UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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, 2018
Commission File Number 001-33401
CINEMARK HOLDINGS, INC
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or other jurisdiction
of incorporation or organization)
3900 Dallas Parkway
Suite 500 Plano, Texas
(Address of principal executive offices)
20-5490327
(I.R.S. Employer
Identification No.)
75093
(Zip Code)
Registrant’s telephone number, including area code: (972) 665-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.001 per share
Name of each exchange on which registered
New York Stock Exchange
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 ☒ No ☐
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 ☐ No ☒
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). Yes ☒ No ☐
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. ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,
or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging
growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Emerging growth company
☒
☐
☐
Accelerated filer
Smaller reporting company
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity owned by non-affiliates of the registrant on June 30, 2018, computed by
reference to the closing price for the registrant’s common stock on the New York Stock Exchange on such date was approximately $3.73 billion
(106,350,432 shares at a closing price per share of $35.08).
As of February 22, 2019, 117,050,337 shares of common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant’s definitive proxy statement, in connection with its 2019 annual meeting of stockholders, to be filed within 120
days of December 31, 2018, are incorporated by reference into Part III, Items 10-14, of this annual report on Form 10-K.
Cautionary Statement Regarding Forward-Looking Statements .......................................................................
Table of Contents
Page
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Business.................................................................................................................................
Risk Factors...........................................................................................................................
Unresolved Staff Comments .................................................................................................
Properties...............................................................................................................................
Legal Proceedings .................................................................................................................
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities ..............................................................................................
Selected Financial Data .........................................................................................................
Management’s Discussion and Analysis of Financial Condition and Results of Operations
...............................................................................................................................................
Quantitative and Qualitative Disclosures About Market Risk ..............................................
Financial Statements and Supplementary Data .....................................................................
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
...............................................................................................................................................
Controls and Procedures........................................................................................................
Other Information..................................................................................................................
Directors, Executive Officers and Corporate Governance ....................................................
Executive Compensation.......................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder
Matters...................................................................................................................................
Certain Relationships and Related Transactions, and Director Independence......................
Principal Accounting Fees and Services ...............................................................................
Exhibits, Financial Statement Schedules...............................................................................
SIGNATURES .................................................................................................................................................
1
2
13
19
19
20
22
23
25
45
46
46
46
47
49
49
49
49
49
49
59
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, or the
Exchange Act. 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. All references to Latin America are to Brazil, Argentina,
Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao
and Paraguay. Unless otherwise specified, all operating and other statistical data are as of and for the year ended
December 31, 2018.
1
Item 1. Business
Our Company
PART I
Cinemark Holdings, Inc. and subsidiaries, or the Company, us or our, is a leader in the motion picture exhibition
industry, with theatres in the United States, or U.S., Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El
Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao and Paraguay.
As of December 31, 2018, we managed our business under two reportable operating segments: U.S. markets
and international markets. See Note 19 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 to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, or the Exchange Act, are available on our website free of charge
under the heading “Investor Relations – Financials - SEC Filings” as soon as practicable after such reports are filed
or furnished electronically to the Securities and Exchange Commission, or the SEC. Additionally, all of our filings
with the SEC can be accessed on the SEC’s website at www.sec.gov.
Description of Business
We are a leader and one of the most geographically diverse operators in the motion picture exhibition industry.
As of December 31, 2018, we operated 546 theatres and 6,048 screens in the U.S. and Latin America and more than
282 million guests attended our theatres worldwide during the year ended December 31, 2018. Our U.S. circuit had
341 theatres and 4,586 screens in 41 states and our international circuit had 205 theatres and 1,462 screens in 15
countries. Our significant and diverse presence in the U.S. and Latin America has made us an important distribution
channel for movie studios. We believe our portfolio of modern, high-quality theatres with multiple platforms provides
a preferred destination for moviegoers and contributes to our consistent financial performance.
Revenues, operating income and net income attributable to Cinemark Holdings, Inc. for the year ended
December 31, 2018, were $3,221.8 million, $388.3 million and $213.8 million, respectively. At December 31, 2018
we had cash and cash equivalents of $426.2 million and total long-term debt of $1,809.3 million. Approximately
$202.9 million, or 11%, of our long-term debt accrues interest at variable rates and $8.0 million of our long-term debt
matures in 2019.
2
Motion Picture Exhibition Industry Overview
Domestic Markets
The U.S. motion picture exhibition industry reported box office revenues of approximately $11.1 billion for
2017. Preliminary estimates for 2018 indicate that box office revenues reached an all-time high of $11.9 billion, an
approximate 7% increase over 2017. The following table represents the results of a survey by MPAA published during
March 2018, outlining the historical trends in U.S. box office performance for the ten year period from 2008 to 2017
(industry data for 2018 has not yet been released):
U.S. Box
Office Revenues
($ in billions)
Attendance
(in billions)
Average Ticket
Price
$
$
$
$
$
$
$
$
$
$
9.6
10.6
10.6
10.2
10.8
10.9
10.4
11.1
11.4
11.1
1.34
1.42
1.34
1.28
1.36
1.34
1.27
1.32
1.32
1.24
$
$
$
$
$
$
$
$
$
$
7.18
7.50
7.89
7.93
7.96
8.13
8.17
8.43
8.65
8.97
Year
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Over the past ten years, industry statistics have shown slight increases and decreases in attendance from one
year to another, however domestic box office revenues have remained relatively stable during this period. The industry
has not experienced highly volatile results, even during recessionary periods, demonstrating the stability of the
industry, its continued ability to attract consumers and the fact that box office performance is primarily dependent on
the quality and quantity of film product rather than economic cycles. Average ticket prices can also be driven by the
mix of film product and availability of films in premium formats.
Films leading the box office during the year ended December 31, 2018 included Black Panther, Avengers:
Infinity War, Incredibles 2, Jurassic World: Fallen Kingdom, Aquaman, Deadpool 2, Dr. Seuss’ The Grinch, Mission
Impossible – Fallout, Ant-Man and the Wasp, Solo: A Star Wars Story, Venom, A Quiet Place, Crazy Rich Asians,
Halloween, Bumblebee, Ralph Breaks the Internet, Fantastic Beasts: The Crimes of Grindelwald, Mary Poppins
Returns, A Star is Born, Bohemian Rhapsody and other films, as well as the carryover of The Greatest Showman,
Jumanji: Welcome to the Jungle and Star Wars: The Last Jedi.
Films scheduled for release during 2019 include Avengers: Endgame, Star Wars: Episode IX, The Lion King,
Frozen 2, Toy Story 4, Aladdin, Captain Marvel, It 2, Spider-Man: Far From Home, The Secret Life of Pets 2, Joker,
Dumbo, and Godzilla 2 among other films.
International Markets
According to MPAA, international box office revenues increased approximately 7% to $29.5 billion for the year
ended December 31, 2017, from $27.4 billion for the year ended December 31, 2016. More specifically, Latin
American box office revenues were $3.4 billion for the year ended December 31, 2017, compared to $2.8 billion for
the year ended December 31, 2016, an increase of approximately 22%. (Industry data for 2018 has not yet been
released.)
While certain Latin American countries have experienced recent political and economic challenges,
performance is also impacted by social behaviors, growing populations, continued retail development in select
markets, and quality product from Hollywood, including 3-D and alternative content offerings. In many Latin
American countries, including Brazil, Argentina, Colombia, Peru and Chile, successful local film product can also
provide incremental box office growth opportunities.
3
We believe many international markets will expand as new theatre technologies are introduced to more
locations, as film and other content offerings continue to broaden, as ancillary revenue opportunities grow and as local
economies strengthen. We also believe most of these markets are underscreened in comparison to the U.S. and
European markets.
Drivers of Continued Industry Success
We believe the following market trends will continue to drive the strength of our industry:
Importance of Theatrical Success in Establishing Movie Brands. Theatrical exhibition has long been the
primary distribution channel for new major motion picture releases. A successful theatrical release “brands” a film
and is one of the major contributors to a film’s success in “downstream” markets, such as digital downloads, video
on-demand, pay-per-view television, DVDs, SVOD, and network and syndicated television, as well as branded retail
merchandise.
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 $8.97 in 2017. Average prices in 2017 for other forms of out-of-home entertainment in the U.S., including sporting
events and theme parks, ranged from approximately $31.67 to $94.98 per ticket according to MPAA. (As of the date
of this report, 2018 industry data was not yet available.)
Expansion of Concepts and Product Offerings that Enhance the Movie-Going Experience. The motion
picture exhibition industry continues to develop new movie theatre platforms and concepts to respond to varying and
changing consumer preferences and to continue to differentiate the movie-going experience from watching a movie
at home. In addition to changing the overall style of, and amenities offered in, some theatres, concession product
offerings have continued to expand to more than just traditional popcorn and candy items. Many locations now offer
hot foods, alcohol offerings and/or healthier snack options for guests. Motion seats are offered in some locations,
further enhancing the movie viewing experience. Virtual reality has also been developed for in-theatre enjoyment.
New and enhanced programming alternatives expand the industry’s entertainment offerings to attract a broader
customer base.
Contribution of International Markets to Box Office Performance. International markets continue to be an
increasingly important component of the overall box office revenues generated by Hollywood films, accounting for
$29.5 billion, or approximately 73%, of 2017 total worldwide box office revenues according to MPAA. (As of the
date of this report, 2018 industry data was not yet available.) With the meaningful contribution of the international
motion picture exhibition industry, we believe the relative contribution of markets outside North America will
continue to be impactful. Many of the top U.S. films released during 2018 also performed exceptionally well in
international markets. Avengers: Infinity War grossed $1,370.0 million in international markets, or 67% of its
worldwide box office. Jurassic World: Fallen Kingdom generated $887.1 million in international markets, or 68%
of its worldwide box office. Aquaman generated $774.2 million in international markets, or 71% of its worldwide
box office.
Our Strategy
Key components of our strategy include:
Focus on Providing an Extraordinary Guest Experience to Maximize Attendance. We differentiate our
theatres by focusing on providing an extraordinary guest experience through a variety of initiatives, as discussed
below. We believe our focus on the guest experience is a catalyst for attendance growth and is a primary factor in our
consistent industry-leading results.
• We have a market-adaptive approach with our theatre amenities, including Luxury Lounger recliner
seats, enhanced food and beverage offerings, and our exhibitor-branded premium large format, XD,
IMAX, motion seats, and a new virtual reality offering in one of our domestic theatres. Our innovative
and advanced technology selections allow us to consistently deliver the highest quality presentation to
fully immerse our guests in the on-screen action.
4
•
• We have taken a retail approach to our food and beverage offerings, which include the traditional
concession items such as popcorn, soft drinks and candy as well as enhanced menu items, alcohol and
various cultural foods. We also have merchandise stands in most theatres, bringing apparel, toys and
other unique movie-themed products to our guests.
Through our various marketing initiatives, including enhanced and tailored customer interactions,
continued investment in our website and app experiences and development of our loyalty and
membership programs, we are dedicated to further understanding our guests and enriching their movie-
going experience. We are also committed to providing a great employee experience through ongoing
training, incentive programs and offering a supportive environment, as our engaged employees are
empowered to provide first-rate customer service to our guests.
Sustained Investment in Core Circuit Combined with Targeted Growth. We continually utilize our cash flows
from operations to invest in our circuit to ensure the highest quality experience for our guests. Our commitment to
investing in our theatre assets is demonstrated by our level of capital expenditures for the years ended December 31,
2017 and 2018, at approximately $380.9 million and $346.1 million, respectively. We selectively build or acquire new
theatres in markets where we can establish and maintain a strong market position. During the year ended December
31, 2018, we built eleven new theatres with 81 screens and acquired three theatres with 19 screens.
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 $388.3 million and $213.8 million, respectively, for the year ended December 31, 2018. Our solid
operating performance is a result of our disciplined and consistent operating philosophy that centers on building new,
and reinvesting in our existing, high-quality theatres, focusing on the guest experience, maintaining favorable theatre-
level economics, controlling operating costs and effectively reacting to economic and market changes.
We continue to grow organically as well as through the acquisition of high-quality theatres in select markets.
Our growth strategy has centered around meeting our stringent return on investment thresholds while also
complementing our existing theatre circuit. We continue to generate consistent cash flows from operating activities,
which demonstrates the success of our growth strategy. We believe the combination of our strong balance sheet and
our continued commitment to earn a strong return on our capital investments, will continue to provide us with the
financial flexibility to pursue further expansion opportunities and maintain our existing locations at a high standard,
while also allowing us to effectively service our debt obligations and continue to offer our stockholders a strong
dividend yield.
Leading Position in Our U.S. Markets. We have a leading market share in most of the U.S. markets we serve,
which includes a presence in 41 states. For the year ended December 31, 2018, we ranked either first or second, based
on box office revenues, in 20 out of our top 25 U.S. markets, including the San Francisco Bay Area, Dallas, Houston,
Salt Lake City, Sacramento, Cleveland, Austin and Las Vegas.
Located in Top Latin American Markets. We have successfully established a significant presence in major
cities in Latin America, with theatres in fourteen of the twenty largest metropolitan areas in South America. As of
December 31, 2018, we operated 205 theatres and 1,462 screens in 15 countries. Our international screens generated
revenues of $682.8 million, or 21.2% of our total revenues, for the year ended December 31, 2018. We are the largest
exhibitor in Brazil and Argentina and have significant market presence in Colombia, Peru and Chile. Our geographic
diversity makes us an important global distribution channel for the movie studios.
State-of-the-Art Theatre Circuit. We offer a state-of-the-art movie-going experience, which we believe makes
our theatres a preferred destination for moviegoers in our markets. During 2018, we built 81 new screens worldwide.
As of December 31, 2018, we had commitments to open 212 additional new screens over the next three years.
5
We have incorporated Luxury Lounger recliner seats in all of our recent domestic new builds and have also
repositioned many of our existing domestic theatres to offer this premium seating feature. We currently feature Luxury
Loungers in 2,565 domestic auditoriums, representing 55.9% of our domestic circuit. We plan to continue to add
additional Luxury Loungers in certain of our domestic locations during 2019.
Our XD screens represent the largest exhibitor-sponsored premium large format footprint in the industry. Our
XD auditoriums offer a premium experience utilizing the latest in digital projection and enhanced custom sound,
including a Barco Auro 11.1 or Dolby Atmos sound system in select locations. The XD experience includes wall-to-
wall screens, wrap-around sound, plush seating and a maximum comfort entertainment environment for an immersive
experience. The exceptional XD technology does not require special format movie prints, which allows us the
flexibility to showcase any available digital print we choose, including 3-D content, in our XD auditoriums. We also
prefer the economies of our exhibitor-sponsored format since there is no additional revenue share component outside
of routine film rental. As of December 31, 2018, we had 256 XD auditoriums in our worldwide circuit. We expect
to further expand our XD footprint during 2019.
We offer enhanced food and beverages such as fresh wraps, hot sandwiches, burgers, and gourmet pizzas, and
a selection of beers, wines, and frozen cocktails, all of which can be enjoyed in the comfort of the auditoriums, at
approximately 58% of our worldwide theatres. We also offer market-adaptive concepts with full bars or dine-in areas
in certain of our theatres, and continue to expand to additional locations.
We currently have auditoriums that offer seats with immersive cinematic motion, which we refer to as motion
seats, throughout our worldwide circuit. These motion seats are programmed in harmony with the audio and video
content of the film and further immerse guests in the on-screen action. We offer motion seats in 229 auditoriums
throughout our worldwide circuit. We plan to add motion seats to additional locations during 2019.
During 2018, we collaborated on an in-theatre immersive virtual reality technology in one of our domestic
theatres that takes guests on a real-life, full-body journey where they engage with characters and their environment
through sight, sound, touch, smell and motion. We plan to install this technology in at least one additional domestic
theatre during 2019 and we are continuing to evaluate other locations at which we can offer our guests this unique
entertainment option.
Experienced Management. Led by Chairman and founder Lee Roy Mitchell, Chief Executive Officer Mark
Zoradi, Chief Operating Officer and Chief Financial Officer Sean Gamble, and President-International Valmir
Fernandes, our operational management team has many years of industry experience. Each of our international offices
is led by general managers that are local citizens familiar with cultural, political and economic factors impacting each
country. Our worldwide management team has successfully navigated us through many industry and economic cycles
over the years.
6
Theatre Operations
As of December 31, 2018, we operated 546 theatres and 6,048 screens in 41 U.S. states and 15 Latin American
countries. The following tables summarize the geographic locations of our theatre circuit as of December 31, 2018.
United States Theatres
State
Texas
California
Ohio
Utah
Nevada
Colorado
Illinois
Pennsylvania
Florida
Kentucky
Arizona
Oregon
North Carolina
Louisiana
Virginia
Oklahoma
Iowa
Washington
Connecticut
New Mexico
Michigan
Massachusetts
Arkansas
Mississippi
Maryland
Indiana
South Carolina
New Jersey
Georgia
South Dakota
Montana
Delaware
West Virginia
Kansas
New York
Alaska
Missouri
Alabama
Tennessee
Wisconsin
Minnesota
Total
Total
Theatres
Total
Screens
86
67
29
15
9
9
9
9
6
8
7
6
7
6
6
5
4
5
4
4
3
3
3
3
2
3
3
2
2
2
2
2
2
1
1
1
1
1
1
1
1
341
1,136
855
365
190
140
136
126
125
110
109
104
90
83
83
82
65
62
61
58
54
46
46
44
41
39
34
34
28
27
26
25
22
22
20
17
16
15
14
14
14
8
4,586
7
International Theatres
Country
Brazil
Colombia
Argentina
Central America(1)
Chile
Peru
Ecuador
Bolivia
Paraguay
Curacao
Total
Total Theatres Total Screens
623
84
202
36
190
22
141
20
133
19
93
13
51
8
13
1
10
1
6
1
1,462
205
(1)
Includes Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala.
We first entered Latin America when we opened a theatre in Chile in 1993. Since then, through our focused
international growth strategy, we have developed one of the most geographically diverse theatre circuits in the region.
We have balanced our risk through a diversified international portfolio, which includes theatres in fourteen of the
twenty largest metropolitan areas in South America. We have established significant presence in Brazil and Argentina,
where we are the largest exhibitor. We also have significant market presence in Colombia, Peru and Chile.
We believe that certain markets within Latin America continue to be underserved as penetration of movie
screens per capita in these markets is substantially lower than in the U.S. and European markets. We intend to continue
to expand our presence in international markets, with emphasis on Latin America, and fund our expansion primarily
with cash flow generated from operations. We are able to mitigate cash flow exposure to currency fluctuations by
transacting local operating expenses primarily in their respective local currencies. Our geographic diversity throughout
South and Central America has allowed us to maintain consistent local currency revenue performance,
notwithstanding currency and economic fluctuations that may affect any particular market.
Content
We offer a variety of content at our theatres. We monitor upcoming films and other content and work diligently
with film distributors to license the content that we believe will be most successful in our theatres. We play mainstream
films from many different genres, such as animated films, family films, dramas, comedies, horror and action films.
We offer content in both 2-D and 3-D formats in all of our theatres, and in many locations, we offer our exhibitor-
branded premium large format, XD. We also offer a format that features motion seats and added sensory features in
addition to the ultra-realistic images of 3-D technology in select locations.
We regularly play art and independent films at many of our U.S. theatres and offer local film product in our
international markets, providing a variety of film choices to our guests. We offer a Classic Series at a majority of our
U.S. theatres and some of our international theatres, which involves playing digitally re-mastered classic movies that
change on a weekly basis. The program covers a variety of genres of classic films that are generally exhibited during
non-peak times.
Our joint venture, AC JV, LLC, with Regal Entertainment Group, or Regal, and AMC Entertainment, Inc., or
AMC, provides marketing and distribution of live and pre-recorded entertainment programming to movie theatres to
augment theatres’ feature film schedules, which includes the Metropolitan Opera, sports programs, concert events, e-
sports gaming events and other special presentations, that may be live or pre-recorded. We, along with AC JV, LLC,
continue to identify new ways to utilize our theatre platform to provide entertainment to consumers.
8
Film Licensing
In the domestic marketplace, our corporate film department negotiates with film distributors to license films for
each of our domestic theatres. In each of our international offices, 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. Film
distributors are responsible for determining film release dates and film marketing campaigns and the related
expenditures, while we are responsible for booking the films at each of our theatres at the optimal showtimes for our
guests. In most instances, we are able to license each first-run, wide-release film without regard to the bookings of
other exhibitors within that area. In certain limited situations, our theatres compete with other nearby theatres for film
content from film distributors. We face competition for patrons from other exhibitors and other forms of entertainment,
as discussed under Competition below, at all of our theatres in all markets. Our theatre personnel focus on providing
an extraordinary guest experience, and we provide a high-quality facility with the most up-to-date sound systems,
comfortable seating and other amenities preferred by our guests, which we believe gives us a competitive advantage
in markets where competing theatres play the same films.
In both our domestic and international locations, we pay film rental fees based on a film’s box office receipts at
our theatres. Film rental rates are negotiated based on either a sliding scale formula under which the rate is based on
a standard rate matrix that is established prior to a film’s run; a firm terms formula, as determined prior to a film’s
run, under which we pay a negotiated rate; or a rate that is negotiated after a film’s run.
Food and Beverage
Concession sales are our second largest revenue source, consistently representing approximately 35% of total
revenues. We have devoted considerable management effort to expanding concession sales by enhancing our offerings
and adapting to our customers’ changing preferences, as discussed below.
Concession Product Mix. Common concession products offered at all of our theatres may include various sizes
and types of popcorn, soft drinks, coffees, non-carbonated drinks, candy and quickly-prepared or pre-prepared food,
such as hot dogs, pizza, pretzel bites, nachos and ice cream. The food and beverage offerings vary based on consumer
preferences in a particular market. We have introduced some healthier snack and beverage options for our guests,
which are available at some locations, added alcohol offerings in a growing number of theatres, and also offer diverse
ethnic foods based on market demographics.
In select locations, we have expanded concession product offerings to include a broader variety of food and
drink options, such as fresh wraps, hot sandwiches, burgers, gourmet pizzas, and a selection of beers, wines, and
frozen cocktails, all of which can be enjoyed in the comfort of the auditoriums. We also have lobby bars and VIP
lounges in many domestic and international theatres.
Our proprietary point-of-sale system allows our category managers to monitor product sales and readily make
adjustments to product mix on a theatre-by-theatre or market-by-market basis, when necessary. This program
flexibility also allows us to efficiently activate and manage both national or regional product launches and promotional
initiatives to further grow food and beverage sales.
