly installments of
approximately $2.3 million beginning March 31, 2010
through March 31, 2016 with the remaining principal amount
of approximately $866.6 million due April 30, 2016.
Payments on the original amount that was not extended are due in
equal quarterly installments of approximately $0.4 million
beginning March 31, 2010 through September 30, 2012
and increase to $37.4 million each calendar quarter from
December 31, 2012 to June 30, 2013, with one final
payment of approximately $42.6 million due at maturity on
October 5, 2013. The amendment also imposed a 1.0%
prepayment premium for one year on certain prepayments of the
extended portion of the term loan debt.
The interest rate on the original term loan debt that was not
extended accrues interest, at Cinemark USA, Inc.’s option,
at: (A) the base rate equal to the higher of (1) the
prime lending rate as set forth on the British Banking
Association Telerate page 5, or (2) the federal funds
effective rate from time to time plus 0.50% (the “base
rate”), plus a margin that ranges from 0.50% to 0.75% per
annum, or (B) a “eurodollar rate” plus a margin
that ranges from 1.50% to 1.75%, per annum. The margin of the
original term loan debt that was not extended is determined by
the applicable corporate credit rating. The interest rate on the
extended portion of the term loan debt accrues interest, at
Cinemark USA, Inc.’s option at: (A) the base rate
equal to the higher of (1) the prime lending rate as set
forth on the British Banking Association Telerate page 5,
or (2) the federal funds effective rate from time to time
plus 0.50%, plus a 2.25% margin per annum, or (B) a
“eurodollar rate” plus a 3.25% margin per annum.
The maturity date of $73.5 million of Cinemark USA,
Inc.’s $150.0 million revolving credit line was
extended from October 2012 to March 2015. The maturity date of
the remaining $76.5 million of Cinemark USA, Inc.’s
revolving credit line did not change and remains October 2012.
The interest rate on the original revolving credit line accrues
interest, at Cinemark USA, Inc.’s option, at: (A) a
base rate equal to the higher of (1) the prime lending rate
as set forth on the British Banking Association Telerate
page 5 and (2) the federal funds effective rate from
time to time plus 0.50%, plus a margin that ranges from 0.50% to
1.00% per annum, or (B) a “eurodollar rate” plus
a margin that ranges from 1.50% to 2.00% per annum. The interest
rate on the extended revolving credit line accrues interest, at
Cinemark USA, Inc.’s option at: (A) the base rate
equal to the higher of (1) the prime lending rate as set
forth on the British Banking Association Telerate page 5,
or (2) the federal funds effective rate from time to time
plus 0.50%, plus a margin that ranges from 1.75% to 2.0% per
annum, or (B) a “eurodollar rate” plus a margin
that ranges from 2.75% to 3.0% per annum. The margin of the
revolving credit line is determined by the consolidated net
senior secured leverage ratio as defined in the credit agreement.
At December 31, 2010, there was $1,072.8 million
outstanding under the term loan and no borrowings outstanding
under the revolving credit line. Cinemark USA, Inc. had
$150.0 million in available borrowing capacity on the
revolving credit line. The average interest rate on outstanding
term loan borrowings under the senior secured credit facility at
December 31, 2010 was approximately 4.8% per annum.
Cinemark USA, Inc.’s obligations under the senior secured
credit facility are guaranteed by Cinemark Holdings, Inc., and
certain of Cinemark USA, Inc.’s domestic subsidiaries and
are secured by mortgages on certain fee and leasehold properties
and security interests in substantially all of Cinemark USA,
Inc.’s and the guarantors’ personal property,
including, without limitation, pledges of all of Cinemark USA,
Inc.’s capital stock, all of the capital stock of certain
of Cinemark USA, Inc.’s domestic subsidiaries and 65% of
the voting stock of certain of its foreign subsidiaries.
The senior secured credit facility contains usual and customary
negative covenants for agreements of this type, including, but
not limited to, restrictions on Cinemark USA, Inc.’s
ability, and in certain instances, its subsidiaries’ and
Cinemark Holdings, Inc.’s ability, to consolidate or merge
or liquidate; wind up or dissolve; substantially change the
nature of its business; sell, transfer or dispose of assets;
create or incur indebtedness; create liens; pay
40
Table of Contents
dividends and repurchase stock; and make capital expenditures
and investments. The senior secured credit facility also
requires Cinemark USA, Inc. to satisfy a consolidated net senior
secured leverage ratio covenant as determined in accordance with
the senior secured credit facility.
The dividend restriction contained in the senior secured credit
facility prevents us and any of our subsidiaries from paying a
dividend or otherwise distributing cash to its stockholders
unless (1) we are not in default, and the distribution
would not cause us to be in default, under the senior secured
credit facility; and (2) the aggregate amount of certain
dividends, distributions, investments, redemptions and capital
expenditures made since October 5, 2006, including
dividends declared by the board of directors, is less than the
sum of (a) the aggregate amount of cash and cash
equivalents received by Cinemark Holdings, Inc. or Cinemark USA,
Inc. as common equity since October 5, 2006,
(b) Cinemark USA, Inc.’s consolidated EBITDA minus
1.75 times its consolidated interest expense, each as defined in
the senior secured credit facility, since October 1, 2006,
(c) $150 million and (d) certain other amounts
specified in the senior secured credit facility, subject to
certain adjustments specified in the senior secured credit
facility. The dividend restriction is subject to certain
exceptions specified in the senior secured credit facility.
The senior secured credit facility 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, certain types
of change of control, material money judgments and failure to
maintain subsidiary guarantees. If an event of default occurs,
all commitments under the senior secured credit facility may be
terminated and all obligations under the senior secured credit
facility could be accelerated by the lenders, causing all loans
outstanding (including accrued interest and fees payable
thereunder) to be declared immediately due and payable.
See discussion of interest rate swap agreements under
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk.
Cinemark
USA, Inc.
8
5
/
8
% Senior
Notes
On June 29, 2009, Cinemark USA, Inc. issued
$470.0 million aggregate principal amount of
8.625% senior notes due 2019 with an original issue
discount of approximately $11.5 million, resulting in
proceeds of approximately $458.5 million. The proceeds were
primarily used to fund the repurchase of the remaining
$419.4 million aggregate principal amount at maturity of
Cinemark, Inc.’s
9
3
/
4
% senior
discount notes discussed below. Interest is payable on June 15
and December 15 of each year. The senior notes mature on
June 15, 2019. As of December 31, 2010, the carrying
value of the senior notes was approximately $459.7 million.
Cinemark USA, Inc. filed a registration statement with the
Securities and Exchange Commission on September 24, 2009
pursuant to which it offered to exchange the senior notes for
substantially similar registered senior notes. The registration
statement became effective on December 17, 2009. The
exchanged registered senior notes do not have transfer
restrictions.
The senior notes are fully and unconditionally guaranteed on a
joint and several senior unsecured basis by certain of our
subsidiaries that guarantee, assume or become liable with
respect to any of our or our guarantor’s debt. The senior
notes and the guarantees are senior unsecured obligations and
rank equally in right of payment with all of our and our
guarantor’s existing and future senior unsecured debt and
senior in right of payment to all of our and our
guarantor’s existing and future subordinated debt. The
senior notes and the guarantees are effectively subordinated to
all of our and our guarantor’s existing and future secured
debt to the extent of the value of the assets securing such
debt, including all borrowings under our senior secured credit
facility. The senior notes and the guarantees are structurally
subordinated to all existing and future debt and other
liabilities of our subsidiaries that do not guarantee the senior
notes.
The indenture to the senior notes contains covenants that limit,
among other things, the ability of Cinemark USA, Inc. and
certain of its subsidiaries to (1) consummate specified
asset sales, (2) make investments or other restricted
payments, including paying dividends, making other distributions
or repurchasing subordinated debt or equity, (3) incur
additional indebtedness and issue preferred stock,
(4) enter into transactions with affiliates, (5) enter
new lines of business, (6) merge or consolidate with, or
sell all or substantially all of its assets to another person
and (7) create liens. Upon a change of control of Cinemark
Holdings, Inc. or Cinemark USA, Inc., Cinemark
41
Table of Contents
USA, Inc. would be required to make an offer to repurchase the
senior notes at a price equal to 101% of the aggregate principal
amount outstanding plus accrued and unpaid interest through the
date of repurchase. Certain asset dispositions are considered
triggering events that may require Cinemark USA, Inc. to use the
proceeds from those asset dispositions to make an offer to
purchase the notes at 100% of their principal amount, plus
accrued and unpaid interest, if any, to the date of repurchase
if such proceeds are not otherwise used within 365 days as
described in the indenture. The indenture governing the senior
notes allows Cinemark USA, Inc. to incur additional indebtedness
if we satisfy the coverage ratio specified in the indenture,
after giving effect to the incurrence of the additional
indebtedness, and in certain other circumstances. The required
minimum coverage ratio is 2 to 1 and our actual ratio as of
December 31, 2010 was 5.04 to 1.
Prior to June 15, 2014, Cinemark USA, Inc. may redeem all
or any part of the senior notes at its option at 100% of the
principal amount plus a make-whole premium. After June 15,
2014, Cinemark USA, Inc. may redeem the senior notes in whole or
in part at redemption prices described in the senior notes. In
addition, Cinemark USA, Inc. may redeem up to 35% of the
aggregate principal amount of the senior notes from the net
proceeds of certain equity offerings at the redemption price set
forth in the senior notes.
Cinemark,
Inc.
9
3
/
4
% Senior
Discount Notes
On March 31, 2004, Cinemark, Inc. issued approximately
$577,173 aggregate principal amount at maturity of
9
3
/
4
% senior
discount notes due 2014. Interest on the notes accreted until
March 15, 2009 up to their aggregate principal amount.
Subsequently, cash interest accrued and was payable
semi-annually in arrears on March 15 and September 15,
commencing on September 15, 2009.
Prior to 2008, Cinemark, Inc. repurchased on the open market
$110,770 aggregate principal amount at maturity of its
9
3
/
4
% senior
discount notes for approximately $96,741 including accreted
interest of $22,147 and cash premiums of $5,380. Cinemark, Inc.
funded these repurchases with available cash from its operations
and with proceeds from our initial public offering.
During 2008, in ten open market purchases, Cinemark, Inc.
repurchased $47,000 aggregate principal amount at maturity of
its
9
3
/
4
% senior
discount notes for approximately $42,208, including accreted
interest of $15,186 and a discount of $2,537. Cinemark, Inc.
funded the transactions with proceeds from our initial public
offering.
On June 15, 2009, Cinemark, Inc. commenced a cash tender
offer for any and all of its
9
3
/
4
% senior
discount notes due 2014, of which $419,403 aggregate principal
amount at maturity remained outstanding. In connection with the
tender offer, Cinemark, Inc. solicited consents to adopt
proposed amendments to the indenture to eliminate substantially
all restrictive covenants and certain events of default
provisions. On June 29, 2009, approximately $402,459
aggregate principal amount at maturity of the
9
3
/
4
% senior
discount notes were tendered and repurchased by Cinemark, Inc.
for approximately $433,415, including accrued interest of
$11,336 and tender premiums paid of $19,620. Cinemark, Inc.
funded the repurchase with the proceeds from the issuance of the
Cinemark USA, Inc. senior notes discussed above. On
August 3, 2009, Cinemark, Inc. delivered to the Bank of New
York Trust Company N.A., as trustee, a notice to redeem the
$16,944 aggregate principal amount at maturity of its
9
3
/
4
% senior
discount notes remaining outstanding. The notice specified
September 8, 2009 as the redemption date, at which time
Cinemark, Inc. paid approximately $18,564, consisting of a
redemption price of 104.875% of the face amount of the discount
notes remaining outstanding plus accrued and unpaid interest to,
but not including, the redemption date. Cinemark, Inc. funded
the redemption with proceeds from the issuance of the Cinemark
USA, Inc. senior notes discussed above.
Cinemark
USA, Inc. 9% Senior Subordinated Notes
On February 11, 2003, Cinemark USA, Inc. issued
$150 million aggregate principal amount of 9% senior
subordinated notes due 2013 and on May 7, 2003, Cinemark
USA, Inc. issued an additional $210 million aggregate
principal amount of 9% senior subordinated notes due 2013,
collectively referred to as the 9% senior subordinated
notes. Interest was payable on February 1 and August 1 of each
year.
Prior to 2009, Cinemark USA, Inc. repurchased a total of
$359.8 million aggregate principal amount of its
9% senior subordinated notes. The transactions were funded
by Cinemark USA, Inc. with proceeds from its sale of a
42
Table of Contents
portion of its investment in NCM during 2007 and available cash
from operations. Cinemark USA, Inc. also executed a supplemental
indenture removing substantially all of the restrictive
covenants and certain events of default.
On October 14, 2010, Cinemark USA, Inc. redeemed all of its
remaining outstanding 9% senior subordinated notes for
approximately $0.2 million, including accrued interest and
premiums.
Covenant
Compliance
As of December 31, 2010, we are in full compliance with all
agreements, including all related covenants, governing our
outstanding debt.
Ratings
We are rated by nationally recognized rating agencies. The
significance of individual ratings varies from agency to agency.
However, companies’ assigned ratings at the top end of the
range have, in the opinion of certain rating agencies, the
strongest capacity for repayment of debt or payment of claims,
while companies at the bottom end of the range have the weakest
capability. Ratings are always subject to change and there can
be no assurance that our current ratings will continue for any
given period of time. A downgrade of our debt ratings, depending
on the extent, could increase the cost to borrow funds. Below
are our latest ratings per category, which were current as of
February 28, 2011.
|
Category
|
Moody’s | Standard and Poor’s | ||
|
Cinemark USA, Inc. 8.625% Senior Notes
|
B3 | B- | ||
|
Cinemark USA, Inc. Senior Secured Credit Facility
|
Ba3 | BB- |
New
Accounting Pronouncements
In December 2009, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”)
No. 2009-17,
“
Consolidations (Topic 810) — Improvements to
Financial Reporting by Enterprises Involved with Variable
Interest Entities
” (“ASU
No. 2009-17”).
This update changes how a reporting entity determines when an
entity that is insufficiently capitalized or is not controlled
through voting (or similar rights) should be consolidated. The
determination of whether a reporting entity is required to
consolidate another entity is based on, among other things, the
other entity’s purpose and design and the reporting
entity’s ability to direct the activities of the other
entity that most significantly impact the other entity’s
economic performance. ASU
No. 2009-17
requires a reporting entity to provide additional disclosures
about its involvement with variable interest entities and any
significant changes in risk exposure due to that involvement. A
reporting entity is required to disclose how its involvement
with a variable interest entity affects the reporting
entity’s financial statements. ASU
No. 2009-17
is effective for fiscal years beginning after November 15,
2009, and interim periods within those fiscal years. We adopted
ASU
No. 2009-17
as of January 1, 2010, and its application had no impact on
our consolidated financial statements.
In January 2010, the FASB issued ASU
No. 2010-06,
“
Fair Value Measurements and Disclosures: Improving
Disclosures about Fair Value Measurements
” (“ASU
No. 2010-06”),
which amends FASB ASC Topic
820-10,
“
Fair Value Measurements and Disclosures
”. This
update requires additional disclosures for transfers in and out
of Levels 1 and 2 and for activity in Level 3 and
clarifies certain other existing disclosure requirements. We
adopted ASU
No. 2010-06
beginning January 1, 2010. This update did not have a
significant impact on our disclosures.
In August 2010, the FASB issued ASU
No. 2010-21,
“
Accounting for Technical Amendments to Various SEC
Rules and Schedules
” (“ASU
No. 2010-21”).
This update amends various SEC paragraphs in the FASB Accounting
Standards Codification pursuant to SEC Final Rule,
“Technical Amendments to Rules Forms, Schedules and
Codification of Financial Reporting Policies”. The adoption
of ASU
No. 2010-21
did not affect our consolidated financial statements.
In August 2010, the FASB issued ASU
No. 2010-22,
“
Accounting for Various Topics
” (“ASU
No. 2010-22”),
which amends various SEC paragraphs based on external comments
received and the issuance of Staff Accounting Bulletin
(“SAB”) 112. SAB 112 was issued to bring existing
SEC guidance into conformity with ASC Topic 805,
43
Table of Contents
“
Business Combinations
” and ASC Topic 810
“
Consolidation
”. The adoption of ASU
No. 2010-22
did not affect our consolidated financial statements.
Seasonality
Our revenues have historically been seasonal, coinciding with
the timing of releases of motion pictures by the major
distributors. Generally, the most successful motion pictures
have been released during the summer, extending from May to
mid-August, and during the holiday season, extending from early
November through year-end. The unexpected emergence of a hit
film during other periods can alter this seasonality trend. The
timing of such film releases can have a significant effect on
our results of operations, and the results of one quarter are
not necessarily indicative of results for the next quarter or
for the same period in the following year.
| Item 7A. | 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
We are currently party to variable rate debt facilities. An
increase or decrease in interest rates would affect our interest
expense relating to our variable rate debt facilities. At
December 31, 2010, there was an aggregate of approximately
$422.8 million of variable rate debt outstanding under
these facilities, which excludes $650.0 million of Cinemark
USA, Inc.’s term loan debt that is hedged with the
Company’s interest rate swap agreements as discussed below.
Based on the interest rates in effect on the variable rate debt
outstanding at December 31, 2010, a 100 basis point
increase in market interest rates would increase our annual
interest expense by approximately $4.2 million.
Our current interest rate swap agreements qualify for cash flow
hedge accounting. The fair values of the interest rate swaps are
recorded on our consolidated balance sheet as an asset or
liability with the effective portion of the interest rate
swaps’ gains or losses reported as a component of
accumulated other comprehensive income (loss) and the
ineffective portion reported in earnings.
Below is a summary of our current interest rate swap agreements:
|
Amount Hedged
|
Effective Date | Pay Rate | Receive Rate | Expiration Date | ||||||||
| $ | 125,000 | August 2007 | 4.9220 | % | 3-month LIBOR | August 2012 | ||||||
| $ | 100,000 | November 2008 | 3.6300 | % | 1-month LIBOR | November 2011 | ||||||
| $ | 75,000 | November 2008 | 3.6300 | % | 1-month LIBOR | November 2012 | ||||||
| $ | 175,000 | December 2010 | 1.3975 | % | 1-month LIBOR | September 2015 | ||||||
| $ | 175,000 | December 2010 | 1.4000 | % | 1-month LIBOR | September 2015 | ||||||
The table below provides information about our fixed rate and
variable rate long-term debt agreements as of December 31,
2010:
|
Average
|
||||||||||||||||||||||||||||||||||||
| Expected Maturity for the Twelve-Month Periods Ending December 31, |
Interest
|
|||||||||||||||||||||||||||||||||||
| 2011 | 2012 | 2013 | 2014 | 2015 | Thereafter | Total | Fair Value | Rate | ||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||
|
Fixed
rate
(1)(2)
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,120.0 | $ | 1,120.0 | $ | 1,159.2 | 7.0 | % | ||||||||||||||||||
|
Variable rate
|
10.8 | 47.9 | 126.7 | 9.2 | 9.2 | 219.0 | 422.8 | 422.8 | 3.1 | % | ||||||||||||||||||||||||||
|
Total debt
|
$ | 10.8 | $ | 47.9 | $ | 126.7 | $ | 9.2 | $ | 9.2 | $ | 1,339.0 | $ | 1,542.8 | $ | 1,582.0 | ||||||||||||||||||||
| (1) | Includes $650.0 million of the Cinemark USA, Inc. term loan, which represents the debt currently hedged with the Company’s interest rate swap agreements. | |
| (2) | Includes the 8.625% senior notes in the aggregate principal amount of $470.0 million, excluding the discount of $10.3 million. |
44
Table of Contents
Foreign
Currency Exchange Rate Risk
We are also exposed to market risk arising from changes in
foreign currency exchange rates as a result of our international
operations. Generally, we export from the U.S. certain of
the equipment and construction interior finish items and other
operating supplies used by our international subsidiaries. A
majority of the revenues and operating expenses of our
international subsidiaries are transacted in the country’s
local currency. Generally accepted accounting principles in the
U.S., or U.S. GAAP, require that our subsidiaries use the
currency of the primary economic environment in which they
operate as their functional currency. If our subsidiaries
operate in a highly inflationary economy, U.S. GAAP
requires that the U.S. dollar be used as the functional
currency for the subsidiary. Currency fluctuations in the
countries in which we operate result in us reporting exchange
gains (losses) or foreign currency translation adjustments.
Based upon our equity ownership in our international
subsidiaries as of December 31, 2010, holding everything
else constant, a 10% immediate, simultaneous, unfavorable change
in all of the foreign currency exchange rates to which we are
exposed, would decrease the aggregate net book value of our
investments in our international subsidiaries by approximately
$47 million and would decrease the aggregate net income of
our international subsidiaries for the years ended
December 31, 2009 and 2010 by approximately $4 million
and $8 million, respectively.
| Item 8. | Financial Statements and Supplementary Data |
The financial statements and supplementary data are listed on
the Index on
page F-1
of this
Form 10-K.
Such financial statements and supplementary data are included
herein beginning on
page F-3.
| Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |
None.
| Item 9A. | Controls and Procedures |
Evaluation
of the Effectiveness of Disclosure Controls and
Procedures
As of December 31, 2010, under the supervision and with the
participation of our principal executive officer and principal
financial officer, we carried out an evaluation required by the
Securities Exchange Act of 1934, as amended, or the
1934 Act, of the effectiveness of the design and operation
of our disclosure controls and procedures, as defined in
Rule 13a-15(e)
of the 1934 Act. Based on this evaluation, our principal
executive officer and principal financial officer concluded
that, as of December 31, 2010, our disclosure controls and
procedures were effective to provide reasonable assurance that
information required to be disclosed by us in the reports that
we file or submit under the 1934 Act is recorded,
processed, summarized, and reported within the time periods
specified in the SEC’s rules and forms and were effective
to provide reasonable assurance that such information is
accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required
disclosures.
Management’s
Report on Internal Control over Financial
Reporting
Management is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined
in
Rule 13a-15(f)
of the 1934 Act. The Company’s internal control
framework and processes are designed to provide reasonable
assurance to management and the board of directors regarding the
reliability of financial reporting and the preparation of the
Company’s consolidated financial statements in accordance
with the accounting principles generally accepted in the United
States of America. Management has assessed the effectiveness of
our internal control over financial reporting as of
December 31, 2010 based on criteria set forth by the
Committee of Sponsoring Organizations of the Treadway
Commission, or COSO, in
Internal Control —
Integrated Framework
. As a result of this assessment,
management concluded that, as of December 31, 2010, our
internal control over financial reporting was effective.
Certifications of our Chief Executive Officer and our Chief
Financial Officer, which are required in accordance with
Rule 13a-14
of the Exchange Act, are attached as exhibits to this Annual
Report. This “Controls and
45
Table of Contents
Procedures” section includes the information concerning the
controls evaluation referred to in the certifications, and it
should be read in conjunction with the certifications for a more
complete understanding of the topics presented.
The Company’s independent auditors, Deloitte &
Touche LLP, with direct access to the Company’s board of
directors through its Audit Committee, have audited the
consolidated financial statements prepared by the Company. Their
report on the consolidated financial statements is included in
Part II, Item 8. Financial Statements and
Supplementary Data. Deloitte & Touche LLP has issued
an attestation report on the Company’s internal control
over financial reporting. Deloitte & Touche LLP’s
report on the Company’s internal control over financial
reporting is included herein.
Changes
in Internal Control Over Financial Reporting
There have been no changes in our internal control over
financial reporting identified in connection with the evaluation
required by paragraph (d) of Exchange Act
Rules 13a-15
that occurred during the quarter ended December 31, 2010
that materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Limitations
on Controls
Management does not expect that our disclosure controls and
procedures or our internal control over financial reporting will
prevent or detect all errors or fraud. Any control system, no
matter how well designed and operated, is based upon certain
assumptions and can provide only reasonable, not absolute,
assurance that its objectives will be met. Further, no
evaluation of controls can provide absolute assurance that
misstatements due to error or fraud will not occur or that all
control issues and instances of fraud, if any, within the
Company have been detected.
46
Table of Contents
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Cinemark Holdings, Inc.
Plano, Texas
We have audited the internal control over financial reporting of
Cinemark Holdings, Inc. and subsidiaries (the
“Company”) as of December 31, 2010, based on
criteria established in
Internal Control —
Integrated Framework
issued by the Committee of Sponsoring
Organizations of the Treadway Commission. The Company’s
management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting,
included in the accompanying management’s report on
internal control over financial reporting. Our responsibility is
to express an opinion on the Company’s internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a
process designed by, or under the supervision of, the
company’s principal executive and principal financial
officers, or persons performing similar functions, and effected
by the company’s board of directors, management, and other
personnel to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the
financial statements.
Because of the inherent limitations of internal control over
financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements
due to error or fraud may not be prevented or detected on a
timely basis. Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting
to future periods are subject to the risk that the controls may
become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.
In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as
of December 31, 2010, based on the criteria established in
Internal Control — Integrated Framework
issued
by the Committee of Sponsoring Organizations of the Treadway
Commission.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated financial statements and financial statement
schedule as of and for the year ended December 31, 2010 of
the Company and our report dated February 28, 2011
expressed an unqualified opinion on those financial statements
and financial statement schedule.
/s/ Deloitte &
Touche LLP
Dallas, Texas
February 28, 2011
47
Table of Contents
| Item 10. | Directors, Executive Officers and Corporate Governance |
Incorporated by reference to the Company’s Proxy Statement
for its Annual Stockholders Meeting (under the headings
“Election of Directors”, “Section 16(a)
Beneficial Ownership Reporting Compliance”, “Corporate
Governance” and “Executive Officers”) to be held
on May 12, 2011 and to be filed with the Securities and
Exchange Commission within 120 days after December 31,
2010.
| Item 11. | Executive Compensation |
Incorporated by reference to the Company’s Proxy Statement
for its Annual Stockholders Meeting (under the heading
“Executive Compensation”) to be held on May 12,
2011 and to be filed with the Securities and Exchange Commission
within 120 days after December 31, 2010.
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Incorporated by reference to the Company’s Proxy Statement
for its Annual Stockholders Meeting (under the headings
“Security Ownership of Certain Beneficial Owners and
Management”) to be held on May 12, 2011 and to be
filed with the Securities and Exchange Commission within
120 days after December 31, 2010.
| Item 13. | Certain Relationships and Related Transactions, and Director Independence |
Incorporated by reference to the Company’s Proxy Statement
for its Annual Stockholders Meeting (under the heading
“Certain Relationships and Related Party Transactions”
and “Corporate Governance”) to be held on May 12,
2011 and to be filed with the Securities and Exchange Commission
within 120 days after December 31, 2010.
| Item 14. | Principal Accounting Fees and Services |
Incorporated by reference to the Company’s Proxy Statement
for its Annual Stockholders Meeting (under the heading
“Board Committees — Audit Committee —
Fees Paid to Independent Registered Public Accounting
Firm”) to be held on May 12, 2011 and to be filed with
the Securities and Exchange Commission within 120 days
after December 31, 2010.
| Item 15. | Exhibits, Financial Statement Schedules |
| (a) | Documents Filed as Part of this Report |
1. The financial statement schedules and related data
listed in the accompanying Index beginning on
page F-1
are filed as a part of this report.
2. The exhibits listed in the accompanying Index beginning
on
page E-1
are filed as a part of this report.
| (b) | Exhibits |
See the accompanying Index beginning on
page E-1.
| (c) | Financial Statement Schedules |
Schedule I — Condensed Financial Information of
Registrant beginning on
page F-46.
All schedules not identified above have been omitted because
they are not required, are not applicable or the information is
included in the consolidated financial statements or notes
contained in this report.
48
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: February 28, 2011
CINEMARK HOLDINGS, INC.
| BY: |
/s/ Alan
W. Stock
|
Alan W. Stock
Chief Executive Officer
| BY: |
/s/ Robert
Copple
|
Robert Copple
Chief Financial Officer and
Principal Accounting Officer
POWER OF
ATTORNEY
Each person whose signature appears below hereby severally
constitutes and appoints Alan W. Stock and Robert Copple his
true and lawful attorney-in-fact and agent, each with the power
of substitution and resubstitution, for him in any and all
capacities, to sign any and all amendments to this Annual Report
on
Form 10-K
and to file the same, with accompanying exhibits and other
related documents, with the Securities and Exchange Commission,
and ratify and confirm all that said attorney-in-fact and agent,
or his substitute or substitutes, may lawfully do or cause to be
done by virtue of said appointment.
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
|
Name
|
Title
|
Date
|
||||
|
/s/ Lee
Roy Mitchell
|
Chairman of the Board of Directors and Director | February 28, 2011 | ||||
|
/s/ Alan
W. Stock
|
Chief Executive Officer
(principal executive officer) |
February 28, 2011 | ||||
|
/s/ Robert
Copple
|
Executive Vice President; Treasurer and Chief Financial Officer (principal financial and accounting officer) | February 28, 2011 | ||||
|
/s/ Benjamin
D. Chereskin
|
Director | February 28, 2011 | ||||
|
/s/ Vahe
A. Dombalagian
|
Director | February 28, 2011 | ||||
49
Table of Contents
|
Name
|
Title
|
Date
|
||||
|
/s/ Peter
R. Ezersky
|
Director | February 28, 2011 | ||||
|
/s/ Enrique
F. Senior
|
Director | February 28, 2011 | ||||
|
/s/ Raymond
W. Syufy
|
Director | February 28, 2011 | ||||
|
/s/ Carlos
M. Sepulveda
|
Director | February 28, 2011 | ||||
|
/s/ Roger
T. Staubach
|
Director | February 28, 2011 | ||||
|
/s/ Donald
G. Soderquist
|
Director | February 28, 2011 | ||||
|
/s/ Steven
Rosenberg
|
Director | February 28, 2011 | ||||
50
Table of Contents
SUPPLEMENTAL
INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
No annual report or proxy material has been sent to our
stockholders. An annual report and proxy material may be sent to
our stockholders subsequent to the filing of this
Form 10-K.
We shall furnish to the Securities and Exchange Commission
copies of any annual report or proxy material that is sent to
our stockholders.
51
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
| Page | ||||
|
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED
FINANCIAL STATEMENTS:
|
||||
| F-2 | ||||
| F-3 | ||||
| F-4 | ||||
| F-5 | ||||
| F-6 | ||||
| F-7 | ||||
| F-46 | ||||
F-1
Table of Contents
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Cinemark Holdings, Inc.
Plano, Texas
We have audited the accompanying consolidated balance sheets of
Cinemark Holdings, Inc. and subsidiaries (the
“Company”) as of December 31, 2009 and 2010, and
the related consolidated statements of operations, equity and
comprehensive income (loss), and cash flows for each of the
three years in the period ended December 31, 2010. Our
audits also included the financial statement schedule listed in
the Index at Item 15. These financial statements and
financial statement schedule are the responsibility of the
Company’s management. Our responsibility is to express an
opinion on the financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of
Cinemark Holdings, Inc. and subsidiaries as of December 31,
2009 and 2010, and the results of their operations and their
cash flows for each of the three years in the period ended
December 31, 2010, in conformity with accounting principles
generally accepted in the United States of America. Also, in our
opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the
information set forth therein.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
Company’s internal control over financial reporting as of
December 31, 2010, based on the criteria established in
Internal Control — Integrated Framework
issued
by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 28, 2011 expressed
an unqualified opinion on the Company’s internal control
over financial reporting.
/s/ Deloitte & Touche LLP
Dallas, Texas
February 28, 2011
F-2
Table of Contents
CONSOLIDATED BALANCE SHEETS
|
December 31,
|
December 31,
|
|||||||
| 2009 | 2010 | |||||||
| (In thousands, except share data) | ||||||||
|
ASSETS
|
||||||||
|
Current assets
|
||||||||
|
Cash and cash equivalents
|
$ | 437,936 | $ | 464,997 | ||||
|
Inventories
|
9,854 | 11,686 | ||||||
|
Accounts receivable
|
33,110 | 50,607 | ||||||
|
Income tax receivable
|
13,025 | 30,733 | ||||||
|
Deferred tax asset
|
3,321 | 8,099 | ||||||
|
Prepaid expenses and other
|
10,051 | 10,931 | ||||||
|
Total current assets
|
507,297 | 577,053 | ||||||
|
Theatre properties and equipment
|
||||||||
|
Land
|
94,879 | 91,678 | ||||||
|
Buildings
|
394,654 | 396,158 | ||||||
|
Property under capital lease
|
204,881 | 212,314 | ||||||
|
Theatre furniture and equipment
|
639,538 | 677,710 | ||||||
|
Leasehold interests and improvements
|
602,583 | 670,344 | ||||||
|
Total
|
1,936,535 | 2,048,204 | ||||||
|
Less accumulated depreciation and amortization
|
716,947 | 832,758 | ||||||
|
Theatre properties and equipment, net
|
1,219,588 | 1,215,446 | ||||||
|
Other assets
|
||||||||
|
Goodwill
|
1,116,302 | 1,122,971 | ||||||
|
Intangible assets — net
|
342,998 | 329,204 | ||||||
|
Investment in NCM
|
34,232 | 64,376 | ||||||
|
Investment in DCIP
|
640 | 10,838 | ||||||
|
Investment in Real D
|
— | 27,993 | ||||||
|
Investments in and advances to affiliates
|
2,889 | 2,619 | ||||||
|
Deferred charges and other assets — net
|
52,502 | 70,978 | ||||||
|
Total other assets
|
1,549,563 | 1,628,979 | ||||||
|
Total assets
|
$ | 3,276,448 | $ | 3,421,478 | ||||
|
LIABILITIES AND EQUITY
|
||||||||
|
Current liabilities
|
||||||||
|
Current portion of long-term debt
|
$ | 12,227 | $ | 10,836 | ||||
|
Current portion of capital lease obligations
|
7,340 | 7,348 | ||||||
|
Current liability for uncertain tax positions
|
13,229 | 1,948 | ||||||
|
Accounts payable
|
53,709 | 64,132 | ||||||
|
Accrued film rentals
|
69,216 | 53,255 | ||||||
|
Accrued interest
|
6,411 | 5,138 | ||||||
|
Accrued payroll
|
29,928 | 31,191 | ||||||
|
Accrued property taxes
|
22,913 | 23,778 | ||||||
|
Accrued other current liabilities
|
65,859 | 74,314 | ||||||
|
Total current liabilities
|
280,832 | 271,940 | ||||||
|
Long-term liabilities
|
||||||||
|
Long-term debt, less current portion
|
1,531,478 | 1,521,605 | ||||||
|
Capital lease obligations, less current portion
|
133,028 | 132,812 | ||||||
|
Deferred tax liability
|
124,823 | 129,293 | ||||||
|
Liability for uncertain tax positions
|
18,432 | 17,840 | ||||||
|
Deferred lease expenses
|
27,698 | 30,454 | ||||||
|
Deferred revenue — NCM
|
203,006 | 230,573 | ||||||
|
Other long-term liabilities
|
42,523 | 53,809 | ||||||
|
Total long-term liabilities
|
2,080,988 | 2,116,386 | ||||||
|
Commitments and contingencies (see Note 22)
|
||||||||
|
Equity
|
||||||||
|
Cinemark Holdings, Inc.’s stockholders’ equity
|
||||||||
|
Common stock, $0.001 par value: 300,000,000 shares
authorized; 114,222,523 shares issued and
110,917,105 shares outstanding at December 31, 2009;
and 117,110,703 shares issued and 113,750,844 shares
outstanding at December 31, 2010
|
114 | 117 | ||||||
|
Additional
paid-in-capital
|
1,011,667 | 1,037,586 | ||||||
|
Treasury stock, 3,305,418 and 3,359,859 common shares at cost at
December 31, 2009 and 2010, respectively
|
(43,895 | ) | (44,725 | ) | ||||
|
Retained earnings (deficit)
|
(60,595 | ) | 388 | |||||
|
Accumulated other comprehensive income (loss)
|
(7,459 | ) | 28,181 | |||||
|
Total Cinemark Holdings, Inc.’s stockholders’ equity
|
899,832 | 1,021,547 | ||||||
|
Noncontrolling interests
|
14,796 | 11,605 | ||||||
|
Total equity
|
914,628 | 1,033,152 | ||||||
|
Total liabilities and equity
|
$ | 3,276,448 | $ | 3,421,478 | ||||
The accompanying notes are an integral part of the consolidated
financial statements.
F-3
Table of Contents
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
|
December 31,
|
December 31,
|
December 31,
|
||||||||||
| 2008 | 2009 | 2010 | ||||||||||
| (In thousands, except per share data) | ||||||||||||
|
Revenues
|
||||||||||||
|
Admissions
|
$ | 1,126,977 | $ | 1,293,378 | $ | 1,405,389 | ||||||
|
Concession
|
534,836 | 602,880 | 642,326 | |||||||||
|
Other
|
80,474 | 80,242 | 93,429 | |||||||||
|
Total revenues
|
1,742,287 | 1,976,500 | 2,141,144 | |||||||||
|
Cost of operations
|
||||||||||||
|
Film rentals and advertising
|
612,248 | 708,160 | 769,698 | |||||||||
|
Concession supplies
|
86,618 | 91,918 | 97,484 | |||||||||
|
Salaries and wages
|
180,950 | 203,437 | 221,246 | |||||||||
|
Facility lease expense
|
225,595 | 238,779 | 255,717 | |||||||||
|
Utilities and other
|
205,814 | 222,660 | 239,470 | |||||||||
|
General and administrative expenses
|
90,788 | 96,497 | 109,045 | |||||||||
|
Depreciation and amortization
|
155,326 | 148,264 | 142,731 | |||||||||
|
Amortization of favorable/unfavorable leases
|
2,708 | 1,251 | 777 | |||||||||
|
Impairment of long-lived assets
|
113,532 | 11,858 | 12,538 | |||||||||
|
(Gain) loss on sale of assets and other
|
8,488 | 3,202 | (431 | ) | ||||||||
|
Total cost of operations
|
1,682,067 | 1,726,026 | 1,848,275 | |||||||||
|
Operating income
|
60,220 | 250,474 | 292,869 | |||||||||
|
Other income (expense)
|
||||||||||||
|
Interest expense
|
(116,058 | ) | (102,505 | ) | (112,444 | ) | ||||||
|
Interest income
|
13,265 | 4,909 | 6,105 | |||||||||
|
Foreign currency exchange gain
|
986 | 635 | 1,054 | |||||||||
|
Gain (loss) on early retirement of debt
|
1,698 | (27,878 | ) | (3 | ) | |||||||
|
Distributions from NCM
|
18,838 | 20,822 | 23,358 | |||||||||
|
Dividend income
|
49 | 51 | — | |||||||||
|
Equity in loss of affiliates
|
(2,373 | ) | (907 | ) | (3,438 | ) | ||||||
|
Total other expense
|
(83,595 | ) | (104,873 | ) | (85,368 | ) | ||||||
|
Income (loss) before income taxes
|
(23,375 | ) | 145,601 | 207,501 | ||||||||
|
Income taxes
|
21,055 | 44,845 | 57,838 | |||||||||
|
Net income (loss)
|
(44,430 | ) | 100,756 | 149,663 | ||||||||
|
Less: Net income attributable to noncontrolling interests
|
3,895 | 3,648 | 3,543 | |||||||||
|
Net income (loss) attributable to Cinemark Holdings,
Inc.
|
$ | (48,325 | ) | $ | 97,108 | $ | 146,120 | |||||
|
Weighted average shares outstanding
|
||||||||||||
|
Basic
|
107,341 | 108,563 | 111,565 | |||||||||
|
Diluted
|
107,341 | 110,255 | 112,151 | |||||||||
|
Earnings (loss) per share attributable to Cinemark Holdings,
Inc.’s common stockholders:
|
||||||||||||
|
Basic
|
$ | (0.45 | ) | $ | 0.89 | $ | 1.30 | |||||
|
Diluted
|
$ | (0.45 | ) | $ | 0.87 | $ | 1.29 | |||||
The accompanying notes are an integral part of the consolidated
financial statements.
F-4
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
|
Accumulated
|
Total Cinemark
|
Comprehensive Income (Loss) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock |
Additional
|
Retained
|
Other
|
Holdings, Inc.’s
|
Attributable to:
|
||||||||||||||||||||||||||||||||||||||||||||||
|
Shares
|
Shares
|
Paid-in-
|
Earnings
|
Comprehensive
|
Stockholders’
|
Noncontrolling
|
Total
|
Cinemark
|
Noncontrolling
|
|||||||||||||||||||||||||||||||||||||||||||
| Issued | Amount | Issued | Amount | Capital | (Deficit) | Income (Loss) | Equity | Interests | Equity | Holdings, Inc. | Interests | Total | ||||||||||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Balance at January 1, 2008
|
106,984 | $ | 107 | — | $ | — | $ | 939,327 | $ | 47,074 | $ | 32,695 | $ | 1,019,203 | $ | 16,182 | $ | 1,035,385 | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||
|
Issuance of restricted stock, net of restricted stock forfeitures
|
385 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
Exercise of stock options
|
169 | — | — | — | 1,292 | — | — | 1,292 | — | 1,292 | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
Share based awards compensation expense
|
— | — | — | — | 5,113 | — | — | 5,113 | — | 5,113 | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
Tax benefit related to stock option exercises
|
— | — | — | — | 474 | — | — | 474 | — | 474 | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
Issuance of shares as a result of Central America share exchange
|
903 | 1 | — | — | 12,948 | — | — | 12,949 | (3,245 | ) | 9,704 | — | — | — | ||||||||||||||||||||||||||||||||||||||
|
Issuance of shares as a result of Ecuador share exchange
|
394 | 1 | — | — | 3,199 | — | — | 3,200 | (1,574 | ) | 1,626 | — | — | — | ||||||||||||||||||||||||||||||||||||||
|
Dividends paid to stockholders
|
— | — | — | — | — | (77,534 | ) | — | (77,534 | ) | — | (77,534 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Dividends accrued on unvested restricted stock unit awards
|
— | — | — | — | — | (74 | ) | — | (74 | ) | — | (74 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Contribution by noncontrolling interest
|
— | — | — | — | — | — | — | — | 585 | 585 | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
Dividends paid to noncontrolling interests
|
— | — | — | — | — | — | — | — | (1,353 | ) | (1,353 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||
|
Comprehensive income (loss):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Net income (loss)
|
— | — | — | — | — | (48,325 | ) | — | (48,325 | ) | 3,895 | (44,430 | ) | (48,325 | ) | 3,895 | (44,430 | ) | ||||||||||||||||||||||||||||||||||
|
Fair value adjustments on interest rate swap agreements, net of
taxes of $2,442
|
— | — | — | — | — | — | (22,063 | ) | (22,063 | ) | — | (22,063 | ) | (22,063 | ) | — | (22,063 | ) | ||||||||||||||||||||||||||||||||||
|
Amortization of accumulated other comprehensive loss on
terminated swap agreement
|
— | — | — | — | — | — | 1,351 | 1,351 | — | 1,351 | 1,351 | — | 1,351 | |||||||||||||||||||||||||||||||||||||||
|
Foreign currency translation adjustment
|
— | — | — | — | — | — | (84,330 | ) | (84,330 | ) | (1,519 | ) | (85,849 | ) | (84,330 | ) | (1,519 | ) | (85,849 | ) | ||||||||||||||||||||||||||||||||
|
Balance at December 31, 2008
|
108,835 | $ | 109 | — | $ | — | $ | 962,353 | $ | (78,859 | ) | $ | (72,347 | ) | $ | 811,256 | $ | 12,971 | $ | 824,227 | $ | (153,367 | ) | $ | 2,376 | $ | (150,991 | ) | ||||||||||||||||||||||||
|
Issuance of restricted stock, net of restricted stock forfeitures
|
479 | — | (30 | ) | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
|
Exercise of stock options, net of stock withholdings
|
4,908 | 5 | (3,275 | ) | (43,895 | ) | 37,442 | — | — | (6,448 | ) | — | (6,448 | ) | — | — | — | |||||||||||||||||||||||||||||||||||
|
Share based awards compensation expense
|
— | — | — | — | 4,304 | — | — | 4,304 | — | 4,304 | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
Tax benefit related to stock option exercises
|
— | — | — | — | 7,545 | — | — | 7,545 | — | 7,545 | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
Dividends paid to stockholders
|
— | — | — | — | — | (78,643 | ) | — | (78,643 | ) | — | (78,643 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Dividends accrued on unvested restricted stock unit awards
|
— | — | — | — | — | (201 | ) | — | (201 | ) | — | (201 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Purchase of noncontrolling interest share of an Argentina
subsidiary
|
— | — | — | — | 23 | — | — | 23 | (117 | ) | (94 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||
|
Dividends paid to noncontrolling interests
|
— | — | — | — | — | — | — | — | (2,322 | ) | (2,322 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||
|
Comprehensive income:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Net income
|
— | — | — | — | — | 97,108 | — | 97,108 | 3,648 | 100,756 | 97,108 | 3,648 | 100,756 | |||||||||||||||||||||||||||||||||||||||
|
Fair value adjustments on interest rate swap agreements, net of
taxes of $2,359
|
— | — | — | — | — | — | 3,898 | 3,898 | — | 3,898 | 3,898 | — | 3,898 | |||||||||||||||||||||||||||||||||||||||
|
Amortization of accumulated other comprehensive loss on
terminated swap agreement
|
— | — | — | — | — | — | 4,633 | 4,633 | — | 4,633 | 4,633 | — | 4,633 | |||||||||||||||||||||||||||||||||||||||
|
Foreign currency translation adjustment
|
— | — | — | — | — | — | 56,357 | 56,357 | 616 | 56,973 | 56,357 | 616 | 56,973 | |||||||||||||||||||||||||||||||||||||||
|
Balance at December 31, 2009
|
114,222 | $ | 114 | (3,305 | ) | $ | (43,895 | ) | $ | 1,011,667 | $ | (60,595 | ) | $ | (7,459 | ) | $ | 899,832 | $ | 14,796 | $ | 914,628 | $ | 161,996 | $ | 4,264 | $ | 166,260 | ||||||||||||||||||||||||
|
Colombia share exchange (see Note 9)
|
1,113 | 1 | — | — | 6,950 | — | (1,086 | ) | 5,865 | (5,865 | ) | — | — | — | — | |||||||||||||||||||||||||||||||||||||
|
Share based awards compensation expense
|
— | — | — | — | 8,352 | — | — | 8,352 | — | 8,352 | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
Issuance of restricted stock, net of restricted stock forfeitures
|
684 | 1 | — | — | — | — | — | 1 | — | 1 | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
Stock repurchases related to restricted stock that vested during
the year ended December 31, 2010
|
— | — | (20 | ) | (299 | ) | — | — | — | (299 | ) | — | (299 | ) | — | — | — | |||||||||||||||||||||||||||||||||||
|
Exercise of stock options, net of stock withholdings
|
1,092 | 1 | (35 | ) | (531 | ) | 8,327 | — | — | 7,797 | — | 7,797 | — | — | — | |||||||||||||||||||||||||||||||||||||
|
Tax benefit related to stock option exercises
|
— | — | — | — | 2,680 | — | — | 2,680 | — | 2,680 | — | — | — | |||||||||||||||||||||||||||||||||||||||
|
Dividends paid to stockholders
|
— | — | — | — | — | (84,502 | ) | — | (84,502 | ) | — | (84,502 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Dividends accrued on unvested restricted stock unit awards
|
— | — | — | — | — | (635 | ) | — | (635 | ) | — | (635 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||
|
Purchase of noncontrolling interest share of Panama subsidiary
|
— | — | — | — | (390 | ) | — | — | (390 | ) | (498 | ) | (888 | ) | — | — | — | |||||||||||||||||||||||||||||||||||
|
Dividends paid to noncontrolling interests
|
— | — | — | — | — | — | — | — | (539 | ) | (539 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||
|
Comprehensive income:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Net income
|
— | — | — | — | — | 146,120 | — | 146,120 | 3,543 | 149,663 | 146,120 | 3,543 | 149,663 | |||||||||||||||||||||||||||||||||||||||
|
Fair value adjustments on interest rate swap agreements, net of
taxes of $4,339
|
— | — | — | — | — | — | 7,170 | 7,170 | — | 7,170 | 7,170 | — | 7,170 | |||||||||||||||||||||||||||||||||||||||
|
Amortization of accumulated other comprehensive loss on
terminated swap agreement
|
— | — | — | — | — | — | 4,633 | 4,633 | — | 4,633 | 4,633 | — | 4,633 | |||||||||||||||||||||||||||||||||||||||
|
Fair value adjustments on
available-for-sale
securities, net of taxes of $3,424
|
— | — | — | — | — | — | 5,659 | 5,659 | — | 5,659 | 5,659 | — | 5,659 | |||||||||||||||||||||||||||||||||||||||
|
Foreign currency translation adjustment
|
— | — | — | — | — | — | 19,264 | 19,264 | 168 | 19,432 | 19,264 | 168 | 19,432 | |||||||||||||||||||||||||||||||||||||||
|
Balance at December 31, 2010
|
117,111 | $ | 117 | (3,360 | ) | $ | (44,725 | ) | $ | 1,037,586 | $ | 388 | $ | 28,181 | $ | 1,021,547 | $ | 11,605 | $ | 1,033,152 | $ | 182,846 | $ | 3,711 | $ | 186,557 | ||||||||||||||||||||||||||
The accompanying notes are an integral part of the consolidated
financial statements.
F-5
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
YEARS
ENDED DECEMBER 31, 2008, 2009 AND 2010
| 2008 | 2009 | 2010 | ||||||||||
| (In thousands) | ||||||||||||
|
Operating activities
|
||||||||||||
|
Net income (loss)
|
$ | (44,430 | ) | $ | 100,756 | $ | 149,663 | |||||
|
Adjustments to reconcile net income (loss) to cash provided by
operating activities:
|
||||||||||||
|
Depreciation
|
151,425 | 144,055 | 138,637 | |||||||||
|
Amortization of intangible and other assets and unfavorable
leases
|
6,609 | 5,460 | 4,871 | |||||||||
|
Amortization of long-term prepaid rents
|
1,717 | 1,389 | 1,786 | |||||||||
|
Amortization of debt issue costs
|
4,696 | 4,775 | 4,716 | |||||||||
|
Amortization of deferred revenues, deferred lease incentives and
other
|
(3,735 | ) | (4,810 | ) | (6,968 | ) | ||||||
|
Amortization of bond discount
|
— | 365 | 780 | |||||||||
|
Amortization of accumulated other comprehensive loss related to
interest rate swap agreement
|
1,351 | 4,633 | 4,633 | |||||||||
|
Impairment of long-lived assets
|
113,532 | 11,858 | 12,538 | |||||||||
|
Share based awards compensation expense
|
5,113 | 4,304 | 8,352 | |||||||||
|
(Gain) loss on sale of assets and other
|
8,488 | 3,202 | (2,464 | ) | ||||||||
|
Loss on contribution and sale of digital projection systems to
DCIP
|
— | — | 2,033 | |||||||||
|
Gain on change in fair value of interest rate swap agreement
|
(5,422 | ) | — | — | ||||||||
|
Write-off unamortized debt issue costs related to the early
retirement of debt
|
839 | 6,337 | — | |||||||||
|
Accretion of interest on senior discount notes
|
40,294 | 8,085 | — | |||||||||
|
Deferred lease expenses
|
4,350 | 3,960 | 3,940 | |||||||||
|
Deferred income tax expenses
|
(25,975 | ) | (12,614 | ) | (8,603 | ) | ||||||
|
Equity in loss of affiliates
|
2,373 | 907 | 3,438 | |||||||||
|
Interest paid on repurchased senior discount notes
|
(15,186 | ) | (158,349 | ) | — | |||||||
|
Tax benefit related to stock option exercises
|
474 | 7,545 | 2,680 | |||||||||
|
Increase in deferred revenue related to new U.S. beverage
agreement
|
— | 6,550 | — | |||||||||
|
Distributions from equity investees
|
644 | 2,699 | 5,486 | |||||||||
|
Changes in other assets and liabilities
|
10,137 | 35,656 | (60,767 | ) | ||||||||
|
Net cash provided by operating activities
|
257,294 | 176,763 | 264,751 | |||||||||
|
Investing activities
|
||||||||||||
|
Additions to theatre properties and equipment
|
(106,109 | ) | (124,797 | ) | (156,102 | ) | ||||||
|
Proceeds from sale of theatre properties and equipment and other
|
2,539 | 2,178 | 21,791 | |||||||||
|
Increase in escrow deposit due to like-kind exchange
|
(2,089 | ) | — | — | ||||||||
|
Return of escrow deposits
|
24,828 | — | — | |||||||||
|
Acquisition of theatres in the U.S.
|
(5,011 | ) | (48,950 | ) | — | |||||||
|
Acquisition of theatres in Brazil
|
(5,100 | ) | (9,061 | ) | — | |||||||
|
Investment in joint venture — DCIP, net of cash
distributions
|
(4,000 | ) | (2,500 | ) | (1,756 | ) | ||||||
|
Net cash used for investing activities
|
(94,942 | ) | (183,130 | ) | (136,067 | ) | ||||||
|
Financing activities
|
||||||||||||
|
Proceeds from stock option exercises
|
1,292 | 2,524 | 7,914 | |||||||||
|
Payroll taxes paid as a result of noncash stock option exercises
and restricted stock withholdings
|
— | (8,972 | ) | (416 | ) | |||||||
|
Dividends paid to stockholders
|
(77,534 | ) | (78,643 | ) | (84,502 | ) | ||||||
|
Retirement of senior discount notes
|
(29,559 | ) | (261,054 | ) | — | |||||||
|
Retirement of senior subordinated notes
|
(3 | ) | — | (181 | ) | |||||||
|
Proceeds from issuance of senior notes
|
— | 458,532 | — | |||||||||
|
Payment of debt issue costs
|
— | (13,003 | ) | (8,858 | ) | |||||||
|
Repayments of other long-term debt
|
(10,430 | ) | (12,605 | ) | (11,853 | ) | ||||||
|
Payments on capital leases
|
(4,901 | ) | (6,064 | ) | (7,327 | ) | ||||||
|
Termination of interest rate swap agreement
|
(12,725 | ) | — | — | ||||||||
|
Purchase of non-controlling interest in Panama
|
— | — | (888 | ) | ||||||||
|
Other
|
(1,231 | ) | (2,416 | ) | (539 | ) | ||||||
|
Net cash provided by (used for) financing activities
|
(135,091 | ) | 78,299 | (106,650 | ) | |||||||
|
Effect of exchange rates on cash and cash equivalents
|
(15,701 | ) | 16,401 | 5,027 | ||||||||
|
Increase in cash and cash equivalents
|
11,560 | 88,333 | 27,061 | |||||||||
|
Cash and cash equivalents:
|
||||||||||||
|
Beginning of year
|
338,043 | 349,603 | 437,936 | |||||||||
|
End of year
|
$ | 349,603 | $ | 437,936 | $ | 464,997 | ||||||
Supplemental information (see Note 20)
The accompanying notes are an integral part of the consolidated
financial statements.
F-6
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
In
thousands, except share and per share data
| 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Business
— Cinemark Holdings, Inc. and
subsidiaries (the “Company”) is a leader in the motion
picture exhibition industry, with theatres in the United States
(“U.S.”), Brazil, Mexico, Chile, Colombia, Argentina,
Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica,
Panama and Guatemala. The Company also managed additional
theatres in the U.S., Brazil, and Colombia during the year ended
December 31, 2010.
Basis of Presentation —
On August 2, 2006,
Cinemark Holdings, Inc. was formed as the Delaware holding
company of Cinemark, Inc. On April 24, 2007, Cinemark
Holdings, Inc. completed an initial public offering of its
common stock. Effective December 11, 2009, Cinemark, Inc.
was merged into Cinemark Holdings, Inc. and Cinemark Holdings,
Inc. became the holding company of Cinemark USA, Inc.
Principles of Consolidation
— The consolidated
financial statements include the accounts of Cinemark Holdings,
Inc., its subsidiaries and its affiliates. Majority-owned
subsidiaries that the Company has control of are consolidated
while those affiliates of which the Company owns between 20% and
50% and does not control are accounted for under the equity
method. Those affiliates of which the Company owns less than 20%
are generally accounted for under the cost method, unless the
Company is deemed to have the ability to exercise significant
influence over the affiliate, in which case the Company would
account for its investment under the equity method. The results
of these subsidiaries and affiliates are included in the
consolidated financial statements effective with their formation
or from their dates of acquisition. Intercompany balances and
transactions are eliminated in consolidation.
Cash and Cash Equivalents
— Cash and cash
equivalents consist of operating funds held in financial
institutions, petty cash held by the theatres and highly liquid
investments with remaining maturities of three months or less
when purchased. At December 31, 2010, cash investments were
primarily in money market funds or other similar funds.
Inventories
— Concession and theatre supplies
inventories are stated at the lower of cost
(first-in,
first-out method) or market.
Theatre Properties and Equipment
— Theatre
properties and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation is provided using
the straight-line method over the estimated useful lives of the
assets as follows:
|
Category
|
Useful Life
|
|
|
Buildings on owned land
|
40 years | |
|
Buildings on leased land
|
Lesser of lease term or useful life | |
|
Buildings under capital lease
|
Lesser of lease term or useful life | |
|
Theatre furniture and equipment
|
5 to 15 years | |
|
Leasehold improvements
|
Lesser of lease term or useful life |
The Company reviews long-lived assets for impairment indicators
on a quarterly basis or whenever events or changes in
circumstances indicate the carrying amount of the assets may not
be fully recoverable.
The Company considers actual theatre level cash flows, future
years budgeted theatre level cash flows, theatre property and
equipment carrying values, amortizing intangible asset carrying
values, the age of a recently built theatre, competitive
theatres in the marketplace, the impact of recent ticket price
changes, available lease renewal options and other factors
considered relevant in its assessment of impairment of
individual theatre assets. Long-lived assets are evaluated for
impairment on an individual theatre basis, which the Company
believes is the lowest applicable level for which there are
identifiable cash flows. The impairment evaluation is based on
the estimated undiscounted cash flows from continuing use
through the remainder of the theatre’s useful life. The
remainder of the useful life correlates with the available
remaining lease period, which includes the probability of
renewal
F-7
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
periods for leased properties and a period of approximately
twenty years for fee owned properties. If the estimated
undiscounted cash flows are not sufficient to recover a
long-lived asset’s carrying value, the Company then
compares the carrying value of the asset group (theatre) with
its estimated fair value. When estimated fair value is
determined to be lower than the carrying value of the asset
group (theatre), the asset group (theatre) is written down to
its estimated fair value. Significant judgment is involved in
estimating cash flows and fair value. Management’s
estimates, which fall under Level 3 of the U.S. GAAP
fair value hierarchy as defined by Financial Accounting
Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) Topic
820-10-35,
are based on historical and projected operating performance,
recent market transactions, and current industry trading
multiples. Fair value is determined based on a multiple of cash
flows, which was eight times for the evaluations performed
during the first, second and third quarters of 2008 and six and
a half times for the evaluation performed during the fourth
quarter of 2008 and the evaluations performed during 2009 and
2010. The Company reduced the multiple it used to determine fair
value during the fourth quarter of 2008 due to the dramatic
decline in estimated market values that resulted from a
significant decrease in its stock price and the declines in the
market capitalizations of the Company and its competitors that
occurred during the fourth quarter of 2008. The long-lived asset
impairment charges recorded during each of the periods presented
are specific to theatres that were directly and individually
impacted by increased competition, adverse changes in market
demographics or adverse changes in the development or the
conditions of the areas surrounding the theatre. See
Note 11.
Goodwill and Other Intangible Assets
— Goodwill
is the excess of cost over fair value of theatre businesses
acquired. Goodwill is evaluated for impairment on an annual
basis during the fourth quarter or whenever events or changes in
circumstances indicate the carrying value of goodwill may not be
fully recoverable. The Company evaluates goodwill for impairment
at the reporting unit level and has allocated goodwill to the
reporting unit based on an estimate of its relative fair value.
Management considers the reporting unit to be each of its
sixteen regions in the U.S. and each of its eight
international countries (Honduras, El Salvador, Nicaragua, Costa
Rica, Panama and Guatemala are considered one reporting unit).