Pricing. New products and promotions are introduced on a regular basis to increase concession purchase
incidence by existing buyers as well as to attract new buyers. We offer specially-priced product combinations at our
theatres. We routinely offer discounts to our guests on certain products by offering weekly coupons as well as reusable
popcorn tubs and soft drink cups that can be refilled at a discounted price. In certain international countries and in all
of our domestic theatres, we offer a loyalty program that periodically offers food and beverage discounts. Our new
Cinemark Movie Club membership program also allows our domestic guests to sign-up for exclusive concessions
discounts.
Staff Training. Employees are continually trained in proper sales techniques, food preparation and handling and
maintaining concession product quality. Some of our product promotions include a motivational element that rewards
theatre staff for exceptional sales of certain promotional items.
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Theatre Design. Our theatres are designed to optimize the guest purchase experience at the concession stands,
which includes multiple concession counters throughout a theatre to facilitate serving guests in an expedited manner.
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 incorporate self-serve candy cases and bottled drink
coolers at our traditional crew-serve theatres to help provide convenience for our guests, drive purchase incidence and
increase product availability for these two core categories. We also have self-service cafeteria-style 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 more efficient service, and superior visibility of concession items.
In some of our international locations, we allow guests to pre-order concession items, either online or at a kiosk, and
pick them up in a dedicated line at the concession counter.
Cost Control. We negotiate prices for concession supplies directly with concession vendors and manufacturers
to obtain volume discounts and also negotiate volume-based and promotional-based rebates with our larger suppliers.
Concession supplies are generally distributed through a distribution network. The concession distributor delivers
inventory to the theatres after receiving orders directly from the theatres or through an online electronic ordering
system. We conduct frequent inventory counts of concession products at every theatre to ensure proper stock levels
are maintained to appropriately serve our guests.
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 provides advertising to our theatres through its branded “Noovie” pre-show entertainment
program and also handles lobby promotions and displays for our theatres. 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 our audience. We receive a monthly theatre access fee for participation in the NCM network and also earn screen
advertising revenue on a per patron basis. As of December 31, 2018, we had an approximate 25% ownership interest
in NCM. See Note 6 to the consolidated financial statements for further discussion of our investment in NCM.
In our international markets, our wholly-owned subsidiary Flix Media Publicidade E Entretenimento, Ltda., or
Flix Media, handles our screen advertising functions in Brazil. Our Flix Media marketing personnel work with local
agencies and advertisers to coordinate screen advertising in our Brazil theatres. We have expanded the Flix Media
advertising services to other exhibitors in Brazil through revenue share agreements. In Argentina, we have in-house
personnel that work with local advertisers to arrange screen advertising in our Argentina theatres. We also operate
advertising subsidiaries that support our theatres in Chile, Central America, Colombia, Paraguay, Bolivia, Ecuador
and Curacao. In Chile, our Flix subsidiary also represents Cinepolis, making our subsidiary the local leader in cinema
advertising. In addition to screen advertising in our theatres, we intend to expand Flix Media’s services to include,
among other things, alternative content, digital media and other synergistic media opportunities. In a few of our other
international markets, we outsource our screen advertising to local companies who have established relationships with
local advertisers that provide similar programming benefits. The terms of our international screen advertising contracts
vary by country, however, we generally earn a percentage of the screen advertising revenues for access to our screens.
Marketing and Promotions
We generally market our theatres and special events, including new theatre grand openings, remodel openings
and VIP events, using email, organic and paid digital advertising, directory film schedules, and radio and television
advertising spots. We exhibit previews of coming attractions and current films as part of our on-screen pre-feature
program. We offer guests access to movie times, the ability to buy their tickets and reserve their seats in advance and
purchase gift cards at our website www.cinemark.com and via our smart phone and tablet applications. Customers can
subscribe to our weekly emails to receive information about current and upcoming films at their preferred Cinemark
theatre(s), including details about upcoming Cinemark XD movies, advanced ticket sales, screenings, special events,
concerts and live broadcasts; as well as contests, promotions, and coupons for concession savings. Email
communications and push notifications are utilized to provide customers with the latest information or exclusive offers
such as screenings, contests or promotions. We partner with film distributors on a regular basis to promote upcoming
films through local, regional and national programs that are exclusive to our theatres. These programs may involve
customer contests that include exclusive giveaways, cross-promotions with the media and other third parties and other
means to impact patronage for films showing at our theatres.
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We interact with guests every day on social media platforms, such as Facebook, on which we recently reached
nine million followers, Twitter and Instagram. Through social media, we provide relevant information, quick access
to advanced ticketing information and upcoming movies and events, as well as to respond to guest feedback. Guests
can also utilize social media to ask us questions regarding their local Cinemark theatre offerings, movie-related
information or to provide suggestions.
We launched a subscription membership program for our domestic circuit in December 2017. Cinemark Movie
Club offers guests a monthly fixed-price 2D ticket, member-pricing for a companion ticket and concession and other
transaction discounts. Cinemark Movie Club is a unique option to reward our loyal guests and allows us to stay
informed of our frequent guests’ preferences.
We offer a free domestic loyalty program to our guests, called Connections, which was launched in 2016.
Connections allows our guests to earn points for different types of transactions as tracked through our Cinemark smart
phone app. Points can then be redeemed for tickets, concession items and discounts, as well as unique and limited
edition experiential rewards that relate to films currently playing at our theatres.
We also have loyalty programs in most of our international markets that either allow customers to pay a nominal
fee for an annual membership card that provides them with certain admissions and concession discounts or that allows
guests to earn loyalty points for each purchase. Similar to the Connections program, our points-based international
programs offer discounts on movie tickets and concessions. Our global loyalty programs put us in direct contact with
our guests and provides additional opportunities for us to partner with the studios and our vendors through targeted
promotions.
Our domestic and international marketing departments also focus on expanding ancillary revenue, which
includes the sale of our gift cards and our SuperSaver discount tickets. We generally market these programs to
businesses as an employee-incentive or rewards program. Our marketing departments also coordinate the use of our
auditoriums, generally during off-peak times, for corporate meetings, private movie screenings, brand and product
launches, education and training sessions or other private events, which contribute to our ancillary revenue.
Competition
We are one of the leaders in the motion picture exhibition industry. We compete against local, regional, national
and international exhibitors with respect to attracting guests, licensing films and developing new theatre sites. Our
primary U.S. competitors include Regal and AMC and our primary international competitors, which vary by country,
include Cinépolis, Cine Colombia, CinePlanet, Kinoplex (GSR), and Araujo.
We are generally able to book films without regard to the film bookings of other exhibitors at many of our
theatres. In certain limited situations, distributors allocate movies to only one theatre in a market generally based on
demographics, the conditions, capacity and grossing potential of each theatre, and the terms of exhibition. In all
theatres, our success in attracting guests can depend on customer service quality, location, theatre capacity, quality of
projection and sound equipment, film showtime availability and ticket prices.
We compete for new theatre sites with other movie theatre exhibitors as well as other entertainment venues.
Securing a potential site depends upon factors such as committed investment and resources, theatre design and
capacity, revenue potential, and financial stability.
We face competition for patrons from a number of alternative film distribution channels, such as digital
downloads, video on-demand, pay-per-view television, DVDs, SVOD, network and syndicated television. We also
face competition from other forms of entertainment competing for the public’s leisure time and disposable income,
such as family entertainment centers, concerts, theme parks and sporting events.
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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 summer months in the
U.S., extending from May to July, and during the holiday season, extending from November through year-end. The
timing of releases, however, has become less pronounced as distributors have begun releasing content more evenly
throughout the year. In our Latin American markets, while Hollywood content has similar release dates as in the U.S.,
the local holidays and seasons can vary. The unexpected emergence of a hit film during other periods can impact this
seasonality trend. The timing and quality of film releases can have a significant impact on our results of operations,
and the results of one period are not necessarily indicative of results for the following period or for the same period in
the following year.
Corporate Operations
Our worldwide headquarters, referred to as the Cinemark Service Center, is located in Plano, Texas. Personnel
at the Cinemark Service Center provide oversight and support for our domestic and international theatres, including
our executive team and department heads in charge of film licensing, food and beverage, theatre operations, theatre
construction and maintenance, real estate, human resources, marketing, legal, finance, accounting, tax and information
technology. Our U.S. operations are comprised of twenty regions, each of which is headed by a regional vice president.
We have nine regional offices in Latin America responsible for the local management of theatres in fifteen countries
(Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala and Curacao are managed out of one Central
American regional office). Each regional office is headed by a general manager with additional personnel responsible
for film licensing, marketing, human resources, information technology, operations and finance. We have divisional
chief financial officers in Brazil and Argentina and a regional chief financial officer located in Chile that oversees
Chile, Bolivia and Paraguay.
Employees
We have approximately 20,000 employees in the U.S., approximately 21% of whom are full time employees
and 79% of whom are part time employees. We have approximately 9,500 employees in our international markets,
approximately 78% of whom are full time employees and approximately 22% of whom are part time employees. Due
to the seasonal nature of our business as discussed above, our headcount can vary throughout the year, depending on
the timing and success of movie releases. 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
has been influenced by 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 Cinemark, 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, and regulations recently issued by the U.S. Food and Drug Administration that
require nutrition labels for certain menu items. Our domestic and international theatre operations are also subject to
federal, state and local laws governing such matters as wages, working conditions, citizenship, health and sanitation
requirements and various business licensing and permitting.
Financial Information About Geographic Areas
We currently have operations in the U.S., Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El
Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao, and Paraguay, which are reflected in the
consolidated financial statements. See Note 19 to the consolidated financial statements for segment information and
financial information by geographic area.
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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. Reduced volume of film releases, 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.
Our results of operations fluctuate on a seasonal basis.
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. The timing of releases, however, has become less pronounced as distributors have begun releasing content
more evenly throughout the year. In our Latin American markets, while Hollywood content has similar release dates
as in the U.S., the local holidays and seasons can vary. The unexpected emergence of a successful film during other
periods or the failure of an expected success at a key time could alter this seasonality trend. 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.
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 seven major film distributors accounting for approximately 90% of U.S. box office revenues
and 48 of the top 50 grossing films during 2018. Numerous antitrust cases and consent decrees resulting from the
antitrust cases impact the distribution of films. Film distributors 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 seven 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.
We face intense competition for patrons and films which may adversely affect our business.
The motion picture exhibition industry is highly competitive. We compete against local, regional, national and
international exhibitors in many of our markets. We compete for both patrons and licensing of films. In markets where
we do not face nearby competitive theatres, there is a risk of new theatres being built. The degree of competition for
patrons is dependent upon such factors as location, theatre capacity, presentation quality, film showtime availability,
customer service quality, products and amenities offered, and ticket prices. The principal competitive factors with
respect to film licensing include the theatre’s location and its demographics, the condition, capacity and grossing
potential of each theatre, and licensing terms. We also face competition from new concept theatres such as dine-in
theatres and tavern style theatres that open in close proximity to our conventional theatres. 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 film distribution channels or 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 digital
downloads, video on-demand, pay-per-view television, DVDs, SVOD, network and syndicated television. Some of
these distribution channels have seen growth in production in recent years. We also compete with other forms of
entertainment, such as family entertainment centers, concerts, theme parks, gaming and sporting events, for our
patrons’ leisure time and disposable income. A significant increase in popularity of these alternative film distribution
channels, competing forms of entertainment or improvements in technologies available at home 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 and digital release windows.
The average video and digital release window, which represents the time that elapses from the date of a film’s
theatrical release to the date a film is available to consumers at home has been approximately ninety days for the past
several years. If patrons choose to wait for an in-home release rather than attend a theatre to view the film, it may
adversely impact our business and results of operations, financial condition and cash flows. These release windows,
which are determined by the studios, may shrink further or be eliminated altogether, which could have an adverse
impact on our business and results of operations.
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 during a period of an economic downturn or political uncertainty, 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, which could adversely affect our results of operations. 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 205 theatres with 1,462 screens in fifteen countries in Latin America. Brazil represented approximately
9% of our consolidated 2018 revenues. Governmental regulation of the motion picture industry in foreign markets
differs from that in the U.S. Changes in regulations affecting prices and quota systems requiring the exhibition of
locally-produced films 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 cash transfers to the U.S., all of which could have an adverse effect on
the results of our 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, 2018, we had $1,809.3 million in long-term debt obligations, $259.5 million in capital
lease obligations and $1,784.5 million in long-term operating lease obligations. Our substantial lease and debt
obligations pose risk by:
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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;
limiting our ability to invest in innovations in technology and implement new platforms or concepts in
our theatres; 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.
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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 may not be able to continue to generate cash flows at current levels, or guarantee 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.
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. The acceleration of our
indebtedness under one agreement may permit acceleration 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.
We are rated by nationally recognized rating agencies. The rating scales and methodologies used to derive
individual ratings may vary from agency to agency. Credit ratings are issued by credit rating agencies based on
evaluations of our ability to pay back our outstanding debt and the likelihood that we would default on that debt prior
to its maturity. The credit ratings issued by the rating agencies represent the rating agency's evaluation of both
qualitative and quantitative information for our company. The credit ratings that are issued are based on the rating
agency’s judgment and experience in determining what information should be considered in giving a rating to a
particular company. 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.
A failure to adapt to future technological innovations could impact our ability to compete effectively and could
adversely affect our results of operations.
While we continue to invest in technological innovations, such as motion seats and satellite distribution
technologies, new technological innovations continue to impact our industry. If we are unable to respond to or invest
in changes in technology and the technological preferences of our customers, we may not be able to compete with
other exhibitors or other entertainment venues, which could adversely affect our results of operations.
We are subject to uncertainties relating to future expansion plans, including our ability to identify suitable
acquisition candidates or new theatre 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 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. The pace of our growth may also be impacted by delays in site development caused
by other parties. 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.
Our expansion strategy may not 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 may not be able to obtain such financing or ensure that such financing will be available to us on
acceptable terms or at all.
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If we do not comply with the ADA 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. On November 15, 2004,
Cinemark and the DOJ entered into a consent order, which was filed with the U.S. District Court for the Northern
District of Ohio, Eastern Division. Under the consent order, the DOJ approved 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 may be subject to increased labor and benefits costs.
In the U.S., we are subject to United States federal and state laws governing such matters as minimum wages,
working conditions and overtime. We are also subject to union regulations in certain of our international markets,
which can specify wage rates as well as minimum hours to be paid to certain employees. As federal and state minimum
wage rates increase, we may need to increase not only the wages of our minimum wage employees, but also the wages
paid to employees at wage rates that are above minimum wage. Labor shortages, increased employee turnover and
health care mandates could also increase our labor costs. This in turn could lead us to increase prices, which could
impact our sales. Conversely, if competitive pressures or other factors prevent us from offsetting increased labor costs
by increases in prices, our results of operations may be adversely impacted.
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, invest in technology innovations or significantly expand our business in the
future.
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
indentures 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, par value $0.001 per share, or
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.
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. These provisions include:
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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 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.
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Certain provisions of our 4.875% senior notes indenture, our 5.125% 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 each of our 4.875% senior notes
and our 5.125% senior notes to repurchase all of the outstanding notes at a purchase price equal to 101% of the
aggregate principal amount outstanding plus accrued and unpaid interest to the date of purchase. A “change of control”
would also be an event of default under our senior secured credit facility.
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, 2018, we had an
aggregate of 170,248,650 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, 2018, we had 116,830,530 shares of our Common Stock outstanding. Of these shares,
approximately 105,931,731 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 large stockholders, our directors or executive officers of
their shares of Common Stock.
As of December 31, 2018, there were 7,700,363 shares of our Common Stock reserved for issuance under our
2017 Omnibus Incentive Plan.
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 U.S. 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.
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 U.S. 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.
17
Cyber security threats and our failure to protect our electronically stored data could adversely affect our business.
We collect, use, store and maintain electronic information and data necessary to conduct our business, including
confidential and proprietary information of the company, our customers, and our employees. We also rely on the
availability of information technology systems to operate our business, including for communications, receiving and
displaying movies, ticketing, guest services, payments, and other general operations. We rely on some of our vendors
to store and process certain data and to manage, host, and/or provide some of our information technology systems.
Because of the scope and complexity of our information technology systems, our reliance on vendors to provide,
support and protect our systems and data, and the constantly evolving cyber-threat landscape, our information
technology systems are subject to the risk of disruption, failure, unauthorized access, cyber-terrorism, human error,
misuse, tampering, theft, and other cyber-attacks. These or similar events, whether accidental or intentional, could
result in theft, unauthorized access or disclosure, loss, fraudulent or unlawful use of customer, employee or company
data, which could harm our reputation or result in a loss of business, as well as remedial and other costs, fines,
investigations, enforcement actions or lawsuits. These or similar events could also lead to an interruption in the
operation of our systems resulting in business impact, including loss of business. Those same scope, complexity,
reliance, and changing cyber-threat landscape factors could also affect our ability to adapt to and comply with
changing regulations and contractual obligations applicable to data security and privacy, which are increasingly
demanding, both in the United States and in other jurisdictions where we operate. In order to address these risks, we
have adopted security measures and technology, operate a security program, and work continuously to evaluate and
improve our security posture. However, the development and maintenance of these systems and programs are costly
and require ongoing monitoring and updating as technologies change and efforts to overcome security measures
become more sophisticated. As such, there can be no assurance that these or similar events will not occur in the future
or will not have an adverse effect on our business and results of operation. In addition to Company-specific cyber
threats or events, our business and results of operations could also be impacted by cyber-related events affecting our
peers and partners within the entertainment industry, as well as other retail companies. We maintain insurance
designed to provide coverage for cyber risks related to what we believe to be adequate and collectible insurance in the
event of the theft, loss, fraudulent or unlawful use of customer, employee or company data, but the foregoing events
or future events could result in costs and business impacts which may not be covered or may be in excess of any
available insurance that we may have procured. As a result, future events could have a material impact on our business
and adversely affect our financial condition and results of operations.
Product recalls and associated costs could adversely affect our reputation and financial condition.
We may be found liable if the consumption of any of the products we sell causes illness or injury. We are
also subject to recall by product manufacturers or if the food products become contaminated. Recalls could result in
losses due to the cost of the recall, the destruction of t h e product and lost sales due to the unavailability of the
product for a period of time.
Changes in privacy laws could adversely affect our ability to market our products effectively.
We rely on a variety of direct marketing techniques, including email marketing. Any expansion on existing
and/or new laws and regulations regarding marketing, solicitation or data protection could adversely affect the
continuing effectiveness of our email and other marketing techniques and could result in changes to our marketing
strategy which could adversely impact our attendance levels and revenues.
We are subject to complex taxation and could be subject to changes in our tax rates, the adoption of new U.S. or
international tax legislation or exposure to additional tax liabilities.
We are subject to many different forms of taxation both in the U.S. and in the foreign jurisdictions where we
operate. The tax authorities may not agree with the determinations that we made and such disagreements could
result in lengthy legal disputes and, ultimately, in the payment of substantial amounts for tax, interest and penalties,
which could have a material impact on our results. Additionally, current economic and political conditions make
tax rates in any jurisdiction, including the U.S., subject to significant change. Our future effective tax rates could be
affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of
deferred tax assets and liabilities, or changes in tax laws or their interpretation. If the Company’s effective tax rates
were to increase, or if the ultimate determination of the Company’s taxes owed in the U.S. or foreign jurisdictions is
for an amount in excess of amounts previously accrued, the Company’s operating results, cash flows, and financial
condition could be adversely affected.
18
We may not be able to generate additional revenues or continue to realize value from our investment in NCM.
As of December 31, 2018, we owned 39,518,644 common units of NCM, which represented an ownership
interest in NCM of approximately 25%. 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, 2016, 2017 and 2018, the Company received approximately $11.0 million,
$11.3 million and $12.1 million in other revenues from NCM, respectively, $14.2 million, $17.4 million and $22.2
million in cash distributions recorded as a reduction of our investment in NCM, respectively, and $14.7 million $16.4
million, $15.4 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, more established and
well known media platforms such as broadcast radio and television, cable and satellite television, outdoor advertising
and Internet portals. In-theatre advertising may not continue to attract advertisers or NCM’s in-theatre advertising
format may not continue to be received favorably by theatre patrons. If NCM is unable to continue to generate
consistent advertising revenues, its results of operations may be adversely affected and our investment in and
distributions and revenues from NCM may be adversely impacted.
Each of our common units in NCM is convertible into one share of NCM, Inc. common stock. As of December
31, 2018, the estimated fair value of our investment in NCM was approximately $256.1 million based on NCM, Inc.’s
stock price as of December 31, 2018 of $6.48 per share, which was less than our carrying value of $275.6 million.
We do not believe that the decline in NCM, Inc.’s stock price is other than temporary and therefore, we did not record
an impairment of our investment in NCM during the year ended December 31, 2018. The market value of NCM,
Inc.’s stock price may continue to vary due to the performance of the business, industry trends, general and economic
conditions and other factors. If NCM, Inc.’s stock price continues to decline or stays at a level below our carrying
value for an extended period of time, we may record an impairment in our investment.
We are subject to impairment losses due to potential declines in the fair value of our assets.
We have a significant amount of long-lived assets. We evaluate long-lived assets for impairment at the theatre
level. Therefore, 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 also have a significant amount of goodwill and tradename intangible assets. 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 result in impairments of
goodwill and our intangible assets.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
United States
As of December 31, 2018, in the U.S., we operated 300 theatres with 3,978 screens pursuant to leases and own
the land and building for 41 theatres with 608 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, 2018,
approximately 8% of our theatre leases in the U.S., covering 25 theatres with 197 screens, have remaining terms,
including optional renewal periods, of less than six years. Approximately 8% of our theatre leases in the U.S., covering
25 theatres with 326 screens, have remaining terms, including optional renewal periods, of between six and 15 years
and approximately 84% of our theatre leases in the U.S., covering 250 theatres with 3,455 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 currently own an office building in Plano, Texas, which is our worldwide headquarters. We also lease
office space in Frisco, Texas for theatre support and maintenance personnel.
19
International
As of December 31, 2018, internationally, we operated 205 theatres with 1,462 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 10 to 30 years. The leases generally provide for contingent rental based upon operating results
with an annual minimum. As of December 31, 2018, approximately 12% of our international theatre leases, covering
24 theatres with 208 screens, have remaining terms, including optional renewal periods, of less than six years.