Goodwill impairment is evaluated using a two-step approach
requiring the Company to compute the fair value of a reporting
unit and compare it with its carrying value. If the carrying
value of the reporting unit exceeds its estimated fair value, a
second step is performed to measure the potential goodwill
impairment. Significant judgment is involved in estimating cash
flows and fair value. Management’s estimates, which fall
under Level 3 of the U.S. GAAP fair value hierarchy as
defined by FASB ASC Topic
820-10-35,
are based on historical and projected operating performance,
recent market transactions, and current industry trading
multiples. Fair value is determined based on a multiple of cash
flows, which was six and a half times for the evaluations
performed during 2008, 2009 and 2010. See Notes 10 and 11.
Tradename intangible assets are tested for impairment at least
annually during the fourth quarter or whenever events or changes
in circumstances indicate the carrying value may not be fully
recoverable. The Company estimates the fair value of its
tradenames by applying an estimated market royalty rate that
could be charged for the use of the Company’s tradename to
forecasted future revenues, with an adjustment for the present
value of such royalties. Significant judgment is involved in
estimating market royalty rates and long-term revenue forecasts.
Management’s estimates, which fall under Level 3 of
the U.S. GAAP fair value hierarchy as defined by FASB ASC
Topic
820-10-35,
are based on historical and projected revenue performance and
industry trends. If the estimated fair value is less than the
carrying value, the tradename intangible asset is written down
to its estimated fair value.
F-8
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The table below summarizes the Company’s intangible assets
and the amortization method used for each type of intangible
asset:
|
Intangible Asset
|
Amortization Method
|
|
|
Goodwill
|
Indefinite-lived | |
|
Tradename
|
Indefinite-lived | |
|
Vendor contracts
|
Straight-line method over the terms of the underlying contracts. The remaining terms of the underlying contracts range from 1 to 12 years. | |
|
Favorable/unfavorable leases
|
Based on the pattern in which the economic benefits are realized over the terms of the lease agreements. The remaining terms of the lease agreements range from 1 to 27 years. | |
|
Other intangible assets
|
Straight-line method over the terms of the underlying agreement. The remaining term of the underlying agreements range from 4 to 10 years. |
Deferred Charges and Other Assets
— Deferred
charges and other assets consist of debt issue costs, long-term
prepaid rents, construction advances and other deposits,
equipment to be placed in service, interest rate swap assets and
other assets. Debt issue costs are amortized using the
straight-line method (which approximates the effective interest
method) over the primary financing terms of the related debt
agreement. Long-term prepaid rents represent advance rental
payments on operating leases. These payments are recognized to
facility lease expense over the period for which the rent was
paid in advance as outlined in the lease agreements. The
amortization periods generally range from 1 to 10 years.
See Note 14 for discussion of interest rate swap agreements.
Lease Accounting
— The Company evaluates each
lease for classification as either a capital lease or an
operating lease. If substantially all of the benefits and risks
of ownership have been transferred to the lessee, the Company
records the lease as a capital lease at its inception. The
Company performs this evaluation at the inception of the lease
and when a modification is made to a lease. If the lease
agreement calls for a scheduled rent increase during the lease
term, the Company recognizes the lease expense on a
straight-line basis over the lease term. The Company determines
the straight-line rent expense impact of an operating lease upon
inception of the lease. The landlord is typically responsible
for constructing a theatre using guidelines and specifications
agreed to by the Company and assumes substantially all of the
risk of construction. If the Company concludes that it has
substantially all of the construction period risks, it records a
construction asset and related liability for the amount of total
project costs incurred during the construction period. At the
end of the construction period, the Company determines if the
transaction qualifies for sale-leaseback accounting treatment in
regards to lease classification.
Deferred Revenues
— Advances collected on
long-term screen advertising, concession and other contracts are
recorded as deferred revenues. In accordance with the terms of
the agreements, the advances collected on such contracts are
recognized during the period in which the advances are earned,
which may differ from the period in which the advances are
collected. Revenues related to these advances are recognized on
either a straight-line basis over the term of the contracts or
as such revenues are earned in accordance with the terms of the
contracts.
Casualty Insurance —
The Company is
self-insured for general liability claims up to $250 per
occurrence with an annual cap of approximately $2,650 per policy
year and is self-insured for medical claims up to $125 per
occurrence. The Company is fully insured for workers
compensation claims. As of December 31, 2009 and 2010, the
Company maintained insurance reserves of $8,022 and $7,447,
respectively, which is reflected in accrued other current
liabilities in the consolidated balance sheets.
Revenue and Expense Recognition
— Revenues are
recognized when admissions and concession sales are received at
the box office. Other revenues primarily consist of screen
advertising. Screen advertising revenues are recognized over the
period that the related advertising is delivered on-screen or
in-theatre. The Company records
F-9
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
proceeds from the sale of gift cards and other advanced
sale-type certificates in current liabilities and recognizes
admissions and concession revenue when a holder redeems the card
or certificate. The Company recognizes unredeemed gift cards and
other advanced sale-type certificates as revenue only after such
a period of time indicates, based on historical experience, the
likelihood of redemption is remote, and based on applicable laws
and regulations. In evaluating the likelihood of redemption, the
Company considers the period outstanding, the level and
frequency of activity, and the period of inactivity. The Company
recognized unredeemed gift cards and other advance sale-type
certificates as revenues in the amount of $7,629, $7,162 and
$7,073 during the years ended December 31, 2008, 2009 and
2010, respectively.
Film rental costs are accrued based on the applicable box office
receipts and either mutually agreed upon firm terms or a sliding
scale formula, which are generally established prior to the
opening of the film, or estimates of the final mutually agreed
upon settlement, which occurs at the conclusion of the film run,
subject to the film licensing arrangement. Under a firm terms
formula, the Company pays the distributor a mutually agreed upon
specified percentage of box office receipts, which reflects
either a mutually agreed upon aggregate rate for the life of the
film or rates that decline over the term of the run. Under the
sliding scale formula, film rental is paid as a percentage of
box office revenues using a pre-determined matrix based upon box
office performance of the film. The settlement process allows
for negotiation of film rental fees upon the conclusion of the
film run based upon how the film performs. Estimates are based
on the expected success of a film. The success of a film can
typically be determined a few weeks after a film is released
when initial box office performance of the film is known.
Accordingly, final settlements typically approximate estimates
since box office receipts are known at the time the estimate is
made and the expected success of a film can typically be
estimated early in the film’s run. If actual settlements
are different than those estimates, film rental costs are
adjusted at that time. Advertising costs are expensed as
incurred and the Company expensed $16,839, $15,104 and $16,147,
respectively for the years ended December 31, 2008, 2009
and 2010.
Accounting for Share Based Awards
— The Company
measures the cost of employee services received in exchange for
an award of equity instruments based on the fair value of the
award on the date of the grant. The grant date fair value is
estimated using either an option-pricing model, consistent with
the terms of the award, or a market observed price, if such a
price exists. Such costs are recognized over the period during
which an employee is required to provide service in exchange for
the award (which is usually the vesting period). The Company
also estimates the number of instruments that will ultimately be
forfeited, rather than accounting for forfeitures as they occur.
See Note 19 for discussion of the Company’s share
based awards and related compensation expense.
Income Taxes —
The Company uses an asset and
liability approach to financial accounting and reporting for
income taxes. Deferred income taxes are provided when tax laws
and financial accounting standards differ with respect to the
amount of income for a year and the basis of assets and
liabilities. A valuation allowance is recorded to reduce the
carrying amount of deferred tax assets unless it is more likely
than not that such assets will be realized. Income taxes are
provided on unremitted earnings from foreign subsidiaries unless
such earnings are expected to be indefinitely reinvested. Income
taxes have also been provided for potential tax assessments. The
evaluation of a tax position is a two-step process. The first
step is recognition: The Company determines whether it is more
likely than not that a tax position will be sustained upon
examination, including resolution of any related appeals or
litigation processes, based on the technical merits of the
position. In evaluating whether a tax position has met the
more-likely-than-not recognition threshold, the Company should
presume that the position would be examined by the appropriate
taxing authority that would have full knowledge of all relevant
information. The second step is measurement: A tax position that
meets the more-likely-than-not recognition threshold is measured
to determine the amount of benefit to recognize in the financial
statements. The tax position is measured as the largest amount
of benefit that is greater than 50 percent likely of being
realized upon ultimate settlement. Differences between tax
positions taken in a tax return and amounts recognized in the
financial statements result in (1) a change in a liability
for income taxes payable or (2) a change in an income tax
refund receivable, a deferred tax asset or a deferred tax
liability or both (1) and (2). The Company accrues interest
and penalties on its uncertain tax positions.
F-10
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Segments
— As of December 31, 2010, the
Company managed its business under two reportable operating
segments, U.S. markets and international markets. See
Note 23.
Use of Estimates
— The preparation of financial
statements in conformity with accounting principles generally
accepted in the United States of America requires the use of
estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
periods presented. The Company’s consolidated financial
statements include amounts that are based on management’s
best estimates and judgments. Actual results could differ from
those estimates.
Foreign Currency Translations
— The assets and
liabilities of the Company’s foreign subsidiaries are
translated into U.S. dollars at current exchange rates as
of the balance sheet date, and revenues and expenses are
translated at average monthly exchange rates. The resulting
translation adjustments are recorded in the consolidated balance
sheets in accumulated other comprehensive income (loss). The
Company recognizes foreign currency transaction gains and losses
when changes in exchange rates impact transactions, other than
intercompany transactions of a long-term investment nature, that
have been denominated in a currency other than the functional
currency.
Fair Value Measurements — The
Company has
interest rate swap agreements that are adjusted to fair value on
a recurring basis (quarterly). The Company uses the income
approach to determine the fair value of its interest rate swap
agreements and under this approach, the Company uses projected
future interest rates as provided by the counterparties to the
interest rate swap agreements and the fixed rates that the
Company is obligated to pay under these agreements. According to
authoritative guidance, inputs used in fair value measurements
fall into three different categories; Level 1, Level 2
and Level 3. Level 1 inputs are quoted prices
(unadjusted) in active markets for identical assets or
liabilities that the reporting entity has the ability to access
at the measurement date. Level 2 inputs are inputs other
than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or
indirectly. Level 3 inputs are unobservable inputs for the
asset or liability. Therefore, the Company’s measurements
use significant unobservable inputs, which fall in Level 3.
There were no changes in valuation techniques during the period,
no transfers in or out of Level 3 and no gains or losses
included in earnings that were attributable to the change in
unrealized gains or losses related to the Company’s current
interest rate swap agreements. See Note 14 for further
discussion of the Company’s interest rate swap agreements
and Note 15 for further discussion of the Company’s
fair value measurements.
Acquisitions
— The Company accounts for
acquisitions under the acquisition method of accounting. The
acquisition method requires that the acquired assets and
liabilities, including contingencies, be recorded at fair value
determined on the acquisition date and changes thereafter
reflected in income. For significant acquisitions, the Company
obtains independent third party valuation studies for certain of
the assets acquired and liabilities assumed to assist the
Company in determining fair value. The estimation of the fair
values of the assets acquired and liabilities assumed involves a
number of estimates and assumptions that could differ materially
from the actual amounts recorded. The Company provides the
assumptions, including both quantitative and qualitative
information, about the specified asset or liability to the third
party valuation firms. The Company primarily utilizes the third
parties to accumulate comparative data from multiple sources and
assemble a report that summarizes the information obtained. The
Company then uses the information to determine fair value. The
third party valuation firms are supervised by Company personnel
who are knowledgeable about valuations and fair value. The
Company evaluates the appropriateness of the valuation
methodology utilized by the third party valuation firm.
| 2. | NEW ACCOUNTING PRONOUNCEMENTS |
In December 2009, the FASB issued Accounting Standards Update
(“ASU”)
No. 2009-17,
“
Consolidations (Topic 810) — Improvements to
Financial Reporting by Enterprises Involved with Variable
Interest Entities
” (“ASU
No. 2009-17”).
This update changes how a reporting entity determines when an
entity that is insufficiently capitalized or is not controlled
through voting (or similar rights) should be consolidated. The
determination of
F-11
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
whether a reporting entity is required to consolidate another
entity is based on, among other things, the other entity’s
purpose and design and the reporting entity’s ability to
direct the activities of the other entity that most
significantly impact the other entity’s economic
performance. ASU
No. 2009-17
requires a reporting entity to provide additional disclosures
about its involvement with variable interest entities and any
significant changes in risk exposure due to that involvement. A
reporting entity is required to disclose how its involvement
with a variable interest entity affects the reporting
entity’s financial statements. ASU
No. 2009-17
is effective for fiscal years beginning after November 15,
2009, and interim periods within those fiscal years. The Company
adopted ASU
No. 2009-17
as of January 1, 2010, and its application had no impact on
the Company’s consolidated financial statements.
In January 2010, the FASB issued ASU
No. 2010-06,
“
Fair Value Measurements and Disclosures: Improving
Disclosures about Fair Value Measurements
” (“ASU
No. 2010-06”),
which amends FASB ASC Topic
820-10,
“
Fair Value Measurements and Disclosures
”. This
update requires additional disclosures for transfers in and out
of Levels 1 and 2 and for activity in Level 3 and
clarifies certain other existing disclosure requirements. The
Company adopted ASU
No. 2010-06
beginning January 1, 2010. This update did not have a
significant impact on the Company’s disclosures.
In August 2010, the FASB issued ASU
No. 2010-21,
“
Accounting for Technical Amendments to Various SEC
Rules and Schedules
” (“ASU
No. 2010-21”).
This update amends various SEC paragraphs in the FASB Accounting
Standards Codification pursuant to SEC Final Rule,
“Technical Amendments to Rules Forms, Schedules and
Codification of Financial Reporting Policies”. The adoption
of ASU
No. 2010-21
did not affect the Company’s consolidated financial
statements.
In August 2010, the FASB issued ASU
No. 2010-22,
“
Accounting for Various Topics
” (“ASU
No. 2010-22”),
which amends various SEC paragraphs based on external comments
received and the issuance of Staff Accounting Bulletin
(“SAB”) 112. SAB 112 was issued to bring
existing SEC guidance into conformity with ASC Topic 805,
“
Business Combinations
” and ASC Topic 810
“
Consolidation.
” The adoption of ASU
No. 2010-22
did not affect the Company’s consolidated financial
statements.
| 3. | EARNINGS PER SHARE |
The Company considers its unvested share based payment awards,
which contain non-forfeitable rights to dividends, participating
securities, and includes such participating securities in its
computation of 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 (loss) 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 and unvested restricted stock plus the potentially
dilutive effect of common equivalent shares outstanding
determined under both the two class method and the treasury
stock method.
The following table presents computations of basic and diluted
earnings (loss) per share under the two class method:
| Year Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
|
Numerator:
|
||||||||||||
|
Net income (loss) attributable to Cinemark Holdings, Inc.
|
$ | (48,325 | ) | $ | 97,108 | $ | 146,120 | |||||
|
(Earnings) loss allocated to participating share-based awards(1)
|
129 | (635 | ) | (1,399 | ) | |||||||
|
Net income (loss) attributable to common stockholders
|
$ | (48,196 | ) | $ | 96,473 | $ | 144,721 | |||||
F-12
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| Year Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
|
Denominator
(shares in thousands):
|
||||||||||||
|
Basic weighted average common stock outstanding
|
107,341 | 108,563 | 111,565 | |||||||||
|
Common equivalent shares for stock options(2)
|
— | 1,594 | 213 | |||||||||
|
Common equivalent shares for restricted stock units(2)
|
— | 98 | 373 | |||||||||
|
Diluted
|
107,341 | 110,255 | 112,151 | |||||||||
|
Basic earnings (loss) per share attributable to common
stockholders
|
$ | (0.45 | ) | $ | 0.89 | $ | 1.30 | |||||
|
Diluted earnings (loss) per share attributable to common
stockholders
|
$ | (0.45 | ) | $ | 0.87 | $ | 1.29 | |||||
| (1) | For the years ended December 31, 2008, 2009 and 2010, a weighted average of approximately 287 shares, 714 shares and 1,076 shares of unvested restricted stock, respectively, are considered participating securities. | |
| (2) | Diluted loss per share calculations for the year ended December 31, 2008 exclude common equivalent shares for stock options of 1,971 and common equivalent shares for restricted stock units of 47 because they were anti-dilutive. |
| 4. | DIVIDENDS |
In August 2007, the Company initiated a quarterly dividend
policy, which was amended in November 2010. Below is a summary
of dividends paid for the fiscal periods indicated.
|
Amount per
|
||||||||||||||||
|
Date of
|
Date
|
Common
|
Total
|
|||||||||||||
|
Date Declared
|
Record | Paid | Share(2) | Dividends(1) | ||||||||||||
|
02/26/08
|
03/06/08 | 03/14/08 | $ | 0.18 | $ | 19,270 | ||||||||||
|
05/09/08
|
05/30/08 | 06/12/08 | $ | 0.18 | $ | 19,353 | ||||||||||
|
08/07/08
|
08/25/08 | 09/12/08 | $ | 0.18 | $ | 19,370 | ||||||||||
|
11/06/08
|
11/26/08 | 12/11/08 | $ | 0.18 | $ | 19,615 | ||||||||||
|
Total — Year ended December 31, 2008
|
$ | 77,608 | ||||||||||||||
|
02/13/09
|
03/05/09 | 03/20/09 | $ | 0.18 | $ | 19,619 | ||||||||||
|
05/13/09
|
06/02/09 | 06/18/09 | $ | 0.18 | $ | 19,734 | ||||||||||
|
07/29/09
|
08/17/09 | 09/01/09 | $ | 0.18 | $ | 19,739 | ||||||||||
|
11/04/09
|
11/25/09 | 12/10/09 | $ | 0.18 | $ | 19,752 | ||||||||||
|
Total — Year ended December 31, 2009
|
$ | 78,844 | ||||||||||||||
|
02/25/10
|
03/05/10 | 03/19/10 | $ | 0.18 | $ | 20,104 | ||||||||||
|
05/13/10
|
06/04/10 | 06/18/10 | $ | 0.18 | $ | 20,313 | ||||||||||
|
07/29/10
|
08/17/10 | 09/01/10 | $ | 0.18 | $ | 20,519 | ||||||||||
|
11/02/10
|
11/22/10 | 12/07/10 | $ | 0.21 | $ | 24,201 | ||||||||||
|
Total — Year ended December 31, 2010
|
$ | 85,137 | ||||||||||||||
| (1) | Of the dividends recorded during 2008, 2009 and 2010, $74, $201 and $635, respectively, were related to outstanding restricted stock units and will not be paid until such units vest. See Notes 19 and 20. |
F-13
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| (2) | Beginning with the dividend declared on November 2, 2010, the Company’s board of directors raised the quarterly dividend to $0.21 per common share. |
| 5. | ACQUISITIONS AND DISPOSITIONS |
On March 18, 2009, the Company acquired four theatres with
82 screens from Muvico Entertainment L.L.C. in an asset
purchase for $48,950 in cash. The acquisition resulted in an
expansion of the Company’s U.S. theatre base, as three
of the theatres are located in Florida and one theatre is
located in Maryland. The Company incurred approximately $113 in
transaction costs, which are reflected in general and
administrative expenses on the consolidated statement of
operations for the year ended December 31, 2009. The
transaction was accounted for by applying the acquisition
method. The following table represents the identifiable assets
acquired and liabilities assumed that have been recognized by
the Company in its consolidated balance sheet as of the date of
acquisition:
|
Theatre properties and equipment
|
$ | 25,575 | ||
|
Brandname
|
3,500 | |||
|
Noncompete agreement
|
1,630 | |||
|
Goodwill
|
44,565 | |||
|
Unfavorable lease
|
(3,600 | ) | ||
|
Capital lease liability (for one theatre)
|
(22,720 | ) | ||
|
Total
|
$ | 48,950 | ||
The brandname and noncompete agreement are presented as
intangible assets and the unfavorable lease is presented as
other long-term liabilities on the Company’s consolidated
balance sheets. The weighted average remaining amortization
period for these intangible assets and the unfavorable lease are
approximately 8 years. Goodwill represents excess of the
costs of acquiring these theatres over amounts assigned to
assets acquired, including intangible assets, and liabilities
assumed. The goodwill recorded is fully deductible for tax
purposes.
During November 2010, the Company sold its one theatre in Canada
for approximately $6,320 in cash proceeds. The transaction
resulted in a gain of approximately $7,025, which also reflected
the write-off of a deferred rent liability related to the
theatre.
During November 2010, the Company also sold its interest in a
profit sharing agreement related to a previously sold Canadian
property. The Company received proceeds of approximately $8,493
and recorded a gain on sale of assets and other.
| 6. | INVESTMENT IN NATIONAL CINEMEDIA LLC AND TRANSACTION RELATED TO ITS INITIAL PUBLIC OFFERING |
In March 2005, Regal Entertainment Inc. (“Regal”) and
AMC Entertainment Inc. (“AMC”) formed National
CineMedia, LLC, or “NCM”, and on July 15, 2005,
the Company joined NCM, as one of the founding members. NCM
operates a digital in-theatre network in the U.S. for
providing cinema advertising and non-film events. Upon joining
NCM, the Company and NCM entered into an Exhibitor Services
Agreement, pursuant to which NCM provides advertising, promotion
and event services to the Company’s theatres. On
February 13, 2007, National CineMedia, Inc., or “NCM
Inc.”, a newly formed entity that serves as a member and
the sole manager of NCM, completed an initial public offering of
its common stock. In connection with the NCM Inc. initial public
offering, the Company amended its operating agreement with NCM
and the Exhibitor Services Agreement (“ESA”). In
connection with NCM Inc.’s initial public offering and the
amendment of the ESA, the Company received proceeds of $389,003,
approximately $215,002 of which related to the Company’s
sale of certain of its shares in NCM and $174,001 of which was
related to the modification of the ESA. The ESA modification
reflected a shift from circuit share expense under the prior
Exhibitor Services Agreement, which obligated NCM to pay the
Company a percentage of revenue, to the monthly theatre access
fee described below, which significantly reduced the
F-14
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
contractual amounts paid to the Company by NCM. The Company
recorded the $174,001 proceeds related to the ESA modification
as deferred revenue, which is being amortized into other
revenues over the life of the agreement using the units of
revenue method.
In consideration for NCM’s exclusive access to the
Company’s theatre attendees for on-screen advertising and
use of off-screen locations within the Company’s theatres
for the lobby entertainment and lobby promotions, the Company
receives a monthly theatre access fee under the modified
Exhibitor Services Agreement (“modified ESA”). The
theatre access fee is composed of a fixed payment per patron,
initially seven cents, and a fixed payment per digital screen,
which may be adjusted for certain reasons outlined in the
modified ESA. The payment per theatre patron increases by 8%
every five years, with the first such increase taking effect
after the end of fiscal 2011, and the payment per digital
screen, initially eight hundred dollars per digital screen per
year, increases annually by 5%. For 2008, 2009 and 2010, the
annual payment per digital screen was eight hundred forty
dollars, eight hundred eighty-two dollars, and nine hundred
twenty-six dollars, respectively. The theatre access fee paid in
the aggregate to Regal, AMC and the Company will not be less
than 12% of NCM’s Aggregate Advertising Revenue (as defined
in the modified ESA), or it will be adjusted upward to reach
this minimum payment. Additionally, with respect to any
on-screen advertising time provided to the Company’s
beverage concessionaire, the Company is required to purchase
such time from NCM at a negotiated rate. The modified ESA has,
except with respect to certain limited services, a remaining
term of approximately 26 years.
During March 2008, NCM performed its initial annual common unit
adjustment calculation in accordance with the Common Unit
Adjustment Agreement dated as of February 13, 2007 between
NCM, Inc. and the Company, Regal and AMC. The annual common unit
adjustment is based on the change in the number of screens
operated by and attendance of the Company, AMC and Regal. As a
result of the calculation, the Company received an additional
846,303 common units of NCM, each of which is convertible into
one share of NCM, Inc. common stock. The Company recorded the
additional common units received at fair value as an investment
with a corresponding adjustment to deferred revenue of $19,020.
Subsequent to the annual common unit adjustment discussed above,
in May 2008, one of NCM’s other founding members completed
an acquisition of another theatre circuit that required an
extraordinary common unit adjustment calculation by NCM in
accordance with the Common Unit Adjustment Agreement. As a
result of this extraordinary common unit adjustment, the
founding member was granted additional common units of NCM,
which resulted in dilution of the Company’s ownership
interest in NCM. The Company recognized a change of interest
loss of approximately $75 during the year ended
December 31, 2008 as a result of this extraordinary common
unit adjustment, which is reflected in (gain) loss on sale of
assets and other on the consolidated statement of operations.
During March 2009, NCM performed its annual common unit
adjustment calculation under the Common Unit Adjustment
Agreement. As a result of the calculation, the Company received
an additional 1,197,303 common units of NCM, each of which is
convertible into one share of NCM, Inc. common stock. The
Company recorded the additional common units received at fair
value as an investment with a corresponding adjustment to
deferred revenue of $15,536.
During March 2010, NCM performed its annual common unit
adjustment calculation under the Common Unit Adjustment
Agreement. As a result of the calculation, the Company received
an additional 1,757,548 common units of NCM, each of which is
convertible into one share of NCM, Inc. common stock. The
Company recorded the additional common units received at fair
value as an investment with a corresponding adjustment to
deferred revenue of $30,683. Subsequent to the annual common
unit adjustment discussed above, in May 2010, one of NCM’s
other founding members completed an acquisition of another
theatre circuit that required an extraordinary common unit
adjustment calculation by NCM in accordance with the Common Unit
Adjustment Agreement. As a result of this extraordinary common
unit adjustment, the founding member was granted additional
common units of NCM, which resulted in dilution of the
Company’s ownership interest in NCM. The Company recognized
a change of interest gain of approximately $271 during the year
ended December 31, 2010 as a result of this extraordinary
F-15
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
common unit adjustment, which is reflected in (gain) loss on
sale of assets and other on the consolidated statement of
operations.
As of December 31, 2010, the Company owned a total of
16,946,503 common units of NCM, which represented an approximate
15% interest. The Company accounts for its investment in NCM
under the equity method of accounting due to its ability to
exercise significant influence over NCM. The Company has
substantial rights as a founding member, including the right to
designate a total of two nominees to the ten-member board of
directors of NCM Inc., the sole manager. So long as the Company
owns at least 5% of NCM’s membership interests, approval of
at least 90% (80% if the board has less than 10 directors)
will be required before NCM Inc. may take certain actions
including but not limited to mergers and acquisitions, issuance
of common or preferred shares, approval of NCM Inc.’s
budget, incurrence of indebtedness, entering into or terminating
material agreements, and modifications to its articles of
incorporation or bylaws. Additionally, if any of the
Company’s director designees are not appointed to the board
of directors of NCM Inc., nominated by NCM Inc. or elected by
NCM Inc.’s stockholders, then the Company (so long as the
Company continues to own at least 5% of NCM’s membership
interest) will be entitled to approve certain actions of NCM
including without limitation, approval of the budget, incurrence
of indebtedness, consummating or amending material agreements,
approving dividends, amending the NCM operating agreement,
hiring or termination of the chief executive officer, chief
financial officer, chief technology officer or chief marketing
officer of NCM and the dissolution or liquidation of NCM.
Below is a summary of activity with NCM included in the
Company’s consolidated financial statements:
|
Investment
|
Deferred
|
Distributions
|
Equity in
|
Other
|
Cash
|
|||||||||||||||||||
| in NCM | Revenue | from NCM | Earnings | Revenue | Received | |||||||||||||||||||
|
Balance as of January 1, 2008
|
$ | — | $ | (172,696 | ) | |||||||||||||||||||
|
Receipt of common units due to 2008 common unit adjustment
|
$ | 19,020 | $ | (19,020 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
|
Change of interest loss due to extraordinary common unit
adjustment(2)
|
(75 | ) | — | — | — | — | — | |||||||||||||||||
|
Revenues earned under ESA(1)
|
— | — | — | — | (1,764 | ) | 1,764 | |||||||||||||||||
|
Receipt of excess cash distributions
|
(644 | ) | — | (16,005 | ) | — | — | 16,649 | ||||||||||||||||
|
Receipt under tax receivable agreement
|
— | — | (2,833 | ) | — | — | 2,833 | |||||||||||||||||
|
Equity in earnings
|
840 | — | — | (840 | ) | — | — | |||||||||||||||||
|
Amortization of deferred revenue
|
— | 1,869 | — | — | (1,869 | ) | — | |||||||||||||||||
|
Balance as of and for the period ended December 31, 2008
|
$ | 19,141 | $ | (189,847 | ) | $ | (18,838 | ) | $ | (840 | ) | $ | (3,633 | ) | $ | 21,246 | ||||||||
|
Receipt of common units due to 2009 common unit adjustment
|
$ | 15,536 | $ | (15,536 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
|
Revenues earned under ESA(1)
|
— | — | — | — | (5,711 | ) | 5,711 | |||||||||||||||||
|
Receipt of excess cash distributions
|
(2,358 | ) | — | (17,738 | ) | — | — | 20,096 | ||||||||||||||||
|
Receipt under tax receivable agreement
|
— | — | (3,084 | ) | — | — | 3,084 | |||||||||||||||||
|
Equity in earnings
|
1,913 | — | — | (1,913 | ) | — | — | |||||||||||||||||
|
Amortization of deferred revenue
|
— | 2,377 | — | — | (2,377 | ) | — | |||||||||||||||||
|
Balance as of and for the period ended December 31, 2009
|
$ | 34,232 | $ | (203,006 | ) | $ | (20,822 | ) | $ | (1,913 | ) | $ | (8,088 | ) | $ | 28,891 | ||||||||
F-16
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CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
|
Investment
|
Deferred
|
Distributions
|
Equity in
|
Other
|
Cash
|
|||||||||||||||||||
| in NCM | Revenue | from NCM | Earnings | Revenue | Received | |||||||||||||||||||
|
Receipt of common units due to 2010 common unit adjustment
|
$ | 30,683 | $ | (30,683 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
|
Change of interest gain due to extraordinary common unit
adjustment(2)
|
271 | — | — | — | — | — | ||||||||||||||||||
|
Revenues earned under ESA(1)
|
— | — | — | — | (5,033 | ) | 5,033 | |||||||||||||||||
|
Receipt of excess cash distributions
|
(4,753 | ) | — | (19,616 | ) | — | — | 24,369 | ||||||||||||||||
|
Receipt under tax receivable agreement
|
(520 | ) | — | (3,742 | ) | — | — | 4,262 | ||||||||||||||||
|
Equity in earnings
|
4,463 | — | — | (4,463 | ) | — | — | |||||||||||||||||
|
Amortization of deferred revenue
|
— | 3,116 | — | — | (3,116 | ) | — | |||||||||||||||||
|
Balance as of and for the period ended December 31, 2010
|
$ | 64,376 | $ | (230,573 | ) | $ | (23,358 | ) | $ | (4,463 | ) | $ | (8,149 | ) | $ | 33,664 | ||||||||
| (1) | Amounts include the per patron and per digital screen theatre access fees due to the Company, net of amounts due to NCM for on-screen advertising time provided to the Company’s beverage concessionaire. The amounts due to NCM for on-screen advertising time provided to the Company’s beverage concessionaire were approximately $12,784, $9,719 and $10,156 for the years ended December 31, 2008, 2009 and 2010, respectively. | |
| (2) | Change in interest gain or loss is included in (gain) loss on sale of assets and other on the consolidated statement of operations. |
The tables below present summary financial information for NCM
for the periods indicated:
| Year Ended | ||||||||||||
|
January 1,
|
December 31,
|
December 31,
|
||||||||||
| 2009 | 2009 | 2010 | ||||||||||
|
Gross revenues
|
$ | 369,524 | $ | 380,667 | $ | 427,475 | ||||||
|
Operating income
|
$ | 173,927 | $ | 168,876 | $ | 190,559 | ||||||
|
Net income
|
$ | 95,328 | $ | 128,531 | $ | 139,541 | ||||||
| As of December 31, | ||||||||
| 2009 | 2010 | |||||||
|
Total assets
|
$ | 304,406 | $ | 425,972 | ||||
|
Total liabilities
|
$ | 944,008 | $ | 932,549 | ||||
| 7. | INVESTMENT IN DIGITAL CINEMA IMPLEMENTATION PARTNERS |
On February 12, 2007, the Company, AMC Entertainment Inc.
and Regal Entertainment Group entered into a joint venture known
as Digital Cinema Implementation Partners LLC (“DCIP”)
to facilitate the implementation of digital cinema in the
Company’s theatres and to establish agreements with major
motion picture studios for the financing of digital cinema.