Approximately 48% of our international theatre leases, covering 99 theatres and 720 screens, have remaining terms,
including optional renewal periods, of between six and 15 years and approximately 40% of our international theatre
leases, covering 82 theatres and 534 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 office space in seven regions in
Latin America for our local management.
See Note 18 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
Silken Brown v. Cinemark USA, Inc., Case No. 3:13cv05669, In the United States District Court for the Northern
District of California, San Francisco Division. The case presents putative class action claims for penalties and
attorney's fees arising from alleged violations of the California wage statement law. The claim is also asserted as a
representative action under the California Private Attorney General Act (PAGA) for penalties. The Court granted class
certification. The company denies the claims, denies that class certification is appropriate, denies that the plaintiff has
standing to assert the claims alleged and is vigorously defending against the claims. The Company denies any
violation of law; however, to avoid the cost and uncertainty associated with litigation the Company and the plaintiff
entered into a Joint Stipulation of Class Action Settlement and Release of Claims (the “Settlement Agreement”) to
fully and finally dismiss all claims that would be brought in the case. The Settlement Agreement must be approved
by the Court. During the year ended December 31, 2018, the Company recorded a litigation reserve based on the
proposed Settlement Agreement in loss on disposal of assets and other on the consolidated income statement.
Flagship Theatres of Palm Desert, LLC d/b/a Cinemas Palme D’Or v. Century Theatres, Inc., and Cinemark
USA, Inc.; Superior Court of the State of California, County of Los Angeles. Plaintiff in this case alleges that the
Company violated California antitrust and unfair competition laws by engaging in “circuit dealing” with various
motion picture distributors and tortuously interfered with Plaintiff’s business relationships. Plaintiff seeks
compensatory damages, trebling of those damages under California law, punitive damages, injunctive relief, attorneys’
fees, costs and interest. Plaintiff also alleges that the Company’s conduct ultimately resulted in closure of its theatre
in June 2016. The Company denied the allegations. In 2008, the Company moved for summary judgment on
Plaintiff’s claims, arguing primarily that clearances between the theatres at issue were lawful and that Plaintiff lacked
proof sufficient to support certain technical elements of its antitrust claims. The trial court granted that motion and
dismissed Plaintiff’s claims. Plaintiff appealed and, in 2011, the Court of Appeal reversed, holding, among other
things, that Plaintiff’s claims were not about the illegality of clearances but were focused, instead, on “circuit dealing.”
Having re-framed the claims in that manner, the Court of Appeal held that the trial court’s decision to limit discovery
to the market where the theatres at issue operated was an error, as “circuit dealing” necessarily involves activities in
different markets. Upon return to the trial court, the parties engaged in additional, broadened discovery related to
Plaintiff’s “circuit dealing” claim. Thereafter, the Company moved again for summary judgment on all of Plaintiff’s
claims. That new motion for summary judgment was pending when, on or about April 11, 2014, the trial court granted
the Company’s motion for terminating sanctions and entered a judgment dismissing the case with prejudice. Plaintiff
then appealed that second dismissal, seeking to have the judgment reversed and the case remanded to the trial court.
The Court of Appeal issued a ruling on May 24, 2016, reversing the granting of terminating sanctions and instead
imposed a lesser evidentiary and damages preclusion sanction. The case returned to the trial court on October 6, 2016.
On May 10, 2018, after a five-week jury trial, the jury found no liability on one circuit dealing claim and awarded
Plaintiff damages on the other claim, which are tripled for antitrust damage awards. Plaintiff would also be entitled
to certain court costs and to seek at least some portion of its attorney’s fees. During the year ended December 31,
2018, the Company recorded a litigation reserve based on an estimate of the jury award, which is reflected in loss on
20
disposal of assets and other on the consolidated income statement. The trial court denied a motion for a judgment
notwithstanding the verdict and a motion for a new trial. The Company intends to appeal the judgment. Although the
Company denies that it engaged in any form of circuit dealing, it cannot predict the outcome of its pending motions
or future appeals.
We received a Civil Investigative Demand (“CID”) from the Antitrust Division of the United States Department
of Justice. The CID relates to an investigation under Sections 1 and 2 of the Sherman Act. We also received CIDs
from the Antitrust Section of the Office of the Attorney General of the State of Ohio and later from other states
regarding similar inquiries under state antitrust laws. The CIDs request us to answer interrogatories, and produce
documents, or both, related to the investigation of matters including film clearances, potential coordination and/or
communication with other major theatre circuits and related joint ventures. We intend to fully cooperate with all
federal and state government agencies. Although we do not believe that it has violated any federal or state antitrust or
competition laws, we cannot predict the ultimate scope, duration or outcome of these investigations.
From time to time, we are involved in other various legal proceedings arising from the ordinary course of
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.
21
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information
Our common equity consists of common stock, which has traded on the New York Stock Exchange since April
24, 2007 under the symbol “CNK."
Holders of Common Stock
As of December 31, 2018, there were 490 holders of record of the Company’s common stock and there were no
other classes of stock issued and outstanding.
Dividend Policy
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.
See Note 5 to our consolidated financial statements for a detail of dividends paid during the years ended
December 31, 2016, 2017 and 2018.
Performance Graph
The performance graph is incorporated by reference to the Company’s proxy statement for its annual
stockholders meeting to be held on May 23, 2019 and to be filed with the SEC within 120 days after December 31,
2018.
Securities Authorized for Issuance under Equity Compensation Plans
Information regarding securities authorized for issuance under the Company’s long-term compensation plan is
incorporated by reference to the Company’s proxy statement for its annual stockholders meeting to be held on May
23, 2019 and to be filed with the SEC within 120 days after December 31, 2018.
22
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, 2018. 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. We adopted ASC Topic 606, Revenue Recognition, effective January 1, 2018. See
Note 3 to the consolidated financial statements for a summary of the impact of adoption.
Statement of Income Data:
Revenues:
2014
Year Ended December 31,
2016
(Dollars in thousands, except per share data)
2017
2015
2018
845,376
137,445
936,970
150,120
$1,644,169 $1,765,519 $1,789,137 $1,794,982 $1,834,173
Admissions
990,103 1,038,788 1,108,793
Concession
278,769
157,777
139,525
Other
2,626,990 2,852,609 2,918,765 2,991,547 3,221,735
Total revenues
999,755
Film rentals and advertising
180,974
Concession supplies
383,860
Salaries and wages
323,316
Facility lease expense
448,070
Utilities and other
165,173
General and administrative expenses
261,162
Depreciation and amortization
32,372
Impairment of long-lived assets
38,702
Loss on disposal of assets and other
$2,263,920 $2,429,457 $2,495,830 $2,599,265 $2,833,384
Total cost of operations
$ 363,070 $ 423,152 $ 422,935 $ 392,282 $ 388,351
Operating income
$ 113,698 $ 112,741 $ 108,313 $ 105,918 $ 109,994
Interest expense
Net income
$ 193,999 $ 218,728 $ 256,827 $ 266,019 $ 215,305
Net income attributable to Cinemark Holdings, Inc. $ 192,610 $ 216,869 $ 255,091 $ 264,180 $ 213,827
Net income attributable to Cinemark Holdings, Inc.
per share:
Basic
Diluted
966,510
166,320
354,510
328,197
355,041
153,278
237,513
15,084
22,812
962,655
154,469
325,765
321,294
355,926
143,355
209,071
2,836
20,459
945,640
144,270
301,099
319,761
355,801
156,736
189,206
8,801
8,143
856,388
131,985
273,880
317,096
335,109
151,444
175,656
6,647
15,715
$
$
$
1.66 $
1.66 $
1.00 $
1.87 $
1.87 $
1.00 $
2.19 $
2.19 $
1.08 $
2.26 $
2.26 $
1.16 $
1.83
1.83
1.28
Cash dividends declared per common share
2014
2015
Year Ended December 31,
2016
(Dollars in thousands)
2017
2018
Other Financial Data:
Cash flow provided by (used for):
Operating activities
Investing activities
Financing activities
Capital expenditures
$ 454,634 $ 455,871 $ 462,910 $ 528,998 $ 556,915
(253,339) (328,122) (327,769) (410,476) (451,370)
(146,833) (151,147) (163,711) (158,008) (192,648)
(244,705) (331,726) (326,908) (380,862) (346,073)
23
2014
2015
As of December 31,
2016
(Dollars in thousands)
2017
2018
Balance Sheet Data:
Cash and cash equivalents
Theatre properties and equipment, net
Total assets
Total long-term debt, including current portion,
net of unamortized debt issue costs
Equity
$ 638,869 $ 588,539 $ 561,235 $ 522,547 $ 426,222
1,450,812 1,505,069 1,704,536 1,828,054 1,833,133
4,120,561 4,126,497 4,306,633 4,470,893 4,481,838
1,791,578 1,781,335 1,788,112 1,787,480 1,780,611
1,123,129 1,110,813 1,272,960 1,405,688 1,456,117
Operating Data:
United States
2014
Year Ended December 31,
2016
2017
2015
2018
Theatres operated (at period end)
Screens operated (at period end)
Total attendance (in 000s)
International
Theatres operated (at period end)
Screens operated (at period end)
Total attendance (in 000s)
Worldwide
335
4,499
341
4,586
173,864 179,601 182,660 174,432 185,268
337
4,518
339
4,561
339
4,559
194
160
1,177
1,398
90,009 100,499 104,581 102,584
176
1,278
187
1,344
205
1,462
96,847
526
5,903
546
6,048
287,241 277,016 282,115
533
5,959
Theatres operated (at period end)
Screens operated (at period end)
Total attendance (in 000s)
495
5,676
513
5,796
263,873 280,100
24
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
We are a leader in the motion picture exhibition industry, with theatres in the U.S., Brazil, Argentina, Chile,
Colombia, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao and
Paraguay. As of December 31, 2018, we managed our business under two reportable operating segments – U.S.
markets and international markets. See Note 19 to the consolidated financial statements.
Revenues and Expenses
We generate revenues primarily from filmed entertainment box office receipts and concession sales with
additional revenues from screen advertising sales and other revenue streams, such as transactional fees, vendor
marketing promotions, studio trailer placements, meeting rentals and electronic video games located in some of our
theatres. NCM provides our domestic theatres with various forms of in theatre advertising. We also offer alternative
entertainment, such as live and pre-recorded sports programs, concert events, the Metropolitan Opera, in-theatre
gaming and other special events in our theatres through our joint venture, AC JV, LLC. Our Flix Media initiative has
also allowed us to expand our screen advertising and alternative content within our international circuit and to other
international exhibitors.
Films leading the box office during the year ended December 31, 2018 included Black Panther, Avengers:
Infinity War, Incredibles 2, Jurassic World: Fallen Kingdom, Aquaman, Deadpool 2, Dr. Seuss’ The Grinch, Mission
Impossible – Fallout, Ant-Man and the Wasp, Solo: A Star Wars Story, Venom, A Quiet Place, Crazy Rich Asians,
Halloween, Bumblebee, Ralph Breaks the Internet, Fantastic Beasts: The Crimes of Grindelwald, Mary Poppins
Returns, A Star is Born, Bohemian Rhapsody and other films, as well as the carryover of The Greatest Showman,
Jumanji: Welcome to the Jungle and Star Wars: The Last Jedi.
Films scheduled for release during 2019 include Avengers: Endgame, Star Wars: Episode IX, The Lion King,
Frozen 2, Toy Story 4, Aladdin, Captain Marvel, It 2, Spider-Man: Far From Home, The Secret Life of Pets 2, Joker,
Dumbo, and Godzilla 2 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. Advertising
costs, which are expensed as incurred, are primarily related to campaigns for new and renovated theatres, loyalty and
membership programs and brand advertising that vary depending on the timing of such campaigns.
Concession supplies expense is variable in nature and fluctuates with our concession revenues and product mix.
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. In some international locations, staffing levels are also subject to local regulations.
Facility lease expense is primarily a fixed cost at the theatre level as most of our facility leases require a fixed
monthly minimum rent payment. Certain leases are subject to percentage rent only, while others are subject to
percentage rent in addition to their fixed monthly rent if a target annual performance level is achieved. Facility lease
expense as a percentage of revenues is also affected by the number of theatres under operating leases, the number of
theatres under capital and finance leases and the number of owned theatres.
25
Utilities and other costs include both fixed and variable costs and primarily consist of utilities, expenses for
projection and sound equipment maintenance and monitoring, property taxes, janitorial costs, repairs, maintenance
and security services.
General and administrative expenses are primarily fixed in nature and consist of the costs to support the overall
management of the Company, including salaries and wages, incentive compensation and benefit costs for our corporate
office personnel, facility expenses for our corporate offices, consulting fees, legal fees, audit fees, supplies and other
costs that are not specifically associated with the operations of our theatres.
Critical Accounting Policies
We prepare our consolidated financial statements in conformity with generally accepted accounting principles
in the U.S., or 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
Our patrons often have the option to purchase movie tickets well in advance of a movie showtime or right before
the movie showtime, or at any point in between those two timeframes depending on seat availability. We recognize
such admissions revenues when the showtime for a purchased movie ticket has passed. Concession revenues are
recognized when sales are made at the registers. Other revenues primarily consist of screen advertising and other
revenue streams, such as transactional fees, vendor marketing promotions, studio trailer placements, meeting rentals
and electronic video games located in some of our theatres. Screen advertising revenues are recognized over the period
that the related advertising is delivered on-screen or in-theatre. We sell gift cards and discount ticket vouchers, the
proceeds from which are recorded as current liabilities. Revenues for gift cards and discount ticket vouchers are
recognized when they are redeemed for movie tickets or concession items. We offer a subscription program in the
U.S. whereby patrons can pay a monthly fee to receive a monthly credit for use towards a future movie ticket purchase.
We record the monthly subscription program fees as current liabilities and record admissions revenues as the credits
are redeemed for movie tickets. We also have loyalty programs in many of our locations that either have a prepaid
annual membership fee or award points to customers as purchases are made. For those loyalty programs that have an
annual membership fee, we recognize the fee collected as other revenues over the term of the membership. For those
loyalty programs that award points to customers based on their purchases, we record a portion of the original
transaction proceeds as liabilities based on the number of reward points issued to the customer and recognize revenues
when the customer redeems such points.
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), (“ASC Topic 606”), which requires an entity
to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to
customers. ASC Topic 606 replaces most existing revenue recognition guidance in U.S. generally accepted accounting
principles. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and
cash flows arising from the contracts with customers. We adopted ASC Topic 606 effective January 1, 2018 under
the modified retrospective method.
26
Changes to the way in which we recognize revenue resulted in the following impacts to our consolidated
statements of income:
a) Recording of incremental other revenue and interest expense related to the significant financing
component of our Exhibitor Services Agreement (“ESA”) with NCM, LLC (“NCM”). See further
discussion at Note 3 to the consolidated financial statements.
c)
b) Deferral of a portion of admissions and concession revenues for transactions that include the issuance
of loyalty points to customers. To determine the amount of revenues to defer upon issuance of points
to customers under our points-based loyalty programs, we estimated the values of the rewards expected
to be redeemed by our customers for those points. The estimates are based on the rewards that have
historically been offered under the loyalty programs, which we believe is representative of the rewards
to be offered in the future.
Increase in other revenues and an increase in utilities and other costs due to the presentation of
transactional fees on a gross versus net basis.
Increase in other revenues due to the change in amortization methodology for deferred revenue – NCM
that is now amortized on a straight-line basis and effective for the entire term of the ESA. The deferred
revenue – NCM is related to our ESA and Common Unit Adjustment agreement with NCM, under
which our performance obligation is to provide NCM with exclusive access to its domestic theatres
for purposes of in-theatre advertising over the term of the ESA. Such exclusivity, and therefore the
satisfaction of our performance obligation, is provided to NCM evenly over time. As a result of the
change in amortization method, we recorded a cumulative effect of accounting change adjustment of
$40,526, net of taxes, in retained earnings on January 1, 2018. See Notes 3 and 6 to the consolidated
financial statements.
d)
Film rental costs are accrued based on the applicable box office receipts and either firm terms or a sliding scale
formula, which are generally established prior to the opening of the film, or estimates of the final settlement rate,
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 percentage of box office receipts, which reflects either an 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. 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 an annual target revenue level is achieved. Percentage rent expense is estimated and recorded for
these theatres on a monthly basis if the theatre’s historical performance or forecasted performance indicates that the
annual target revenue level will be reached. Once annual revenues are known, which is generally at the end of the
year, the percentage rent expense is adjusted at that time. 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. Leasehold improvements for which we pay and to which we have title are amortized over the lesser
of useful life or the lease term.
27
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 also perform a full
quantitative impairment evaluation on an annual basis. We assess many factors including the following to determine
whether to impair individual theatre assets:
•
•
•
•
•
•
•
•
•
•
actual theatre level cash flows;
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;
the impact of recent theatre remodels or other substantial improvements;
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 a 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 theatre’s useful
life correlates with the remaining lease period, which includes the probability of the exercise of available renewal
periods for leased properties and the lesser of twenty years or the building’s remaining useful life for owned properties.
If the estimated undiscounted cash flows are not sufficient to recover a long-lived asset’s carrying value, 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. Fair value is
determined based on a multiple of cash flows, which was six and a half times for the evaluations performed during
2016, 2017 and 2018. 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. 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.
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 we 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 its twenty regions in the U.S. and seven of
its international countries with Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala considered one
reporting unit (the Company does not have goodwill recorded for all of its international locations). Under ASC Topic
350, Goodwill, Intangibles and Other (“ASC Topic 350”), we may perform a qualitative impairment assessment or a
quantitative impairment assessment of our goodwill.
A quantitative analysis requires us to estimate the fair value of each reporting unit and compare it with its
carrying value. If the carrying value of the reporting unit exceeds its estimated fair value, goodwill would be written
down such that the carrying value would equal estimated fair value. Fair value is determined based on a multiple of
cash flows, which was eight times for the evaluations performed during 2017 and 2018. Significant judgment is
involved in estimating cash flows and fair value. Management’s estimates, which fall under Level 3 of the U.S. GAAP
28
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. A qualitative assessment includes
consideration of historical and expected future industry performance, estimated future performance of the Company,
current industry trading multiples and other economic factors, and a review of current carrying values compared to
estimated fair values as determined during our most recent quantitative assessment.
We performed a qualitative assessment for all reporting units for the year ended December 31, 2016. We
performed a quantitative goodwill impairment analysis for all reporting units during the year ended December 31,
2017. For the year ended December 31, 2018, we performed a quantitative goodwill assessment for three new
domestic reporting units and a qualitative assessment for all other reporting units. As of December 31, 2018, the
estimated fair value of our goodwill for each reporting unit exceeded its carrying value by more than 10%, with the
exception of one reporting unit, whose fair value exceeded its carrying value by approximately 9%. We did not record
any goodwill impairment charges as a result of the assessments performed during the years ended December 31, 2016,
2017 and 2018.
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. Under ASC Topic 350,
we can elect to perform a qualitative or quantitative impairment assessment for our tradename intangible assets. A
quantitative tradename impairment assessment includes comparing the carrying values of tradename assets to an
estimated fair value. Fair values are estimated 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. A qualitative
assessment considers our historical and forecasted revenues and changes in estimated royalty rates, and a comparison
of current carrying values to estimated fair values from our most recent quantitative assessment.
During the year ended December 31, 2016, we performed a quantitative tradename impairment assessment for
our tradename in Ecuador and performed a qualitative tradename impairment analysis for all other tradename
intangible assets. During the year ended December 31, 2017, we performed quantitative tradename impairment
evaluations for all tradename assets. During the year ended December 31, 2018, we performed a qualitative tradename
impairment analysis. As a result of the analysis performed during each year, no impairment charges were recorded
related to tradename intangible assets for the years ended December 31, 2016, 2017 and 2018.
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. See “Impact of Recent Accounting Developments” below.
29
On December 22, 2017, the U.S. government enacted comprehensive tax legislation, the Tax Cuts and Jobs Act
(the "Tax Act"). The Tax Act made changes to the U.S. tax code, which included (1) reduced the U.S. corporate tax
rate from 35 percent to 21 percent, (2) generally eliminated U.S. federal income taxes on dividends from foreign
subsidiaries, (3) a one-time transition tax on certain undistributed earnings of foreign subsidiaries, and (4) created
new taxes on certain foreign-sourced earnings. As of December 31, 2018, the amounts recorded for the Tax Act are
final for the 2017 transition tax, the re-measurement of deferred taxes, and our reassessment of valuation allowances.
Accounting for Investment in National CineMedia, LLC and Related Agreements
We have an investment in NCM. NCM operates a digital in-theatre network in the U.S. for providing cinema
advertising and non-film events. Upon joining NCM, we entered into an Exhibitor Services Agreement (“ESA”), with
NCM pursuant to which NCM provides advertising, promotion and event services to our 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, we amended our operating agreement and the Exhibitor Services Agreement, or ESA, with NCM and
received proceeds related to the modification of the ESA and our sale of certain of shares in NCM. The ESA
modification reflected a shift from circuit share expense under the prior Exhibitor Services Agreement, which
obligated NCM to pay us a percentage of revenue, to a monthly theatre access fee, which significantly reduced the
contractual amounts paid to the Company by NCM. The Company recorded the proceeds related to the ESA
modification as deferred revenue. As a result of the proceeds received as part of the NCM, Inc. initial public offering,
the Company had a negative basis in its original membership units in NCM (referred to herein as its Tranche 1
Investment). The Company does not recognize undistributed equity in the earnings on its Tranche 1 Investment until
NCM's future net earnings, less distributions received, surpass the amount of the excess distribution. The Company
recognizes equity in earnings on its Tranche 1 Investment only to the extent it receives cash distributions from NCM.
The Company believes that the accounting model provided by ASC 323-10-35-22 for recognition of equity investee
losses in excess of an investor's basis is analogous to the accounting for equity income subsequent to recognizing an
excess distribution.
Pursuant to a Common Unit Adjustment Agreement dated as of February 13, 2007 between NCM, Inc. and
Cinemark, AMC and Regal, collectively referred to as its Founding Members, annual adjustments to the common
membership units are made primarily based on increases or decreases in the number of theatre screens operated and
theatre attendance generated by each Founding Member. To account for the receipt of additional common units under
the Common Unit Adjustment Agreement, the Company follows the guidance in ASC 323-10-35-29 (formerly EITF
02-18, Accounting for Subsequent Investments in an Investee after Suspension of Equity Loss Recognition) by analogy,
which also refers to AICPA Technical Practice Aid 2220.14, which indicates that if a subsequent investment is made
in an equity method investee that has experienced significant losses, the investor must determine if the subsequent
investment constitutes funding of prior losses. The Company concluded that the construction or acquisition of new
theatres that has led to the common unit adjustments equates to making additional investments in National CineMedia.
The Company evaluated the receipt of the additional common units in National CineMedia and the assets exchanged
for these additional units and has determined that the right to use its incremental new screens would not be considered
funding of prior losses. The Company accounts for these additional common units (referred to herein as its Tranche 2
Investment) as a separate investment than its Tranche 1 Investment. The common units received are recorded at fair
value as an increase in the Company’s investment in NCM with an offset to deferred revenue. The deferred revenue
is amortized over the remaining term of the ESA. The Tranche 2 Investment is accounted for following the equity
method, with undistributed equity earnings related to its Tranche 2 Investment included as a component of equity in
income of affiliates and distributions received related to its Tranche 2 Investment are recorded as a reduction of its
investment basis.
30
Impact of Recent Accounting Developments
Impact of New Revenue Recognition Standard
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (“ASC
Topic 606”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the
transfer of promised goods or services to customers. ASC Topic 606 replaces most existing revenue recognition
guidance in U.S. generally accepted accounting principles. In addition, the standard requires disclosure of the nature,
amount, timing, and uncertainty of revenue and cash flows arising from the contracts with customers.
Impact of New Lease Accounting Standard
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), (“ASU 2016-02”). The purpose of ASU
2016-02 is to provide financial statement users a better understanding of the amount, timing, and uncertainty of cash
flows arising from leases. The adoption of ASU 2016-02 will result in the recognition of a right-of-use asset and a
lease liability for most operating leases. New disclosure requirements include qualitative and quantitative information
about the amounts recorded in the financial statements related to leases. ASU 2016-02 is effective for fiscal years
beginning after December 15, 2018. ASU 2016-02 requires a modified retrospective transition by means of a
cumulative-effect adjustment to retained earnings as of the earliest period presented with the option to elect certain
practical expedients. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases
(“ASU 2018-10”). In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842), Targeted Improvements (“ASU
2018-11”). ASU 2018-11 provides an additional transition method to adopt ASU 2016-02. Under this new transition
method, an entity initially applies ASU 2016-02 at the adoption date and recognizes a cumulative-effect adjustment
to the opening balance of retained earnings in the period of adoption. This additional transition method changes only
when an entity is required to initially apply the transition requirements outlined in ASU 2016-02; it does not change
how those requirements are applied. We used the transition method outlined in ASU 2018-11 upon adoption.
We adopted ASC Topic 842 and the related amendments in ASU 2016-02 and ASU 2018-11 (collectively
referred to herein as “the New Leasing Standard”) effective January 1, 2019. We are finalizing its evaluation of the
impact of the New Leasing Standard on our consolidated financial statements, and expect the most significant impacts
to be as follows:
1. We will recognize liabilities representing the present value of the remaining future minimum lease
payments for all of our operating leases as of January 1, 2019. We estimate these liabilities will be between
$1.4 billion and $1.7 billion.
2. We will recognize right of use assets for all of our operating leases equal to the liabilities calculated in (1)
above, adjusted for the balances of long-term prepaid rent, favorable lease intangible assets, deferred lease
expense, unfavorable lease liabilities and deferred lease incentive liabilities as of January 1, 2019.
3. We have theatre leases in which we were involved in construction that failed sale-leaseback accounting at
the end of the construction period. These leases, which were accounted for as capital leases, will be
derecognized upon adoption of the New Leasing Standard and evaluated to determine classification upon
adoption. Some of these leases will be classified as operating leases upon adoption and, beginning in 2019,
lease payments for these leases will be recorded as facility lease expense on the consolidated income
statement. Previously, as capital leases, lease payments were classified as interest expense and reductions
of the capital lease obligations.
4. For the capital leases derecognized as discussed in (3) above, we will write-off the net book value of the
capital lease asset and capital lease liability, with the difference between those amounts resulting in an
adjustment to beginning retained earnings as of January 1, 2019.
Recent Developments
On February 22, 2019, our board of directors approved a cash dividend for the fourth quarter of 2018 of $0.34
per share of common stock is payable to stockholders of record on March 8, 2019, and will be paid on March 22,
2019.
31
Results of Operations
The following table sets forth, for the periods indicated, the amounts for certain items reflected in our
consolidated statements of income along with each of those items as a percentage of revenues.
Year Ended December 31,
2017
2018
2016
Operating data (in millions):
Revenues
Admissions
Concession
Other
Total revenues
Cost of operations
Film rentals and advertising
Concession supplies
Salaries and wages
Facility lease expense
Utilities and other
General and administrative expenses
Depreciation and amortization
Impairment of long-lived assets
Loss on disposal of assets and other
Total cost of operations
Operating income
Operating data as a percentage of total revenues:
Revenues
$
Admissions
Concession
Other
Total revenues
Cost of operations (1)
Film rentals and advertising
Concession supplies
Salaries and wages
Facility lease expense
Utilities and other
General and administrative expenses
Depreciation and amortization
Impairment of long-lived assets
Loss on disposal of assets and other
Total cost of operations
Operating income
Average screen count (month end average)
Average operating screen count (month end)
average)
Revenues per average screen (dollars)
$
$
1,789.2
990.1
139.5
2,918.8
$
$
1,795.0
1,038.8
157.8
2,991.6
$
$
962.7
154.5
325.8
321.3
355.9
143.4
209.1
2.8
20.4
2,495.9
422.9
$
966.5
166.3
354.5
328.2
355.0
153.3
237.5
15.1
22.8
2,599.2
392.4
$
61.3%
33.9%
4.8%
100.0%
53.8%
15.6%
11.2%
11.0%
12.2%
4.9%
7.2%
0.1%
0.7%
85.5%
14.5%
5,856
60.0%
34.7%
5.3%
100.0%
53.8%
16.0%
11.9%
11.0%
11.9%
5.1%
7.9%
0.5%
0.8%
86.9%
13.1%
5,925
1,834.2
1,108.8
278.8
3,221.8
999.8
181.0
383.9
323.3
448.0
165.2
261.2
32.4
38.7
2,833.5
388.3
56.9%
34.4%
8.7%
100.0%
54.5%
16.3%
11.9%
10.0%
13.9%
5.1%
8.1%
1.0%
1.2%
87.9%
12.1%
5,997
5,767
498,423
$
5,777
504,902
$
5,925
537,224
$
(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.
32
Comparison of Years Ended December 31, 2018 and December 31, 2017
Revenues. Total revenues increased $230.2 million to $3,221.8 million for 2018 from $2,991.6 million for 2017,
representing a 7.7% 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 Segment
International Operating Segment
Consolidated
Constant Currency
(3)
2018
2017
%
Change
2018 2017
%
Change
2018
%
Change
2018
2017
%
Change
Admissions revenues (1)
Concession revenues (1)
Other revenues (1)(2)
Total revenues (1)(2)
Attendance (1)
Average ticket price (1)
$
Concession revenues per patron (1) $
7.7% $373.0 $ 438.1 (14.9)% $ 426.7
$1,461.2 $1,356.9
$ 892.4 $ 790.1 12.9% $216.4 $ 248.7 (13.0)% $ 243.8
$ 185.4 $
75.1 146.9% $ 93.4 $ 82.7 12.9% $ 111.7
$2,539.0 $2,222.1 14.3% $682.8 $ 769.5 (11.3)% $ 782.2
185.3
7.89 $
4.82 $
174.4
7.78
4.53
6.3% 96.8 102.6
1.4% $ 3.85 $ 4.27
6.4% $ 2.24 $ 2.42
(5.7)%
(9.8)% $ 4.41
(7.4)% $ 2.52
2.2%
(2.6)% $1,834.2 $1,795.0
(2.0)% $1,108.8 $1,038.8
6.7%
35.1% $ 278.8 $ 157.8 76.7%
7.7%
1.7% $3,221.8 $2,991.6
1.8%
277.0
282.1
0.3%
6.48
6.50 $
4.8%
3.75
3.93 $
3.3% $
4.1% $
(1)
(2)
(3)
•
•
Revenue and attendance amounts in millions. Average ticket price is calculated as admissions revenues divided by attendance. Concession
revenues per patron is calculated as concession revenues divided by attendance.
U.S. operating segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 19
of our consolidated financial statements.
Constant currency revenue amounts, which are non-GAAP measurements, were calculated using the average exchange rates for the
corresponding months for 2017. We translate the results of our international operating segment from local currencies into U.S. dollars using
currency rates in effect at different points in time. Significant changes in foreign exchange rates from one period to the next can result in
meaningful variations in reported results. We are providing constant currency amounts for our international operating segment to present
a period-to-period comparison of business performance without the impact of foreign currency fluctuations.
U.S. Admissions revenues increased $104.3 million primarily due to a 6.3% increase in attendance and a 1.4%
increase in average ticket price. Concession revenues increased $102.3 million primarily due to the 6.3% increase
in attendance and a 6.4% increase in concession revenues per patron. The increase in attendance was due to a
record-breaking slate of films during 2018 as well as the favorable impact of Luxury Lounger conversions.
Preliminary 2018 estimates indicate U.S. industry box office revenues set an all-time record of $11.9 billion.
The increase in average ticket price was primarily due to strategic price increases and the impact of Luxury
Lounger conversions. The increase in concession revenues per patron was primarily due to strategic price
increases, incremental sales and continued expansion of concession offerings. Other revenues increased $110.3
million primarily due to the impact of changes in revenue recognition as discussed in Note 3 to our consolidated
financial statements.
International. Admissions revenues decreased $65.1 million as reported primarily due to a 9.8% decrease in
average ticket price and a 5.7% decrease in attendance. Admissions revenues decreased $11.4 million in constant
currency. Concession revenues decreased $32.3 million as reported primarily due to a 7.4% decrease in concession
revenues per patron and the 5.7% decrease in attendance. Concession revenues decreased $4.9 million in constant
currency. The decline in attendance was driven by weaker consumer appeal of the international film slate during
2018 compared to 2017. Average ticket price and concession revenues per patron decreased, as reported, primarily
due to the impact of changes in foreign currency exchange rates in certain countries in which we operate. Other
revenues increased primarily due to the impact of changes in revenue recognition as discussed in Note 3 to our
consolidated financial statements, partially offset by the impact of changes in foreign currency exchange rates in
certain countries in which we operate.
33
Cost of Operations. The table below summarizes certain of our theatre operating costs by reportable operating
segment (in millions) for the years ended December 31, 2017 and 2018.
U.S. Operating Segment
International Operating Segment
Consolidated
Film rentals and advertising
Concession supplies
Salaries and wages
Facility lease expense
Utilities and other
$
2018
822.6 $
134.6
303.7
245.1
327.0
2017
756.4 $
112.8
265.8
241.0
241.6
2018
177.2 $
46.4
80.2
78.2
121.0
2017
210.1 $
53.5
88.7
87.2
113.4
202.6 $
52.2
94.1
87.3
140.6
2018
999.8 $
181.0
383.9
323.3
448.0
2017
966.5
166.3
354.5
328.2
355.0
Constant
Currency
2018 (1)
(1)
•
•
Constant currency expense amounts, which are non-GAAP measurements, were calculated using the average exchange rates for the
corresponding months for 2017. We translate the results of our international operating segment from local currencies into U.S. dollars using
currency rates in effect at different points in time. Significant changes in foreign exchange rates from one period to the next can result in
meaningful variations in reported results. We are providing constant currency amounts for our international operating segment to present a
period-to-period comparison of business performance without the impact of foreign currency fluctuations.
U.S. Film rentals and advertising costs were $822.6 million, or 56.3% of admissions revenues, for 2018
compared to $756.4 million, or 55.7% of admissions revenues, for 2017. The increase in the film rentals and
advertising rate was primarily due to the record-breaking box office and the relative contribution of blockbuster
films to overall box office during the 2018 period. The 2018 period included such blockbuster releases as Black
Panther, Avengers: Infinity War, Incredibles 2 and Jurassic World: Fallen Kingdom, which grossed in excess
of $700 million, $650 million, $600 million and $400 million, respectively, in 2018. Concession supplies
expense was $134.6 million, or 15.1% of concession revenues, for 2018 compared to $112.8 million, or 14.3%
of concession revenues, for 2017. The increase in the concessions supplies rate was primarily due to expanded
concession offerings.
Salaries and wages increased to $303.7 million for 2018 from $265.8 million for 2017 primarily due to increased
staffing levels to support the increased attendance and expanded concession offerings, staffing at new and
recently remodeled theatres and increases in minimum and other wage rates. Facility lease expense increased to
$245.1 million for 2018 from $241.0 million for 2017 due to percentage rent due to revenue growth. Utilities
and other costs increased to $327.0 million for 2018 from $241.6 million for 2017. The increase was primarily
due to the presentation of transactional fees on a gross basis versus net basis (see Note 3 to our consolidated
financial statements for further discussion).
International. Film rentals and advertising costs were $177.2 million ($202.6 million in constant currency), or
47.5% of admissions revenues, for 2018 compared to $210.1 million, or 48.0% of admissions revenues, for
2017. The decrease in the film rentals and advertising rate was primarily due to higher advertising costs during
2017. Concession supplies expense was $46.4 million ($52.2 million in constant currency), or 21.4% of
concession revenues, for 2018 compared to $53.5 million, or 21.5% of concession revenues, for 2017.
Salaries and wages decreased to $80.2 million (increased to $94.1 million in constant currency) for 2018 from
$88.7 million for 2017. The as reported decrease was due to the impact of changes in foreign currency exchange
rates in certain countries in which we operate, partially offset by increased local currency wages that were primarily
driven by inflation, new theatres and limited flexibility in scheduling staff caused by shifting government
regulations. Facility lease expense decreased to $78.2 million (increased to $87.3 million in constant currency)
for 2018 from $87.2 million for 2017. The as reported decrease was due to the impact of changes in foreign
currency exchange rates in certain countries in which we operate and lower percentage rent due to the decline in
revenues, partially offset by an increase in base rent due to new theatres. Utilities and other costs increased to
$121.0 million ($140.6 million in constant currency) for 2018 from $113.4 million for 2017. The as reported
increase was primarily due to the presentation of transactional fees on a gross basis versus net basis (see Note 3
to our consolidated financial statements for further discussion).
34
General and Administrative Expenses. General and administrative expenses increased to $165.2 million for
2018 from $153.3 million for 2017. The increase was primarily due to increased headcount to support strategic
initiatives, increased benefits costs and professional fees, partially offset by the impact of changes in foreign currency
exchange rates in certain countries in which we operate.
Depreciation and Amortization. Depreciation and amortization expense was $261.2 million for 2018 compared
to $237.5 million for 2017. The increase was primarily due to depreciation expense related to theatre remodels,
including Luxury Lounger conversions, and new theatres.
Impairment of Long-Lived Assets. We recorded asset impairment charges on assets held and used of $32.4
million for 2018 compared to $15.1 million for 2017. Impairment charges for 2018 consisted of theatre properties in
nine of our U.S. regions, Brazil, Colombia, Panama and Peru. Impairment charges for 2017 consisted of theatre
properties in eleven of our U.S. regions, Colombia, Brazil, Guatemala and Curacao. 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 1 and 9 to our consolidated financial statements.
Loss on Disposal of Assets and Other. We recorded a loss on disposal of assets and other of $38.7 million during
2018 compared to $22.8 million during 2017. The loss recorded during 2018 was primarily due to the retirement of
assets related to theatre remodels, including Luxury Lounger conversions, and the accrual of reserves for outstanding
litigation (see Note 18 to the consolidated financial statements). The loss recorded during 2017 included the retirement
of assets due to theatre remodels and closures and the write-off of a favorable lease intangible asset due to the
amendment of a theatre lease, partially offset by gains related to the sale of excess land parcels and a gain on a landlord
buyout of a theatre lease.
Interest Expense. Interest costs incurred, including amortization of debt issue costs, were $110.0 million for
2018 compared to $105.9 million for 2017. The increase was primarily due to an increase in the variable rate at which
our term loan accrued interest during 2018. See Note 11 to our consolidated financial statements for discussion of our
long-term debt and our interest rate swap agreements.
Foreign Currency Exchange Gain (Loss). We recorded a foreign currency exchange loss of $11.7 million during
2018 and a foreign currency exchange gain of $0.9 million during 2017 primarily related to intercompany transactions
and changes in exchange rates from original transaction dates until cash settlement. See Notes 1 and 13 to our
consolidated financial statements for discussion of foreign currency translation.
Loss on Debt Amendments and Refinancing. We recorded a loss of $1.5 million during 2018 related to
amendments to our senior secured credit facility that included a reduction in the interest rate at which our term loan
accrues interest and to reduce the amount of real property required to be mortgaged to secure the loans. We recorded
a loss of $0.5 million during 2017 related to amendments to our senior secured credit facility that included a reduction
in the interest rates applicable to the term loan and revolving credit line, revisions to certain definitions within the
agreement, and an extension of the maturity of the revolving credit line. See Note 11 to our consolidated financial
statements for discussion of our long-term debt.
Distributions from NCM. We recorded distributions received from NCM of $15.4 million during 2018 and $16.4
million during 2017, which were in excess of the carrying value of our Tranche 1 Investment. See Note 6 to our
consolidated financial statements.
Interest expense – NCM. We recorded non-cash interest expense of $19.7 million during 2018 related to the
significant financing component associated with revenues collected in advance under certain of our agreements with
NCM. See Note 3 to our consolidated financial statements for further discussion of ASC Topic 606.
Equity in Income of Affiliates. We recorded equity in income of affiliates of $39.2 million during 2018 and $36.0
million during 2017. See Notes 6 and 7 to our consolidated financial statements for information about our equity
investments.
35
Income Taxes. Income tax expense of $95.4 million was recorded for 2018 compared to $79.4 million recorded
for 2017. The effective tax rate for 2018 was 30.7% and included a net additional charge, as a result of the Tax Act
and its recently issued guidance, of $19.2 million all non-cash. The effective tax rate for 2017 was 23.0%, which
included the impact of a one-time benefit of $44.9 million related to the enactment of the Tax Act. See Note 17 to
our consolidated financial statements for further information on our income tax expense and tax reform.
Comparison of Years Ended December 31, 2017 and December 31, 2016
Revenues. Total revenues increased $72.8 million to $2,991.6 million for 2017 from $2,918.8 million for 2016,
representing a 2.5% 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 Segment
International Operating Segment
Consolidated
Constant Currency
(3)
Admissions revenues (1)
Concession revenues (1)
Other revenues (1)(2)
Total revenues (1)(2)
Attendance (1)
Average ticket price (1)
$
Concession revenues per patron (1) $
75.1 $
2016
2017
$1,356.9 $1,379.0
$ 790.1 $ 764.6
73.6
$
$2,222.1 $2,217.2
182.6
7.55
4.19
174.4
7.78 $
4.53 $
%
Change
%
Change
%
Change
2017
2016
%
Change
2017
2017 2016
(1.6)% $438.1 $410.2
6.8% $ 426.7
3.3% $248.7 $225.5 10.3% $ 243.4
2.0% $ 82.7 $ 65.9 25.5% $
9.7% $ 751.6
0.2% $769.5 $701.6
(1.9)%
(4.5)% 102.6 104.6
3.0% $ 4.27 $ 3.92
8.9% $
8.1% $ 2.42 $ 2.16 12.0% $
4.0% $1,795.0 $1,789.2
7.9% $1,038.8 $ 990.1
0.3%
4.9%
81.5 23.7% $ 157.8 $ 139.5 13.1%
2.5%
(3.6)%
4.0%
8.7%
7.1% $2,991.6 $2,918.8
287.2
277.0
6.23
6.48 $
3.45
3.75 $
4.16
2.37
6.1% $
9.7% $
(1)
(2)
(3)
•
•
Revenue and attendance amounts in millions. Average ticket price is calculated as admissions revenues divided by attendance. Concession
revenues per patron is calculated as concession revenues divided by attendance.
U.S. operating segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 19
of our consolidated financial statements.
Constant currency revenue amounts, which are non-GAAP measurements, were calculated using the average exchange rates for the
corresponding months for 2016. We translate the results of our international operating segment from local currencies into U.S. dollars using
currency rates in effect at different points in time. Significant changes in foreign exchange rates from one period to the next can result in
meaningful variations in reported results. We are providing constant currency amounts for our international operating segment to present
a period-to-period comparison of business performance without the impact of foreign currency fluctuations.
U.S. Admissions revenues decreased $22.1 million primarily due to a 4.5% decrease in attendance, partially
offset by a 3.0% increase in average ticket price. Concession revenues increased $25.5 million primarily due to
an 8.1% increase in concession revenues per patron, partially offset by the 4.5% decrease in attendance. The
decrease in attendance was due to a slate of films in 2017 that had weaker consumer appeal compared to 2016,
partially offset by the favorable impact of Luxury Lounger conversions and new theatres. The increase in
average ticket price was primarily due to price increases. The increase in concession revenues per patron was
primarily due to incremental sales, expanded offerings, price increases and new theatres.
International. Admissions revenues increased $27.9 million as reported ($16.5 million in constant currency),
primarily due to an 8.9% increase in average ticket price, partially offset by a 1.9% decrease in attendance.
Concession revenues increased $23.2 million as reported ($17.9 million in constant currency), primarily due to a
12.0% increase in concession revenues per patron, partially offset by the 1.9% decrease in attendance. The
decrease in attendance was due to a slate of films in 2017 that had weaker consumer appeal compared to 2016,
partially offset by the impact of new theatres. Average ticket price and concession revenues per patron increased
primarily due to price increases, which were predominantly driven by local inflation. Other revenues increased
primarily due to increased promotional income and incremental screen advertising revenues generated by an
expansion of our Flix Media services to affiliates in various countries.
36
Cost of Operations. The table below summarizes certain of our theatre operating costs by reportable operating
segment (in millions) for the years ended December 31, 2016 and 2017.