On March 10, 2010, the Company signed a master equipment
lease agreement and other related agreements (collectively the
“Agreements”) with Kasima LLC (“Kasima”),
which is an indirect subsidiary of DCIP and a related party to
the Company. Upon signing the Agreements, the Company
contributed digital projection systems at a fair value of
$16,380 to DCIP, which DCIP then contributed to Kasima. The net
book value of the contributed equipment was approximately
$18,090, and as a result, the Company recorded a loss of
approximately $1,710,
F-17
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
which is reflected in (gain) loss on sale of assets and other on
the consolidated statement of operations for the year ended
December 31, 2010. On April 24, 2010, the Company sold
digital projection systems with a net book value of
approximately $1,520 to Kasima for approximately $1,197,
resulting in an additional loss of approximately $323, which is
reflected in (gain) loss on sale of assets and other on the
consolidated statement of operations for the year ended
December 31, 2010. As of December 31, 2010, the
Company had a 33% voting interest in DCIP and a 24.3% economic
interest in DCIP.
The Company accounts for its investment in DCIP and its
subsidiaries under the equity method of accounting. Below is a
summary of activity with DCIP:
|
Investment in
|
||||
| DCIP | ||||
|
Balance as of January 1, 2008
|
$ | 260 | ||
|
Cash contributions to DCIP
|
4,000 | |||
|
Equity in losses
|
(3,243 | ) | ||
|
Balance as of December 31, 2008
|
$ | 1,017 | ||
|
Cash contributions to DCIP
|
2,500 | |||
|
Equity in losses
|
(2,877 | ) | ||
|
Balance as of December 31, 2009
|
$ | 640 | ||
|
Cash contributions to DCIP
|
2,813 | |||
|
Equipment contributions to DCIP, at fair value
|
16,380 | |||
|
Distributions received from DCIP
|
(1,068 | ) | ||
|
Equity in losses
|
(7,927 | ) | ||
|
Balance as of December 31, 2010
|
$ | 10,838 | ||
As a result of the Agreements, the Company continues to roll out
digital projection systems to a majority of its first run
U.S. theatres. The digital projection systems are being
leased from Kasima under an operating lease with an initial term
of twelve years that contains ten one-year fair value renewal
options. The equipment lease agreement also contains a fair
value purchase option. Under the equipment lease agreement, the
Company pays minimum annual rent of one thousand dollars per
digital projection system for the first six and a half years
from the effective date of the agreement and minimum annual rent
of three thousand dollars per digital projection system
beginning at six and a half years from the effective date
through the end of the lease term. The Company may also be
subject to various types of other rent if such digital
projection systems do not meet minimum performance requirements
as outlined in the agreements. Certain of the other rent
payments are subject to either a monthly or an annual maximum.
As of December 31, 2010, the Company had 1,336 digital
projection systems being leased under the master equipment lease
agreement with Kasima. The Company recorded equipment lease
expense of approximately $1,354 during the year ended
December 31, 2010, which is included in utilities and other
costs on the consolidated statement of operations.
The Company has a variable interest in Kasima through the terms
of its master equipment lease agreement; however, the Company
has determined that it is not the primary beneficiary of Kasima,
as the Company does not have the ability to direct the
activities of Kasima that most significantly impact
Kasima’s economic performance.
The digital projection systems leased from Kasima will replace a
majority of the Company’s existing 35 millimeter projection
systems in its U.S. theatres. Therefore, upon signing the
agreements, the Company began accelerating the depreciation of
these existing 35 millimeter projection systems, based on the
estimated two year replacement timeframe. The Company recorded
depreciation expense of approximately $9,423 on its domestic 35
millimeter projectors during the year ended December 31,
2010. The net book value of the existing 35 millimeter
projection systems to be replaced was approximately $10,606 as
of December 31, 2010.
F-18
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| 8. | INVESTMENT IN REAL D |
The Company licenses
3-D
systems
from Real D. Under its license agreement, the Company earns
options to purchase shares of Real D common stock at an exercise
price of $0.00667 once it has installed a certain number of
3-D
systems
as outlined in the license agreement. During the second quarter
of 2010, the Company reached the first target level and vested
in 407,593 options to purchase shares of common stock in Real D.
Upon vesting in these options, the Company recorded an
investment in Real D of approximately $6,521, which represents
the estimated fair value of the options, with an offset to
deferred lease incentive liability. The fair value of the
options was determined using Real D’s initial public
offering price.
During the third quarter of 2010, the Company vested in an
additional 499,708 Real D options by reaching the second target
level and a pro-rata portion of the third target level, as
outlined in the license agreement. Upon vesting in these
additional 499,708 options, the Company increased its investment
in Real D and its deferred lease incentive by approximately
$8,117, which represented the estimated fair value of the Real D
options. The fair value measurements were based upon Real
D’s closing stock prices on the dates of vesting,
discounted to reflect the impact of the
lock-up
period to which the Company is subject until January 2011.
During the fourth quarter of 2010, the Company vested in an
additional 178,527 Real D options by installing additional Real
D 3D systems. Upon vesting in these additional 178,527 options,
the Company increased its investment in Real D and its deferred
lease incentive by approximately $4,271, which represented the
estimated fair value of the Real D options, discounted to
reflect the impact of the
lock-up
period to which the Company is subject until January 2011.
The fair value measurements used to estimate the fair value of
Real D options in which the company vested during the year, as
discussed above, fall under Level 2 of the U.S. GAAP
fair value hierarchy as defined by ASC Topic
820-10-35.
The aggregate deferred lease incentive liability of
approximately $18,909 recorded as a result of the vesting events
discussed above is reflected in other long-term liabilities on
the consolidated balance sheet as of December 31, 2010 and
is being amortized over the remaining term of the license
agreement, which is approximately seven years.
Prior to the completion of Real D’s initial public
offering, the Company accounted for its investment in Real D as
a cost method investment. Subsequent to the completion of Real
D’s initial public offering, which occurred during July
2010, the Company is accounting for its investment in Real D as
a marketable security. The Company has determined that its Real
D options are available for sale securities in accordance with
ASC Topic
320-10-35-1,
therefore unrealized holding gains and losses are reported as a
component of accumulated other comprehensive income (loss) until
realized.
As of December 31, 2010, the Company had vested in a total
of 1,085,828 Real D Options, with an estimated fair value of
$27,993. The fair value of the Real D options as of
December 31, 2010 was determined based upon the closing
price of Real D’s common stock on that date, discounted to
reflect the
lock-up
period to which the Company is subject until January 2011, which
falls under Level 2 of the U.S. GAAP fair value
hierarchy as defined by ASC Topic
820-10-35.
During the year ended December 31, 2010, the Company
recorded an unrealized holding gain of approximately $9,084 as a
component of accumulated other comprehensive income (loss).
Under the license agreement, the Company can earn up to an
additional 136,951 Real D options as it meets additional
3-D
system
installation targets as outlined in the license agreement.
| 9. | SHARE EXCHANGES WITH AND PURCHASES OF NONCONTROLLING INTERESTS |
During May 2008, the Company’s partners in Central America
(the “Central American Partners”) exercised an option
available to them under an Exchange Option Agreement dated
February 7, 2007 between the Company and the Central
American Partners. Under this option, which was contingent upon
completion of an initial public offering of common stock by the
Company, the Central American Partners were entitled to exchange
their shares in
F-19
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Cinemark Equity Holdings Corporation, which is the
Company’s Central American holding company, for shares of
the Company’s common stock. The number of shares to be
exchanged was determined based on the Company’s equity
value and the equity value of the Central American
Partner’s interest in Cinemark Equity Holdings Corporation,
both of which are defined in the Exchange Option Agreement. As a
result of this exchange on October 1, 2008, the Company
issued 902,981 shares of its common stock to its Central
American Partners (the “Central America Share
Exchange”). As a result of this transaction, the Company
owns 100% of the shares in Cinemark Equity Holdings Corporation.
The Company accounted for the transaction as a step acquisition.
The purchase price of the shares in Cinemark Equity Holdings
Corporation was recorded based on the fair value of the shares
issued by the Company of $12,949 plus related transaction costs
of $2, which totaled approximately $12,951. The following table
represents the allocation of purchase price to the assets
acquired and liabilities assumed:
|
Net unfavorable leases
|
$ | (443 | ) | |
|
Vendor contract
|
1,034 | |||
|
Tradename
|
892 | |||
|
Goodwill
|
8,222 | |||
|
Reduction of noncontrolling interest
|
3,246 | |||
| $ | 12,951 | |||
The net book values of fixed assets approximated fair value. The
net unfavorable leases, vendor contracts and tradename are
presented as intangible assets on the Company’s
consolidated balance sheets. The goodwill recorded as a result
of the acquisition is not deductible for tax purposes and is
included in the international segment.
During July 2008, the Company’s partners in Ecuador (the
“Ecuador Partners”) exercised an option available to
them under an Exchange Option Agreement dated April 24,
2007 between the Company and the Ecuador Partners. Under this
option, which was contingent upon completion of an initial
public offering of common stock by the Company, the Ecuador
Partners were entitled to exchange their shares in Cinemark del
Ecuador S.A. for shares of the Company’s common stock. The
number of shares to be exchanged was determined based on the
Company’s equity value and the equity value of the Ecuador
Partner’s interest in Cinemark del Ecuador S.A., both of
which are defined in the Exchange Option Agreement. As a result
of this exchange on November 6, 2008, the Company issued
393,615 shares of its common stock to its Ecuador partners
(the “Ecuador Share Exchange”). As a result of this
transaction, the Company owns 100% of the shares of Cinemark del
Ecuador S.A. The Company accounted for the transaction as a step
acquisition. The purchase price of the shares in Cinemark del
Ecuador S.A. was recorded based on the fair value of the shares
issued by the Company, which was approximately $3,200.
The following table represents the allocation of purchase price
to the assets acquired and liabilities assumed:
|
Net unfavorable leases
|
$ | (161 | ) | |
|
Tradename
|
313 | |||
|
Goodwill
|
1,473 | |||
|
Reduction of noncontrolling interest
|
1,575 | |||
| $ | 3,200 | |||
The net book value of fixed assets approximated fair value. The
net unfavorable leases and tradename are presented as intangible
assets on the Company’s consolidated balance sheets. The
goodwill recorded as a result of the acquisition is not
deductible for tax purposes and is included in the international
segment.
During April 2010, the Company’s partners in Colombia (the
“Colombian Partners”) exercised an option available to
them under an Exchange Option Agreement dated April 9, 2007
between the Company and the Colombian Partners. Under this
option, which was contingent upon completion of an initial
public offering of common stock by the Company, the Colombian
Partners were entitled to exchange their shares in Cinemark
Colombia S.A. for shares of the Company’s common stock (the
“Colombia Share Exchange”). The number of shares to be
exchanged was determined based on the
F-20
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Company’s equity value and the equity value of the
Colombian Partners’ interest in Cinemark Colombia S.A.,
both of which are defined in the Exchange Option Agreement. As a
result of the Colombia Share Exchange, on June 14, 2010,
the Company issued 1,112,723 shares of its common stock to
the Colombian Partners. The increase in the Company’s
ownership interest in its Colombian subsidiary was accounted for
as an equity transaction. The Company recorded an increase in
common stock and additional-paid-in-capital of approximately
$6,951, which represented the book value of the Colombian
partners’ noncontrolling interest account of approximately
$5,865 plus the Colombian partners’ share of accumulated
other comprehensive loss of approximately $1,086. As a result of
this transaction, the Company owns 100% of the shares in
Cinemark Colombia S.A.
During November 2010, the Company purchased its noncontrolling
interests’ 20% share of Cinemark Panama S.A.
(“Cinemark Panama”) for approximately $888 in cash.
The transaction was accounted for as an equity transaction in
accordance with ASC Topic
810-45-23.
The book value of Cinemark Panama’s noncontrolling interest
was approximately $498, therefore the Company recorded an
adjustment to additional
paid-in-capital
of approximately $390. As a result of the transaction, the
Company owns 100% of Cinemark Panama.
| 10. | GOODWILL AND OTHER INTANGIBLE ASSETS — NET |
The Company’s goodwill was as follows:
|
U.S.
|
International
|
|||||||||||
|
Operating
|
Operating
|
|||||||||||
| Segment | Segment | Total | ||||||||||
|
Balance at January 1, 2009(1)
|
$ | 903,461 | $ | 136,357 | $ | 1,039,818 | ||||||
|
Acquisition of four U.S. theatres(2)
|
44,565 | — | 44,565 | |||||||||
|
Acquisition of one Brazil theatre(3)
|
— | 6,270 | 6,270 | |||||||||
|
Foreign currency translation adjustments and other
|
— | 25,649 | 25,649 | |||||||||
|
Balance at December 31, 2009(1)
|
$ | 948,026 | $ | 168,276 | $ | 1,116,302 | ||||||
|
Foreign currency translation adjustments
|
— | 6,669 | 6,669 | |||||||||
|
Balance at December 31, 2010(1)
|
$ | 948,026 | $ | 174,945 | $ | 1,122,971 | ||||||
| (1) | Balances are presented net of accumulated impairment losses of $214,031 for the U.S. operating segment and $27,622 for the international operating segment. | |
| (2) | See Note 5. | |
| (3) | The Company acquired one theatre in Brazil during 2009 for approximately $9,061 which resulted in an allocation of $6,270 to goodwill, $2,130 to theatre properties and equipment and $661 to other current assets and liabilities. |
As of December 31, intangible
assets-net,
consisted of the following:
|
December 31,
|
December 31,
|
|||||||||||||||||||
| 2008 | Additions(1) | Amortization | Other(2) | 2009 | ||||||||||||||||
|
Intangible assets with finite lives:
|
||||||||||||||||||||
|
Gross carrying amount
|
$ | 78,696 | $ | 4,755 | $ | — | $ | (467 | ) | $ | 82,984 | |||||||||
|
Accumulated amortization
|
(46,030 | ) | — | (5,640 | ) | 1,204 | (50,466 | ) | ||||||||||||
|
Total net intangible assets with finite lives
|
32,666 | 4,755 | (5,640 | ) | 737 | 32,518 | ||||||||||||||
|
Intangible assets with indefinite lives:
|
||||||||||||||||||||
|
Tradename
|
309,102 | — | — | 1,378 | 310,480 | |||||||||||||||
|
Total intangible assets — net
|
$ | 341,768 | $ | 4,755 | $ | (5,640 | ) | $ | 2,115 | $ | 342,998 | |||||||||
F-21
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
|
December 31,
|
December 31,
|
|||||||||||||||||||
| 2009 | Additions | Amortization | Other(2) | 2010 | ||||||||||||||||
|
Intangible assets with finite lives:
|
||||||||||||||||||||
|
Gross carrying amount
|
$ | 82,984 | $ | — | $ | — | $ | (18,665 | ) | $ | 64,319 | |||||||||
|
Accumulated amortization
|
(50,466 | ) | — | (5,126 | ) | 9,407 | (46,185 | ) | ||||||||||||
|
Total net intangible assets with finite lives
|
32,518 | — | (5,126 | ) | (9,258 | ) | 18,134 | |||||||||||||
|
Intangible assets with indefinite lives:
|
||||||||||||||||||||
|
Tradename
|
310,480 | — | — | 590 | 311,070 | |||||||||||||||
|
Total intangible assets — net
|
$ | 342,998 | $ | — | $ | (5,126 | ) | $ | (8,668 | ) | $ | 329,204 | ||||||||
| (1) | The additions to other intangible assets are a result of the acquisition of theatres in the U.S. as discussed in Note 5, partially offset by a decrease due to the final purchase price allocation related to the acquisition of theatres in Brazil during 2008. | |
| (2) | Activity for 2009 and 2010 includes foreign currency translation adjustments and impairments. See Note 11 for summary of impairment charges. Activity for 2010 also includes a write-off of approximately $5,814 for a vendor contract in Mexico that was terminated and approximately $2,294 related to the Company’s original IMAX license agreement that was terminated. |
Estimated aggregate future amortization expense for intangible
assets is as follows:
|
For the year ended December 31, 2011
|
$ | 3,981 | ||
|
For the year ended December 31, 2012
|
2,997 | |||
|
For the year ended December 31, 2013
|
2,437 | |||
|
For the year ended December 31, 2014
|
1,902 | |||
|
For the year ended December 31, 2015
|
1,799 | |||
|
Thereafter
|
5,018 | |||
|
Total
|
$ | 18,134 | ||
| 11. | IMPAIRMENT OF LONG-LIVED ASSETS |
The Company reviews long-lived assets for impairment indicators
on a quarterly basis or whenever events or changes in
circumstances indicate the carrying amount of the assets may not
be fully recoverable. See Note 1 for discussion of the
Company’s impairment evaluation.
The Company’s long-lived asset impairment losses are
summarized in the following table:
| Year Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
|
United States theatre properties
|
$ | 27,761 | $ | 10,013 | $ | 5,166 | ||||||
|
International theatre properties
|
6,869 | 1,340 | 5,668 | |||||||||
|
Subtotal
|
$ | 34,630 | $ | 11,353 | $ | 10,834 | ||||||
|
Intangible assets (see Note 10)
|
323 | 358 | 1,527 | |||||||||
|
Goodwill (see Note 10)
|
78,579 | — | — | |||||||||
|
Equity investment
|
— | 147 | 177 | |||||||||
|
Impairment of long-lived assets
|
$ | 113,532 | $ | 11,858 | $ | 12,538 | ||||||
F-22
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The long-lived asset impairment charges recorded during each of
the years presented are specific to theatres that were directly
and individually impacted by increased competition, adverse
changes in market demographics or adverse changes in the
development or the conditions of the areas surrounding the
theatre. As of December 31, 2010, the estimated aggregate
fair value of the long-lived assets impaired during the year
ended December 31, 2010 was approximately $5,680.
| 12. | DEFERRED CHARGES AND OTHER ASSETS — NET |
As of December 31, deferred charges and other
assets — net consisted of the following:
| December 31, | ||||||||
| 2009 | 2010 | |||||||
|
Debt issue costs
|
$ | 37,334 | $ | 45,510 | ||||
|
Less: Accumulated amortization
|
(12,210 | ) | (16,235 | ) | ||||
|
Subtotal
|
25,124 | 29,275 | ||||||
|
Long-term prepaid rents
|
15,426 | 17,773 | ||||||
|
Interest rate swap assets (see Note 14)
|
— | 8,955 | ||||||
|
Construction advances and other deposits
|
3,171 | 5,426 | ||||||
|
Equipment to be placed in service
|
6,454 | 7,753 | ||||||
|
Other
|
2,327 | 1,796 | ||||||
|
Total
|
$ | 52,502 | $ | 70,978 | ||||
During the year ended December 31, 2010, the Company paid
debt issue costs of approximately $8,858 related to the
amendment and extension of its senior secured credit facility.
See Note 13. In addition, the Company wrote off fully
amortized debt issue costs for certain debt that was retired
during the year ended December 31, 2010.
| 13. |
|
As of December 31, long-term debt consisted of the
following:
| December 31, | ||||||||
| 2009 | 2010 | |||||||
|
Cinemark USA, Inc. term loan
|
$ | 1,083,600 | $ | 1,072,764 | ||||
|
Cinemark USA, Inc.
8
5
/
8
% senior
notes due 2019(1)
|
458,897 | 459,677 | ||||||
|
Cinemark USA, Inc. 9% senior subordinated notes due 2013
|
181 | — | ||||||
|
Other long-term debt
|
1,027 | — | ||||||
|
Total long-term debt
|
1,543,705 | 1,532,441 | ||||||
|
Less current portion
|
12,227 | 10,836 | ||||||
|
Long-term debt, less current portion
|
$ | 1,531,478 | $ | 1,521,605 | ||||
| (1) | Includes the $470,000 aggregate principal amount of the 8 5 / 8 % senior notes net of the unamortized discount of $11,103 and $10,323 at December 31, 2009 and 2010, respectively. |
Senior
Secured Credit Facility
On October 5, 2006, in connection with the Century
Acquisition, Cinemark USA, Inc. entered into a senior secured
credit facility that provided for a $1,120,000 term loan and a
$150,000 revolving credit line. On March 2, 2010, the
Company completed an amendment and extension to its existing
senior secured credit facility to primarily
F-23
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
extend the maturities of the facility and make certain other
modifications. Approximately $924,375 of the Company’s then
remaining outstanding $1,083,600 term loan debt was extended
from an original maturity date of October 2013 to a maturity
date of April 2016. The remaining term loan debt of $159,225
that was not extended matures on the original maturity date of
October 2013. Payments on the extended amount are due in equal
quarterly installments of $2,311 through March 31, 2016
with the remaining principal amount of $866,602 due
April 30, 2016. Payments on the original amount that was
not extended are due in equal quarterly installments of
approximately $398 beginning March 31, 2010 through
September 30, 2012 and increase to approximately $37,418
each calendar quarter from December 31, 2012 to
June 30, 2013 with one final payment of approximately
$42,593 at maturity on October 5, 2013. The amendment also
imposed a 1.0% prepayment premium for one year on certain
prepayments of the extended portion of the term loan debt.
The interest rate on the original term loan debt that was not
extended accrues interest, at Cinemark USA, Inc.’s option,
at: (A) the base rate equal to the higher of (1) the
prime lending rate as set forth on the British Banking
Association Telerate page 5, or (2) the federal funds
effective rate from time to time plus 0.50% (the “base
rate”), plus a margin that ranges from 0.50% to 0.75% per
annum, or (B) a “eurodollar rate” plus a margin
that ranges from 1.50% to 1.75%, per annum. The margin of the
original term loan debt that was not extended is determined by
the applicable corporate credit rating. The interest rate on the
extended portion of the term loan debt accrues interest, at
Cinemark USA, Inc.’s option at: (A) the base rate
equal to the higher of (1) the prime lending rate as set
forth on the British Banking Association Telerate page 5,
or (2) the federal funds effective rate from time to time
plus 0.50%, plus a 2.25% margin per annum, or (B) a
“eurodollar rate” plus a 3.25% margin per annum.
The maturity date of $73,500 of Cinemark USA, Inc.’s
$150,000 revolving credit line has been extended from October
2012 to March 2015. The maturity date of the remaining $76,500
of Cinemark USA, Inc.’s revolving credit line did not
change and remains October 2012. As of September 30, 2010,
the Company had no borrowings outstanding under the revolving
credit line. The interest rate on the original revolving credit
line accrues interest, at Cinemark USA, Inc.’s option, at:
(A) a base rate equal to the higher of (1) the prime
lending rate as set forth on the British Banking Association
Telerate page 5 and (2) the federal funds effective
rate from time to time plus 0.50%, plus a margin that ranges
from 0.50% to 1.00% per annum, or (B) a “eurodollar
rate” plus a margin that ranges from 1.50% to 2.00% per
annum. The interest rate on the extended revolving credit line
accrues interest, at Cinemark USA, Inc.’s option at:
(A) the base rate equal to the higher of (1) the prime
lending rate as set forth on the British Banking Association
Telerate page 5, or (2) the federal funds effective
rate from time to time plus 0.50%, plus a margin that ranges
from 1.75% to 2.0% per annum, or (B) a “eurodollar
rate” plus a margin that ranges from 2.75% to 3.0% per
annum. The margin of the revolving credit line is determined by
the consolidated net senior secured leverage ratio as defined in
the credit agreement.
The Company incurred debt issue costs of approximately $8,858
during the year ended December 31, 2010 related to the
amendment and extension of its senior secured credit facility.
These costs are being amortized over the remaining term of the
facility.
At December 31, 2010, there was $1,072,764 outstanding
under the term loan and no borrowings outstanding under the
$150,000 revolving credit line. The average interest rate on
outstanding term loan borrowings under the senior secured credit
facility at December 31, 2010 was approximately 4.8% per
annum.
Cinemark USA, Inc.’s obligations under the senior secured
credit facility are guaranteed by Cinemark Holdings, Inc. and
certain of Cinemark USA, Inc.’s domestic subsidiaries and
are secured by mortgages on certain fee and leasehold properties
and security interests in substantially all of Cinemark USA,
Inc.’s and the guarantors’ personal property,
including, without limitation, pledges of all of Cinemark USA,
Inc.’s capital stock, all of the capital stock of certain
of Cinemark USA, Inc.’s domestic subsidiaries and 65% of
the voting stock of certain of its foreign subsidiaries.
The senior secured credit facility contains usual and customary
negative covenants for agreements of this type, including, but
not limited to, restrictions on Cinemark USA, Inc.’s
ability, and in certain instances, its subsidiaries’
F-24
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
and Cinemark Holdings, Inc.’s ability, to consolidate or
merge or liquidate, wind up or dissolve; substantially change
the nature of its business; sell, transfer or dispose of assets;
create or incur indebtedness; create liens; pay dividends, and
repurchase stock; and make capital expenditures and investments.
The senior secured credit facility also requires Cinemark USA,
Inc. to satisfy a consolidated net senior secured leverage ratio
covenant as determined in accordance with the senior secured
credit facility.
The dividend restriction contained in the senior secured credit
facility prevents the Company and any of its subsidiaries from
paying a dividend or otherwise distributing cash to its
stockholders unless (1) the Company is not in default, and
the distribution would not cause the Company to be in default,
under the senior secured credit facility; and (2) the
aggregate amount of certain dividends, distributions,
investments, redemptions and capital expenditures made since
October 5, 2006, including dividends declared by the board
of directors, is less than the sum of (a) the aggregate
amount of cash and cash equivalents received by Cinemark
Holdings, Inc. or Cinemark USA, Inc. as common equity since
October 5, 2006, (b) Cinemark USA, Inc.’s
consolidated EBITDA minus 1.75 times its consolidated interest
expense, each as defined in the senior secured credit facility,
since October 1, 2006, (c) $150 million and
(d) certain other amounts specified in the senior secured
credit facility, subject to certain adjustments specified in the
senior secured credit facility. The dividend restriction is
subject to certain exceptions specified in the senior secured
credit facility.
The senior secured credit facility 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, certain types
of change of control, material money judgments and failure to
maintain subsidiary guarantees. If an event of default occurs,
all commitments under the senior secured credit facility may be
terminated and all obligations under the senior secured credit
facility could be accelerated by the lenders, causing all loans
outstanding (including accrued interest and fees payable
thereunder) to be declared immediately due and payable.
See Note 14 for a discussion of the Company’s interest
rate swap agreements.
Senior
Notes
On June 29, 2009, Cinemark USA, Inc. issued $470,000
aggregate principal amount of 8.625% senior notes due 2019
with an original issue discount of $11,468, resulting in
proceeds of approximately $458,532. The proceeds were primarily
used to fund the repurchase of the remaining $419,403 aggregate
principal amount at maturity of Cinemark, Inc.’s
9
3
/
4
% senior
discount notes discussed below. Interest is payable on June 15
and December 15 of each year. The senior notes mature on
June 15, 2019. The original issue discount is being
amortized on the effective interest method over the term of the
senior notes. The Company incurred debt issue costs of $12,722
in connection with the issuance during the year ended
December 31, 2009. As of December 31, 2010, the
carrying value of the senior notes was $459,677.
Cinemark USA, Inc. filed a registration statement with the
Securities and Exchange Commission on September 24, 2009
pursuant to which Cinemark USA, Inc. offered to exchange the
senior notes for substantially similar registered senior notes.
The registration statement became effective and the notes were
exchanged on December 17, 2009. The exchanged registered
senior notes do not have transfer restrictions.
The senior notes are fully and unconditionally guaranteed on a
joint and several senior unsecured basis by certain of Cinemark
USA, Inc.’s subsidiaries that guarantee, assume or become
liable with respect to any of Cinemark USA, Inc.’s or a
guarantor’s debt. The senior notes and the guarantees are
senior unsecured obligations and rank equally in right of
payment with all of Cinemark USA, Inc.’s and its
guarantor’s existing and future senior unsecured debt and
senior in right of payment to all of Cinemark USA, Inc.’s
and its guarantor’s existing and future subordinated debt.