U.S. Operating Segment
International Operating Segment
Consolidated
Film rentals and advertising
Concession supplies
Salaries and wages
Facility lease expense
Utilities and other
$
2017
756.4 $
112.8
265.8
241.0
241.6
2016
768.9 $
107.3
248.2
240.7
250.9
2017
210.1 $
53.5
88.7
87.2
113.4
2016
193.8 $
47.2
77.6
80.6
105.0
205.1 $
52.3
88.2
84.6
111.6
2017
966.5 $
166.3
354.5
328.2
355.0
2016
962.7
154.5
325.8
321.3
355.9
Constant
Currency
2017 (1)
(1)
•
•
Constant currency expense amounts, which are non-GAAP measurements, were calculated using the average exchange rates for the
corresponding months for 2016. We translate the results of our international operating segment from local currencies into U.S. dollars using
currency rates in effect at different points in time. Significant changes in foreign exchange rates from one period to the next can result in
meaningful variations in reported results. We are providing constant currency amounts for our international operating segment to present a
period-to-period comparison of business performance without the impact of foreign currency fluctuations.
U.S. Film rentals and advertising costs were $756.4 million, or 55.7% of admissions revenues, for 2017
compared to $768.9 million, or 55.8% of admissions revenues, for 2016. The decrease in the film rentals and
advertising rate was primarily due to a higher concentration of blockbuster films during 2016. Concession
supplies expense was $112.8 million, or 14.3% of concession revenues, for 2017 compared to $107.3 million,
or 14.0% of concession revenues, for 2016. The increase in the concession supplies rate was primarily due to
the impact of our expanded concession offerings.
Salaries and wages increased to $265.8 million for 2017 from $248.2 million for 2016 primarily due to
incremental staffing at new and recently remodeled theatres, increases in minimum wages and increased staffing
for food and beverage initiatives. Facility lease expense increased to $241.0 million for 2017 from $240.7
million for 2016 due to the impact of new theatres. Utilities and other costs decreased to $241.6 million for 2017
from $250.9 million for the 2016 period. The decrease was primarily due to the change in classification of
transactional fees and decreased equipment lease expenses for 3-D presentations.
International. Film rentals and advertising costs were $210.1 million ($205.1 million in constant currency), or
48.0% of admissions revenues, for 2017 compared to $193.8 million, or 47.2% of admissions revenues, for
2016. The increase in the film rentals and advertising rate was primarily due to higher advertising costs during
2017. Concession supplies expense was $53.5 million ($52.3 million in constant currency), or 21.5% of
concession revenues, for 2017 compared to $47.2 million, or 20.9% of concession revenues, for 2016. The
increase in the concession supplies rate was primarily due to the mix of concession products sold.
Salaries and wages increased to $88.7 million ($88.2 million in constant currency) for 2017 from $77.6 million
for 2016. The as reported increase was due to increased local currency wage rates primarily due to inflation,
new theatres and limited flexibility in scheduling staff caused by shifting government regulations. Facility lease
expense increased to $87.2 million ($84.6 million in constant currency) for 2017 from $80.6 million for 2016.
The as reported increase was due to the impact of changes in foreign currency exchange rates in certain countries
in which we operate and new theatres. Utilities and other costs increased to $113.4 million ($111.6 million in
constant currency) for 2017 from $105.0 million for 2016. The as reported increase was due to new theatres,
increases in repairs and maintenance expenses and utility expenses and the impact of changes in foreign currency
exchange rates in certain countries in which we operate.
General and Administrative Expenses. General and administrative expenses increased to $153.3 million for
2017 from $143.4 million for 2016. The increase was primarily due to increased salaries and wages partially due to
inflation, professional fees and the impact of changes in foreign currency exchange rates in certain countries in which
we operate.
Depreciation and Amortization. Depreciation and amortization expense was $237.5 million for 2017 compared
to $209.1 million for 2016. The increase was primarily due to depreciation expense related to theatre remodels and
new theatres.
37
Impairment of Long-Lived Assets. We recorded asset impairment charges on assets held and used of $15.1
million for 2017 compared to $2.8 million for 2016. Impairment charges for 2017 consisted of theatre properties in
the U.S., Colombia, Brazil, Guatemala and Curacao, impacting fifteen of our twenty-seven reporting units. Impairment
charges for 2016 consisted of theatre properties in the U.S., Colombia and Ecuador, impacting fourteen of our twenty-
seven 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. See Notes
1 and 9 to our consolidated financial statements.
Loss on Disposal of Assets and Other. We recorded a loss on disposal of assets and other of $22.8 million during
2017 compared to $20.4 million during 2016. The loss recorded during 2017 included the retirement of assets due to
theatre remodels and closures and the write-off of a favorable lease intangible asset due to the amendment of a theatre
lease, partially offset by gains related to the sale of excess land parcels and a gain on a landlord buyout of a theatre
lease. The loss recorded during 2016 included the retirement of assets due to theatre remodels and closures, partially
offset by a gain on the sale of our investment in RealD stock (see Note 7 to our consolidated financial statements) and
a gain on the sale of a land parcel.
Interest Expense. Interest costs incurred, including amortization of debt issue costs, were $105.9 million for
2017 compared to $108.3 million for 2016. The decrease was due to the redemption of our previously outstanding
$200.0 million 7.375% senior subordinated notes (the “7.375% Senior Subordinated Notes”) funded by a $225.0
million add-on to our 4.875% senior notes (the “4.875% Senior Notes), which occurred on March 21, 2016, as well
as amendments to our senior secured credit facility completed during June and December of 2016 and June of 2017,
which, in the aggregate, reduced the rate at which our term loan accrues interest by 100 basis points. See Note 11 to
our consolidated financial statements for discussion of our long-term debt.
Foreign Currency Exchange Gain. We recorded a foreign currency exchange gain of $0.9 million during 2017
and a foreign currency exchange gain of $6.5 million during 2016 primarily related to intercompany transactions and
changes in exchange rates from the original transaction date until cash settlement. See Notes 1 and 13 to our
consolidated financial statements for discussion of foreign currency translation.
Loss on Debt Amendments and Refinancing. We recorded a loss of $0.5 million during 2017 related to
amendments to our senior secured credit facility that included a reduction in the interest rate at which our term loan
accrues interest, revisions to certain definitions within the agreement, a reduction of the interest rates applicable to the
revolving credit line and an extension of the maturity of the revolving credit line. We recorded a loss of $13.4 million
during 2016 primarily related to the early redemption of our $200.0 million 7.375% Senior Subordinated Notes. See
Note 11 to our consolidated financial statements for discussion of our long-term debt.
Distributions from NCM. We recorded distributions received from NCM of $16.4 million during 2017 and $14.7
million during 2016, which were in excess of the carrying value of our Tranche 1 Investment. See Note 6 to our
consolidated financial statements.
Equity in Income of Affiliates. We recorded equity in income of affiliates of $36.0 million during 2017 and $32.0
million during 2016. See Notes 6 and 7 to our consolidated financial statements for information about our equity
investments.
Income Taxes. Income tax expense of $79.4 million was recorded for 2017 compared to $103.8 million recorded
for 2016. The effective tax rate for 2017 was 23.0%, which included the impact of a one-time benefit of $44.9 million
related to the enactment of the Tax Act. See Note 17 to our consolidated financial statements. The effective tax rate
for 2016 was 28.8%.
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, our theatres provide the patron a choice of using a credit card or debit card. Since our revenues are received
38
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 $462.9 million, $529.0
million and $556.9 million for the years ended December 31, 2016, 2017 and 2018, respectively. The increase in cash
flows from operating activities for the years ended December 31, 2017 and 2018 was primarily due to the increase in
revenues and the amount and timing of vendor payments for movies released during December of those years.
Investing Activities
Our investing activities have been principally related to the development, remodel and acquisition of theatres.
New theatre openings, remodels and acquisitions historically have been financed with internally generated cash and
by debt financing, including borrowings under our senior secured credit facility. Cash used for investing activities
amounted to $327.8 million, $410.5 million and $451.4 million for the years ended December 31, 2016, 2017 and
2018, respectively. The increase in cash used for investing activities during 2017 was primarily due to increases in
capital expenditures and acquisitions. The increase in cash used for investing activities during 2018 was primarily
due to the acquisition of NCM common units (see Note 6) for $78.4 million, partially offset by a decrease in capital
expenditures.
Capital expenditures for the years ended December 31, 2016, 2017 and 2018 were as follows (in millions):
Period
Year Ended December 31, 2016
Year Ended December 31, 2017
Year Ended December 31, 2018
New
Theatres
Existing
Theatres (1)
Total
$
$
$
89.8 $
58.3 $
80.7 $
237.1 $
322.6 $
265.4 $
326.9
380.9
346.1
(1)
The amounts for the years ended December 31, 2016, 2017 and 2018 include approximately $3.9, $9.4 million and $8.3
million, respectively, for the remodel of our corporate headquarters building.
Capital expenditures for existing theatres in the table above includes the costs of remodeling certain of our
existing properties to include Luxury Loungers and expanded concession offerings, which began during 2015. During
the years ended December 31, 2016, 2017 and 2018, we had an average of 89, 148 and 72 of our domestic screens,
respectively, temporarily closed for such remodels.
Our U.S. theatre circuit consisted of 341 theatres with 4,586 screens as of December 31, 2018. We built three
new theatres and 32 screens and closed one theatre with 7 screens during the year ended December 31, 2018. At
December 31, 2018, we had signed commitments to open six new theatres and 70 screens in domestic markets during
2019 and open five new theatres with 54 screens subsequent to 2019. We estimate the remaining capital expenditures
for the development of these 124 domestic screens will be approximately $80 million.
Our international theatre circuit consisted of 205 theatres with 1,462 screens as of December 31, 2018. We built
eight new theatres and 49 screens, acquired three theatres with 19 screens and closed four screens during the year
ended December 31, 2018. At December 31, 2018, we had signed commitments to open eight new theatres and 59
screens in international markets during 2019 and open two new theatres and 29 screens subsequent to 2019. We
estimate the remaining capital expenditures for the development of these 88 international screens will be
approximately $52 million.
Actual expenditures for continued theatre development, remodels and acquisitions are subject to change based
upon the availability of attractive opportunities. 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.
39
Financing Activities
Cash used for financing activities was $163.7 million, $158.0 million and $192.6 million during the years ended
December 31, 2016, 2017 and 2018, respectively. Cash used for financing activities primarily consists of dividends
paid to our stockholders (see Note 5 to the consolidated financial statements).
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 as discussed below,
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, 2017 and 2018 (in millions):
Cinemark USA, Inc. term loan
Cinemark USA, Inc. 5.125% senior notes due 2022
Cinemark USA, Inc. 4.875% senior notes due 2023
Other
Total long-term debt
Less current portion
Subtotal long-term debt, less current portion
Less: Debt discounts and debt issuance costs, net of accumulated amortization
Long-term debt, less current portion, net of debt issuance costs
As of December 31,
2018
2017
$
659.5 $
400.0
755.0
2.8
$ 1,817.3 $
7.1
$ 1,810.2 $
29.8
$ 1,780.4 $
652.9
400.0
755.0
1.4
1,809.3
8.0
1,801.3
28.7
1,772.6
As of December 31, 2018, after giving effect to a letter of credit outstanding, we had $98.8 million in available
borrowing capacity on our revolving credit line.
As of December 31, 2018, 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
(in millions)
Contractual Obligations
Long-term debt (1)
Scheduled interest payments on long-term debt(2)
Operating lease obligations
Capital lease obligations
Scheduled interest payments on capital leases
Purchase and other commitments(3)
Current liability for uncertain tax positions(4)
Total obligations
Total
$ 1,809.3
$
419.0
$ 1,784.5
259.5
$
86.4
$
153.2
$
$
0.6
$ 4,512.5
Less Than
One Year
8.0
$
86.2
253.3
27.1
15.4
89.6
0.6
480.2
$
1 - 3 Years
13.2
$
171.3
472.7
51.7
24.4
54.3
—
787.6
$
3 - 5 Years
$ 1,168.2
127.4
381.4
43.1
17.9
9.3
—
$ 1,747.3
After
5 Years
$
619.9
34.1
677.1
137.6
28.7
—
—
$ 1,497.4
(1)
(2)
(3)
(4)
Amounts are presented before adjusting for debt issuance costs.
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, 2018. The average interest rates on our fixed rate and variable rate debt
were 4.8% and 4.3%, respectively, as of December 31, 2018.
Includes estimated capital expenditures associated with the construction of new theatres to which we were committed as of December 31,
2018, obligations under employment agreements and contractual purchase commitments.
The contractual obligations table excludes the long-term portion of our liability for uncertain tax positions of $13.4 million because we
cannot make a reliable estimate of the timing of the related cash payments.
40
Off-Balance Sheet Arrangements
Other than the operating leases and purchase and other commitments disclosed in the tables above, we do not
have any other off-balance sheet arrangements.
Senior Secured Credit Facility
Cinemark USA, Inc. has a senior secured credit facility that includes a $700.0 million term loan and a $100.0
million revolving credit line (the “Credit Agreement”).
On May 16, 2016, Cinemark USA, Inc. made a pre-payment of $13.5 million on its term loan using the net
proceeds received from the sale of shares of RealD (see Note 7 to our consolidated financial statements). We did not
incur any fees as a result of the pre-payment.
Cinemark USA, Inc. amended its Credit Agreement during 2016, 2017 and 2018 as follows:
Effective Date
June 13, 2016
December 15, 2016
June 16, 2017
November 28, 2017
March 29, 2018
Nature of Amendment
Reduced term loan interest rate by 0.25% $
Reduced term loan interest rate by 0.50% $
Reduced term loan interest rate by 0.25%;
modified certain definitions and other
provisions in the Credit Agreement
Extended maturity of revolving credit line
to December 2022; reduced the interest
rate applicable to borrowings under the
credit line
Extended maturity of term loan to March
2025; reduced term loan interest rate by
0.25%; reduced real property mortgage
requirements
$
$
$
Debt Issue
Costs Paid (1)
0.8
2.4
Loss on Debt
Amendment (2)
$
$
0.2
0.2
0.5
$
0.2
0.3
$
0.3
5.0
$
1.5
(1)
(2)
Reflected as a reduction of long term debt on the consolidated balance sheet.
Reflected as a loss on debt amendments and refinancing on the consolidated statement of income for the year in which the amendments were
effective.
Under the amended Credit Agreement, quarterly principal payments of $1.6 million are due on the term loan
through December 31, 2024, with a final principal payment of $613.4 million due on March 29, 2025.
Subsequent to the March 29, 2018 amendment noted above, interest on the term loan accrues at Cinemark USA,
Inc.’s option at: (A) the base rate equal to the greater of (1) the US “Prime Rate” as quoted in The Wall Street Journal
or if no such rate is quoted therein, in a Federal Reserve Board statistical release, (2) the federal funds effective rate
plus 0.50%, and (3) a one-month Eurodollar-based rate plus 1.0%, plus, in each case, a margin of 0.75% per annum,
or (B) a Eurodollar-based rate for a period of 1, 2, 3, 6, 9 or 12 months plus a margin of 1.75% per annum. Interest on
the revolving credit line accrues, at our option, at: (A) a base rate equal to the greater of (1) the US “Prime Rate” as
quoted in The Wall Street Journal or if no such rate is quoted therein, in a Federal Reserve Board statistical release,
(2) the federal funds effective rate plus 0.50%, and (3) a one-month Eurodollar-based rate plus 1.0%, plus, in each
case, a margin that ranges from 0.50% to 1.25% per annum, or (B) a Eurodollar-based rate for a period of 1, 2, 3, 6, 9
or 12 months plus a margin that ranges from 1.50% to 2.25% per annum. The margin of the revolving credit line is
determined by the consolidated net senior secured leverage ratio as defined in the Credit Agreement.
At December 31, 2018, there was $652.9 million outstanding under the term loan. Cinemark USA, Inc. had $98.8
million in available borrowing capacity on the revolving credit line, after giving effect to a letter of credit outstanding
as of December 31, 2018. The average interest rate on outstanding term loan borrowings under the Credit Agreement
at December 31, 2018 was approximately 4.4% per annum.
41
Cinemark USA, Inc.’s obligations under the Credit Agreement 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 Credit Agreement 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 our
ability, to consolidate or merge or liquidate, wind up or dissolve; substantially change the nature of its business; sell,
transfer or dispose of assets; create or incur indebtedness; create liens; pay dividends or repurchase stock; and make
capital expenditures and investments. If Cinemark USA, Inc. has borrowings outstanding on the revolving credit line,
it is required to satisfy a consolidated net senior secured leverage ratio covenant as defined in the Credit Agreement,
not to exceed 5.0 to 1. As of December 31, 2018, Cinemark USA, Inc.’s actual ratio was 2.9 to 1.
The dividend restriction contained in the Credit Agreement 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 Cinemark USA, Inc. to be in default, under the Credit Agreement; and (2) the
aggregate amount of certain dividends, distributions, investments, redemptions and capital expenditures made since
December 18, 2012, including dividends declared by the 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 December 18, 2012, (b) Cinemark USA, Inc.’s consolidated EBITDA minus 1.75 times its consolidated interest
expense, each as defined in the Credit Agreement, and (c) certain other defined amounts. As of December 31, 2018,
Cinemark USA, Inc. could have distributed up to approximately $2,918.1 million to its parent company and sole
stockholder, Cinemark Holdings, Inc.
We have three interest rate swap agreements that are used to hedge a portion of the interest rate risk associated
with the variable interest rates on the term loan outstanding under the Credit Agreement. See Note 11 of our
consolidation financial statements for discussion of interest rate swaps. See also discussion of interest rate risk at Item
7A. Quantitative and Qualitative Disclosures About Market Risk.
4.875% Senior Notes
On May 24, 2013, Cinemark USA, Inc. issued $530.0 million aggregate principal amount of 4.875% senior
notes due 2023, at par value, (the “4.875% Senior Notes”). Interest on the 4.875% Senior Notes is payable on June 1
and December 1 of each year. The 4.875% Senior Notes mature on June 1, 2023.
On March 21, 2016, Cinemark USA, Inc. issued an additional $225.0 million aggregate principal amount of the
4.875% Senior Notes, at 99.0% of the principal amount plus accrued and unpaid interest from December 1, 2015.
Proceeds, after payment of fees, were used to finance the redemption of Cinemark, USA, Inc.’s previously outstanding
$200.0 million 7.375% senior subordinated notes due 2021 (the “7.375% Senior Subordinated Notes”), as discussed
below. These additional notes have identical terms, other than the issue date, the issue price and the first interest
payment date, and constitute part of the same series as Cinemark USA, Inc.’s existing 4.875% Senior Notes. The
aggregate principal amount of $755.0 million of 4.875% Senior Notes mature on June 1, 2023. The Company incurred
debt issue costs of approximately $3.7 million in connection with the issuance of the additional notes, which, along
with the discount of $2.3 million, are reflected as a reduction of long term debt, net of accumulated amortization, on
the consolidated balance sheet as of December 31, 2018.
The 4.875% 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 4.875% 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 senior subordinated debt. The 4.875% 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 Credit Agreement. The 4.875% Senior
Notes and the guarantees are structurally subordinated to all existing and future debt and other liabilities of Cinemark
USA, Inc.’s subsidiaries that do not guarantee the 4.875% Senior Notes.
42
The indenture to the 4.875% Senior Notes contains covenants that limit, among other things, the ability of
Cinemark USA, Inc. and certain of its subsidiaries to (1) make investments or other restricted payments, including
paying dividends, making other distributions or repurchasing subordinated debt or equity, (2) incur additional
indebtedness and issue preferred stock, (3) enter into transactions with affiliates, (4) enter new lines of business,
(5) merge or consolidate with, or sell all or substantially all of its assets to, another person and (6) create liens. As of
December 31, 2018, Cinemark USA, Inc. could have distributed up to approximately $2,980.6 million to its parent
company and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the 4.875% Senior Notes,
subject to its available cash and other borrowing restrictions outlined in the indenture. Upon a change of control, as
defined in the indenture governing the 4.875% Senior Notes, Cinemark USA, Inc. would be required to make an offer
to repurchase the 4.875% Senior Notes at a price equal to 101% of the aggregate principal amount outstanding plus
accrued and unpaid interest, if any, through the date of repurchase. The indenture governing the 4.875% 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, 2018 was approximately 6.3 to 1.
Cinemark USA, Inc. may redeem the 4.875% Senior Notes in whole or in part at redemption prices specified in
the indenture.
5.125% Senior Notes
On December 18, 2012, Cinemark USA, Inc. issued $400.0 million aggregate principal amount of 5.125% senior
notes due 2022, at par value (the “5.125% Senior Notes”). Interest on the 5.125% Senior Notes is payable on June 15
and December 15 of each year. The 5.125% Senior Notes mature on December 15, 2022.
The 5.125% 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 5.125% 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 5.125% 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 Credit Agreement. The 5.125% Senior
Notes and the guarantees are structurally subordinated to all existing and future debt and other liabilities of Cinemark
USA, Inc.’s subsidiaries that do not guarantee the 5.125% Senior Notes.
The indenture to the 5.125% Senior Notes contains covenants that limit, among other things, the ability of
Cinemark USA, Inc. and certain of its subsidiaries to (1) make investments or other restricted payments, including
paying dividends, making other distributions or repurchasing subordinated debt or equity, (2) incur additional
indebtedness and issue preferred stock, (3) enter into transactions with affiliates, (4) enter new lines of business,
(5) merge or consolidate with, or sell all or substantially all of its assets to, another person and (6) create liens. As of
December 31, 2018, Cinemark USA, Inc. could have distributed up to approximately $2,985.8 million to its parent
company and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the 5.125% Senior Notes,
subject to its available cash and other borrowing restrictions outlined in the indenture. Upon a change of control, as
defined in the indenture governing the 5.125% Senior Notes, Cinemark USA, Inc. would be required to make an offer
to repurchase the 5.125% Senior Notes at a price equal to 101% of the aggregate principal amount outstanding plus
accrued and unpaid interest, if any, through the date of repurchase. The indenture governing the 5.125% 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, 2018 was approximately 6.3 to 1.
As of December 31, 2018, we believe we were in full compliance with all agreements, including all related
covenants, governing our outstanding debt.
43
Ratings
We are rated by nationally recognized rating agencies. The rating scales and methodologies used to derive
individual ratings may vary from agency to agency. Credit ratings are issued by credit rating agencies based on
evaluations of our ability to pay back our outstanding debt and the likelihood that we would default on that debt prior
to its maturity. The credit ratings issued by the credit rating agencies represent the credit rating agency's evaluation
of both qualitative and quantitative information for our company. The credit ratings that are issued are based on the
credit rating agency’s judgment and experience in determining what information should be considered in giving a
rating to a particular company. 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.