The senior notes and the guarantees are effectively subordinated
to all of Cinemark USA, Inc.’s and its guarantor’s
existing and future secured debt to the extent of the value of
the assets securing such debt, including all borrowings under
Cinemark USA, Inc.’s senior secured credit facility. The
senior notes and the
F-25
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
guarantees are structurally subordinated to all existing and
future debt and other liabilities of Cinemark USA, Inc.’s
subsidiaries that do not guarantee the senior notes.
The indenture to the senior notes contains covenants that limit,
among other things, the ability of Cinemark USA, Inc. and
certain of its subsidiaries to (1) consummate specified
asset sales, (2) make investments or other restricted
payments, including paying dividends, making other distributions
or repurchasing subordinated debt or equity, (3) incur
additional indebtedness and issue preferred stock,
(4) enter into transactions with affiliates, (5) enter
new lines of business, (6) merge or consolidate with, or
sell all or substantially all of its assets to, another person
and (7) create liens. Upon a change of control of Cinemark
Holdings, Inc. or Cinemark USA, Inc., Cinemark USA, Inc. would
be required to make an offer to repurchase the senior notes at a
price equal to 101% of the aggregate principal amount
outstanding plus accrued and unpaid interest, if any, through
the date of repurchase. Certain asset dispositions are
considered triggering events that may require Cinemark USA, Inc.
to use the proceeds from those asset dispositions to make an
offer to purchase the notes at 100% of their principal amount,
plus accrued and unpaid interest, if any, to the date of
repurchase if such proceeds are not otherwise used within
365 days as described in the indenture. The indenture
governing the senior notes allows Cinemark USA, Inc. to incur
additional indebtedness if it satisfies the coverage ratio
specified in the indenture, after giving effect to the
incurrence of the additional indebtedness, and in certain other
circumstances. The required minimum coverage ratio is 2 to 1 and
our actual ratio as of December 31, 2010 was 5.04 to 1.
Prior to June 15, 2014, Cinemark USA, Inc. may redeem all
or any part of the senior notes at its option at 100% of the
principal amount plus a make-whole premium. After June 15,
2014, Cinemark USA, Inc. may redeem the senior notes in whole or
in part at redemption prices described in the senior notes. In
addition, Cinemark USA, Inc. may redeem up to 35% of the
aggregate principal amount of the senior notes from the net
proceeds of certain equity offerings at the redemption price set
forth in the senior notes.
Senior
Discount Notes
On March 31, 2004, Cinemark, Inc. issued approximately
$577,173 aggregate principal amount at maturity of
9
3
/
4
% senior
discount notes due 2014. Interest on the notes accreted until
March 15, 2009 up to their aggregate principal amount.
Subsequently, cash interest accrued and was payable
semi-annually in arrears on March 15 and September 15,
commencing on September 15, 2009.
Prior to 2008, Cinemark, Inc. repurchased on the open market
$110,770 aggregate principal amount at maturity of its
9
3
/
4
% senior
discount notes for approximately $96,741 including accreted
interest of $22,147 and cash premiums of $5,380. Cinemark, Inc.
funded these repurchases with available cash from its operations
and with proceeds from the Company’s initial public
offering.
During 2008, in ten open market purchases, Cinemark, Inc.
repurchased $47,000 aggregate principal amount at maturity of
its
9
3
/
4
% senior
discount notes for approximately $42,208, including accreted
interest of $15,186 and a discount of $2,537. Cinemark, Inc.
funded the transactions with proceeds from the Company’s
initial public offering. The Company recorded a gain on early
retirement of debt of approximately $1,698 during the year ended
December 31, 2008 related to these repurchases, which
included gains on the repurchases offset by the write-off of
unamortized debt issue costs.
On June 15, 2009, Cinemark, Inc. commenced a cash tender
offer for any and all of its
9
3
/
4
% senior
discount notes due 2014, of which $419,403 aggregate principal
amount at maturity remained outstanding. In connection with the
tender offer, Cinemark, Inc. solicited consents to adopt
proposed amendments to the indenture to eliminate substantially
all restrictive covenants and certain events of default
provisions. On June 29, 2009, approximately $402,459
aggregate principal amount at maturity of the
9
3
/
4
% senior
discount notes were tendered and repurchased by the Company for
approximately $433,415, including accrued interest of $11,336
and tender premiums paid of $19,620. The Company funded the
repurchase with the proceeds from the issuance of the Cinemark
USA, Inc. senior notes discussed above. On August 3, 2009,
the Company delivered to the Bank of New York Trust Company
F-26
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
N.A., as trustee, a notice to redeem the $16,944 aggregate
principal amount at maturity of the Company’s
9
3
/
4
% senior
discount notes remaining outstanding. The notice specified
September 8, 2009 as the redemption date, at which time the
Company paid approximately $18,564, consisting of a redemption
price of 104.875% of the face amount of the discount notes
remaining outstanding plus accrued and unpaid interest to, but
not including, the redemption date. The Company funded the
redemption with proceeds from the issuance of the Cinemark USA,
Inc. senior notes discussed above. The Company recorded a loss
on early retirement of debt of approximately $27,878 during the
year ended December 31, 2009, which included tender and
call premiums paid, other fees and the write-off of unamortized
debt issue costs.
Senior
Subordinated Notes
On February 11, 2003, Cinemark USA, Inc. issued $150,000
aggregate principal amount of 9% senior subordinated notes
due 2013 and on May 7, 2003, Cinemark USA, Inc. issued an
additional $210,000 aggregate principal amount of 9% senior
subordinated notes due 2013, collectively referred to as the
9% senior subordinated notes. Interest was payable on
February 1 and August 1 of each year.
Prior to 2008, Cinemark USA, Inc. repurchased a total of
$359,816 aggregate principal amount of its 9% senior
subordinated notes. The transactions were funded by Cinemark
USA, Inc. with the proceeds from its sale of a portion of its
investment in NCM during 2007 and available cash from its
operations.
During 2008, in one open market purchase, Cinemark USA, Inc.
repurchased $3 aggregate principal amount of its 9% senior
subordinated notes.
On October 14, 2010, Cinemark USA, Inc. redeemed all of its
remaining outstanding 9% senior subordinated notes for
approximately $181. The Company recorded a loss on early
retirement of debt of approximately $3 during the year ended
December 31, 2010, consisting of premiums paid.
Fair
Value of Long Term Debt
The Company estimates the fair value of its long-term debt
primarily using quoted market prices, which fall under
Level 2 of the U.S. GAAP fair value hierarchy as
defined by FASB ASC Topic
820-10-35.
The carrying value of the Company’s long term debt was
$1,532,441 and $1,543,705 as of December 31, 2010 and 2009,
respectively. The fair value of the Company’s long term
debt was $1,581,963 and $1,513,838 as of December 31, 2010
and 2009, respectively.
Covenant
Compliance and Debt Maturity
As of December 31, 2010, the Company was in full compliance
with all agreements, including related covenants, governing its
outstanding debt. The Company’s long-term debt at
December 31, 2010 matures as follows:
|
2011
|
$ | 10,836 | ||
|
2012
|
47,856 | |||
|
2013
|
126,672 | |||
|
2014
|
9,244 | |||
|
2015
|
9,244 | |||
|
Thereafter
|
1,338,912 | (1) | ||
|
Total
|
$ | 1,542,764 | ||
| (1) | Reflects the aggregate principal amount at maturity of the 8 5 / 8 % senior notes before the original issue discount of $10,323. |
F-27
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| 14. | INTEREST RATE SWAP AGREEMENTS |
The Company is currently a party to four interest rate swap
agreements that qualify for cash flow hedge accounting. No
premium or discount was incurred upon the Company entering into
any of its interest rate swap agreements because the pay rates
and receive rates on the interest rate swap agreements
represented prevailing rates for each counterparty at the time
each of the interest rate swap agreements was consummated. The
fair values of the interest rate swaps are recorded on the
Company’s consolidated balance sheet as an asset or
liability with the effective portion of the interest rate
swaps’ gains or losses reported as a component of
accumulated other comprehensive income (loss) and the
ineffective portion reported in earnings. The Company’s
current interest rate swap agreements exhibited no
ineffectiveness during the years ended December 2008, 2009 and
2010.
The valuation technique used to determine fair value is the
income approach and under this approach, the Company uses
projected future interest rates as provided by counterparties to
the interest rate swap agreements and the fixed rates that the
Company is obligated to pay under these agreements. Therefore,
the Company’s measurements use significant unobservable
inputs, which fall in Level 3 of the U.S. GAAP
hierarchy as defined by FASB ASC Topic
820-10-35.
There were no changes in valuation techniques during the period,
no transfers in or out of Level 3 and no gains or losses
included in earnings that were attributable to the change in
unrealized gains or losses related to the interest rate swap
agreements.
Below is a summary of the Company’s current interest rate
swap agreements:
|
Estimated
|
||||||||||||||||||||
|
Amount
|
Effective
|
Pay
|
Receive
|
Expiration
|
Fair Value at
|
|||||||||||||||
|
Category
|
Hedged
|
Date
|
Rate
|
Rate
|
Date
|
December 31, 2010
|
||||||||||||||
|
Interest Rate Swap Assets
|
||||||||||||||||||||
| $ | 175,000 | December 2010 | 1.400 | % | 1-Month LIBOR | September 2015 | $ | 4,421 | ||||||||||||
| $ | 175,000 | December 2010 | 1.398 | % | 1-Month LIBOR | September 2015 | 4,534 | |||||||||||||
| $ | 8,955 | |||||||||||||||||||
|
Interest Rate Swap Liabilities
|
||||||||||||||||||||
| $ | 125,000 | August 2007 | 4.922 | % | 3-Month LIBOR | November 2012 | $ | (8,801 | ) | |||||||||||
| $ | 175,000 | November 2008 | 3.630 | % | 1-Month LIBOR | (1) | (7,169 | )(2) | ||||||||||||
| $ | (15,970 | ) | ||||||||||||||||||
|
Total
|
$ | 650,000 | ||||||||||||||||||
| (1) | $100,000 of this swap expires November 2011 and $75,000 expires November 2012. | |
| (2) | Approximately $2,928 is reflected in other current liabilities on the consolidated balance sheet as of December 31, 2010. |
The Company was previously a party to an interest rate swap
agreement that was effective during 2007 with a counterparty
that filed for bankruptcy during September 2008 and whose credit
rating was downgraded as a result. Prior to the
counterparty’s credit rating downgrade, the change in fair
value of the interest rate swap was recorded as a component of
accumulated other comprehensive income (loss). Subsequent to the
counterparty’s credit rating downgrade, the change in fair
value of the interest rate swap was recorded in earnings as a
component of interest expense. The Company terminated the
interest rate swap agreement during October 2008. The Company
determined that the forecasted transactions hedged by this
interest rate swap are still probable to occur, thus the total
amount previously reported in accumulated other comprehensive
income (loss) related to this interest rate swap agreement of
$18,147 is being amortized on a straight-line basis to interest
expense over the period during which the forecasted transactions
are expected to occur, which is September 15, 2008 through
August 13, 2012. The Company amortized approximately $1,351
to interest expense during the year ended December 31, 2008
and
F-28
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
$4,633 to interest expense during each of the years ended
December 31, 2009 and 2010. The Company will amortize
approximately $4,633 to interest expense over the next twelve
months.
See Note 15 for additional information about the
Company’s fair value measurements related to its interest
rate swap agreements.
| 15. | FAIR VALUE MEASUREMENTS |
The Company determines fair value measurements in accordance
with FASB ASC Topic 820, which establishes a fair value
hierarchy under which an asset or liability is categorized based
on the lowest level of input significant to its fair value
measurement. The levels of input defined by FASB ASC Topic 820
are as follows:
Level 1 — quoted market prices in active markets
for identical assets or liabilities that are accessible at the
measurement date;
Level 2 — other than quoted market prices
included in Level 1 that are observable for the asset or
liability, either directly or indirectly; and
Level 3 — unobservable and should be used to
measure fair value to the extent that observable inputs are not
available.
Below is a summary of assets and liabilities measured at fair
value on a recurring basis by the Company under FASB ASC Topic
820 as of December 31, 2010:
|
Carrying
|
Fair Value | |||||||||||||||
|
Description
|
Value | Level 1 | Level 2 | Level 3 | ||||||||||||
|
Interest rate swap liabilities — current (see
Note 14)
|
$ | (2,928 | ) | $ | — | $ | — | $ | (2,928 | ) | ||||||
|
Interest rate swap liabilities — long term (see
Note 14)
|
$ | (13,042 | ) | $ | — | $ | — | $ | (13,042 | ) | ||||||
|
Interest rate swap assets — long term (see
Note 14)
|
$ | 8,955 | $ | — | $ | — | $ | 8,955 | ||||||||
|
Investment in Real D (see Note 8)
|
$ | 27,993 | $ | — | $ | 27,993 | $ | — | ||||||||
Below is a summary of assets and liabilities measured at fair
value on a recurring basis by the Company under FASB ASC Topic
820 as of December 31, 2009:
|
Carrying
|
Fair Value | |||||||||||||||
|
Description
|
Value | Level 1 | Level 2 | Level 3 | ||||||||||||
|
Interest rate swap liabilities — long term (see
Note 14)
|
$ | (18,524 | ) | $ | — | $ | — | $ | (18,524 | ) | ||||||
Below is a reconciliation of the beginning and ending balance
for assets and liabilities measured at fair value on a recurring
basis using significant unobservable inputs (Level 3):
| Liabilities | Assets | |||||||||||||||
| 2009 | 2010 | 2009 | 2010 | |||||||||||||
|
Beginning balance — January 1
|
$ | (24,781 | ) | $ | (18,524 | ) | $ | — | $ | — | ||||||
|
Total gain included in accumulated other comprehensive income
(loss)
|
6,257 | 2,554 | — | 8,955 | ||||||||||||
|
Ending balance — December 31
|
$ | (18,524 | ) | $ | (15,970 | ) | $ | — | $ | 8,955 | ||||||
There were no changes in valuation techniques during the period.
There were no transfers in or out of Level 3 and no gains
or losses included in the earnings that were attributable to the
change in unrealized gains or losses related to the interest
rate swap agreements.
F-29
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| 16. | FOREIGN CURRENCY TRANSLATION |
The accumulated other comprehensive income (loss) account in
stockholders’ equity of $(7,459) and $28,181 at
December 31, 2009 and December 31, 2010, respectively,
includes the cumulative foreign currency adjustments of $16,070
and $34,248, respectively, from translating the financial
statements of the Company’s international subsidiaries, and
also includes the change in fair values of the Company’s
interest rate swap agreements.
In 2009 and 2010, all foreign countries where the Company has
operations were deemed non-highly inflationary and the local
currency is the same as the functional currency in all of the
locations. Thus, any fluctuation in the currency results in a
cumulative foreign currency translation adjustment recorded to
accumulated other comprehensive income (loss).
On December 31, 2010, the exchange rate for the Brazilian
real was 1.67 reais to the U.S. dollar (the exchange rate
was 1.75 reais to the U.S. dollar at December 31,
2009). As a result, the effect of translating the
December 31, 2010 Brazilian financial statements into
U.S. dollars is reflected as a foreign currency translation
adjustment to the accumulated other comprehensive income (loss)
account as an increase in stockholders’ equity of $10,377.
At December 31, 2010, the total assets of the
Company’s Brazilian subsidiaries were U.S. $333,562.
On December 31, 2010, the exchange rate for the Mexican
peso was 12.39 pesos to the U.S. dollar (the exchange rate
was 13.04 pesos to the U.S. dollar at December 31,
2009). As a result, the effect of translating the
December 31, 2010 Mexican financial statements into
U.S. dollars is reflected as a foreign currency translation
adjustment to the accumulated other comprehensive income (loss)
account as an increase in stockholders’ equity of $5,338.
At December 31, 2010, the total assets of the
Company’s Mexican subsidiaries were U.S. $143,898.
On December 31, 2010, the exchange rate for the Chilean
peso was 473.20 pesos to the U.S. dollar (the exchange rate
was 519.30 pesos to the U.S. dollar at December 31,
2009). As a result, the effect of translating the
December 31, 2010 Chilean financial statements into
U.S. dollars is reflected as a foreign currency translation
adjustment to the accumulated other comprehensive income (loss)
account as an increase in stockholders’ equity of $2,270.
At December 31, 2010, the total assets of the
Company’s Chilean subsidiaries were U.S. $35,593.
The effect of translating the December 31, 2010 financial
statements of the Company’s other international
subsidiaries, with local currencies other than the
U.S. dollar, is reflected as a foreign currency translation
adjustment to the accumulated other comprehensive income (loss)
account as an increase in stockholders’ equity of $1,279.
During June 2010, the Company’s ownership in its Colombian
subsidiary increased from 50.1% to 100%, as a result of the
Colombia Share Exchange. As part of this transaction, the
Company recorded the amount of accumulated other comprehensive
loss previously allocated to the noncontrolling interest of
$1,086 to accumulated other comprehensive income (loss) with an
offsetting credit to additional
paid-in-capital.
See Note 9.
| 17. | INVESTMENTS IN AND ADVANCES TO AFFILIATES |
The Company had the following investments in and advances to
affiliates at December 31:
| December 31, | ||||||||
| 2009 | 2010 | |||||||
|
Cinemark — Core Pacific, Ltd. (Taiwan) —
investment, at cost — 14% interest
|
$ | 1,383 | $ | 1,383 | ||||
|
Other
|
1,506 | 1,236 | ||||||
|
Total
|
$ | 2,889 | $ | 2,619 | ||||
F-30
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| 18. | NONCONTROLLING INTERESTS IN SUBSIDIARIES |
Noncontrolling interests in subsidiaries of the Company were as
follows at December 31:
| December 31, | ||||||||
| 2009 | 2010 | |||||||
|
Cinemark Partners II — 49.2% interest
|
$ | 7,961 | $ | 8,655 | ||||
|
Cinemark Colombia, S.A. — 49.0% interest until April
2010
|
4,465 | — | ||||||
|
Greeley Ltd. — 49.0% interest
|
982 | 857 | ||||||
|
Cinemark Panama S.A. — 20% interest until November 2010
|
369 | — | ||||||
|
Others
|
1,019 | 2,093 | ||||||
|
Total
|
$ | 14,796 | $ | 11,605 | ||||
During April 2010, the Company’s partners in Colombia (the
“Colombian Partners”) exercised an option available to
them under an Exchange Option Agreement dated April 9, 2007
between the Company and the Colombian Partners. Under this
option, which was contingent upon completion of an initial
public offering of common stock by the Company, the Colombian
Partners were entitled to exchange their shares in Cinemark
Colombia S.A. for shares of the Company’s common stock (the
“Colombia Share Exchange”). The number of shares to be
exchanged was determined based on the Company’s equity
value and the equity value of the Colombian Partners’
interest in Cinemark Colombia S.A., both of which are defined in
the Exchange Option Agreement. As a result of the Colombia Share
Exchange, on June 14, 2010, the Company issued
1,112,723 shares of its common stock to the Colombian
Partners. The increase in the Company’s ownership interest
in its Colombian subsidiary was accounted for as an equity
transaction. The Company recorded an increase in
additional-paid-in-capital of approximately $6,951, which
represented the book value of the Colombian partners’
noncontrolling interest account of approximately $5,865 plus the
Colombian partners’ share of accumulated other
comprehensive loss of approximately $1,086. As a result of this
transaction, the Company owns 100% of the shares in Cinemark
Colombia S.A.
During November 2010, the Company purchased its noncontrolling
interests’ 20% share of Cinemark Panama S.A.
(“Cinemark Panama”) for approximately $888 in cash.
The transaction was accounted for as an equity transaction in
accordance with ASC Topic
810-45-23.
The book value of Cinemark Panama’s noncontrolling interest
was approximately $498, therefore the Company recorded an
adjustment to additional
paid-in-capital
of approximately $390. As a result of the transaction, the
Company owns 100% of Cinemark Panama.
F-31
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Below is a summary of the impact of changes in the
Company’s ownership interest in its subsidiaries on its
equity:
| Years Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
|
Net income (loss) attributable to Cinemark Holdings, Inc.
|
$ | (48,325 | ) | $ | 97,108 | $ | 146,120 | |||||
|
Transfers from noncontrolling interests
|
||||||||||||
|
Increase in Cinemark Holdings, Inc. common stock and additional
paid-in-capital
for the Colombia Share Exchange
|
$ | — | $ | — | $ | 6,951 | ||||||
|
Decrease in Cinemark Holdings, Inc. additional
paid-in-capital
for the buyout of Panama noncontrolling interests
|
— | — | (390 | ) | ||||||||
|
Increase in Cinemark Holdings, Inc. common stock and additional
paid-in-capital
for the Central America Share Exchange
|
12,949 | — | — | |||||||||
|
Increase in Cinemark Holdings, Inc. common stock and additional
paid-in-capital
for the Ecuador Share Exchange
|
3,200 | — | — | |||||||||
|
Increase in Cinemark Holdings, Inc. additional
paid-in-capital
for the buyout of Argentina noncontrolling interests
|
— | 23 | — | |||||||||
|
Net transfers from non-controlling interests
|
16,149 | 23 | 6,561 | |||||||||
|
Change from net income (loss) attributable to Cinemark Holdings,
Inc. and transfers from noncontrolling interests
|
$ | (32,176 | ) | $ | 97,131 | $ | 152,681 | |||||
| 19. | CAPITAL STOCK |
Common Stock —
Common stockholders are entitled
to vote on all matters submitted to a vote of the Company’s
stockholders. Subject to the rights of holders of any then
outstanding shares of the Company’s preferred stock, the
Company’s common stockholders are entitled to any dividends
that may be declared by the board of directors. The shares of
the Company’s common stock are not subject to any
redemption provisions. The Company has no issued and outstanding
shares of preferred stock.
The Company’s ability to pay dividends is effectively
limited by its status as a holding company and the terms of its
indenture and its subsidiary’s senior secured credit
facility, which also significantly restrict the ability of
certain of the Company’s subsidiaries to pay dividends
directly or indirectly to the Company. Furthermore, certain of
the Company’s foreign subsidiaries currently have a deficit
in retained earnings which prevents the Company from declaring
and paying dividends from those subsidiaries.
During May 2008, the Company’s partners in Central America
(the “Central American Partners”) exercised an option
available to them under an Exchange Option Agreement dated
February 7, 2007 between the Company and the Central
American Partners. Under this option, which was triggered by
completion of an initial public offering of common stock by the
Company, the Central American Partners were entitled to exchange
their shares in Cinemark Equity Holdings Corporation, which is
the Company’s Central American holding company, for shares
of the Company’s common stock. As a result of this exchange
on October 1, 2008, the Company issued 902,981 shares
of its common stock to its Central American Partners during
October 2008. See Note 9.
During July 2008, the Company’s partners in Ecuador (the
“Ecuador Partners”) exercised an option available to
them under an Exchange Option Agreement dated April 24,
2007 between the Company and the Ecuador Partners. Under this
option, which was triggered by completion of an initial public
offering of common stock by the Company, the Ecuador Partners
were entitled to exchange their shares in Cinemark del Ecuador
S.A. for shares of
F-32
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
the Company’s common stock. As a result of this exchange,
the Company issued 393,615 shares of its common stock to
its Ecuador partners during November 2008. See Note 9.
During April 2010, the Company’s partners in Colombia (the
“Colombian Partners”) exercised an option available to
them under an Exchange Option Agreement dated April 9, 2007
between the Company and the Colombian Partners. Under this
option, which was contingent upon completion of an initial
public offering of common stock by the Company, the Colombian
Partners were entitled to exchange their shares in Cinemark
Colombia S.A. for shares of the Company’s common stock. The
number of shares to be exchanged was determined based on the
Company’s equity value and the equity value of the
Colombian Partners’ interest in Cinemark Colombia S.A.,
both of which are defined in the Exchange Option Agreement. As a
result of this exchange, on June 14, 2010, the Company
issued 1,112,723 shares of its common stock to the
Colombian Partners. See Note 9.
Treasury Stock —
Treasury stock represents
shares of common stock repurchased by the Company and not yet
retired. The Company has applied the cost method in recording
its treasury shares.
Below is a summary of the Company’s treasury stock activity
for the years ended December 31, 2009 and 2010:
|
Number of
|
||||||||
|
Treasury
|
||||||||
| Shares | Cost | |||||||
|
Balance at January 1, 2009
|
— | $ | — | |||||
|
Restricted stock forfeitures(1)
|
30,475 | — | ||||||
|
Noncash stock option exercises(2)
|
3,274,943 | 43,895 | ||||||
|
Balance at December 31, 2009
|
3,305,418 | $ | 43,895 | |||||
|
Restricted stock forfeitures(1)
|
2,719 | — | ||||||
|
Noncash stock option exercises(3)
|
35,298 | 531 | ||||||
|
Restricted stock withholdings(4)
|
16,424 | 299 | ||||||
|
Balance at December 31, 2010
|
3,359,859 | $ | 44,725 | |||||
| (1) | The Company repurchased forfeited restricted shares at a cost of $0.001 per share in accordance with the Amended and Restated 2006 Long Term Incentive Plan. | |
| (2) | In a noncash stock option exercise, the exercise price for the shares to be held by employees and the related tax withholdings are satisfied with stock withholdings. The Company repurchased the shares at current market value based on the days on which the stock options were exercised, which ranged from $13.40 to $13.46. | |
| (3) | In a noncash stock option exercise, the exercise price for the shares to be held by employees and the related tax withholdings are satisfied with stock withholdings. The Company repurchased the shares at current market value based on the days on which the stock options were exercised, which ranged from $14.85 to $15.17. | |
| (4) | The Company repurchased restricted shares as a result of the election by employees to have the Company withhold shares of restricted stock to satisfy their tax liabilities upon vesting in restricted stock. The Company repurchased the shares at market value on the dates of repurchase. |
All of these repurchases were done in accordance with the
Amended and Restated 2006 Long Term Incentive Plan
(“Restated Incentive Plan”). As of December 31,
2010, the Company had no plans to retire any shares of treasury
stock.
Share Based Awards
— During March 2008, the
Company’s board of directors approved the Amended and
Restated 2006 Long Term Incentive Plan (the “Restated
Incentive Plan”). The Restated Incentive Plan amended and
restated the prior plan, to (i) increase the number of
shares reserved for issuance from 9,097,360 shares of
common stock to 19,100,000 shares of common stock and
(ii) permit the Compensation Committee of the
Company’s board
F-33
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
of directors (the “Compensation Committee”) to award
participants restricted stock units and performance awards. The
right of a participant to exercise or receive a grant of a
restricted stock unit or performance award may be subject to the
satisfaction of such performance or objective business criteria
as determined by the Compensation Committee. With the exception
of the changes identified in (i) and (ii) above, the
Restated Incentive Plan does not materially differ from the
prior plan. The Restated Incentive Plan was approved by the
Company’s stockholders at its annual meeting held on
May 15, 2008.
During August 2008, the Company filed a registration statement
with the Securities and Exchange Commission on
Form S-8
for the purpose of registering the additional shares available
for issuance under the Restated Incentive Plan.
Stock Options
— A summary of stock option
activity and related information for the years ended
December 31, 2008, 2009 and 2010 is as follows:
|
Year Ended
|
Year Ended
|
Year Ended
|
||||||||||||||||||||||||||
| December 31, 2008 | December 31, 2009 | December 31, 2010 | ||||||||||||||||||||||||||
|
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||||||||||
|
Average
|
Average
|
Average
|
Aggregate
|
|||||||||||||||||||||||||
|
Exercise
|
Exercise
|
Exercise
|
Intrinsic
|
|||||||||||||||||||||||||
| Shares | Price | Shares | Price | Shares | Price | Value | ||||||||||||||||||||||
|
Outstanding at January 1
|
6,323,429 | $ | 7.63 | 6,139,670 | $ | 7.63 | 1,231,892 | $ | 7.63 | |||||||||||||||||||
|
Granted
|
— | — | — | — | — | — | ||||||||||||||||||||||
|
Forfeited
|
(14,492 | ) | $ | 7.63 | — | — | — | — | ||||||||||||||||||||
|
Exercised
|
(169,267 | ) | $ | 7.63 | (4,907,778 | ) | $ | 7.63 | (1,091,536 | ) | $ | 7.63 | ||||||||||||||||
|
Outstanding at December 31
|
6,139,670 | $ | 7.63 | 1,231,892 | $ | 7.63 | 140,356 | $ | 7.63 | $ | 1,349 | |||||||||||||||||
|
Vested options at December 31
|
5,809,343 | $ | 7.63 | 1,231,892 | $ | 7.63 | 140,356 | $ | 7.63 | $ | 1,349 | |||||||||||||||||
The total intrinsic value of options exercised during the years
ended December 31, 2008, 2009 and 2010, was $1,191, $28,083
and $9,836, respectively. The Company recognized tax benefits of
approximately $474, $7,545 and $2,680 related to the options
exercised during the year ended December 31, 2008, 2009 and
2010, respectively.
The Company recorded compensation expense of $3,393 and $1,152
during the years ended December 31, 2008 and 2009,
respectively, related to these stock options. As of
December 31, 2010, there was no remaining unrecognized
compensation expense related to outstanding stock options and
all outstanding options fully vested on April 2, 2009.
Options outstanding at December 31, 2010 have an average
remaining contractual life of approximately four years.
F-34
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Restricted Stock
— Below is a summary of
restricted stock activity for the years ended December 31,
2008, 2009 and 2010:
|
Year Ended
|
Year Ended
|
Year Ended
|
||||||||||||||||||||||
| December 31, 2008 | December 31, 2009 | December 31, 2010 | ||||||||||||||||||||||
|
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||||||
|
Average
|
Average
|
Average
|
||||||||||||||||||||||
|
Exercise
|
Exercise
|
Exercise
|
||||||||||||||||||||||
| Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||
|
Outstanding at January 1
|
21,880 | $ | 18.28 | 385,666 | $ | 13.32 | 764,078 | $ | 11.10 | |||||||||||||||
|
Granted
|
392,317 | $ | 13.32 | 472,881 | $ | 9.69 | 683,921 | $ | 17.94 | |||||||||||||||
|
Vested
|
(22,032 | ) | $ | 18.24 | (70,493 | ) | $ | 13.77 | (190,589 | ) | $ | 12.63 | ||||||||||||
|
Forfeited
|
(6,499 | ) | $ | 13.14 | (23,976 | ) | $ | 11.15 | (2,719 | ) | $ | 11.03 | ||||||||||||
|
Outstanding at December 31
|
385,666 | $ | 13.32 | 764,078 | $ | 11.10 | 1,254,691 | $ | 14.60 | |||||||||||||||
During the year ended December 31, 2010, the Company
granted 683,921 shares of restricted stock to directors and
employees of the Company. The fair value of the shares of
restricted stock granted was determined based on the market
value of the Company’s stock on the dates of grant, which
ranged from $13.15 to $18.47 per share. The Company assumed
forfeiture rates ranging from zero to 5% for the restricted
stock awards. The restricted stock granted to directors vests
over periods ranging from six months to one year and the
restricted stock granted to employees vests over four years
based on continued service.