New Accounting Pronouncements
See Note 2 to our consolidated financial statements for a discussion of recently issued accounting
pronouncements and their impact on our 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 summer months in the
U.S., extending from May to July, and during the holiday season, extending from November through year-end. The
timing of releases, however, has become less pronounced as distributors have begun releasing content more evenly
throughout the year. In our Latin American markets, while Hollywood content has similar release dates as in the U.S.,
the local holidays and seasons can vary. The unexpected emergence of a hit film during other periods can alter this
seasonality trend. The timing and quality 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.
44
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, 2018, there was an aggregate of
approximately $202.9 million of variable rate debt outstanding under these facilities, after giving effect to the interest
rate swap agreements discussed below. Based on the interest rates in effect on the variable rate debt outstanding at
December 31, 2018, a 100 basis point increase in market interest rates would increase our annual interest expense by
approximately $2.0 million.
The table below provides information about our fixed rate and variable rate long-term debt agreements as of
December 31, 2018:
Fixed rate
Variable rate
Total debt (1)
$
$
2019
2020
Expected Maturity for the Twelve-Month Periods Ending December 31,
(in millions)
2023
1.4 $ — $ — $ 400.0 $ 755.0 $ 450.0 $1,606.4 $ 1,574.7
6.6
6.6
199.4
6.6 $ 406.6 $ 761.6 $ 619.9 $1,809.3 $ 1,774.1
8.0 $
6.6
6.6 $
Thereafter
202.9
169.9
6.6
6.6
Total
2022
2021
Fair Value Rate
Average
Interest
4.8%
4.3%
(1)
Amounts are presented before adjusting for debt issuance costs.
Interest Rate Swap Agreements
All of 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 related gains or
losses reported as a component of accumulated other comprehensive loss. See Note 11 to the consolidated financial
statements for further discussion of the interest rate swap agreements.
Below is a summary of our interest rate swap agreements as of December 31, 2018:
Effective Date
Notional
Amount
$175.0 million December 31, 2018
$137.5 million December 31, 2018
$137.5 million December 31, 2018
$450.0 million
Foreign Currency Exchange Rate Risk
Pay Rate
2.751%
2.765%
2.746%
Receive Rate
1-Month LIBOR
1-Month LIBOR
1-Month LIBOR
Expiration Date
December 31, 2022
December 31, 2022
December 31, 2022
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 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. U.S. GAAP requires 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, which could impact future results of operations as reported. 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, 2018,
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 $46.0 million and would decrease the aggregate net income of our
international subsidiaries for the year ended December 31, 2018 by $5.9 million, respectively.
45
We deemed Argentina to be highly inflationary beginning July 1, 2018. A highly inflationary economy is
defined as an economy with a cumulative inflation rate of approximately 100 percent or more over a three-year period.
If a country’s economy is classified as highly inflationary, the financial statements of the foreign entity operating in
that country must be remeasured to the functional currency of the reporting entity. The financial statements of the
Company’s Argentina subsidiaries has been remeasured in U.S. dollars in accordance with ASC Topic 830, Foreign
Currency Matters, effective beginning July 1, 2018.
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, 2018, under the supervision and with the participation of our principal executive officer
and principal financial officer, we carried out an evaluation required by the Exchange Act of the effectiveness of the
design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act.
Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of
December 31, 2018, 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 Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and were effective
to provide reasonable assurance that such information is accumulated and communicated to our management,
including our principal executive officer and principal financial officer, as appropriate to allow timely decisions
regarding required disclosures.
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, 2018 that materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
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 Exchange 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 U.S. Management has assessed the effectiveness of our internal control
over financial reporting as of December 31, 2018 based on criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission, or COSO, in Internal Control—Integrated Framework (2013). As a
result of this assessment, management concluded that, as of December 31, 2018, 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 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.
46
The Company’s independent registered public accounting firm, Deloitte & Touche LLP, which has 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.
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.
Item 9B. Other Information
None.
47
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Cinemark Holdings, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Cinemark Holdings, Inc. and subsidiaries (the “Company”)
as of December 31, 2018, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established
in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended December 31,
2018, of the Company and our report dated February 28, 2019, expressed an unqualified opinion on those financial statements
and financial statement schedule.
Basis for Opinion
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 are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. 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.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed 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 its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Dallas, Texas
February 28, 2019
48
PART III
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 23, 2019 and to be filed with the SEC within 120 days after December 31, 2018.
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 23, 2019 and to be filed with the SEC within 120 days after December 31,
2018.
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 23, 2019 and to be filed with the
SEC within 120 days after December 31, 2018.
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 23, 2019 and to be
filed with the SEC within 120 days after December 31, 2018.
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
23, 2019 and to be filed with the SEC within 120 days after December 31, 2018.
Item 15. Exhibits, Financial Statement Schedules
(a) Documents Filed as Part of this Report
PART IV
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.
The exhibits listed in the accompanying Index beginning on page 50 are filed as a part of this report.
1.
2.
(b) Exhibits
See the accompanying Index beginning on page 50.
(c) Financial Statement Schedules
Schedule I – Condensed Financial Information of Registrant beginning on page S-1.
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.
49
Number
3.1
3.2(a)
3.2(b)
3.2(c)
4.1
4.4(a)
4.4(b)
4.5(a)
4.5(b)
4.6
10.1(a)
10.1(b)
10.1(c)
10.1(d)
EXHIBIT INDEX
Exhibit Title
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).
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).
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).
Second Amendment to the Amended and Restated Bylaws of Cinemark Holdings, Inc. dated August 20, 2015 (incorporated by reference
to Exhibit 3.1 to Current Report on Form 8K, File No. 001-33401, filed August 21, 2015).
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).
Indenture, dated as of December 18, 2012, between Cinemark USA, Inc. and Wells Fargo Bank, N.A. governing the 5.125% senior notes
issued thereunder (incorporated by reference to Exhibit 4.1 to Cinemark Holdings, Inc.’s Current Report on Form 8K, File No. 001-
33401, filed on December 20,2012).
Form of 5.125% senior notes of Cinemark USA, Inc. (contained in the Indenture listed as Exhibit 4.4(a) above) (incorporated by reference
to Exhibit 4.1 to the Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No. 001-33401, filed on December 20, 2012).
Indenture, dated as of May 24, 2013, between Cinemark USA, Inc. and Well Fargo Bank, N.A. governing the 4.875% Senior Notes issued
thereunder (incorporated by reference to Exhibit 4.1 to Cinemark Holdings, Inc.’s Current Report on Form 8K, File No. 001-33401 filed
May 28, 2013).
Form of 4.875% Senior Notes of Cinemark USA, Inc. (contained in the Indenture listed as Exhibit 4.5(a) above (incorporated by reference
to Exhibit 4.1 to Cinemark Holdings, Inc.’s Current Report on Form 8K, File No. 001-33401, filed May 28, 2013).
First Supplemental Indenture, dated as of March 21, 2016, among Cinemark USA, Inc., the Guarantors named therein and Wells Fargo
Bank, N.A., as trustee (incorporated by reference to Exhibit 4.3 to Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No. 001-
33401, filed on March 21, 2016).
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). (P)
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).
Second Amendment to Management Agreement 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 Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed March 13, 2009).
Third Amendment to Management Agreement of Laredo Theatres, Ltd., effective as of December 10, 2013, 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(d)
to the Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed February 24, 2016).
10.2
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). (P)
10.3(a)
10.3(b)
10.3 (c)
Amended and Restated Credit Agreement, dated as of December 18, 2012, among Cinemark USA, Inc., Cinemark Holdings, Inc., the
several banks and other financial institutions and entities from time to time parties thereto, Barclays Bank PLC, Deutsche Bank Securities
Inc., Morgan Stanley Senior Funding, Inc. and Wells Fargo Securities, LLC, as joint bookrunners, Morgan Stanley Senior Funding, Inc.,
as syndication agent, Deutsche Bank Securities Inc., Wells Fargo Securities, Inc. and Webster Bank, N.A., as co-documentation agents,
and Barclays Bank PLC, as administrative agent. (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s Current Report
on Form 8-K, File No. 001-33401, filed on December 20, 2012).
Second Amendment to the Amended and Restated Credit Agreement, dated as of May 8, 2015, among Cinemark USA, Inc., Cinemark
Holdings, Inc., the several banks and other financial institutions and entities from time to time parties thereto, Barclays Bank PLC as
administrative agent, Barclays Bank PLC as lead arranger, Barclays, Morgan Stanley Senior Funding, Inc., Deutsche Bank Securities Inc.
and Wells Fargo Securities, LLC, as joint bookrunners, J.P.Morgan Securities LLC, Webster Bank, N.A., as co-arrangers (incorporated
by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No. 001-33401, filed on May 14, 2015).
Third Amendment to the Amended and Restated Credit Agreement, dated as of June 13, 2016, among Cinemark Holdings, Inc., Cinemark
USA, Inc., the several banks and other financial institutions party thereto, Barclays Bank PLC, as administrative agent, and the other
agents party thereto (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No. 001-
33401, filed on June 17, 2016).
50
Number
10.3 (d)
10.3 (e)
10.3 (f)
10.3 (g)
10.3(h)
10.3(i)
Exhibit Title
Fourth Amendment to the Amended and Restated Credit Agreement, dated as of December 15, 2016, among Cinemark Holdings, Inc.,
Cinemark USA, Inc., the several banks and other financial institutions party thereto, Barclays Bank PLC, as administrative agent, and the
other agents party thereto (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No.
001-33401, filed on December 20, 2016).
Fifth Amendment to the Amended and Restated Credit Agreement, dated as of June 16, 2017, among Cinemark Holdings, Inc., Cinemark
USA, Inc., the several banks and other financial institutions party thereto, Barclays Bank PLC, as administrative agent, and the other
agents party thereto (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No. 001-
33401, filed on June 20, 2017).
Sixth Amendment to the Amended and Restated Credit Agreement, dated as of November 28, 2017, among Cinemark Holdings, Inc.,
Cinemark USA, Inc., the several banks and other financial institutions party thereto, Barclays Bank PLC, as administrative agent, and the
other agents party thereto (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No.
001-33401, filed on December 4, 2017).
Seventh Amendment to the Amended and Restated Credit Agreement, dated as of March 29, 2018, among Cinemark Holdings, Inc.,
Cinemark USA, Inc., the several banks and other financial institutions party thereto, Barclays Bank PLC, as administrative agent, and the
other agents party thereto (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No.
001-33401, filed on April 4, 2018).
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. 033-47040, filed by Cinemark USA, Inc. on October 12, 2006).
Reaffirmation agreement, dated as of December 18, 2012, between Cinemark Holdings, Inc., Cinemark USA, Inc. and each subsidiary
guarantor party thereto (incorporated by reference to Exhibit 10.4(c) to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File
No. 001-33401, filed February 28, 2013).
+10.5(a)
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(b)
+10.5(c)
+10.5(d)
+10.5(e)
+10.5(f)
+10.5(g)
+10.6(a)
+10.6(b)
+10.6(c)
+10.6(d)
+10.6(e)
+10.6(f)
Amendment to Employment Agreement dated as of November 12, 2014 between Cinemark Holdings, Inc. and Lee Roy Mitchell
(incorporated by reference to Exhibit 10.6(h) to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed
February 27, 2015).
Employment Agreement dated as of June 23, 2014, by and between Cinemark Holdings, Inc. and Sean Gamble (incorporated by reference
to Exhibit 10.1 to Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No.001-33401, filed June 23, 2014).
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. 001-33401, filed August 8, 2008).
Employment Agreement, dated as of February 15, 2010, between Cinemark Holdings, Inc. and Valmir Fernandes (incorporated by
reference to Exhibit 10.5(u) to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed March 10, 2010).
Amended and Restated Employment Agreement, dated as of February 19, 2016, between Cinemark Holdings, Inc. and Mark Zoradi
(incorporated by reference to Exhibit 10.6(l) to the Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed
February 24, 2016).
First Amendment to the Amended and Restated Employment Agreement, dated as of February 20, 2018, between Cinemark Holdings,
Inc. and Mark Zoradi (incorporated by reference to Exhibit 10.l to Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No.001-
33401, filed February 23, 2018).
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).
First Amendment to the Amended and Restated Cinemark Holdings, Inc. 2006 Long Term Incentive Plan (incorporated by reference to
Exhibit 10.1 to Current Report on Form 8-K, File No. 001-33401, filed February 18, 2014).
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).
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).
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 10.7(f) to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-
33401, filed February 29, 2012).
Form of Restricted Stock Unit Award Agreement pursuant to the Amended and Restated Cinemark Holdings, Inc. 2006 Long Term
Incentive Plan, as amended (incorporated by reference to Exhibit 10.7(f) to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File
No. 001-33401, filed February 27, 2015).
51
Number
+10.6(g)
+10.7(a)
+10.7(b)
+10.7(c)
+10.7(d)
+10.7(e)
+10.7(f)
+10.7(g)
10.8
10.9
10.10(a)
10.10(b)
10.10(c)
10.10(d)
10.10(e)
10.11(a)
10.11(b)
10.11(c)
10.11(d)
Exhibit Title
Form of Restricted Share Unit Award Agreement pursuant to the Amended and Restated Cinemark Holdings, Inc. 2006 Long Term
Incentive Plan, as amended (incorporated by reference to Exhibit 10.7(h) to the Cinemark Holdings, Inc.’s Annual Report on Form 10-
K, File No. 001-33401, filed February 24, 2016).
Cinemark Holdings, Inc. 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.7(a) to Cinemark Holdings, Inc.’s Annual
Report on Form 10-K, File No. 001-33401, filed February 23, 2018).
Form of Stock Option Award Agreement pursuant to the Cinemark Holdings, Inc. 2017 Omnibus Incentive Plan (incorporated by
reference to Exhibit 4.3 to Cinemark Holdings, Inc.’s Registration Statement on Form S-8, File No. 333-218697, filed June 13, 2017).
Form of Performance Stock Award Agreement pursuant to the Cinemark Holdings, Inc. 2017 Omnibus Incentive Plan (incorporated by
reference to Exhibit 4.4 to Cinemark Holdings, Inc.’s Registration Statement on Form S-8, File No. 333-218697, filed June 13, 2017).
Form of Restricted Stock Award Agreement pursuant to the Cinemark Holdings, Inc. 2017 Omnibus Incentive Plan (incorporated by
reference to Exhibit 4.5 to Cinemark Holdings, Inc.’s Registration Statement on Form S-8, File No. 333-218697, filed June 13, 2017).
Form of Restricted Stock Award Agreement pursuant to the Cinemark Holdings, Inc. 2017 Omnibus Incentive Plan (incorporated by
reference to Exhibit 10.7(d) to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed February 23, 2018).
Form of Performance Stock Unit Award Certificate pursuant to the Cinemark Holdings, Inc. 2017 Omnibus Incentive Plan (incorporated
by reference to Exhibit 4.6 to Cinemark Holdings, Inc.’s Registration Statement on Form S-8, File No. 333-218697, filed June 13, 2017).
Form of Restricted Stock Unit Award Certificate pursuant to the Cinemark Holdings, Inc. 2017 Omnibus Incentive Plan (incorporated by
reference to Exhibit 4.7 to Cinemark Holdings, Inc.’s Registration Statement on Form S-8, File No. 333-218697, filed June 13, 2017).
Amended and Restated Exhibitor Services Agreement between National CineMedia, LLC and Cinemark USA, Inc., dated as of December
26, 2013(incorporated by reference to Exhibit 10.45 to Cinemark Holdings, Inc.’s Annual Report on Form 10-K , File No. 001-33401,
filed February 28, 2014).
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).
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).
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).
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).
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).
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.(succeeded by Century Theatres, Inc.), as tenant, for Century Stadium 14,
Sacramento, CA. (incorporated by reference to Exhibit 10.10(a) of Cinemark Holdings, Inc. Quarterly Report on Form 10-Q, File No.
001-33401, filed November 7, 2013).
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).
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).
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).
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).
52
Number
10.11(e)
10.11(f)
10.12(a)
10.12(b)
10.12(c)
10.12(d)
10.12(e)
10.12(f)
10.13(a)
10.13(b)
10.13(c)
10.13(d)
10.13(e)
10.13(f)
10.13(g)
10.14(a)
Exhibit Title
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. (succeeded by Century Theatres, Inc.), as tenant, for Century Laguna 16, Elk
Grove, CA. (incorporated by reference to Exhibit 10.10(b) of Cinemark Holdings, Inc. Quarterly Report on Form 10-Q, File No. 001-
33401, filed November 7, 2013).
Fifth Amendment, dated as of January 29, 2018, 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. (succeeded by Century Theatres, Inc.), as tenant, for Century Laguna 16, Elk
Grove, CA. (incorporated by reference to Exhibit 10.5 to Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No. 001-33401,
filed January 29, 2018).
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).
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).
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).
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).
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. (succeeded by Century Theatres, Inc.), as tenant, for Century 14, Folsom, CA.
(incorporated by reference to Exhibit 10.10(c) of Cinemark Holdings, Inc. Quarterly Report on Form 10-Q, File No. 001-33401, filed
November 7, 2013).
Fifth Amendment, dated as of January 29, 2018 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. (succeeded by Century Theatres, Inc.), as tenant, for Century 14, Folsom, CA.
(incorporated by reference to Exhibit 10.4 to Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No. 001-33401, filed January
29, 2018).
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).
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).
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).
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).
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).
Fifth Amendment to Indenture of Lease, dated as of October 5, 2012 by and between Syufy Enterprises, L.P. as landlord and Century
Theatres, Inc., as tenant, for Cinedome 12, Henderson, NV. (incorporated by reference to Exhibit 10.13(f) to Cinemark Holdings, Inc.’s
Annual Report on Form 10-K, File No. 001-33401, filed February 27, 2015).
Sixth Amendment to Indenture of Lease, dated as of January 29, 2018 by and between Syufy Enterprises, L.P. as landlord and Century
Theatres, Inc., as tenant, for Cinedome 12, Henderson, NV. (incorporated by reference to Exhibit 10.3 to Cinemark Holdings, Inc.’s
Current Report on Form 8-K, File No. 001-33401, filed January 29, 2018).
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).
53
Number
10.14(b)
10.14(c)
10.14(d)
10.14(e)
10.14(f)
10.14(g)
10.14(h)
10.15(a)
10.15(b)
10.15(c)
10.15(d)
10.15(e)
10.15(f)
10.17(a)
10.17(b)
10.17(c)
Exhibit Title
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).
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).
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).
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 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).
Fifth Amendment, dated as of May 1, 2014, to Indenture of Lease by and between Syufy Enterprises, L.P., as landlord and Century
Theatres, Inc., as tenant for Century 8, North Hollywood, CA. (incorporated by reference to Exhibit 10.14(f) to Cinemark Holdings, Inc.’s
Annual Report on Form 10-K, File No. 001-33401, filed February 27, 2015).
Sixth Amendment, dated as of July 28, 2015, to Indenture of Lease by and between Syufy Enterprises, L.P., as landlord and Century
Theatres, Inc., as tenant for Century 8, North Hollywood, CA (incorporated by reference to Exhibit 10.14(g) to Cinemark Holdings, Inc.’s
Annual Report on Form 10-K, File No. 001-33401, filed February 23, 2018).
Seventh Amendment, dated as of January 29, 2018, to Indenture of Lease by and between Syufy Enterprises, L.P., as landlord and Century
Theatres, Inc., as tenant for Century 8, North Hollywood, CA. (incorporated by reference to Exhibit 10.1 to Cinemark Holdings, Inc.’s
Current Report on Form 8-K, File No. 001-33401, filed January 29, 2018).
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).
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).
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).
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).
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. (succeeded by Century Theatres, Inc.), as tenant, for Century Cinema 16,
Mountain View, CA. (incorporated by reference to Exhibit 10.10(d) of Cinemark Holdings, Inc. Quarterly Report on Form 10-Q, File
No. 001-33401, filed November 7, 2013).
Fifth Amendment, dated as of January 29, 2018, 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. (succeeded by Century Theatres, Inc.), as tenant, for Century Cinema 16,
Mountain View, CA. (incorporated by reference to Exhibit 10.2 to Cinemark Holdings, Inc.’s Current Report on Form 8—K, File No.
001-33401, filed January 29, 2018).
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).
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).
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).
54
Number
10.17(d)
10.19(a)
10.19(b)
10.19(c)
10.19(d)
10.19(e)
10.19(f)
10.20(a)
10.20(b)
10.20(c)
10.20(d)
10.20(e)
10.21(a)
10.21(b)
10.21(c)
10.21(d)
10.21(e)
Exhibit Title
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
10.10(j) of Cinemark Holdings, Inc. Quarterly Report on Form 10-Q, File No. 001-33401, filed November 7, 2013).
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).
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).
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).
Third Amendment, dated as of August 5, 2006, to Lease Agreement, dated as of October 1, 1996, by and between Stadium Promenade
LLC, as landlord and Century Theatres, Inc., as tenant, for Century Stadium 25, Orange, CA. (incorporated by reference to Exhibit
10.10(h) of Cinemark Holdings, Inc. Quarterly Report on Form 10-Q, File No. 001-33401, filed November 7, 2013).
Fourth Amendment, dated as of August 15, 2014, to Lease Agreement, dated as of October 1, 1996, by and between Stadium Promenade
LLC, as landlord and Century Theatres, Inc., as tenant, for Century Stadium 25, Orange, CA (incorporated by reference to Exhibit 10.19(e)
to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed February 23, 2018).
Fifth Amendment, dated as of August 3, 2015, to Lease Agreement, dated as of October 1, 1996, by and between Stadium Promenade
LLC, as landlord and Century Theatres, Inc., as tenant, for Century Stadium 25, Orange, CA (incorporated by reference to Exhibit 10.19(f)
to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed February 23, 2018).
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).
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).
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).
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 10.10(g) of Cinemark Holdings, Inc. Quarterly Report on Form 10-Q, File No. 001-33401, filed November 7,
2013).
Fourth Amendment, dated as of January 29, 2018, 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 10.7 to Cinemark Holdings, Inc.’s Current Report on Form 8—K, File No. 001-33401, filed January 29, 2018).
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).
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).
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).
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 10.10(e) of
Cinemark Holdings, Inc. Quarterly Report on Form 10-Q, File No. 001-33401, filed November 7, 2013).
Fourth Amendment, dated as of January 29, 2018, 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 10.6 to
Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No. 001-33401, filed January 29, 2018).
55
Number
10.22(a)
10.22(b)
10.22(c)
10.22(d)
10.22 (e)
10.22(f)
10.22(g)
10.23(a)
10.23(b)
10.23(c)
10.23(d)
10.23(e)
10.23(f)
10.24(a)
10.24(b)
10.24(c)
Exhibit Title
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).
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).
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).
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).
Fourth Amendment dated as of September 29, 2005 to Indenture of Lease, dated September 30, 1995 between Syufy Enterprises L.P., as
landlord and Century Theatres, Inc., as tenant for Century Stadium 16, Ventura, CA (incorporated by reference to Exhibit 10.22(e) to
Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed February 27, 2015).
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 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).
Sixth Amendment dated November 29, 2012 to Indenture of Lease, dated as of September 30, 1995, between Syufy Enterprises, L.P., as
landlord and Century Theatres, Inc., as tenant, for Century Stadium 16, Ventura, CA (incorporated by reference to Exhibit 10.22(g) to
Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed February 27, 2015).
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).
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).
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).
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
10.10(m) of Cinemark Holdings, Inc. Quarterly Report on Form 10-Q, File No. 001-33401, filed November 7, 2013).
Fourth Amendment, dated as of August 4, 2017, 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
10.23(e) to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed February 23, 2018).
Fifth Amendment, dated as of January 29, 2018, 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
10.10 to Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No. 001-33401, filed January 29, 2018).
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).
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).
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).
56
Number
10.24(d)
10.24(e)
10.24(f)
10.25(a)
10.25(b)
10.25(c)
10.25(d)
10.25(e)
10.25(f)
10.26(a)
10.26(b)
10.26(c)
10.26(d)
10.26(e)
10.26(4)
10.27(a)
10.27(b)
Exhibit Title
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).
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).
Fifth Amendment, dated as of August 7, 2006, to Indenture of Lease, dated as of September 30, 1995, by and between SYUT Properties,
Inc. (succeeded by Syufy Properties, Inc.), as landlord and Century Theatres of Utah, Inc. (succeeded by Century Theatres, Inc.), as
tenant, for Century 16, Salt Lake City, UT. (incorporated by reference to Exhibit 10.10(l) of Cinemark Holdings, Inc. Quarterly Report
on Form 10-Q, File No. 001-33401, filed November 7, 2013).
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).
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).
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).
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).
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 10.10(k)
of Cinemark Holdings, Inc. Quarterly Report on Form 10-Q, File No. 001-33401, filed November 7, 2013).
Fifth Amendment, dated as of January 29, 2018, 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 10.9 to
Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No. 001-33401, filed January 29, 2018).
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).
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).
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).
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 10.10(f)
of Cinemark Holdings, Inc.’s Quarterly Report on Form 10-Q, File No. 001-33401, filed November 7, 2013).
Fourth Amendment, dated as of August 8, 2017, 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 10.26(e)
to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed February 23, 2018).
Fifth Amendment, dated as of January 29, 2018, 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 10.8
to Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No. 001-33401, filed January 29, 2018).
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).
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).
57
Number
10.27(c)
10.27(d)
10.27(e)
10.27(f)
10.27(g)
10.28(a)
10.28(b)
10.29
+10.30
10.31
10.32
10.33
10.34
Exhibit Title
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).
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).
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).
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. (succeeded by Century Theatres, Inc.), as tenant, for Century 16, Sacramento,
CA (incorporated by reference to Exhibit 10.10(n) of Cinemark Holdings, Inc.’s Quarterly Report on Form 10-Q, File No. 001-33401,
filed November 7, 2013).
Sixth Amendment, dated as of January 29, 2018, 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. (succeeded by Century Theatres, Inc.), as tenant, for Century 16, Sacramento,
CA (incorporated by reference to Exhibit 10.11 to Cinemark Holdings, Inc.’s Current Report on Form 8—K, File No. 001-33401, filed
January 29, 2018).
Lease Agreement, dated as of May 26, 2015, by and between Sy Arden Way LLC, as landlord and Century Theatres, Inc., as tenant, for
Howe ‘Bout Arden Center, Sacramento, CA (incorporated by reference to Exhibit 10.28(a) to Cinemark Holdings, Inc.’s Annual Report
on Form 10-K, File No. 001-33401, filed February 23, 2018).
Letter Agreement, dated as of February 8, 2016, to Lease Agreement, dated as of May 26, 2015, by and between Sy Arden Way LLC, as
landlord and Century Theatres, Inc., as tenant, for Howe ‘Bout Arden Center, Sacramento, CA (incorporated by reference to Exhibit
10.28(b) to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed February 23, 2018).
Cinemark Holdings, Inc. Performance Bonus Plan, as amended (incorporated by reference to Appendix B to Cinemark Holdings, Inc.’s
Definitive Proxy Statement, filed April 11, 2013).
Third Amended and Restated Non-Employee Director Compensation Policy, dated as of February 15, 2017 (incorporated by reference to
Exhibit 10.30 to Cinemark Holdings, Inc.’s Annual Report on Form 10-K, File No. 001-33401, filed February 23, 2018).
Aircraft Time Sharing Agreement, dated as of September 2, 2009, between Copper Beach Capital, LLC and Cinemark USA, Inc.
(incorporated by reference to Exhibit 10.1 of Cinemark Holdings, Inc.’s Current Report on Form 8-K, File No. 001-33401, filed September
8, 2009).
Limited Liability Company Agreement of FE Concepts, LLC dated as of April 20, 2018 (incorporated by reference to Exhibit 10.1 of
Cinemark Holdings, Inc.’s Quarterly Report on Form 10-Q, File No. 001-33401, filed August 8, 2018).
Management Services Agreement by and between FE Concepts, LLC and Cinema Operations, L.L.C. dated as of April 20, 2018
(incorporated by reference to Exhibit 10.2 of Cinemark Holdings, Inc.’s Quarterly Report on Form 10-Q, File No. 001-33401, filed August
8, 2018).
Theatre Services Agreement by and between FE Concepts, LLC and CNMK Texas Properties, LLC dated as of April 20, 2018
(incorporated by reference to Exhibit 10.3 of Cinemark Holdings, Inc.’s Quarterly Report on Form 10-Q, File No. 001-33401, filed August
8, 2018).
*21
Subsidiaries of Cinemark Holdings, Inc.
*23.1
*31.1
*31.2
*32.1
*32.2
*101
Consent of Deloitte & Touche LLP.
Certification of Mark Zoradi, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Sean Gamble, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Mark Zoradi, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-
Oxley Act of 2002.
Certification of Sean Gamble, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-
Oxley Act of 2002.
The following financial information from Cinemark Holdings, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018
filed with the SEC on February 28, 2019, formatted in XBRL includes: (i) Consolidated Balance Sheets (ii) Consolidated Statements of
Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Equity, (v) Consolidated Statements
of Cash Flows and (vi) the Notes to Consolidated Financial Statements tagged as detailed text.
*
+
(P)
Filed herewith.
Any management contract, compensatory plan or arrangement.
Paper filing.
58
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: February 28, 2019
CINEMARK HOLDINGS, INC
BY:
BY:
/s/ Mark Zoradi
Mark Zoradi
Chief Executive Officer
/s/ Sean Gamble
Sean Gamble
Chief Financial Officer and
Principal Accounting Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby severally constitutes and appoints Mark Zoradi and Sean
Gamble 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 Exchange Act, 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
/s/ Lee Roy Mitchell
Lee Roy Mitchell
/s/ Mark Zoradi
Mark Zoradi
/s/ Sean Gamble
Sean Gamble
/s/ Benjamin D. Chereskin
Benjamin D. Chereskin
/s/ Enrique F. Senior
Enrique F. Senior
/s/ Raymond W. Syufy
Raymond W. Syufy
/s/ Carlos M. Sepulveda
Carlos M. Sepulveda
/s/ Steven Rosenberg
Steven Rosenberg
/s/ Nina Vaca
Nina Vaca
/s/ Darcy Antonellis
Darcy Antonellis
/s/ Nancy Loewe
Nancy Loewe
Title
Chairman of the Board of Directors and Director
Date
February 28, 2019
Chief Executive Officer and Director
(principal executive officer)
Chief Financial Officer
(principal financial and accounting officer)
Director
Director
Director
Director
Director
Director
Director
Director
59
February 28, 2019
February 28, 2019
February 28, 2019
February 28, 2019
February 28, 2019
February 28, 2019
February 28, 2019
February 28, 2019
February 28, 2019
February 28, 2019
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.
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 SEC copies of any
annual report or proxy material that is sent to our stockholders.
60
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL
STATEMENTS:
Report of Independent Registered Public Accounting Firm...............................................................................
Consolidated Balance Sheets, December 31, 2017 and 2018 ............................................................................
Consolidated Statements of Income for the Years Ended December 31, 2016, 2017 and 2018 ........................
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2016, 2017 and
2018 ....................................................................................................................................................................
Consolidated Statements of Equity for the Years Ended December 31, 2016, 2017 and 2018 .........................
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2017 and 2018 .................
Notes to Consolidated Financial Statements ......................................................................................................
Page
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Cinemark Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Cinemark Holdings, Inc. and subsidiaries (the
"Company") as of December 31, 2017 and 2018, the related consolidated statements of income, comprehensive
income, equity, and cash flows, for each of the three years in the period ended December 31, 2018, and the related
notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our
opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2017 and 2018, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of
America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2018, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission and our report dated February 28, 2019, expressed an unqualified opinion on the
Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Dallas, Texas
February 28, 2019
We have served as the Company's auditor since 1988.
F-2
PART IV - FINANCIAL INFORMATION
Item 15. Financial Statement
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
December 31,
2017
December 31,
2018
Assets
Current assets
Cash and cash equivalents
Inventories
Accounts receivable
Current income tax receivable
Prepaid expenses and other
Total current assets
Theatre properties and equipment
Land
Buildings
Property under capital lease
Theatre furniture and equipment
Leasehold interests and improvements
Total
Less: accumulated depreciation and amortization
Theatre properties and equipment, net
Other assets
Goodwill
Intangible assets - net
Investment in NCM
Investments in and advances to affiliates
Long-term deferred tax asset
Deferred charges and other assets - net
Total other assets
Total assets
Liabilities and equity
Current liabilities
Current portion of long-term debt
Current portion of capital and finance lease obligations
Current income tax payable
Current liability for uncertain tax positions
Accounts payable
Accrued film rentals
Accrued payroll
Accrued property taxes
Accrued other current liabilities
Total current liabilities
Long-term liabilities
Long-term debt, less current portion
Capital and finance lease obligations, less current portion
Long-term deferred tax liability
Long-term liability for uncertain tax positions
Deferred lease expenses
Deferred revenue - NCM
Other long-term liabilities
Total long-term liabilities
Commitments and contingencies (see Note 18)
Equity
Cinemark Holdings, Inc.'s stockholders' equity:
Common stock, $0.001 par value: 300,000,000 shares authorized, 121,000,903 shares issued and
116,475,033 shares outstanding at December 31, 2017 and 121,456,721 shares issued and
116,830,530 shares outstanding at December 31, 2018
Additional paid-in-capital
Treasury stock, 4,525,870 and 4,626,191 shares, at cost, at December 31, 2017 and December 31,
2018, respectively
Retained earnings
Accumulated other comprehensive loss
Total Cinemark Holdings, Inc.'s stockholders' equity
Noncontrolling interests
Total equity
Total liabilities and equity
$
$
$
522,547 $
17,507
89,250
11,730
16,536
657,570
104,207
490,394
430,764
1,199,702
1,103,522
3,328,589
1,500,535
1,828,054
1,284,079
336,761
200,550
120,045
4,067
39,767
1,985,269
4,470,893 $
7,099 $
25,511
5,509
11,873
109,984
106,738
50,349
31,353
120,497
468,913
1,780,381
251,151
121,787
8,358
40,929
351,706
41,980
2,596,292
121
1,141,088
(76,354 )
582,222
(253,282 )
1,393,795
11,893
1,405,688
426,222
19,319
95,084
3,288
15,117
559,030
103,739
522,355
387,480
1,239,122
1,151,454
3,404,150
1,571,017
1,833,133
1,276,324
330,910
275,592
156,766
9,028
41,055
2,089,675
4,481,838
7,984
27,065
12,179
573
104,638
95,754
46,500
31,154
148,842
474,689
1,772,627
232,467
155,626
13,380
39,235
287,349
50,348
2,551,032
121
1,155,424
(79,259 )
686,459
(319,007 )
1,443,738
12,379
1,456,117
$
4,470,893 $
4,481,838
The accompanying notes are an integral part of the consolidated financial statements.
F-3
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2016, 2017 AND 2018
(in thousands, except per share data)
Revenues
Admissions
Concession
Other
Total revenues
Cost of operations
Film rentals and advertising
Concession supplies
Salaries and wages
Facility lease expense
Utilities and other
General and administrative expenses
Depreciation and amortization
Impairment of long-lived assets
Loss on disposal of assets and other
Total cost of operations
Operating income
Other income (expense)
Interest expense
Loss on debt amendments and refinancing
Interest income
Foreign currency exchange gain (loss)
Distributions from NCM
Interest expense - NCM
Equity in income of affiliates
Total other expense
Income before income taxes
Income taxes
Net income
Less: Net income attributable to noncontrolling interests
Net income attributable to Cinemark Holdings, Inc.
Weighted average shares outstanding
Basic
Diluted
2016
2017
2018
$
1,789,137 $
990,103
139,525
2,918,765
1,794,982 $
1,038,788
157,777
2,991,547
1,834,173
1,108,793
278,769
3,221,735
962,655
154,469
325,765
321,294
355,926
143,355
209,071
2,836
20,459
2,495,830
422,935
966,510
166,320
354,510
328,197
355,041
153,278
237,513
15,084
22,812
2,599,265
392,282
(108,313)
(13,445)
6,396
6,455
14,656
—
31,962
(62,289)
360,646
103,819
256,827 $
1,736
255,091 $
(105,918)
(521)
6,249
893
16,407
—
35,985
(46,905)
345,377
79,358
266,019 $
1,839
264,180 $
999,755
180,974
383,860
323,316
448,070
165,173
261,162
32,372
38,702
2,833,384
388,351
(109,994)
(1,484)
10,614
(11,660)
15,389
(19,724)
39,242
(77,617)
310,734
95,429
215,305
1,478
213,827
115,508
115,783
115,766
116,059
116,054
116,342
$
$
Earnings per share attributable to Cinemark Holdings, Inc.'s
common stockholders
Basic
Diluted
$
$
2.19 $
2.19 $
2.26 $
2.26 $
1.83
1.83
The accompanying notes are an integral part of the consolidated financial statements.
F-4
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2016, 2017 AND 2018
(In thousands)
Net income
Other comprehensive income (loss), net of tax
Unrealized gain (loss) due to fair value adjustments on interest rate swap
agreements, net of taxes of $138, $0 and $1,243, net of settlements
Other comprehensive income (loss) in equity method investments
Foreign currency translation adjustments
Total other comprehensive income (loss), net of tax
Total comprehensive income, net of tax
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Cinemark Holdings, Inc.
2016
2017
$ 256,827 $ 266,019 $ 215,305
2018
—
248
(3,851)
234
(139)
89
(4,966) (62,253)
26,394
26,717
(4,718) (66,243)
283,544 261,301 149,062
(1,478)
$ 281,775 $ 259,462 $ 147,584
(1,839)
(1,769)
The accompanying notes are an integral part of the consolidated financial statements.
F-5
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
YEARS ENDED DECEMBER 31, 2016, 2017 AND 2018
(in thousands, except per share amounts)
Common Stock
Treasury Stock
Shares
Acquired
Amount
Total
Accumulated
Other
Comprehensive
Loss
Cinemark
Holdings, Inc.'s
Stockholders'
Equity
Noncontrolling
Interests
$
(271,686 ) $
Shares
Balance at January 1, 2016
Issuance of restricted stock
Issuance of stock upon vesting of restricted stock units
Restricted stock forfeitures and stock withholdings related to share
based awards that vested during the year ended December 31, 2016
Share based awards compensation expense
Tax benefit related to share based award vestings
Dividends paid to stockholders, $1.08 per share
Dividends accrued on unvested restricted stock unit awards
Dividends paid to noncontrolling interests
Buyout of noncontrolling interests' share of Chilean subsidiary
Gain realized on available-for-sale securities, net of taxes of $1,180
Net income
Other comprehensive income
Balance at December 31, 2016
Issuance of restricted stock
Issuance of stock upon vesting of restricted stock units
Restricted stock forfeitures and stock withholdings related to share
based awards that vested during the year ended December 31, 2017
Share based awards compensation expense
Tax expense related to share based award vestings
Dividends paid to stockholders, $1.16 per share
Dividends accrued on unvested restricted stock unit awards
Dividends paid to noncontrolling interests
Net income
Reclassification of cumulative translation adjustments
Other comprehensive loss
Balance at December 31, 2017
Cumulative effect of change in accounting principle, net of taxes of
$13,079 (see Note 3)
Issuance of restricted stock
Issuance of stock upon vesting of restricted stock units
Restricted stock forfeitures and stock withholdings related to share
based awards that vested during the year ended December 31, 2018
Share based awards compensation expense
Dividends paid to stockholders, $1.28 per share
Dividends accrued on unvested restricted stock unit awards
Dividends paid to noncontrolling interests
Net income
Reclassification of cumulative translation adjustments
Other comprehensive loss
Balance at December 31, 2018
Issued
120,108
334
215
Amount
$
120
1
—
—
—
—
—
—
—
—
—
—
—
120,657
247
97
—
—
—
—
—
—
—
—
—
121,001
—
329
127
—
—
—
—
—
—
—
—
121,457
$
$
$
—
—
—
—
—
—
—
—
—
—
121
—
—
—
—
—
—
—
—
—
—
—
121
—
—
—
—
—
—
—
—
—
—
—
121
Additional
Paid-in-
Capital
Retained
Earnings
(66,577 ) $ 1,113,219 $ 324,632
—
—
—
—
—
—
—
—
—
(6,834 )
—
—
—
—
—
—
—
—
—
—
13,394
1,856
—
—
—
(27 )
—
—
—
(125,490 )
(554 )
—
—
—
255,091
—
(73,411 ) $ 1,128,442 $ 453,679
—
—
—
—
—
—
$
—
—
—
(2,943 )
—
—
—
—
—
—
—
—
—
12,681
(35 )
—
—
—
—
—
—
(135,079 )
(558 )
—
264,180
—
—
(76,354 ) $ 1,141,088 $ 582,222
$
(4,184 ) $
—
—
(263 )
—
—
—
—
—
—
—
—
—
(4,447 ) $
—
—
(79 )
—
—
—
—
—
—
—
—
(4,526 ) $
—
—
—
—
—
—
—
—
—
(2,011 )
—
26,684
(247,013 ) $
—
—
—
—
—
—
—
—
—
(1,551 )
(4,718 )
(253,282 ) $
$
1,099,708
1
—
(6,834 )
13,394
1,856
(125,490 )
(554 )
-
(27 )
(2,011 )
255,091
26,684
1,261,818
—
—
$
(2,943 )
12,681
(35 )
(135,079 )
(558 )
—
264,180
(1,551 )
(4,718 )
$
1,393,795
—
—
—
—
—
—
—
—
—
40,526
—
—
—
—
—
40,526
—
—
(100 )
—
—
—
—
—
—
—
(4,626 ) $
—
—
—
14,336
—
—
—
—
(2,905 )
—
—
—
—
—
—
—
(149,492 )
(624 )
—
213,827
—
—
(79,259 ) $ 1,155,424 $ 686,459
—
$
—
—
—
—
—
—
518
(66,243 )
(319,007 ) $
(2,905 )
14,336
(149,492 )
(624 )
—
213,827
518
(66,243 )
$
1,443,738
Total
Equity
$ 1,110,813
1
—
11,105
—
—
—
—
—
—
—
(1,309 )
(423 )
-
1,736
33
11,142
—
—
(6,834 )
13,394
1,856
(125,490 )
(554 )
(1,309 )
(450 )
(2,011 )
256,827
26,717
$ 1,272,960
—
—
—
—
—
—
—
(1,088 )
1,839
—
—
11,893
(2,943 )
12,681
(35 )
(135,079 )
(558 )
(1,088 )
266,019
(1,551 )
(4,718 )
$ 1,405,688
—
—
—
40,526
—
—
—
—
—
—
(992 )
1,478
—
—
12,379
(2,905 )
14,336
(149,492 )
(624 )
(992 )
215,305
518
(66,243 )
$ 1,456,117
The accompanying notes are an integral part of the consolidated financial statements.
F-6
CINEMARK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2016, 2017 AND 2018
(In thousands)
Operating activities
Net income
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation
Amortization of intangible and other assets and favorable/unfavorable leases
Amortization of long-term prepaid rents
Amortization of debt issue costs
Amortization of deferred revenues, deferred lease incentives and other
Impairment of long-lived assets
Share based awards compensation expense
Loss on disposal of assets and other
Loss on debt amendments and refinancing
Deferred lease expenses
Reclassification of cumulative translation adjustments
Equity in income of affiliates
Deferred income tax expenses
Distributions from equity investees
Changes in other assets and liabilities:
Inventories
Accounts receivable
Income tax receivable
Prepaid expenses and other
Deferred charges and other assets - net
Accounts payable and accrued expenses
Income tax payable
Liabilities for uncertain tax positions
Other long-term liabilities
Net cash provided by operating activities
Investing activities
Additions to theatre properties and equipment and other
Proceeds from sale of theatre properties and equipment and other
Acquisitions of theatres in the U.S. and international markets, net of cash acquired
Acquisition of screen advertising business
Proceeds from sale of marketable securities
Acquisition of NCM common units
Investment in joint ventures and other, net
Net cash used for investing activities
Financing activities
Dividends paid to stockholders
Payroll taxes paid as a result of restricted stock withholdings
Proceeds from issuance of Senior Notes, net of discount
Retirement of Senior Subordinated Notes
Repayments of long-term debt
Payment of debt issue costs
Fees paid related to debt amendments
Payments on capital leases
Proceeds from financing lease
Purchases of non-controlling interests
Other
Net cash used for financing activities
Effect of exchange rate changes on cash and cash equivalents
Decrease in cash and cash equivalents
Cash and cash equivalents:
Beginning of period
End of period
Supplemental information (see Note 16)
2016
2017
2018
$
256,827 $
266,019 $
215,305
207,091
1,980
1,826
5,492
(16,731 )
2,836
13,394
20,459
13,445
(990 )
—
(31,962 )
(5,467 )
21,916
(1,007 )
(706 )
15,510
(2,267 )
(1,619 )
(30,516 )
(2,261 )
1,182
(5,522 )
462,910
(326,908 )
3,570
(15,300 )
(1,450 )
13,451
—
(1,132 )
(327,769 )
(125,490 )
(6,834 )
222,750
(200,000 )
(16,605 )
(7,217 )
(11,076 )
(19,343 )
—
(450 )
554
(163,711 )
1,266
(27,304 )
235,093
2,420
2,274
6,197
(16,211 )
15,084
12,681
22,812
521
(1,268 )
(1,551 )
(35,985 )
(15,015 )
25,973
(541 )
(13,195 )
(4,363 )
(775 )
(4,956 )
23,405
438
2,041
7,900
528,998
(380,862 )
15,098
(40,997 )
—
—
—
(3,715 )
(410,476 )
(135,079 )
(2,943 )
-
-
(5,671 )
(1,146 )
(521 )
(21,725 )
10,200
—
(1,123 )
(158,008 )
798
(38,688 )
$
588,539
561,235 $
561,235
522,547 $
257,826
3,336
2,382
5,561
(21,706 )
32,372
14,336
38,702
1,484
(1,320 )
518
(39,242 )
23,187
30,143
(1,813 )
(4,584 )
8,442
1,419
(6,303 )
(11,408 )
6,670
(10,066 )
11,674
556,915
(346,073 )
3,920
(11,289 )
—
—
(78,393 )
(19,535 )
(451,370 )
(149,492 )
(2,905 )
-
-
(7,984 )
(5,218 )
(704 )
(25,353 )
—
—
(992 )
(192,648 )
(9,222 )
(96,325 )
522,547
426,222
The accompanying notes are an integral part of the consolidated financial statements.