The Company recorded total compensation expense of $1,394,
$2,393 and $4,928 related to restricted stock awards during the
years ended December 31, 2008, 2009 and 2010, respectively.
As of December 31, 2010, the remaining unrecognized
compensation expense related to these restricted stock awards
was approximately $12,486 and the weighted average period over
which this remaining compensation expense will be recognized is
approximately three years. Upon vesting, the Company receives an
income tax deduction. The total fair value of shares vested
during the years ended December 31, 2008, 2009 and 2010 was
$286, $762 and $3,272, respectively. The Company recognized tax
benefits of approximately $109, $287 and $1,087 related to
shares that vested during December 2008, 2009 and 2010,
respectively. The recipients of restricted stock are entitled to
receive dividends and to vote their respective shares, however
the sale and transfer of the restricted shares is prohibited
during the restriction period.
Restricted Stock Units
— During the years ended
December 31, 2008, 2009 and 2010, the Company granted
restricted stock units representing 204,361, 303,168 and 396,429
hypothetical shares of common stock, respectively, under the
Restated Incentive Plan. The restricted stock units vest based
on a combination of financial performance factors and continued
service. The financial performance factors are based on an
implied equity value concept that determines an internal rate of
return (“IRR”) during a three fiscal year period based
on a formula utilizing a multiple of Adjusted EBITDA subject to
certain specified adjustments (as defined in the restricted
stock unit award agreement). The financial performance factors
for the restricted stock units have a threshold, target and
maximum level of payment opportunity. If the IRR for the three
year period is at least 8.5%, which is the threshold, one-third
of the restricted stock units vest. If the IRR for the three
year period is at least 10.5%, which is the target, two-thirds
of the restricted stock units vest. If the IRR for the three
year period is at least 12.5%, which is the maximum, 100% of the
restricted stock units vest. All payouts of restricted stock
units that vest will be subject to an additional one year
service requirement and will be paid in the form of common stock
if the participant continues to provide services through the
fourth anniversary of the grant date. Restricted stock unit
award participants are eligible to receive dividend equivalent
payments if and at the time the restricted stock unit awards
vest.
F-35
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Below is a table summarizing the potential number of shares that
could vest under restricted stock unit awards granted during the
years ended December 31, 2008, 2009 and 2010 at each of the
three levels of financial performance (excluding forfeitures):
| Granted During the Year Ended December 31, | ||||||||||||||||||||||||
| 2008 | 2009 | 2010 | ||||||||||||||||||||||
|
Number of
|
Number of
|
Number of
|
||||||||||||||||||||||
|
Shares
|
Value at
|
Shares
|
Value at
|
Shares
|
Value at
|
|||||||||||||||||||
| Vesting | Grant | Vesting | Grant | Vesting | Grant | |||||||||||||||||||
|
at IRR of at least 8.5%
|
68,116 | $ | 885 | 101,051 | $ | 963 | 132,144 | $ | 2,423 | |||||||||||||||
|
at IRR of at least 10.5%
|
136,239 | $ | 1,771 | 202,117 | $ | 1,927 | 264,288 | $ | 4,847 | |||||||||||||||
|
at IRR of at least 12.5%
|
204,361 | $ | 2,656 | 303,168 | $ | 2,891 | 396,429 | $ | 7,271 | |||||||||||||||
During the year ended December 31, 2010, the Compensation
Committee of the Company’s board of directors approved a
modification of restricted stock unit awards granted to
employees during 2008. The Compensation Committee also approved
the cancellation and replacement of restricted stock unit awards
granted to the Company’s top five executive officers during
2008. Both the modification and the cancellation and replacement
were accounted for as modifications of share based awards. As a
result of these modifications, the Company recorded incremental
compensation expense of approximately $435 during the year ended
December 31, 2010, which represents the difference between
the grant date fair value and the modification date fair value
of these awards for the portion of the service period that has
been satisfied. The service period for the modified awards did
not change. The Company will record additional incremental
compensation expense of $261 over the remaining service period.
At the time of each of the 2008 and 2009 restricted stock unit
grants, the Company was not able to determine which IRR level
would be reached for the respective three year performance
period, therefore the Company assumed the mid-point IRR level
for both grants in determining the amount of compensation
expense to record for such grants. During the year ended
December 31, 2010, based upon additional information, the
Company determined that the 12.5% IRR level will be reached for
the 2008 grant and the 12.5% IRR level is expected to be reached
for the 2009 grant. The Company recorded additional compensation
expense of approximately $823 for the 2008 restricted stock unit
grant and $377 for the 2009 restricted stock unit grant during
the year ended December 31, 2010.
Due to the fact that the IRR for the three year performance
period could not be determined at the time of the 2010 grant,
the Company estimated that the most likely outcome is the
achievement of the mid-point IRR level. The Company assumed a
forfeiture rate of 5% for the restricted stock unit awards. If
during the service period, additional information becomes
available to lead the Company to believe a different IRR level
will be achieved for the three year performance periods, the
Company will reassess the number of units that will vest for the
respective grant and adjust its compensation expense accordingly
on a prospective basis over the remaining service period.
As of December 31, 2010, no restricted stock unit awards
had vested. There were no forfeitures of restricted stock unit
awards during the year ended December 31, 2010. The Company
recorded compensation expense of $326, $759 and $3,424 related
to these restricted stock unit awards during the years ended
December 31, 2008, 2009 and 2010, respectively. As of
December 31, 2010, the Company had restricted stock units
outstanding that represented a total of 884,040 hypothetical
shares of common stock, net of actual cumulative forfeitures of
19,918 units, assuming the maximum IRR of at least 12.5% is
achieved for all of the grants. As of December 31, 2010,
the remaining unrecognized compensation expense related to the
outstanding restricted stock unit awards was $6,389, which
assumes the high-point IRR level has been achieved for the 2008
grant, the high-point IRR level will be achieved for the 2009
grant and the mid-point IRR level will be achieved for the 2010
grant. The weighted average period over which this remaining
compensation expense will be recognized is approximately two
years.
F-36
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| 20. | SUPPLEMENTAL CASH FLOW INFORMATION |
The following is provided as supplemental information to the
consolidated statements of cash flows:
| Year Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
|
Cash paid for interest(1)
|
$ | 94,533 | $ | 239,376 | $ | 103,047 | ||||||
|
Cash paid for income taxes, net of refunds received
|
$ | 36,203 | $ | 46,213 | $ | 93,435 | ||||||
|
Noncash investing and financing activities:
|
||||||||||||
|
Change in accounts payable and accrued expenses for the
acquisition of theatre properties and equipment(2)
|
$ | 3,723 | $ | (6,166 | ) | $ | 3,339 | |||||
|
Theatre properties and equipment acquired under capital lease(3)
|
$ | 7,911 | $ | 20,400 | $ | 6,934 | ||||||
|
Change in fair market values of interest rate swap agreements,
net of taxes
|
$ | (22,063 | ) | $ | 3,898 | $ | 7,170 | |||||
|
Investment in NCM — receipt of common units (See
Note 6)
|
$ | 19,020 | $ | 15,536 | $ | 30,683 | ||||||
|
Investment in NCM — change of interest gain (loss)
(See Note 6)
|
$ | (75 | ) | $ | — | $ | 271 | |||||
|
Net book value of equipment contributed to DCIP (See Note 7)
|
$ | — | $ | — | $ | 18,090 | ||||||
|
Dividends accrued on unvested restricted stock unit awards
|
$ | (74 | ) | $ | (201 | ) | $ | (635 | ) | |||
|
Shares issued upon non-cash stock option exercises, at exercise
price of $7.63 per share
|
$ | — | $ | 34,923 | $ | 413 | ||||||
|
Investment in Real D (See Note 8)
|
$ | — | $ | — | $ | 18,909 | ||||||
|
Change in fair market value of
available-for-sale
securities, net of taxes (See Note 8)
|
$ | — | $ | — | $ | 5,659 | ||||||
|
Issuance of common stock as a result of the Central America
Share Exchange (See Note 9)
|
$ | 12,949 | $ | — | $ | — | ||||||
|
Issuance of common stock as a result of the Ecuador Share
Exchange (See Note 9)
|
$ | 3,200 | $ | — | $ | — | ||||||
|
Issuance of common stock as a result of the Colombia Share
Exchange (See Note 9)
|
$ | — | $ | — | $ | 6,951 | ||||||
| (1) | Includes $158,349 of interest paid as a result of the repurchase of approximately $419,403 aggregate principal amount of the Company’s 9 3 / 4 % senior discount notes in 2009. The interest portion of the repurchase had accreted on the senior discount notes since issuance during 2004. | |
| (2) | Additions to theatre properties and equipment included in accounts payable as of December 31, 2009 and 2010 were $7,823 and $11,162, respectively. | |
| (3) | Amount recorded during the twelve months ended December 31, 2009 was a result of the acquisition of theatres in the U.S. as discussed in Note 5. |
During 2008, the Company elected to use the proceeds of
approximately $2,089 from the sale of real properties to pursue
the purchase of like-kind properties in accordance with the
Internal Revenue Code and as a result, the proceeds were
deposited to an escrow account. The Company did not purchase
like-kind properties and the deposits of approximately $24,828
were returned to the Company during the year ended
December 31, 2008.
F-37
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| 21. | INCOME TAXES |
Income (loss) before income taxes consisted of the following:
| Year Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
|
Income (loss) before income taxes:
|
||||||||||||
|
U.S.
|
$ | (53,452 | ) | $ | 98,908 | $ | 124,335 | |||||
|
Foreign
|
30,077 | 46,693 | 83,166 | |||||||||
|
Total
|
$ | (23,375 | ) | $ | 145,601 | $ | 207,501 | |||||
|
Current:
|
||||||||||||
|
Federal
|
$ | 37,681 | $ | 35,303 | $ | 35,172 | ||||||
|
Foreign
|
4,620 | 13,706 | 21,933 | |||||||||
|
State
|
4,729 | 8,450 | 9,336 | |||||||||
|
Total current expense
|
47,030 | 57,459 | 66,441 | |||||||||
|
Deferred:
|
||||||||||||
|
Federal
|
(28,138 | ) | (9,527 | ) | (143 | ) | ||||||
|
Foreign
|
7,330 | (2,405 | ) | (7,188 | ) | |||||||
|
State
|
(5,167 | ) | (682 | ) | (1,272 | ) | ||||||
|
Total deferred taxes
|
(25,975 | ) | (12,614 | ) | (8,603 | ) | ||||||
|
Income taxes
|
$ | 21,055 | $ | 44,845 | $ | 57,838 | ||||||
A reconciliation between income tax expense and taxes computed
by applying the applicable statutory federal income tax rate to
income (loss) before income taxes follows:
| Year Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
|
Computed normal tax expense (benefit)
|
$ | (9,544 | ) | $ | 50,960 | $ | 72,625 | |||||
|
Goodwill
|
27,503 | — | — | |||||||||
|
Foreign inflation adjustments
|
464 | 1,614 | 47 | |||||||||
|
State and local income taxes, net of federal income tax impact
|
(2,506 | ) | 5,215 | 5,195 | ||||||||
|
Foreign losses not benefited and other changes in valuation
allowance
|
1,459 | (552 | ) | (5,685 | ) | |||||||
|
Foreign tax rate differential
|
1,537 | (1,464 | ) | (4,798 | ) | |||||||
|
Foreign dividends
|
2,084 | 2,141 | 3,952 | |||||||||
|
Capital loss benefit
|
— | (12,913 | ) | — | ||||||||
|
Changes in uncertain tax positions
|
— | 6,957 | (8,080 | ) | ||||||||
|
True up to deferred tax items
|
— | (6,453 | ) | — | ||||||||
|
Other — net
|
58 | (660 | ) | (5,418 | ) | |||||||
|
Income taxes
|
$ | 21,055 | $ | 44,845 | $ | 57,838 | ||||||
The Company reinvests the undistributed earnings of its foreign
subsidiaries, with the exception of its subsidiary in Ecuador.
Accordingly, deferred U.S. federal and state income taxes
are provided only on the undistributed earnings of the
Company’s Ecuador subsidiary. As of December 31, 2010,
the cumulative amount of
F-38
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
undistributed earnings of the foreign subsidiaries on which the
Company has not recognized income taxes was approximately
$254,000.
Deferred
Income Taxes
The tax effects of significant temporary differences and tax
loss and tax credit carryforwards comprising the net long-term
deferred income tax liabilities as of December 31, 2009 and
2010 consisted of the following:
| December 31, | ||||||||
| 2009 | 2010 | |||||||
|
Deferred liabilities:
|
||||||||
|
Theatre properties and equipment
|
$ | 102,464 | $ | 101,162 | ||||
|
Deferred intercompany sales
|
8,650 | 12,905 | ||||||
|
Intangible asset — other
|
7,277 | 23,872 | ||||||
|
Intangible asset — tradenames
|
116,054 | 112,720 | ||||||
|
Investment in partnerships
|
38,405 | 56,732 | ||||||
|
Total deferred liabilities
|
272,850 | 307,391 | ||||||
|
Deferred assets:
|
||||||||
|
Deferred lease expenses
|
13,493 | 21,333 | ||||||
|
Theatre properties and equipment
|
11,672 | 14,152 | ||||||
|
Deferred revenue — NCM and Fandango
|
64,313 | 84,206 | ||||||
|
Capital lease obligations
|
52,645 | 51,294 | ||||||
|
Interest rate swaps agreements
|
7,157 | (606 | ) | |||||
|
Tax loss carryforwards
|
12,747 | 8,847 | ||||||
|
Alternative minimum tax and other credit carryforwards
|
5,634 | 9,076 | ||||||
|
Other expenses, not currently deductible for tax purposes
|
1,915 | 13,320 | ||||||
|
Total deferred assets
|
169,576 | 201,622 | ||||||
|
Net deferred income tax liability before valuation allowance
|
103,274 | 105,769 | ||||||
|
Valuation allowance against deferred assets
|
18,228 | 15,425 | ||||||
|
Net deferred income tax liability
|
$ | 121,502 | $ | 121,194 | ||||
|
Net deferred tax liability — Foreign
|
$ | 13,381 | $ | 6,807 | ||||
|
Net deferred tax liability — U.S.
|
108,121 | 114,387 | ||||||
|
Total
|
$ | 121,502 | $ | 121,194 | ||||
The Company’s valuation allowance against deferred tax
assets decreased from $18,228 at December 31, 2009 to
$15,425 at December 31, 2010. The change in the valuation
allowance was primarily due to realization of deferred tax
assets for the Company’s Chilean subsidiaries.
The Company’s foreign tax credit carryforwards begin
expiring in 2015. Some foreign net operating losses will expire
in the next reporting period; however, some losses may be
carried forward indefinitely. State net operating losses may be
carried forward for periods of between five and twenty years
with the last expiring year being 2029.
F-39
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Uncertain
Tax Positions
The following is a reconciliation of the total amounts of
unrecognized tax benefits excluding interest and penalties, for
the years ended December 31, 2008, 2009 and 2010:
| Year Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
|
Balance at January 1,
|
$ | 12,493 | $ | 13,976 | $ | 23,857 | ||||||
|
Gross increases-tax positions in prior periods
|
37 | 2,274 | — | |||||||||
|
Gross decreases-tax positions in prior periods
|
(199 | ) | — | (1,392 | ) | |||||||
|
Gross increases — current period tax positions
|
2,397 | 7,845 | 3,551 | |||||||||
|
Gross decreases — current period tax positions
|
(752 | ) | (622 | ) | (613 | ) | ||||||
|
Settlements
|
— | — | (10,383 | ) | ||||||||
|
Foreign currency translation adjustments
|
— | 384 | 177 | |||||||||
|
Balance at December 31,
|
$ | 13,976 | $ | 23,857 | $ | 15,197 | ||||||
The Company had $31,661 and $19,788 of gross unrecognized tax
benefits, including interest and penalties, as of
December 31, 2009 and December 31, 2010, respectively.
Of these amounts, $23,212 and $14,339 represent the amount of
unrecognized tax benefits that if recognized would impact the
effective income tax rate for the years ended December 31,
2009 and 2010, respectively. The Company had $7,804 and $4,592
accrued for interest and penalties as of December 31, 2009
and 2010, respectively.
The Company and its subsidiaries file income tax returns in the
U.S. federal jurisdiction, and multiple state and foreign
jurisdictions, and the Company is routinely under audit by many
different tax authorities. The Company believes that its accrual
for tax liabilities is adequate for all open audit years based
on its assessment of many factors including past experience and
interpretations of tax law. This assessment relies on estimates
and assumptions and may involve a series of complex judgments
about future events. The Company is no longer subject to income
tax audits from the Internal Revenue Service for years before
2006. The Company is no longer subject to state income tax
examinations by tax authorities in its major state jurisdictions
for years before 2006. Certain state returns were amended as a
result of the Internal Revenue Service examination closures for
2002 through 2005, and the statutes remain open for those
amendments. The Company is no longer subject to
non-U.S. income
tax examinations by tax authorities in its major
non-U.S. tax
jurisdictions for years before 2004.
The Company is currently under examination by the Internal
Revenue Service for the 2006 and 2007 tax years. It is
reasonably possible that these audits could be completed within
the next twelve months. These events could result in a decrease
in the Company’s total unrecognized tax benefits of
approximately $1,948, which includes approximately $259 of
accrued interest.
| 22. | COMMITMENTS AND CONTINGENCIES |
Leases
— The Company conducts a significant
part of its theatre operations in leased properties under
noncancelable operating and capital leases with terms generally
ranging from 10 to 25 years. In addition to the minimum
annual lease payments, some of the leases provide for contingent
rentals based on operating results of the theatre and most
require the payment of taxes, insurance and other costs
applicable to the property. The Company can renew, at its
option, a substantial portion of the leases at defined or then
market rental rates for various periods. Some leases also
provide for escalating rent payments throughout the lease term.
A liability for deferred lease expenses of $27,698 and $30,454
at December 31, 2009 and 2010, respectively, has been
provided to account for
F-40
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
lease expenses on a straight-line basis, where lease payments
are not made on such a basis. Rent expense was as follows:
| Year Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
|
Fixed rent expense
|
$ | 175,368 | $ | 181,075 | $ | 186,893 | ||||||
|
Contingent rent expense
|
50,227 | 57,704 | 68,824 | |||||||||
|
Total facility lease expense
|
$ | 225,595 | $ | 238,779 | $ | 255,717 | ||||||
Future minimum lease payments under noncancelable operating and
capital leases that have initial or remaining terms in excess of
one year at December 31, 2010 are due as follows:
|
Operating
|
Capital
|
|||||||
| Leases | Leases | |||||||
|
2011
|
$ | 200,144 | $ | 21,237 | ||||
|
2012
|
200,444 | 21,376 | ||||||
|
2013
|
196,047 | 21,514 | ||||||
|
2014
|
188,802 | 21,790 | ||||||
|
2015
|
182,114 | 22,007 | ||||||
|
Thereafter
|
827,684 | 132,675 | ||||||
|
Total
|
$ | 1,795,235 | $ | 240,599 | ||||
|
Amounts representing interest payments
|
100,439 | |||||||
|
Present value of future minimum payments
|
$ | 140,160 | ||||||
|
Current portion of capital lease obligations
|
7,348 | |||||||
|
Capital lease obligations, less current portion
|
$ | 132,812 | ||||||
Employment Agreements
— Effective June 16,
2008, the Company entered into new employment agreements with
Alan W. Stock, Timothy Warner, Robert Copple and Michael
Cavalier and effective December 15, 2008, the Company
entered into new employment agreements with Lee Roy Mitchell,
Rob Carmony, and John Lundin. Collectively these new employment
agreements are herein referred to as the “Employment
Agreements”. The Employment Agreements have an initial term
of three years subject to an automatic extension for a one-year
period, unless the employment agreements are terminated.
Effective June 3, 2009, the Company terminated its
employment agreement with John Lundin. Effective May 25,
2009, the Company entered into an employment agreement with
Steve Bunnell that has an initial term of two years subject to
an extension for a one year period, unless the agreement is
terminated. Effective February 15, 2010, the Company
entered into an employment agreement with Valmir Fernandes, that
has an initial term of three years. The base salaries stipulated
in the employment agreements are subject to review during the
term of the agreements for increase (but not decrease) each year
by the Company’s Compensation Committee. Management
personnel subject to these employment agreements are eligible to
receive annual cash incentive bonuses upon the Company meeting
certain performance targets established by its Compensation
Committee.
Retirement Savings Plan
— The Company has a
401(k) retirement savings plan for the benefit of all employees
and makes contributions as determined annually by the board of
directors. Contribution payments of $1,834 and $2,081 were made
in 2009 (for plan year 2008) and 2010 (for plan year 2009),
respectively. A liability of approximately $2,313 has been
recorded at December 31, 2010 for contribution payments to
be made in 2011 (for plan year 2010).
F-41
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Litigation and Litigation Settlements
— On
December 10, 2010, the Company was made a party to a
putative class action claim in the United States District Court
for the Northern District of California. The claim has been
filed by a disability rights group and two individuals for
injunctive relief, damages and attorney’s fees concerning
captioning the movie exhibitions at the Company’s theatres
in California. Monetary damages are also sought on behalf of all
hearing-disabled patrons of our theatres in California. This
case is in an early pretrial phase. The Company intends to
vigorously defend this suit. The Company is currently unable to
estimate a possible loss or range of loss related to this matter.
From time to time, the Company is involved in other various
legal proceedings arising from the ordinary course of its
business operations, such as personal injury claims, employment
matters, landlord-tenant disputes, patent claims and contractual
disputes, some of which are covered by insurance or by
indemnification from vendors. The Company believes its potential
liability with respect to these types of proceedings currently
pending is not material, individually or in the aggregate, to
the Company’s financial position, results of operations and
cash flows.
| 23. | SEGMENTS |
The Company manages its international market and its
U.S. market as separate reportable operating segments. The
international segment consists of operations in Brazil, Mexico,
Chile, Colombia, Argentina, Peru, Ecuador, Honduras, El
Salvador, Nicaragua, Costa Rica, Panama and Guatemala. The
U.S. segment includes U.S. and Canada operations.
(Note that the Company’s only Canadian theatre was sold
during November 2010). Each segment’s revenue is derived
from admissions and concession sales and other ancillary
revenues, primarily screen advertising. The measure of segment
profit and loss the Company uses to evaluate performance and
allocate its resources is Adjusted EBITDA, as defined in the
reconciliation table below. The Company does not report asset
information by segment because that information is not used to
evaluate the performance or allocate resources between segments.
Below is a breakdown of select financial information by
reportable operating segment:
| Year Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
|
Revenues:
|
||||||||||||
|
U.S.
|
$ | 1,360,176 | $ | 1,558,736 | $ | 1,584,281 | ||||||
|
International
|
385,817 | 421,765 | 564,240 | |||||||||
|
Eliminations
|
(3,706 | ) | (4,001 | ) | (7,377 | ) | ||||||
|
Total revenues
|
$ | 1,742,287 | $ | 1,976,500 | $ | 2,141,144 | ||||||
| Year Ended December 31, | ||||||||||||
| Adjusted EBITDA: | 2008 | 2009 | 2010 | |||||||||
|
U.S.
|
$ | 291,487 | $ | 361,685 | $ | 363,345 | ||||||
|
International
|
78,805 | 83,839 | 122,575 | |||||||||
|
Total Adjusted EBITDA
|
$ | 370,292 | $ | 445,524 | $ | 485,920 | ||||||
| Year Ended December 31, | ||||||||
| Capital Expenditures: | 2009 | 2010 | ||||||
|
U.S.
|
$ | 81,695 | $ | 70,474 | ||||
|
International
|
43,102 | 85,628 | ||||||
|
Total capital expenditures
|
$ | 124,797 | $ | 156,102 | ||||
F-42
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table sets forth a reconciliation of net income
(loss) to Adjusted EBITDA:
| Year Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
|
Net income (loss)
|
$ | (44,430 | ) | $ | 100,756 | $ | 149,663 | |||||
|
Add (deduct):
|
||||||||||||
|
Income taxes
|
21,055 | 44,845 | 57,838 | |||||||||
|
Interest expense(1)
|
116,058 | 102,505 | 112,444 | |||||||||
|
(Gain) loss on early retirement of debt
|
(1,698 | ) | 27,878 | 3 | ||||||||
|
Other income(2)
|
(11,927 | ) | (4,688 | ) | (3,721 | ) | ||||||
|
Depreciation and amortization
|
155,326 | 148,264 | 142,731 | |||||||||
|
Amortization of favorable/unfavorable leases
|
2,708 | 1,251 | 777 | |||||||||
|
Impairment of long-lived assets
|
113,532 | 11,858 | 12,538 | |||||||||
|
(Gain) loss on sale of assets and other
|
8,488 | 3,202 | (431 | ) | ||||||||
|
Deferred lease expenses
|
4,350 | 3,960 | 3,940 | |||||||||
|
Amortization of long-term prepaid rents
|
1,717 | 1,389 | 1,786 | |||||||||
|
Share based awards compensation expense
|
5,113 | 4,304 | 8,352 | |||||||||
|
Adjusted EBITDA
|
$ | 370,292 | $ | 445,524 | $ | 485,920 | ||||||
| (1) | Includes amortization of debt issue costs. | |
| (2) | Includes interest income, foreign currency exchange gain, and equity in loss of affiliates and excludes distributions from NCM. Distributions from NCM are reported entirely within the U.S. operating segment. |
Financial
Information About Geographic Areas
We have operations in the U.S., Brazil, Mexico, Chile, Colombia,
Argentina, Peru, Ecuador, Honduras, El Salvador, Nicaragua,
Costa Rica, Panama and Guatemala, which are reflected in the
consolidated financial statements. Below is a breakdown of
select financial information by geographic area:
| Year Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
|
Revenues
|
||||||||||||
|
U.S.
|
$ | 1,360,176 | $ | 1,558,736 | $ | 1,584,281 | ||||||
|
Brazil
|
186,159 | 218,236 | 315,884 | |||||||||
|
Mexico
|
78,292 | 65,206 | 70,859 | |||||||||
|
Other foreign countries
|
121,366 | 138,323 | 177,497 | |||||||||
|
Eliminations
|
(3,706 | ) | (4,001 | ) | (7,377 | ) | ||||||
|
Total
|
$ | 1,742,287 | $ | 1,976,500 | $ | 2,141,144 | ||||||
| December 31, | ||||||||
| 2009 | 2010 | |||||||
|
Theatres properties and equipment, net
|
||||||||
|
U.S.
|
$ | 1,040,395 | $ | 972,358 | ||||
|
Brazil
|
91,996 | 129,361 | ||||||
|
Mexico
|
39,371 | 43,127 | ||||||
|
Other foreign countries
|
47,826 | 70,600 | ||||||
|
Total
|
$ | 1,219,588 | $ | 1,215,446 | ||||
F-43
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| 24. | RELATED PARTY TRANSACTIONS |
The Company leased one theatre from Plitt Plaza Joint Venture
(“Plitt Plaza”) on a
month-to-month
basis. Plitt Plaza is indirectly owned by Lee Roy Mitchell, the
Company’s Chairman of the Board, who owns approximately 12%
of the Company’s issued and outstanding shares of common
stock. The Company closed this theatre during March 2010. The
Company recorded $127, $118 and $30 of facility lease and other
operating expenses payable to Plitt Plaza joint venture during
the years ended December 31, 2008, 2009 and 2010,
respectively. During the year ended December 31, 2010, the
Company recorded approximately $111 related to the termination
of the lease, which is reflected in (gain) loss on sale of
assets and other on the consolidated statements of operations.
The Company manages one theatre for Laredo Theatre, Ltd.
(“Laredo”). The Company is the sole general partner
and owns 75% of the limited partnership interests of Laredo.
Lone Star Theatres, Inc. owns the remaining 25% of the limited
partnership interests in Laredo and is 100% owned by
Mr. David Roberts, Lee Roy Mitchell’s
son-in-law.
Under the agreement, management fees are paid by Laredo to the
Company at a rate of 5% of annual theatre revenues up to $50,000
and 3% of annual theatre revenues in excess of $50,000. The
Company recorded $92, $102 and $105 of management fee revenues
during the years ended December 31, 2008, 2009 and 2010,
respectively. All such amounts are included in the
Company’s consolidated financial statements with the
intercompany amounts eliminated in consolidation.
The Company has an Aircraft Time Sharing Agreement with Copper
Beech Capital, LLC to use, on occasion, a private aircraft owned
by Copper Beech Capital, LLC. Copper Beech Capital, LLC is owned
by Mr. Mitchell and his wife, Tandy Mitchell. The private
aircraft is used by Mr. Mitchell and other executives who
accompany Mr. Mitchell to business meetings for the
Company. The Company reimburses Copper Beech Capital, LLC the
actual costs of fuel usage and the expenses of the pilots,
landing fees, storage fees and similar expenses incurred during
the trip. For the years ended December 31, 2008, 2009 and
2010, the aggregate amounts paid to Copper Beech Capital, LLC
for the use of the aircraft was approximately $136, $64 and $73,
respectively.
The Company leases 20 theatres and one parking facility
from Syufy Enterprises, LP (“Syufy”) or affiliates of
Syufy. Raymond Syufy is one of the Company’s directors and
is an officer of the general partner of Syufy. Of these 21
leases, 17 have fixed minimum annual rent in an aggregate amount
of approximately $21,044. The four leases without minimum annual
rent have rent based upon a specified percentage of gross sales
as defined in the lease with no minimum annual rent. For the
years ended December 31, 2008, 2009 and 2010, the Company
paid approximately $1,304, $1,296 and $1,224, respectively, in
percentage rent for these four leases.
| 25. | VALUATION AND QUALIFYING ACCOUNTS |
The Company’s valuation allowance for deferred tax assets
for the years ended December 31, 2008, 2009 and 2010 were
as follows:
|
Valuation Allowance for
|
||||
| Deferred Tax Assets | ||||
|
Balance at January 1, 2008
|
$ | 9,872 | ||
|
Additions
|
4,200 | |||
|
Deductions
|
(609 | ) | ||
|
Balance at December 31, 2008
|
$ | 13,463 | ||
|
Additions
|
5,163 | |||
|
Deductions
|
(398 | ) | ||
|
Balance at December 31, 2009
|
$ | 18,228 | ||
|
Additions
|
3,398 | |||
|
Deductions
|
(6,201 | ) | ||
|
Balance at December 31, 2010
|
$ | 15,425 | ||
F-44
Table of Contents
CINEMARK
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| 26. | QUARTERLY FINANCIAL INFORMATION (UNAUDITED) |
| 2009 | ||||||||||||||||||||
|
First
|
Second
|
Third
|
Fourth
|
|||||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Full Year | ||||||||||||||||
|
Revenues
|
$ | 425,800 | $ | 517,508 | $ | 496,825 | $ | 536,367 | $ | 1,976,500 | ||||||||||
|
Operating income
|
$ | 50,586 | $ | 70,550 | $ | 55,671 | $ | 73,667 | $ | 250,474 | ||||||||||
|
Net income attributable to Cinemark Holdings, Inc.
|
$ | 17,565 | $ | 18,670 | $ | 21,011 | $ | 39,862 | $ | 97,108 | ||||||||||
|
Net income per share attributable to Cinemark Holdings,
Inc.’s common stockholders:
|
||||||||||||||||||||
|
Basic
|
$ | 0.16 | $ | 0.17 | $ | 0.19 | $ | 0.36 | $ | 0.89 | ||||||||||
|
Diluted
|
$ | 0.16 | $ | 0.17 | $ | 0.19 | $ | 0.36 | $ | 0.87 | ||||||||||
| 2010 | ||||||||||||||||||||
|
First
|
Second
|
Third
|
Fourth
|
|||||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Full Year | ||||||||||||||||
|
Revenues
|
$ | 516,631 | $ | 539,369 | $ | 560,235 | $ | 524,909 | $ | 2,141,144 | ||||||||||
|
Operating income
|
$ | 71,793 | $ | 79,697 | $ | 73,788 | $ | 67,591 | $ | 292,869 | ||||||||||
|
Net income attributable to Cinemark Holdings, Inc.
|
$ | 35,093 | $ | 39,682 | $ | 33,332 | $ | 38,013 | $ | 146,120 | ||||||||||
|
Net income per share attributable to Cinemark Holdings,
Inc.’s common stockholders:
|
||||||||||||||||||||
|
Basic
|
$ | 0.32 | $ | 0.35 | $ | 0.29 | $ | 0.33 | $ | 1.30 | ||||||||||
|
Diluted
|
$ | 0.31 | $ | 0.35 | $ | 0.29 | $ | 0.33 | $ | 1.29 | ||||||||||
| 27. | SUBSEQUENT EVENT — DIVIDEND DECLARATION |
On February 24, 2011, the Company’s board of directors
declared a cash dividend for the fourth quarter of 2010 of $0.21
per share of common stock payable to stockholders of record on
March 4, 2011. The dividend will be paid on March 16,
2011.
F-45
Table of Contents
SCHEDULE 1 —
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CINEMARK
HOLDINGS, INC.
PARENT
COMPANY BALANCE SHEETS
|
December 31,
|
December 31,
|
|||||||
| 2009 | 2010 | |||||||
| (In thousands, except share data) | ||||||||
|
ASSETS
|
||||||||
|
Cash and cash equivalents
|
$ | 199 | $ | 232 | ||||
|
Accounts receivable
|
317 | — | ||||||
|
Investment in subsidiaries
|
907,344 | 1,029,101 | ||||||
|
Total assets
|
$ | 907,860 | $ | 1,029,333 | ||||
|
LIABILITIES AND EQUITY
|
||||||||
|
Liabilities
|
||||||||
|
Accounts payable to subsidiaries
|
$ | 7,656 | $ | 6,728 | ||||
|
Accrued other current liabilities
|
98 | 149 | ||||||
|
Other long-term liabilities
|
274 | 909 | ||||||
|
Total liabilities
|
8,028 | 7,786 | ||||||
|
Equity
|
||||||||
|
Common stock, $0.001 par value: 300,000,000 shares
authorized, 114,222,523 shares issued and
110,917,105 shares outstanding at December 31, 2009;
and 117,110,703 shares issued and 113,750,844 shares
outstanding at December 31, 2010
|
114 | 117 | ||||||
|
Additional
paid-in-capital
|
1,011,667 | 1,037,586 | ||||||
|
Treasury stock, 3,305,418 and 3,359,859 common shares at cost at
December 31, 2009 and 2010, respecitvely
|
(43,895 | ) | (44,725 | ) | ||||
|
Retained earnings (deficit)
|
(60,595 | ) | 388 | |||||
|
Accumulated other comprehensive income (loss)
|
(7,459 | ) | 28,181 | |||||
|
Total equity
|
899,832 | 1,021,547 | ||||||
|
Total liabilities and equity
|
$ | 907,860 | $ | 1,029,333 | ||||
The accompanying notes are an integral part of the consolidated
financial statements.
F-46
Table of Contents
CINEMARK
HOLDINGS, INC.
PARENT
COMPANY STATEMENTS OF OPERATIONS
YEARS
ENDED DECEMBER 31, 2008, 2009 AND 2010
| Year Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
| (In thousands) | ||||||||||||
|
Revenues
|
$ | — | $ | — | $ | — | ||||||
|
Cost of operations
|
988 | 1,536 | 2,030 | |||||||||
|
Operating loss
|
(988 | ) | (1,536 | ) | (2,030 | ) | ||||||
|
Other income
|
1,940 | 94 | 1 | |||||||||
|
Income (loss) before income taxes and equity in income (loss) of
subsidiaries
|
952 | (1,442 | ) | (2,029 | ) | |||||||
|
Income taxes
|
(365 | ) | 519 | 762 | ||||||||
|
Equity in income (loss) of subsidiaries, net of taxes
|
(48,912 | ) | 98,031 | 147,387 | ||||||||
|
Net income (loss)
|
$ | (48,325 | ) | $ | 97,108 | $ | 146,120 | |||||
The accompanying notes are an integral part of the consolidated
financial statements.
F-47
Table of Contents
CINEMARK
HOLDINGS, INC.
PARENT
COMPANY STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME (LOSS)
YEARS
ENDED DECEMBER 31, 2008, 2009 AND 2010
|
Accumulated
|
Total
|
|||||||||||||||||||||||||||||||||||
|
Other
|
Cinemark
|
|||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock |
Additional
|
Retained
|
Comprehensive
|
Holdings, Inc.
|
Comprehensive
|
||||||||||||||||||||||||||||||
|
Shares
|
Shares
|
Paid-in-
|
Earnings
|
Income
|
Stockholders’
|
Income
|
||||||||||||||||||||||||||||||
| Issued | Amount | Issued | Amount | Capital | (Deficit) | (Loss) | Equity | (Loss) | ||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||
|
Balance at January 1, 2008
|
106,984 | $ | 107 | — | $ | — | $ | 939,327 | $ | 47,074 | $ | 32,695 | $ | 1,019,203 | ||||||||||||||||||||||
|
Issuance of restricted stock, net of restricted stock forfeitures
|
385 | — | — | |||||||||||||||||||||||||||||||||
|
Exercise of stock options
|
169 | — | 1,292 | 1,292 | ||||||||||||||||||||||||||||||||
|
Share based awards compensation expense
|
474 | 474 | ||||||||||||||||||||||||||||||||||
|
Subsidiaries’ share based awards activity
|
5,113 | 5,113 | ||||||||||||||||||||||||||||||||||
|
Issuance of shares as a result of Central America share exchange
|
903 | 1 | 12,948 | 12,949 | ||||||||||||||||||||||||||||||||
|
Issuance of shares as a result of Ecuador share exchange
|
394 | 1 | 3,199 | 3,200 | ||||||||||||||||||||||||||||||||
|
Dividends paid to stockholders
|
(77,534 | ) | (77,534 | ) | ||||||||||||||||||||||||||||||||
|
Dividends accrued on unvested restricted stock awards
|
(74 | ) | (74 | ) | ||||||||||||||||||||||||||||||||
|
Contribution by noncontrolling interest
|
— | |||||||||||||||||||||||||||||||||||
|
Dividends paid to noncontrolling interests
|
— | |||||||||||||||||||||||||||||||||||
|
Comprehensive income (loss):
|
||||||||||||||||||||||||||||||||||||
|
Net loss
|
(48,325 | ) | (48,325 | ) | (48,325 | ) | ||||||||||||||||||||||||||||||
|
Fair value adjustments on interest rate swap agreements, net of
taxes of $2,442
|
(22,063 | ) | (22,063 | ) | (22,063 | ) | ||||||||||||||||||||||||||||||
|
Amortization of accumulated other comprehensive loss on
terminated swap agreement
|
1,351 | 1,351 | 1,351 | |||||||||||||||||||||||||||||||||
|
Foreign currency translation adjustment
|
(84,330 | ) | (84,330 | ) | (84,330 | ) | ||||||||||||||||||||||||||||||
|
Balance at December 31, 2008
|
108,835 | $ | 109 | — | $ | — | $ | 962,353 | $ | (78,859 | ) | $ | (72,347 | ) | $ | 811,256 | $ | (153,367 | ) | |||||||||||||||||
|
Issuance of restricted stock, net of restricted stock forfeitures
|
479 | — | (30 | ) | — | — | — | — | — | |||||||||||||||||||||||||||
|
Exercise of stock options, net of stock withholdings
|
4,908 | 5 | (3,275 | ) | (43,895 | ) | 37,442 | — | — | (6,448 | ) | |||||||||||||||||||||||||
|
Share based awards compensation expense
|
— | — | — | — | 500 | — | — | 500 | ||||||||||||||||||||||||||||
|
Subsidiaries’ share based awards activity
|
— | — | — | — | 11,349 | — | — | 11,349 | ||||||||||||||||||||||||||||
|
Dividends paid to stockholders
|
— | — | — | — | — | (78,643 | ) | — | (78,643 | ) | ||||||||||||||||||||||||||
|
Dividends accrued on unvested restricted stock awards
|
— | — | — | — | — | (201 | ) | — | (201 | ) | ||||||||||||||||||||||||||
|
Purchase of noncontrolling interest share of an Argentina
subsidiary
|
— | — | — | — | 23 | — | — | 23 | ||||||||||||||||||||||||||||
|
Dividends paid to noncontrolling interests
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
|
Comprehensive income:
|
— | |||||||||||||||||||||||||||||||||||
|
Net income
|
— | — | — | — | — | 97,108 | 97,108 | 97,108 | ||||||||||||||||||||||||||||
|
Fair value adjustments on interest rate swap agreements, net of
taxes of $2,359
|
— | — | — | — | — | — | 3,898 | 3,898 | 3,898 | |||||||||||||||||||||||||||
|
Amortization of accumulated other comprehensive loss on
terminated swap agreement
|
— | — | — | — | — | — | 4,633 | 4,633 | 4,633 | |||||||||||||||||||||||||||
|
Foreign currency translation adjustment
|
— | — | — | — | — | — | 56,357 | 56,357 | 56,357 | |||||||||||||||||||||||||||
|
Balance at December 31, 2009
|
114,222 | $ | 114 | (3,305 | ) | $ | (43,895 | ) | $ | 1,011,667 | $ | (60,595 | ) | $ | (7,459 | ) | $ | 899,832 | $ | 161,996 | ||||||||||||||||
|
Colombia share exchange
|
1,113 | 1 | — | — | 6,950 | — | (1,086 | ) | 5,865 | |||||||||||||||||||||||||||
|
Share based awards compensation expense
|
— | — | — | — | 765 | — | — | 765 | ||||||||||||||||||||||||||||
|
Subsidiaries’ share based awards activity
|
— | — | — | — | 7,587 | — | — | 7,587 | ||||||||||||||||||||||||||||
|
Issuance of restricted stock, net of restricted stock forfeitures
|
684 | 1 | — | — | — | — | — | 1 | ||||||||||||||||||||||||||||
|
Stock repurchases related to restricted stock that vested during
the year ended December 31, 2010
|
— | — | (20 | ) | (299 | ) | — | — | — | (299 | ) | |||||||||||||||||||||||||
|
Exercise of stock options, net of stock withholdings
|
1,092 | 1 | (35 | ) | (531 | ) | 8,327 | — | — | 7,797 | ||||||||||||||||||||||||||
|
Tax benefit related to stock option exercises
|
— | — | — | — | 2,680 | — | — | 2,680 | ||||||||||||||||||||||||||||
|
Dividends paid to stockholders
|
— | — | — | — | — | (84,502 | ) | — | (84,502 | ) | ||||||||||||||||||||||||||
|
Dividends accrued on unvested restricted stock unit awards
|
— | — | — | — | — | (635 | ) | — | (635 | ) | ||||||||||||||||||||||||||
|
Purchase of noncontrolling interest share of Panama subsidiary
|
— | — | — | — | (390 | ) | — | — | (390 | ) | ||||||||||||||||||||||||||
|
Dividends paid to noncontrolling interests
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
|
Comprehensive income:
|
||||||||||||||||||||||||||||||||||||
|
Net income
|
— | — | — | — | — | 146,120 | — | 146,120 | 146,120 | |||||||||||||||||||||||||||
|
Fair value adjustments on interest rate swap agreements, net of
taxes of $4,339
|
— | — | — | — | — | — | 7,170 | 7,170 | 7,170 | |||||||||||||||||||||||||||
|
Amortization of accumulated other comprehensive loss on
terminated swap agreement
|
— | — | — | — | — | — | 4,633 | 4,633 | 4,633 | |||||||||||||||||||||||||||
|
Fair value adjustments on available-for-sale securities, net of
taxes of $3,424
|
— | — | — | — | — | — | 5,659 | 5,659 | 5,659 | |||||||||||||||||||||||||||
|
Foreign currency translation adjustment
|
— | — | — | — | — | — | 19,264 | 19,264 | 19,264 | |||||||||||||||||||||||||||
|
Balance at December 31, 2010
|
117,111 | $ | 117 | (3,360 | ) | $ | (44,725 | ) | $ | 1,037,586 | $ | 388 | $ | 28,181 | $ | 1,021,547 | $ | 182,846 | ||||||||||||||||||
The accompanying notes are an integral part of the consolidated
financial statements.
F-48
Table of Contents
CINEMARK
HOLDINGS, INC.
PARENT
COMPANY STATEMENTS OF CASH FLOWS
YEARS
ENDED DECEMBER 31, 2008, 2009 AND 2010
| Year Ended December 31, | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
| (In thousands) | ||||||||||||
|
Operating Activities
|
||||||||||||
|
Net income (loss)
|
$ | (48,325 | ) | $ | 97,108 | $ | 146,120 | |||||
|
Adjustments to reconcile net income (loss) to cash provided by
(used for) operating activities:
|
||||||||||||
|
Share based awards compensation expense
|
474 | 500 | 765 | |||||||||
|
Equity in (income) loss of subsidiaries
|
48,912 | (98,031 | ) | (147,387 | ) | |||||||
|
Changes in other assets and liabilities
|
(2,837 | ) | 9,171 | (561 | ) | |||||||
|
Net cash provided by (used for) operating activities
|
(1,776 | ) | 8,748 | (1,063 | ) | |||||||
|
Investing Activities
|
||||||||||||
|
Investments in subsidiaries; Cinemark, Inc. and Cinemark USA,
Inc.
|
(42,207 | ) | (18,000 | ) | — | |||||||
|
Dividends received from subsidiaries; Cinemark, Inc. and
Cinemark USA, Inc.
|
51,500 | 58,625 | 78,100 | |||||||||
|
Net cash provided by investing activities
|
9,293 | 40,625 | 78,100 | |||||||||
|
Financing Activities
|
||||||||||||
|
Proceeds from stock option exercises
|
1,292 | 2,524 | 7,914 | |||||||||
|
Payroll taxes paid as a result of immaculate option exercises
|
— | (8,972 | ) | (416 | ) | |||||||
|
Dividends paid to stockholders
|
(77,534 | ) | (78,643 | ) | (84,502 | ) | ||||||
|
Net cash used for financing activities
|
(76,242 | ) | (85,091 | ) | (77,004 | ) | ||||||
|
Increase (decrease) in cash and cash equivalents
|
(68,725 | ) | (35,718 | ) | 33 | |||||||
|
Cash and cash equivalents:
|
||||||||||||
|
Beginning of period
|
104,642 | 35,917 | 199 | |||||||||
|
End of period
|
$ | 35,917 | $ | 199 | $ | 232 | ||||||
The accompanying notes are an integral part of the consolidated
financial statements.
F-49
Table of Contents
CINEMARK
HOLDINGS, INC.
NOTES TO
PARENT COMPANY FINANCIAL STATEMENTS
In
thousands, except share and per share data
| 1. | BASIS OF PRESENTATION |
On August 2, 2006, Cinemark Holdings, Inc. was formed as
the Delaware holding company of Cinemark, Inc. On April 24,
2007, Cinemark Holdings, Inc. completed an initial public
offering of its common stock. Effective December 11, 2009,
Cinemark, Inc. was merged into Cinemark Holdings, Inc. and
Cinemark Holdings, Inc. became the holding company of Cinemark
USA, Inc.
Cinemark Holdings, Inc. conducts substantially all of its
operations through its subsidiaries. There are significant
restrictions over Cinemark Holdings, Inc.’s ability to
obtain funds from its subsidiaries through dividends, loans or
advances. Accordingly, these financial statements have been
presented on a “parent-only” basis.
| 2. | DIVIDEND PAYMENTS |
In August 2007, Cinemark Holdings, Inc. initiated a quarterly
dividend policy, which was amended in November 2010. Below is a
summary of dividends paid for the fiscal periods indicated.
|
Amount per
|
||||||||||||||||
|
Date of
|
Date
|
Common
|
Total
|
|||||||||||||
|
Date Declared
|
Record | Paid | Share | Dividends(1) | ||||||||||||
|
02/26/08
|
03/06/08 | 03/14/08 | $ | 0.18 | $ | 19,270 | ||||||||||
|
05/09/08
|
05/30/08 | 06/12/08 | $ | 0.18 | 19,353 | |||||||||||
|
08/07/08
|
08/25/08 | 09/12/08 | $ | 0.18 | 19,370 | |||||||||||
|
11/06/08
|
11/26/08 | 12/11/08 | $ | 0.18 | 19,615 | |||||||||||
|
Total — Year ended December 31, 2008
|
$ | 77,608 | ||||||||||||||
|
02/13/09
|
03/05/09 | 03/20/09 | $ | 0.18 | $ | 19,619 | ||||||||||
|
05/13/09
|
06/02/09 | 06/18/09 | $ | 0.18 | 19,734 | |||||||||||
|
07/29/09
|
08/17/09 | 09/01/09 | $ | 0.18 | 19,739 | |||||||||||
|
11/04/09
|
11/25/09 | 12/10/09 | $ | 0.18 | 19,752 | |||||||||||
|
Total — Year ended December 31, 2009
|
$ | 78,844 | ||||||||||||||
|
02/25/10
|
03/05/10 | 03/19/10 | $ | 0.18 | $ | 20,104 | ||||||||||
|
05/13/10
|
06/04/10 | 06/18/10 | $ | 0.18 | 20,313 | |||||||||||
|
07/29/10
|
08/17/10 | 09/01/10 | $ | 0.18 | 20,519 | |||||||||||
|
11/02/10
|
11/22/10 | 12/07/10 | $ | 0.21 | 24,201 | |||||||||||
|
Total — Year ended December 31, 2010
|
$ | 85,137 | ||||||||||||||
| (1) | Of the dividends recorded during 2008, 2009 and 2010, $74, $201 and $635, respectively, were related to outstanding restricted stock units and will not be paid until such units vest. See Note 19 to the Company’s consolidated financial statements included elsewhere in this annual report on Form 10-K. | |
| (2) | Beginning with the dividend declared on November 2, 2010, the Company’s board of directors raised the quarterly dividend to $0.21 per common share. |
| 3. | DIVIDENDS RECEIVED FROM SUBSIDIARIES |
During the years ended December 31, 2008 and 2009, Cinemark
Holdings, Inc. received cash dividends of $51,500, and $39,050,
respectively, from its former subsidiary, Cinemark, Inc. During
the years ended December 31, 2009 and 2010, Cinemark
Holdings, Inc. received cash dividends of $19,575 and $78,100,
respectively, from its subsidiary, Cinemark USA, Inc.
F-50
Table of Contents
CINEMARK
HOLDINGS, INC.
NOTES TO
PARENT COMPANY FINANCIAL
STATEMENTS — (Continued)
| 4. | LONG-TERM DEBT |
Cinemark Holdings, Inc. has no direct outstanding debt
obligations, but its subsidiaries do. For a discussion of the
debt obligations of Cinemark Holdings, Inc.’s subsidiaries,
see Note 13 to the Company’s consolidated financial
statements included elsewhere in this annual report on
Form 10-K.
| 5. | CAPITAL STOCK |
Cinemark Holdings, Inc.’s capital stock along with its 2006
long-term incentive plan and related activity are discussed in
Note 19 of the Company’s consolidated financial
statements included elsewhere in this annual report on
Form 10-K.
| 6. | COMMITMENTS AND CONTINGENCIES |
Cinemark Holdings, Inc. has no direct commitments and
contingencies, but its subsidiaries do. See Note 22 of the
Company’s consolidated financial statements included
elsewhere in this annual report on
Form 10-K.
F-51
Table of Contents
EXHIBITS
TO
FORM 10-K
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR
CINEMARK HOLDINGS, INC.
FOR FISCAL YEAR ENDED
DECEMBER 31, 2010
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR
CINEMARK HOLDINGS, INC.
FOR FISCAL YEAR ENDED
DECEMBER 31, 2010
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EXHIBIT INDEX
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Number
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Exhibit Title
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|||
| 2 | .1(a) | Stock Contribution and Exchange Agreement, dated as of August 7, 2006, by and between Cinemark Holdings, Inc., Cinemark, Inc., Syufy Enterprises, LP and Century Theatres Holdings, LLC (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K, File No. 000-47040, filed by Cinemark USA, Inc. on August 11, 2006). | ||
| 2 | .1(b) | Stock Purchase Agreement, dated as of August 7, 2006, by and among Cinemark USA, Inc., Cinemark Holdings, Inc., Syufy Enterprises LP, Century Theatres, Inc. and Century Theatres Holdings, LLC (incorporated by reference to Exhibit 10.1 to current Report on Form 8-K, File No, 000-47040, filed by Cinemark USA, Inc. on August 11, 2006). | ||
| 2 | .2 | Contribution and Exchange Agreement, dated as of August 7, 2006, by and among Cinemark Holdings, Inc. and Lee Roy Mitchell, The Mitchell Special Trust, Alan W. Stock, Timothy Warner, Robert Copple, Michael Cavalier, Northwestern University, John Madigan, Quadrangle Select Partners LP, Quadrangle Capital Partners A LP, Madison Dearborn Capital Partners IV, L.P., K&E Investment Partners, LLC — 2004-B-DIF, Piola Investments Ltd., Quadrangle (Cinemark) Capital Partners LP and Quadrangle Capital Partners LP (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K, File No. 000-47040, filed by Cinemark USA, Inc. on August 11, 2006). | ||
| 3 | .1 | Second Amended and Restated Certificate of Incorporation of Cinemark Holdings, Inc. filed with the Delaware Secretary of State on April 9, 2007 (incorporated by reference to Exhibit 3.1 to Amendment No. 2 to our Registration Statement on Form S-1, File No. 333-140390, filed April 9, 2007). | ||
| 3 | .2(a) | Amended and Restated Bylaws of Cinemark Holdings, Inc. dated April 9, 2007 (incorporated by reference to Exhibit 3.2 to Amendment No. 2 to our Registration Statement on Form S-1, File No. 333-140390, filed April 9, 2007). | ||
| 3 | .2(b) | First Amendment to the Amended and Restated Bylaws of Cinemark Holdings, Inc. dated April 16, 2007 (incorporated by reference to Exhibit 3.2(b) to Amendment No. 4 to our Registration Statement on Form S-1, File No. 333-140390, filed April 19, 2007). | ||
| 4 | .1 | Specimen stock certificate of Cinemark Holdings, Inc. (incorporated by reference to Exhibit 4.1 to Amendment No. 2 to our Registration Statement on Form S-1, File No. 333-140390, filed April 9, 2007). | ||
| 4 | .2(a) | Indenture, dated as of March 31, 2004, between Cinemark, Inc. and The Bank of New York Trust Company, N.A. governing the 9 3 / 4 % senior discount notes issued thereunder (incorporated by reference to Exhibit 4.2(a) to Cinemark, Inc.’s Registration Statement on Form S-4, File No. 333-116292, filed June 8, 2004). | ||
| 4 | .2(b) | Form of 9 3 / 4 % senior discount notes (contained in the indenture listed as Exhibit 4.2(a) above) (incorporated by reference to Exhibit 4.2(b) to Cinemark, Inc.’s Registration Statement on Form S-4, File No. 333-116292, filed June 8, 2004). | ||
| 4 | .3(a) | Indenture, dated as of February 11, 2003, between Cinemark USA, Inc. and The Bank of New York Trust Company of Florida, N.A. governing the 9% senior subordinated notes issued thereunder (incorporated by reference to Exhibit 10.2(b) to Cinemark USA, Inc.’s Annual Report on Form 10-K, File 033-47040, filed March 19, 2003). | ||
| 4 | .3(b) | First Supplemental Indenture, dated as of May 7, 2003, between Cinemark USA, Inc., the subsidiary guarantors party thereto and The Bank of New York Trust Company of Florida, N.A. (incorporated by reference from Exhibit 4.2(i) to Cinemark USA, Inc.’s Registration Statement on Form S-4/A, File No. 333-104940, filed May 28, 2003). | ||
| 4 | .3(c) | Second Supplemental Indenture dated as of November 11, 2004, between Cinemark USA, Inc., the subsidiary guarantors party thereto and The Bank of New York Trust Company of Florida, N.A. (incorporated by reference to Exhibit 4.2(c) to Cinemark USA, Inc.’s Annual Report on Form 10-K, File No. 033-047040, filed March 28, 2005). | ||
| 4 | .3(d) | Third Supplemental Indenture, dated as of October 5, 2006, among Cinemark USA, Inc., the subsidiaries of Cinemark USA, Inc. named therein, and The Bank of New York Trust Company, N.A., as trustee (incorporated by reference to Exhibit 10.7 to Current Report on Form 8-K, File No. 000-47040, filed by Cinemark USA, Inc. on October 12, 2006). | ||
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Number
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Exhibit Title
|
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| 4 | .3(e) | Fourth Supplemental Indenture, dated as of March 20, 2007, among Cinemark USA, Inc., the subsidiaries of Cinemark USA, Inc. named therein, and The Bank of New York Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1to the Current Report on Form 8-K, File No. 033-47040, filed by Cinemark USA, Inc. on March 26, 2007). | ||
| 4 | .3(f) | Form of 9% Senior Subordinated Note, Due 2013 (contained in the Indenture listed as Exhibit 4.3(a) above) (incorporated by reference to Exhibit 10.2(b) to Cinemark USA, Inc.’s Annual Report on Form 10-K , File 033-47040, filed March 19, 2003). | ||
| 4 | .5 | Registration Agreement, dated as of August 7, 2006, effective October 5, 2006, by and among Cinemark Holdings, Inc. and the stockholders party thereto (incorporated by reference to Exhibit 4.5 to Cinemark Holdings Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed February 1, 2007). | ||
| 4 | .6 | Director Nomination Agreement by and among Cinemark Holdings, Inc. and certain stockholders (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s Current Report on Form 8K, File No. 001-33401, filed May 3, 2007). | ||
| 4 | .8(a) | Indenture dated as of June 29, 2009, among Cinemark USA, Inc., the Guarantors named therein and Wells Fargo Bank, N.A., as trustee governing the 8.625% Senior Notes due 2019 of Cinemark USA, Inc. issued thereunder (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, File No. 001-33401, filed July 6, 2009). | ||
| 4 | .8(b) | Form of 8.625% Senior Notes due 2019 of Cinemark USA, Inc. (contained in the Indenture listed as Exhibit 4.2(a) above) (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, File No. 001-33401, filed July 6, 2009). | ||
| 4 | .9(a) | Indenture dated as of March 31, 2004 between Cinemark, Inc. and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of New York Trust Company, N.A.) governing the 9.75% Senior Discount Notes issued thereunder (incorporated by reference to Exhibit 4.2(a) to Cinemark, Inc.’s Registration Statement on Form S-4 (File No. 333-116292) filed June 8, 2004). | ||
| 4 | .9(b) | First Supplemental Indenture dated as of June 29, 2009 between Cinemark, Inc., the subsidiary guarantors party thereto and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of New York Trust Company, N.A.) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, File No. 001-33401, filed June 30, 2009). | ||
| 10 | .1(a) | Management Agreement, dated December 10, 1993, between Laredo Theatre, Ltd. and Cinemark USA, Inc. (incorporated by reference to Exhibit 10.14(b) to Cinemark USA, Inc.’s Annual Report on Form 10-K, File No. 033-47040, filed March 31, 1994). | ||
| 10 | .1(b) | First Amendment to Management Agreement of Laredo Theatre, Ltd., effective as of December 10, 2003, between CNMK Texas Properties, Ltd. (successor in interest to Cinemark USA, Inc.) and Laredo Theatre Ltd. (incorporated by reference to Exhibit 10.1(d) to Cinemark, Inc.’s Registration Statement on Form S-4, File No. 333-116292, filed June 8, 2004). | ||
| 10 | .1(c) | Second Amendment to Management of Laredo Theatres, Ltd., effective as of December 10, 2008, between CNMK Texas Properties, L.L.C. (Successor in interest to Cinemark USA, Inc.) and Laredo Theatre Ltd (incorporated by reference to Exhibit 10.1(c) to the Company’s Annual Report on Form 10-K, File No. 001-33401, filed March 13, 2009). | ||
| +10 | .2(a) | Amended and Restated Agreement to Participate in Profits and Losses, dated as of March 12, 2004, between Cinemark USA, Inc. and Alan W. Stock (incorporated by reference to Exhibit 10.2 to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q, File No. 033-47040, filed May 14, 2004). | ||
| +10 | .2(b) | Termination Agreement to Amended and Restated Agreement to Participate in Profits and Losses, dated as of May 3, 2007, by and between Cinemark USA, Inc. and Alan W. Stock (incorporated by reference to Exhibit 10.2 to Cinemark Holdings, Inc.’s Current Report on Form 8K, File No. 001-33401, filed May 3, 2007). | ||
| 10 | .3 | License Agreement, dated December 10, 1993, between Laredo Joint Venture and Cinemark USA, Inc. (incorporated by reference to Exhibit 10.14(c) to Cinemark USA, Inc.’s Annual Report on Form 10-K, File No. 033-47040, filed March 31, 1994). | ||
| 10 | .4(a) | Tax Sharing Agreement, between Cinemark USA, Inc. and Cinemark International, L.L.C. (f/k/a Cinemark II, Inc. ), dated as of June 10, 1992 (incorporated by reference to Exhibit 10.22 to Cinemark USA, Inc.’s Annual Report on Form 10-K, File No. 033-47040, filed March 31, 1993). | ||
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Number
|
Exhibit Title
|
|||
| 10 | .4(b) | Tax Sharing Agreement, dated as of July 28, 1993, between Cinemark USA, Inc. and Cinemark Mexico (USA) (incorporated by reference to Exhibit 10.10 to Cinemark Mexico (USA)’s Registration Statement on Form S-4, File No. 033-72114, filed November 24, 1993). | ||
| +10 | .5(a) | Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Lee Roy Mitchell (incorporated by reference to Exhibit 10.14(a) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q, File No. 033-47040, filed May 14, 2004). | ||
| +10 | .5(b) | First Amendment to Employment Agreement, effective as of December 12, 2006, by and between Cinemark, Inc. and Lee Roy Mitchell (incorporated by reference to Exhibit 10.1 to Cinemark, Inc.’s Current Report on Form 8-K, File No. 001-31372, filed December 18, 2006). | ||
| +10 | .5(c) | Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Alan Stock (incorporated by reference to Exhibit 10.14(b) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q, File No. 033-47040, filed May 14, 2004). | ||
| +10 | .5(d) | First Amendment to Employment Agreement, effective as of December 12, 2006, by and between Cinemark, Inc. and Alan W. Stock (incorporated by reference to Exhibit 10.2 to Cinemark, Inc.’s Current Report on Form 8-K, File No. 001-31372, filed December 18, 2006). | ||
| +10 | .5(e) | Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Timothy Warner (incorporated by reference to Exhibit 10.14(c) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q, File No. 033-47040, filed May 14, 2004). | ||
| +10 | .5(f) | First Amendment to Employment Agreement, effective as of December 12, 2006, by and between Cinemark, Inc. and Timothy Warner (incorporated by reference to Exhibit 10.3 to Cinemark, Inc.’s Current Report on Form 8-K, File No. 001-31372, filed December 18, 2006). | ||
| +10 | .5(g) | Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Robert Copple (incorporated by reference to Exhibit 10.14(d) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q, File No. 033-47040, filed May 14, 2004). | ||
| +10 | .5(h) | First Amendment to Employment Agreement, effective as of January 25, 2007, between Cinemark, Inc. and Robert Copple (incorporated by reference to Exhibit 10.5(j) to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed February 1, 2007). | ||
| +10 | .5(i) | Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Rob Carmony (incorporated by reference to Exhibit 10.14(e) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q, File No. 033-47040, filed May 14, 2004). | ||
| +10 | .5(j) | First Amendment to Employment Agreement, effective as of January 14, 2008, between Cinemark, Inc. and Rob Carmony (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s Current Report on Form 8K, File No. 001-33401, filed January 16, 2008). | ||
| +10 | .5(k) | Employment Agreement, dated as of March 12, 2004, between Cinemark, Inc. and Tandy Mitchell (incorporated by reference to Exhibit 10.14(f) to Cinemark USA, Inc.’s Quarterly Report on Form 10-Q, File No. 033-47040, filed May 14, 2004). | ||
| +10 | .5(l) | Termination Agreement, dated as of June 16, 2008, between Cinemark Holdings, Inc. and Tandy Mitchell (incorporated by reference to Exhibit 10.5 to Cinemark Holdings, Inc.’s Quarterly Report on Form 10-Q, File No. 001-33401, filed August 8, 2008). | ||
| +10 | .5(m) | Employment Agreement, dated as of June 16, 2008, between Cinemark Holdings, Inc. and Alan Stock (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s Quarterly Report on Form 10-Q, File No. 333-140390, filed August 8, 2008). | ||
| +10 | .5(n) | Employment Agreement, dated as of June 16, 2008, between Cinemark Holdings, Inc. and Timothy Warner (incorporated by reference to Exhibit 10.2 to Cinemark Holdings, Inc.’s Quarterly Report on Form 10-Q, File No. 333-140390, filed August 8, 2008). | ||
| +10 | .5(o) | Employment Agreement, dated as of June 16, 2008, between Cinemark Holdings, Inc. and Robert Copple (incorporated by reference to Exhibit 10.3 to Cinemark Holdings, Inc.’s Quarterly Report on Form 10-Q, File No. 333-140390, filed August 8, 2008). | ||
| +10 | .5(p) | Employment Agreement, dated as of June 16, 2008, between Cinemark Holdings, Inc. and Michael Cavalier (incorporated by reference to Exhibit 10.4 to Cinemark Holdings, Inc.’s Quarterly Report on Form 10-Q, File No. 333-140390, filed August 8, 2008). | ||
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Number
|
Exhibit Title
|
|||
| +10 | .5(q) | Employment Agreement, dated as of December 15, 2008, between Cinemark Holdings, Inc. and Lee Roy Mitchell (incorporated by reference to Exhibit 10.5 (q) to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed March 13, 2009). | ||
| +10 | .5(r) | Employment Agreement, dated as of December 15, 2008, between Cinemark Holdings, Inc. and Rob Carmony (incorporated by reference to Exhibit 10.5 (r) to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed March 13, 2009). | ||
| +10 | .5(s) | Employment Agreement, dated as of December 15, 2008, between Cinemark Holdings, Inc. and John Lundin (incorporated by reference to Exhibit 10.5 (s) to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed March 13, 2009). | ||
| +10 | .5(t) | Employment agreement, dated as of April 7, 2009, between Cinemark Holdings, Inc. and Steven Bunnell (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s Quarterly Report on Form 10-Q, File No. 001-33401, filed August 7, 2009). | ||
| +10 | .5(u) | Employment Agreement, dated as of February 15, 2010, between Cinemark Holdings, Inc. and Valmir Fernandes (incorporated by reference to Exhibit 10.5(v) to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed March 10, 2010). | ||
| 10 | .6(a) | Credit Agreement, dated as of October 5, 2006, among Cinemark Holdings, Inc., Cinemark, Inc., CNMK Holding, Inc., Cinemark USA, Inc., the several banks and other financial institutions or entities from time to time parties to the Agreement, Lehman Brothers Inc. and Morgan Stanley Senior Funding, Inc., as joint lead arrangers and joint bookrunners, Morgan Stanley Senior Funding, Inc., as syndication agent, BNP Paribas and General Electric Capital Corporation as co-documentation agents, and Lehman Commercial Paper Inc., as administrative agent (incorporated by reference to Exhibit 10.5 to Current Report on Form 8-K, File No. 000-47040, filed by Cinemark USA, Inc. on October 12, 2006). | ||
| 10 | .6(b) | First Amendment to Credit Agreement dated as of March 14, 2007 among Cinemark Holdings, Inc., Cinemark, Inc., CNMK Holding, Inc., Cinemark USA, Inc., the several banks and other financial institutions or entities from time to time parties thereto, Lehman Brothers Inc. and Morgan Stanley Senior Funding, Inc., as joint lead arrangers and joint bookrunners, Morgan Stanley Senior Funding, Inc., as syndication agent, BNP Paribas and General Electric Capital Corporation, as co-documentation agents, and Lehman Commercial Paper Inc., as administrative agent (incorporated by reference to Exhibit 10.6(b) to Amendment No. 1 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed March 16, 2007). | ||
| 10 | .6(c) | Second Amendment to Credit Agreement dated as of January 29, 2010 by and among Lehman Commercial Paper Inc. (“Lehman”), a debtor and debtor in possession under chapter 11 of the Bankruptcy Code as Administrative Agent, the Required Lenders, Barclay’s Bank PLC, as successor Administrative Agent, Cinemark USA, Inc. and each Loan Party. (incorporated by reference to the Company’s Annual Report on Form 10-K, File No. 001-33401, filed March 10, 2010). | ||
| 10 | .6(d) | Third Amendment to Credit Agreement dated as of March 2, 2010 by and among Cinemark Holdings, Inc., Cinemark USA, Inc., Barclays Bank PLC and the Required Lenders (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s Current Report on Form 8-K , File No. 001-33401, filed on March 8, 2010). | ||
| 10 | .6(e) | Guarantee and Collateral Agreement, dated as of October 5, 2006, among Cinemark Holdings, Inc., Cinemark, Inc., CNMK Holding, Inc., Cinemark USA, Inc. and each subsidiary guarantor party thereto (incorporated by reference to Exhibit 10.6 to Current Report on Form 8-K, File No. 000-47040, filed by Cinemark USA, Inc. on October 12, 2006). | ||
| +10 | .7(a) | Cinemark Holdings, Inc. 2006 Long Term Incentive Plan, dated December 22, 2006 (incorporated by reference to Exhibit 10.7(a) to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed February 1, 2007). | ||
| +10 | .7(b) | First Amendment to Cinemark Holdings, Inc. 2006 Long Term Incentive Plan, dated December 22, 2006 (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s Current Report on Form 8K, File No. 001-33401, filed November 15, 2007). | ||
| +10 | .7(c) | Amended and Restated Cinemark Holdings, Inc. 2006 Long Term Incentive Plan (incorporated by reference to Exhibit 4.1 to Cinemark Holdings, Inc.’s Quarterly Report on form 10-Q, File No. 001-33401, filed May 9, 2008). | ||
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Number
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Exhibit Title
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| +10 | .7(d) | Form of Stock Option Agreement (incorporated by reference to Exhibit 10.7(b) to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed February 1, 2007). | ||
| +10 | .7(e) | Form of Restricted Share Award Agreement pursuant to the Amended and Restated Cinemark Holdings, Inc. 2006 Long Term Incentive Plan (incorporated by reference to Exhibit 4.6 to Cinemark Holdings, Inc.’s Registration Statement on Form S-8, File No. 333-146349, filed August 29, 2008). | ||
| +10 | .7(f) | Form of Restricted Stock Unit Award Agreement pursuant to the Amended and Restated Cinemark Holdings, Inc. 2006 Long Term Incentive Plan (incorporated by reference to Exhibit 4.2 to Cinemark Holdings, Inc.’s Quarterly Report on Form 10-Q, File No. 001-33401, filed May 9, 2008). | ||
| 10 | .8 | Exhibitor Services Agreement, dated as of February 13, 2007, by and between National CineMedia, LLC and Cinemark USA, Inc. (incorporated by reference to Exhibit 10.8 to Amendment No. 1 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed March 16, 2007). | ||
| 10 | .9 | Third Amended and Restated Limited Liability Company Operating Agreement, dated as of February 12, 2007, by and between Cinemark Media, Inc., American Multi-Cinema, Inc., Regal CineMedia, LLC and National CineMedia, Inc. (incorporated by reference to Exhibit 10.9 to Amendment No. 1 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed March 16, 2007). | ||
| 10 | .10(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 14, Sacramento, CA (incorporated by reference to Exhibit 10.10(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .10(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 14, Sacramento, CA (incorporated by reference to Exhibit 10.10(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .10(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 14, Sacramento, CA(incorporated by reference to Exhibit 10.10(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .10(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 14, Sacramento, CA (incorporated by reference to Exhibit 10.10(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .10(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 14, Sacramento, CA (incorporated by reference to Exhibit 10.10(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .11(a) | Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Laguna 16, Elk Grove, CA (incorporated by reference to Exhibit 10.11(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .11(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Laguna 16, Elk Grove, CA (incorporated by reference to Exhibit 10.11(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
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Exhibit Title
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| 10 | .11(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Laguna 16, Elk Grove, CA (incorporated by reference to Exhibit 10.11(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .11(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Laguna 16, Elk Grove, CA (incorporated by reference to Exhibit 10.11(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .11(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Laguna 16, Elk Grove, CA (incorporated by reference to Exhibit 10.11(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .12(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Capitol 16, San Jose, CA (incorporated by reference to Exhibit 10.12(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .12(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Capitol 16, San Jose, CA (incorporated by reference to Exhibit 10.12(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .12(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Capitol 16, San Jose, CA (incorporated by reference to Exhibit 10.12(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .12(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Capitol 16, San Jose, CA (incorporated by reference to Exhibit 10.12(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .12(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Capitol 16, San Jose, CA (incorporated by reference to Exhibit 10.12(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .13(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 10 Berryessa, San Jose, CA (incorporated by reference to Exhibit 10.13(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .13(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 10 Berryessa, San Jose, CA (incorporated by reference to Exhibit 10.13(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .13(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 10 Berryessa, San Jose, CA (incorporated by reference to Exhibit 10.13(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
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| 10 | .13(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 10 Berryessa, San Jose, CA (incorporated by reference to Exhibit 10.13(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007).. | ||
| 10 | .13(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 10 Berryessa, San Jose, CA (incorporated by reference to Exhibit 10.13(e) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .14(a) | Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 14, Folsom, CA (incorporated by reference to Exhibit 10.14(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .14(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 14, Folsom, CA (incorporated by reference to Exhibit 10.14(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .14(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 14, Folsom, CA (incorporated by reference to Exhibit 10.14(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .14(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 14, Folsom, CA (incorporated by reference to Exhibit 10.14(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .14(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 14, Folsom, CA (incorporated by reference to Exhibit 10.14(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .15(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Cinedome 12, Henderson, NV (incorporated by reference to Exhibit 10.15(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .15(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Cinedome 12, Henderson, NV (incorporated by reference to Exhibit 10.15(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .15(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Cinedome 12, Henderson, NV (incorporated by reference to Exhibit 10.15(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .15(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Cinedome 12, Henderson, NV (incorporated by reference to Exhibit 10.15(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
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| 10 | .15(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Cinedome 12, Henderson, NV (incorporated by reference to Exhibit 10.15(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007).. | ||
| 10 | .16(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Park 12, Redwood City, CA (incorporated by reference to Exhibit 10.16(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .16(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Park 12, Redwood City, CA (incorporated by reference to Exhibit 10.16(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .16(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Park 12, Redwood City, CA (incorporated by reference to Exhibit 10.16(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .16(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Park 12, Redwood City, CA (incorporated by reference to Exhibit 10.16(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .16(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Park 12, Redwood City, CA (incorporated by reference to Exhibit 10.16(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .17(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 8, North Hollywood, CA (incorporated by reference to Exhibit 10.17(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .17(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 8, North Hollywood, CA (incorporated by reference to Exhibit 10.17(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .17(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 8, North Hollywood, CA (incorporated by reference to Exhibit 10.17(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .17(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 8, North Hollywood, CA (incorporated by reference to Exhibit 10.17(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .17(e) | Third Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 8, North Hollywood, CA (incorporated by reference to Exhibit 10.17(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
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| 10 | .18(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Plaza 10, S. San Francisco, CA (incorporated by reference to Exhibit 10.18(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .18(b) | First Amendment, dated as of October 31, 1996, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Plaza 10, S. San Francisco, CA (incorporated by reference to Exhibit 10.18(b) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .18(c) | Second Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Plaza 10, S. San Francisco, CA (incorporated by reference to Exhibit 10.18(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .18(d) | Third Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Plaza 10, S. San Francisco, CA (incorporated by reference to Exhibit 10.18(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .18(e) | Fourth Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Plaza 10, S. San Francisco, CA (incorporated by reference to Exhibit 10.18(e) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .18(f) | Fifth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Plaza 10, S. San Francisco, CA (incorporated by reference to Exhibit 10.18(f) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .19(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Freemont, CA (incorporated by reference to Exhibit 10.19(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .19(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Freemont, CA (incorporated by reference to Exhibit 10.19(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .19(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Freemont, CA (incorporated by reference to Exhibit 10.19(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .19(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Freemont, CA (incorporated by reference to Exhibit 10.19(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .19(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Freemont, CA (incorporated by reference to Exhibit 10.19(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
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| 10 | .20(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 7, Newark, CA (incorporated by reference to Exhibit 10.20(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .20(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 7, Newark, CA (incorporated by reference to Exhibit 10.20(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .20(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 7, Newark, CA (incorporated by reference to Exhibit 10.20(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .20(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 7, Newark, CA(incorporated by reference to Exhibit 10.20(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .20(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 7, Newark, CA (incorporated by reference to Exhibit 10.20(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .21(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Cinema 16, Mountain View, CA (incorporated by reference to Exhibit 10.21(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .21(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Cinema 16, Mountain View, CA (incorporated by reference to Exhibit 10.21(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .21(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Cinema 16, Mountain View, CA (incorporated by reference to Exhibit 10.21(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .21(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Cinema 16, Mountain View, CA (incorporated by reference to Exhibit 10.21(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .21(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Cinema 16, Mountain View, CA (incorporated by reference to Exhibit 10.21(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .22(a) | Indenture of Lease, dated as of September 30, 1995, by and between Sycal Properties, Inc. (succeeded by Syufy Properties, Inc.), as landlord and Century Theatres of California, Inc., as tenant, for Cinearts 5, Pleasant Hill, CA (incorporated by reference to Exhibit 10.22(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
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| 10 | .22(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinearts 5, Pleasant Hill, CA (incorporated by reference to Exhibit 10.22(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .22(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinearts 5, Pleasant Hill, CA (incorporated by reference to Exhibit 10.22(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .22(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinearts 5, Pleasant Hill, CA (incorporated by reference to Exhibit 10.22(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .22(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinearts 5, Pleasant Hill, CA (incorporated by reference to Exhibit 10.22(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .23(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 24, San Jose, CA (incorporated by reference to Exhibit 10.23(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .23(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 24, San Jose, CA (incorporated by reference to Exhibit 10.23(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .23(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 24, San Jose, CA (incorporated by reference to Exhibit 10.23(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .23(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 24, San Jose, CA (incorporated by reference to Exhibit 10.23(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .23(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 24, San Jose, CA (incorporated by reference to Exhibit 10.23(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .24(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Napa, CA (incorporated by reference to Exhibit 10.24(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .24(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Napa, CA (incorporated by reference to Exhibit 10.24(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
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| 10 | .24(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Napa, CA (incorporated by reference to Exhibit 10.24(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .24(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Napa, CA (incorporated by reference to Exhibit 10.24(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .24(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Cinedome 8, Napa, CA (incorporated by reference to Exhibit 10.24(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .25(a) | Lease Agreement, dated as of April 10, 1998, by and between Dyer Triangle LLC, as landlord and Century Theatres, Inc., as tenant, for Century 25 Union Landing, Union City, CA (incorporated by reference to Exhibit 10.25(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .25(b) | First Amendment, dated as of April 15, 2005, to Lease Agreement, dated as of April 10, 1998, by and between Dyer Triangle LLC, as landlord and Century Theatres, Inc., as tenant, for Century 25 Union Landing, Union City, CA (incorporated by reference to Exhibit 10.25(b) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .25(c) | Second Amendment, dated as of September 29, 2005, to Lease Agreement, dated as of April 10, 1998, by and between Dyer Triangle LLC, as landlord and Century Theatres, Inc., as tenant, for Century 25 Union Landing, Union City, CA (incorporated by reference to Exhibit 10.25(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .25(d) | Third Amendment, dated as of August 5, 2006, to Lease Agreement, dated as of April 10, 1998, by and between Dyer Triangle LLC, as landlord and Century Theatres, Inc., as tenant, for Century 25 Union Landing, Union City, CA (incorporated by reference to Exhibit 10.25(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .26(a) | Indenture of Lease, dated as of March 7, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Sparks, Sparks, NV (incorporated by reference to Exhibit 10.26(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .26(b) | First Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of March 7, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Sparks, Sparks, NV (incorporated by reference to Exhibit 10.26(b) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .26(c) | Second Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of March 7, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Sparks, Sparks, NV (incorporated by reference to Exhibit 10.26(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .26(d) | Third Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of March 7, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Sparks, Sparks, NV (incorporated by reference to Exhibit 10.26(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
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| 10 | .27(a) | Lease Agreement, dated as of October 1, 1996, by and between Syufy Enterprises, L.P.(succeeded by Stadium Promenade LLC), as landlord and Century Theatres, Inc., as tenant, for Century Stadium 25, Orange, CA (incorporated by reference to Exhibit 10.27(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .27(b) | First Amendment, dated as of April 15, 2005, to Lease Agreement, dated as of October 1, 1996, by and between Syufy Enterprises, L.P.(succeeded by Stadium Promenade LLC), as landlord and Century Theatres, Inc., as tenant, for Century Stadium 25, Orange, (incorporated by reference to Exhibit 10.27(b) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .27(c) | Second Amendment, dated as of September 29, 2005, to Lease Agreement, dated as of October 1, 1996, by and between Syufy Enterprises, L.P.(succeeded by Stadium Promenade LLC), as landlord and Century Theatres, Inc., as tenant, for Century Stadium 25, Orange, (incorporated by reference to Exhibit 10.27(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .27(d) | Third Amendment, dated as of August 5, 2006, to Lease Agreement, dated as of October 1, 1996, by and between Syufy Enterprises, L.P.(succeeded by Stadium Promenade LLC), as landlord and Century Theatres, Inc., as tenant, for Century Stadium 25, Orange, (incorporated by reference to Exhibit 10.27(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .28(a) | Indenture of Lease, dated as of July 1, 1996, by and between Synm Properties Inc.(succeeded by Syufy Properties, Inc.), as landlord and Century Theatres, Inc., as tenant, Century Rio 24, Albuquerque, NM(incorporated by reference to Exhibit 10.28(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .28(b) | First Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of July 1, 1996, by and between Synm Properties Inc.(succeeded by Syufy Properties, Inc.), as landlord and Century Theatres, Inc., as tenant, Century Rio 24, Albuquerque, NM (incorporated by reference to Exhibit 10.28(b) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .28(c) | Second Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of July 1, 1996, by and between Synm Properties Inc.(succeeded by Syufy Properties, Inc.), as landlord and Century Theatres, Inc., as tenant, Century Rio 24, Albuquerque, NM (incorporated by reference to Exhibit 10.28(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .28(d) | Third Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of July 1, 1996, by and between Synm Properties Inc.(succeeded by Syufy Properties, Inc.), as landlord and Century Theatres, Inc., as tenant, Century Rio 24, Albuquerque, NM (incorporated by reference to Exhibit 10.28(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .29(a) | Indenture of Lease, dated as of September 3, 1996, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century 14, Roseville, CA (incorporated by reference to Exhibit 10.29(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .29(b) | First Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 3, 1996, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century 14, Roseville, CA (incorporated by reference to Exhibit 10.29(b) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .29(c) | Second Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 3, 1996, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century 14, Roseville, CA (incorporated by reference to Exhibit 10.29(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
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| 10 | .29(d) | Third Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 3, 1996, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century 14, Roseville, CA (incorporated by reference to Exhibit 10.29(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .30(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Rancho Santa Fe 16, Las Vegas, NV (incorporated by reference to Exhibit 10.30(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .30(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Rancho Santa Fe 16, Las Vegas, NV (incorporated by reference to Exhibit 10.30(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .30(c) | Second Amendment, dated as of September 30, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of Nevada, Inc., as tenant, for Rancho Santa Fe 16, Las Vegas, NV (incorporated by reference to Exhibit 10.30(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .31(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 16, Ventura, CA (incorporated by reference to Exhibit 10.31(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .31(b) | First Amendment, dated as of October 1, 1996, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 16, Ventura, CA (incorporated by reference to Exhibit 10.31(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .31(c) | Second Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 16, Ventura, CA (incorporated by reference to Exhibit 10.31(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .31(d) | Third Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 16, Ventura, CA (incorporated by reference to Exhibit 10.31(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .31(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century Stadium 16, Ventura, CA (incorporated by reference to Exhibit 10.31(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .32(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Northridge 14, Salinas, CA (incorporated by reference to Exhibit 10.32(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .32(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Northridge 14, Salinas, CA (incorporated by reference to Exhibit 10.32(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
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| 10 | .32(c) | Second Amendment, dated as of October 1, 2001, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Northridge 14, Salinas, CA (incorporated by reference to Exhibit 10.32(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .32(d) | Third Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Northridge 14, Salinas, CA (incorporated by reference to Exhibit 10.32(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .33(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Properties, Inc. (succeeded by Syufy Enterprises, L.P.), as landlord and Century Theatres of Utah, Inc., as tenant, for Century 16, Salt Lake City, UT (incorporated by reference to Exhibit 10.33(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .33(b) | First Amendment, dated as of January 4, 1998, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Properties, Inc. (succeeded by Syufy Enterprises, L.P.), as landlord and Century Theatres of Utah, Inc., as tenant, for Century 16, Salt Lake City, UT (incorporated by reference to Exhibit 10.33(b) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .33(c) | Second Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Properties, Inc. (succeeded by Syufy Enterprises, L.P.), as landlord and Century Theatres of Utah, Inc., as tenant, for Century 16, Salt Lake City, UT (incorporated by reference to Exhibit 10.33(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .33(d) | Third Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Properties, Inc. (succeeded by Syufy Enterprises, L.P.), as landlord and Century Theatres of Utah, Inc., as tenant, for Century 16, Salt Lake City, UT (incorporated by reference to Exhibit 10.33(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .33(e) | Fourth Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Properties, Inc. (succeeded by Syufy Enterprises, L.P.), as landlord and Century Theatres of Utah, Inc., as tenant, for Century 16, Salt Lake City, UT (incorporated by reference to Exhibit 10.33(e) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .33(f) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Properties, Inc. (succeeded by Syufy Enterprises, L.P.), as landlord and Century Theatres of Utah, Inc., as tenant, for Century 16, Salt Lake City, UT (incorporated by reference to Exhibit 10.33(f) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .34(a) | Indenture of Lease, dated as of April 17, 1998, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Larkspur, Larkspur, CA (incorporated by reference to Exhibit 10.34(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .34(b) | First Amendment, dated as of April 30, 2003, to Indenture of Lease, dated as of April 17, 1998, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Larkspur, Larkspur, CA (incorporated by reference to Exhibit 10.34(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .34(c) | Second Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of April 17, 1998, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Larkspur, Larkspur, CA (incorporated by reference to Exhibit 10.34(c) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
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| 10 | .34(d) | Third Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of April 17, 1998, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Larkspur, Larkspur, CA (incorporated by reference to Exhibit 10.34(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .34(e) | Fourth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of April 17, 1998, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Larkspur, Larkspur, CA (incorporated by reference to Exhibit 10.34(e) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .35(a) | Indenture of Lease, dated as of August 1, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Park Lane 16, Reno, NV (incorporated by reference to Exhibit 10.35(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .35(b) | First Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of August 1, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Park Lane 16, Reno, NV (incorporated by reference to Exhibit 10.35(b) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .35(c) | Second Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of August 1, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Park Lane 16, Reno, NV (incorporated by reference to Exhibit 10.35(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .35(d) | Third Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of August 1, 1997, by and between Syufy Enterprises, L.P., as landlord and Century Theatres, Inc., as tenant, for Century Park Lane 16, Reno, NV (incorporated by reference to Exhibit 10.35(d) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .36(a) | Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 16, Sacramento, CA (incorporated by reference to Exhibit 10.36(a) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .36(b) | First Amendment, dated as of September 1, 2000, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 16, Sacramento, CA (incorporated by reference to Exhibit 10.36(b) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .36(c) | Second Amendment, dated as of October 1, 2001, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 16, Sacramento, CA (incorporated by reference to Exhibit 10.36(c) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .36(d) | Third Amendment, dated as of April 15, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 16, Sacramento, CA (incorporated by reference to Exhibit 10.36(d) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .36(e) | Fourth Amendment, dated as of September 29, 2005, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 16, Sacramento, CA (incorporated by reference to Exhibit 10.36(e) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
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| 10 | .36(f) | Fifth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc., as tenant, for Century 16, Sacramento, CA (incorporated by reference to Exhibit 10.36(f) to Amendment No. 5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 20, 2007). | ||
| 10 | .37(a) | Lease Agreement, dated as of October 31, 1997, by and between Sycal Properties, Inc. (succeeded by 150 Pelican LLC), as landlord and Century Theatres, Inc., as tenant, for office building situated at 150 Pelican Way, San Rafael, CA (incorporated by reference to Exhibit 10.37(a) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| 10 | .37(b) | First Amendment, dated as of December 1, 1998, to Lease Agreement, dated as of October 31, 1997, by and between Sycal Properties, Inc. (succeeded by 150 Pelican LLC), as landlord and Century Theatres, Inc., as tenant, for office building situated at 150 Pelican Way, San Rafael, CA (incorporated by reference to Exhibit 10.37(b) to Amendment No. 3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-1, File No. 333-140390, filed April 18, 2007). | ||
| *12 | Calculation of Ratio of Earnings to Fixed Charges. | |||
| *21 | Subsidiaries of Cinemark Holdings, Inc. | |||
| *23 | .1 | Consent of Deloitte & Touche LLP. | ||
| *31 | .1 | Certification of Alan Stock, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
| *31 | .2 | Certification of Robert Copple, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
| *32 | .1 | Certification of Alan Stock, Chief Executive Officer, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002. | ||
| *32 | .2 | Certification of Robert Copple, Chief Financial Officer, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002. | ||
| * | Filed herewith. | |
| + | Any management contract, compensatory plan or arrangement. |
E-18
TABLE OF CONTENTS
Part IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. ReservedPart IIItem 5. Market For Registrant S Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity SecuritiesItem 6. Selected Financial DataItem 7. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresPart IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions, and Director IndependenceItem 14. Principal Accounting Fees and ServicesPart IVItem 15. Exhibits, Financial Statement Schedules