F-7
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business — Cinemark Holdings, Inc. and subsidiaries (the “Company”) operates in the motion picture exhibition
industry, with theatres in the United States (“U.S.”), Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El
Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curaçao and Paraguay.
Principles of Consolidation — The consolidated financial statements include the accounts of Cinemark
Holdings, Inc. and its subsidiaries. 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 equity method
investees 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 original maturities of three months or
less when purchased. Cash investments are primarily in money market funds, certificates of deposit or other similar
funds.
Accounts Receivable – Accounts receivable, which are recorded at net realizable value, consist primarily of
receivables related to screen advertising, receivables related to discounted tickets and gift cards sold third party to
retail locations, receivables from landlords related to theatre construction and remodels, rebates earned from the
Company’s concession vendors and value-added and other non-income tax receivables.
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
Buildings on owned land
Buildings on leased land
Land and buildings under capital and
finance leases (1)
Theatre furniture and equipment
Leasehold improvements
Useful Life
40 years
Lesser of lease term or useful life
Lesser of lease term or useful life
3 to 15 years
Lesser of lease term or useful life
(1)
Amortization of capital lease assets is included in depreciation and amortization expense on the consolidated statements of income.
Accumulated amortization of capital and finance lease assets as of December 31, 2017 and 2018 was $200,683 and $177,733, respectively.
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 also
performs a full quantitative impairment evaluation on an annual basis. The Company considers actual theatre level
cash flows, 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, the impact of recent theatre remodels or other substantial improvements, available lease renewal
options and other factors considered relevant in its impairment assessment. Long-lived assets are evaluated for
impairment on a 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
F-8
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
use through the remainder of the theatre’s useful life. The remainder of the theatre’s useful life correlates with the
remaining lease period, which includes the probability of the exercise of available renewal periods or extensions, for
leased properties and the lesser of twenty years or the building’s remaining useful life for owned properties. If the
estimated undiscounted cash flows are not sufficient to recover a long-lived asset’s carrying value, the Company then
compares the carrying value of the asset group (theatre) with its estimated fair value. When the estimated fair value is
determined to be lower than the carrying value of the asset group, the asset group 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 six and a half times for the evaluations performed during 2016, 2017 and 2018. 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 9 for further discussion.
Goodwill and Other Intangible Assets — The Company evaluates 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. The Company evaluates goodwill for impairment at the reporting unit level and we 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 its twenty regions in the U.S. and seven of its international countries with Honduras, El Salvador,
Nicaragua, Costa Rica, Panama and Guatemala considered one reporting unit (the Company does not have goodwill
recorded for all of its international locations). Under ASC Topic 350, Goodwill, Intangibles and Other (“ASC Topic
350”), the Company may perform a qualitative impairment assessment or a quantitative impairment assessment of our
goodwill.
A quantitative analysis requires the Company to estimate the fair value of each reporting unit and compare it
with its carrying value. If the carrying value of the reporting unit exceeds its estimated fair value, goodwill would be
written down such that the carrying value would equal estimated fair value. Fair value is determined based on a
multiple of cash flows, which was eight times for the evaluations performed during 2017 and 2018. 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 2017 and 2018. A
qualitative assessment includes consideration of historical and expected future industry performance, estimated future
performance of the Company, current industry trading multiples and other economic factors, and a review of current
carrying values to estimated fair values as determined during our most recent quantitative assessment.
We performed a qualitative assessment for all reporting units for the year ended December 31, 2016. We
performed a quantitative goodwill impairment analysis for all reporting units during the year ended December 31,
2017. For the year ended December 31, 2018, we performed a quantitative goodwill assessment for three new
domestic reporting units and a qualitative assessment for all other reporting units. We did not record any goodwill
impairment charges as a result of the assessments performed during the years ended December 31, 2016, 2017 and
2018.
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. Under ASC Topic 350,
the Company can elect to perform a qualitative or quantitative impairment assessment for our tradename intangible
assets. A quantitative tradename impairment assessment includes comparing the carrying values of tradename assets
to an estimated fair value. Fair values are estimated 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. A qualitative
assessment considers our historical and forecasted revenues and changes in estimated royalty rates, and a comparison
of current carrying values to estimated fair values from our most recent quantitative assessment.
F-9
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
During the year ended December 31, 2016, the Company performed a quantitative tradename impairment
assessment for our tradename in Ecuador and performed a qualitative tradename impairment analysis for all other
tradename intangible assets. During the year ended December 31, 2017, the Company performed a quantitative
tradename impairment evaluations for all of its tradename assets. During the year ended December 31, 2018, the
Compay performed a qualitative tradename impairment analysis for all of its tradename assets. As a result of the
analysis performed during each year, no impairment charges were recorded related to tradename intangible assets for
the years ended December 31, 2016, 2017 and 2018.
The table below summarizes the Company’s intangible assets and the amortization method used for each type
of intangible asset:
Intangible Asset
Goodwill
Tradename
Vendor contracts
Favorable/unfavorable
leases
Other intangible assets
Amortization Method
Indefinite-lived
Indefinite-lived and definite-lived. Definite-lived tradename assets
have a remaining useful life of approximately two to eight years.
Straight-line method over the terms of the underlying contracts. The
remaining term of the underlying contract is two years.
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 approximately one to eighteen years. See
Note 2 for discussion of the expected impact of new lease accounting
pronouncements.
Straight-line method over the terms of the underlying agreement or
the expected useful life of the intangible asset. The remaining useful
lives of these intangible assets range from two to eight years.
Deferred Charges and Other Assets — Deferred charges and other assets consist of long-term prepaid rents,
construction and other deposits, equipment to be placed in service, and other assets of a long-term nature. Long-term
prepaid rents represent prepayments of rent on operating leases, which are recognized as facility lease expense over
the period for which the rent was paid in advance as outlined in the lease agreements. The remaining amortization
periods generally range from one to seventeen years. See Note 2 for discussion of the expected impact of new lease
accounting pronouncements.
Lease Accounting — The Company evaluates each lease for classification as either a capital lease or an operating
lease. The Company records the lease as a capital lease at its inception if 1) the present value of future minimum lease
payments exceeds 90% of the leased property’s estimated fair value; 2) the lease term exceeds 75% of the property’s
estimated useful life; 3) the lease contains a bargain purchase option; or 4) ownership transfers to the Company at the
end of the lease. 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. For some newly built theatres, the landlord is responsible for
constructing the theatre using guidelines and specifications agreed to by the Company and assumes substantially all
of the risks of construction. For other theatres, the Company is responsible for managing construction of the theatre
and the landlord contributes an agreed upon amount toward the costs of construction. If the Company concludes that
it has substantially all of the construction period risks, it considers itself the owner of the property 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. If the Company receives a lease incentive
payment from a landlord, the Company records the proceeds as a deferred lease incentive liability and amortizes the
liability as a reduction in rent expense over the initial term of the lease if a new theatre, or over the remaining lease
term if an existing theatre. See Note 2 for discussion of the expected impact of new lease accounting pronouncements.
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. These advances are recognized on either a straight-line basis over the term of the
F-10
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
contracts or as such revenues are earned in accordance with the terms of the contracts. In addition, the Company
records deferred revenues for sales of gift cards and discounted ticket vouchers, as well as for proceeds received from
its monthly subscription program, annual membership fees for certain of its loyalty programs and for points issued to
customers under other loyalty programs. See Note 3 for further discussion of revenue recognition and Note 6 for
discussion of deferred revenue – NCM.
Self-Insurance Reserves — In the U.S., the Company is self-insured for general liability claims subject to an
annual cap. For the years ended December 31, 2016, 2017 and 2018, general liability claims were capped at $100,
$250 and $250, respectively, per occurrence with aggregate annual caps of approximately $3,350, $3,900 and $4,750,
respectively. For its international locations, the Company is fully insured for general liability claims with little or no
deductibles per occurrence. In the U.S., the Company was fully insured for workers compensation claims during the
year ended December 31, 2016. During 2017, the Company implemented a fully-funded deductible workers
compensation insurance plan under which the Company is responsible for pre-funding claims and is responsible for
claims up to $250 per occurrence, with an annual cap of $5,000 for the years ended December 31, 2017 and 2018.
The Company was also self-insured for domestic medical claims up to $150, $250 and $250 per occurrence for the
years ended December 31, 2016, 2017 and 2018, respectively. As of December 31, 2017 and 2018, the Company’s
insurance reserves were $8,252 and $10,827, respectively, and are reflected in accrued other current liabilities on the
consolidated balance sheets.
Revenue and Expense Recognition — See Note 3 for discussion of revenue recognition.
Film rental costs are accrued based on the applicable box office receipts and either firm terms or a sliding scale
formula, which are generally established prior to the opening of the film, or estimates of the final settlement rate,
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 percentage of box office receipts, which reflects either an aggregate rate for the
life of the film or rates that decline over the term of the run. Under a 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 the time of settlement.
Loyalty Programs – The Company launched its domestic app-based loyalty program, Connections, in February
2016. Customers earn points for various transactions as tracked within the app. Points may be redeemed for movie
tickets, concessions items, concession discounts and experiential rewards, each of which are offered for limited periods
of time and at varying times during the year. For the years ended December 31, 2016 and 2017, the Company applied
the incremental cost approach to accounting for the rewards earned, as it determined that the values of the rewards
offered to the customer are insignificant to the original transactions required to earn such rewards. The Company also
has loyalty programs in certain of its international markets, which generally consist of the customer paying a
membership fee in exchange for discounts during the membership period. Effective January 1, 2018, the Company
adopted ASC Topic 606 and now accounts for its points-based loyalty programs by deferring a portion of the revenue
associated with the transaction that earned such points. See Note 3 for discussion of revenue recognition as it relates
to the Company’s loyalty programs.
Accounting for Share Based Awards — The Company measures the cost of employee services received in
exchange for an equity award based on the fair value of the award on the date of the grant. The grant date fair value
is estimated using a market observed price. 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). At the time of the grant,
the Company also estimates the number of awards that will ultimately be forfeited. See Note 15 for discussion of the
Company’s share based awards and related compensation expense.
F-11
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
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 an
uncertain 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 as a component of income
tax expense.
Segments — For the years ended December 31, 2016, 2017 and 2018, the Company managed its business under
two reportable operating segments, U.S. markets and international markets. See Note 19.
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 loss. See Note 13 for a summary of the translation adjustments recorded in
accumulated other comprehensive loss for the years ended December 31, 2016, 2017 and 2018. 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 — 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. See Note 12 for a
discussion of our fair value measurements for the year ended December 31, 2018.
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 certain 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 realized. The
Company provides 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 record estimated 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
assumptions and valuation methodologies utilized by the third party valuation firm.
F-12
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
2.
NEW ACCOUNTING PRONOUNCEMENTS
Impact of New Revenue Recognition Standard
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), (“ASC Topic 606”), which requires an entity
to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to
customers. ASC Topic 606 replaces most existing revenue recognition guidance in U.S. generally accepted accounting
principles. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and
cash flows arising from the contracts with customers. The Company adopted ASC Topic 606 effective January 1,
2018. See Note 3 for further discussion.
Impact of New Lease Accounting Standard
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), (“ASC Topic 842”). The purpose of
ASU 2016-02 is to provide financial statement users a better understanding of the amount, timing, and uncertainty of
cash flows arising from leases. The adoption of ASC Topic 842 will result in the recognition of a right-of-use asset
and a lease liability for most operating leases. New disclosure requirements include qualitative and quantitative
information about the amounts recorded in the financial statements related to leases. ASC Topic 842 is effective for
fiscal years beginning after December 15, 2018. ASC Topic 842 requires a modified retrospective transition by means
of a cumulative-effect adjustment to retained earnings as of the earliest period presented with the option to elect certain
practical expedients. ASC Topic 842 provides an additional transition method in which an entity initially applies ASC
Topic 842 at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained
earnings in the period of adoption. This additional transition method changes only when an entity is required to
initially apply the transition requirements outlined in ASC Topic 842; it does not change how those requirements are
applied. The Company used this transition method upon adoption.
The Company adopted ASC Topic 842 effective January 1, 2019. The Company is finalizing its evaluation of
the impact of ASC Topic 842 on its consolidated financial statements, and expects the most significant impacts to be
as follows:
1. The Company will recognize liabilities representing the present value of the remaining future minimum
lease payments for all of its operating leases as of January 1, 2019. The Company estimates these liabilities
will be between $1,400,000 and $1,700,000.
2. The Company will recognize right of use assets for all of its operating leases equal to the liabilities
calculated in (1) above, adjusted for the balances of long-term prepaid rent, favorable lease intangible assets,
deferred lease expense, unfavorable lease liabilities and deferred lease incentive liabilities as of January 1,
2019.
3. The Company has theatre leases for which it was involved in construction that failed sale-leaseback
accounting at the end of the construction period. These leases, which were accounted for as capital leases,
will be derecognized upon adoption of ASC Topic 842 and evaluated to determine classification upon
adoption. Some of these leases will be classified as operating leases upon adoption and, beginning in 2019,
lease payments for these leases will be recorded as facility lease expense on the consolidated income
statement. Previously, as capital leases, lease payments were classified as interest expense and reductions
of the capital lease obligations.
4. For the capital leases derecognized as discussed in (3) above, the Company will write-off of the net book
value of the capital lease asset and capital lease liability, with the difference between those amounts
resulting in an adjustment to beginning retained earnings as of January 1, 2019.
F-13
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Other Accounting Pronouncements
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of
Certain Cash Receipts and Cash Payments – a consensus of the FASB Emerging Issues Task Force, (“ASU 2016-
15”). The purpose of ASU 2016-15 is to reduce the diversity in practice regarding how certain cash receipts and cash
payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years
beginning after December 15, 2017, including interim periods within that year. A retrospective transition method
should be used in the application of the amendments within ASU 2016-15. Early adoption is permitted. The Company
adopted ASU 2016-15 in the first quarter of 2018. Upon adoption, the Company reclassified $11,076 and $521 of
cash payments recorded in loss on debt amendments and refinancing from operating activities to financing activities
for the years ended December 31, 2016 and 2017, respectively. The amendments in ASU 2016-15 did not have any
other material impact on the consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope
Modification Accounting, (“ASU 2017-09”). The amendments in ASU 2017-09 provide guidance on which changes
to the terms or conditions of a share-based payment award require an entity to apply modification accounting as
described in ASC Topic 718. The amendments should be applied on a prospective basis. ASU 2017-09 is effective for
fiscal years beginning after December 15, 2017, including interim periods within that year. Early adoption is permitted.
The Company adopted ASU 2017-09 during the first quarter of 2018. The amendments in ASU 2017-09 did not have
a material impact on the consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements
to Accounting for Hedging Activities, (“ASU 2017-12”). The amendments in ASU 2017-12 improve the financial
reporting of hedging relationships to better reflect the economic results of an entity’s risk management activities in its
financial statements. Additionally, the amendments in ASU 2017-12 simplify certain steps of applying hedge
accounting guidance. ASU 2017-12 is effective for fiscal years beginning after December 15, 2017, including interim
periods within that year. Early adoption is permitted. The Company adopted ASU 2017-12 effective January 1, 2018
and applied the related guidance when evaluating three new interest rate swap agreements entered into during 2018,
which were designated as cash flow hedges by the Company (see Note 11).
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework
– Changes to the Disclosure Requirements for Fair Value Measurement, (“ASU 2018-13”). The purpose of ASU
2018-13 is to improve the disclosures related to fair value measurements in the financial statements. The
improvements in ASU include the removal, modification and addition of certain disclosure requirements primarily
related to Level 3 fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15,
2019, including interim periods within that year. The amendments in ASU 2018-13 should be applied prospectively.
The Company does not expect ASU 2018-13 to have a significant impact on the consolidated financial statements.
U.S. Tax Reform
On December 22, 2017, the U.S. government enacted comprehensive tax legislation, the Tax Cuts and Jobs Act
(the "Tax Act"). The Tax Act made changes to the U.S. tax code, which included (1) reduced U.S. corporate tax rate
from 35 percent to 21 percent, (2) generally eliminated U.S. federal income taxes on dividends from foreign
subsidiaries, (3) a one-time transition tax on certain undistributed earnings of foreign subsidiaries, and (4) created
new taxes on certain foreign-sourced earnings. As of December 31, 2018, the amounts recorded for the Tax Act are
final for the 2017 transition tax, the re-measurement of deferred taxes, and our reassessment of valuation allowances.
See further discussion at Note 17.
F-14
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
3.
REVENUE RECOGNITION
Revenue Recognition Policy
The Company’s patrons have the option to purchase movie tickets well in advance of a movie showtime or right
before the movie showtime, or at any point in between those two timeframes depending on seat availability. The
Company recognizes such admissions revenues when the showtime for a purchased movie ticket has passed.
Concession revenues are recognized when sales are made at the registers. Other revenues primarily consist of screen
advertising and transactional fees. Screen advertising revenues are recognized over the period that the related
advertising is delivered on-screen or in-theatre. The Company sells gift cards and discount ticket vouchers, the
proceeds from which are recorded as current liabilities. Revenues for gift cards and discount ticket vouchers are
recognized when they are redeemed for movie tickets or concession items. The Company offers a subscription
program in the U.S. whereby patrons can pay a monthly fee to receive a monthly credit for use towards a future movie
ticket purchase. The Company records the monthly subscription program fees as current liabilities and records
admissions revenues as the credits are redeemed for movie tickets. The Company also has loyalty programs in many
of its locations that either have a prepaid annual membership fee or award points to customers as purchases are made.
For those loyalty programs that have an annual membership fee, the Company recognizes the fee collected as other
revenues over the term of the membership. For those loyalty programs that award points to customers based on their
purchases, the Company records a portion of the original transaction proceeds as liabilities based on the number of
reward points issued to customers and recognizes revenues when the customer redeems such points. Screen
advertising revenues are generally recognized over the period that the related advertising is delivered on-screen or in-
theatre. 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 Company satisfies the related performance obligations, which may differ from the
period in which the advances are collected. These advances are recognized on either a straight-line basis over the term
of the contracts or as the Company has met its performance obligations in accordance with the terms of the contracts.
See additional revenue recognition policy considerations, updated for the adoption of ASC Topic 606, below.
Adoption of ASC Topic 606
The Company adopted ASC 606, Revenue from Contracts with Customers, effective January 1, 2018 under the
modified retrospective method (cumulative-effect) and therefore, revenue amounts as presented on the consolidated
statements of income have not been adjusted for prior periods presented. The Company applied the guidance in ASC
606 only to contracts that had not been completed as of January 1, 2018.
Changes to the way in which the Company recognizes revenue resulted in the following impacts to the
consolidated statements of income:
a) Recording of incremental other revenue and interest expense related to the significant financing
component of the Company’s Exhibitor Services Agreement (“ESA”) with NCM, LLC (“NCM”). See
further discussion below, including the estimated interest rates assumed in determining the amount of
interest expense.
b) Deferral of a portion of admissions and concession revenues for transactions that include the issuance
of loyalty points to customers. To determine the amount of revenues to defer upon issuance of points
to customers under its points-based loyalty programs, the Company estimated the values of the rewards
expected to be redeemed by its customers for those points. The estimates are based on the rewards
that have historically been offered under the loyalty programs, which the Company believes is
representative of the rewards to be offered in the future.
Increase in other revenues and an increase in utilities and other expenses due to the presentation of
transactional fees on a gross versus net basis.
c)
F-15
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
d)
Increase in other revenues due to the change in amortization methodology for deferred revenue – NCM
that is now amortized on a straight-line basis and effective for the entire term of the ESA. The deferred
revenue – NCM is related to the Company’s ESA and Common Unit Adjustment agreement with
NCM, under which the Company’s performance obligation is to provide NCM with exclusive access
to its domestic theatres for purposes of in-theatre advertising over the term of the ESA. Such
exclusivity, and therefore the satisfaction of the Company’s performance obligation, is provided to
NCM evenly over time. As a result of the change in amortization method, the Company recorded a
cumulative effect of accounting change adjustment of $40,526, net of taxes, in retained earnings on
January 1, 2018 (see also Note 6).
The significant changes discussed above had the following impact on the Company’s statements of income and
cash flows for the year ended December 31, 2018:
Statement of income:
Admissions revenues
Concession revenues
Other revenues
Utilities and other expense
Interest expense - NCM
Statement of cash flows:
Without
Adoption of
ASC 606
Impact of
Adoption of
ASC 606
As Reported
$ 1,839,723 $
$ 1,110,703 $
161,743 $
$
354,740 $
$
— $
$
(5,550) $ 1,834,173
(1,910) $ 1,108,793
278,769
448,070
19,724
117,026 $
93,330 $
19,724 $
Amortization of deferred revenues, deferred
incentives and other
Changes in other assets and liabilities - Other long-term
liabilities
lease
$
$
(17,602) $
(4,104) $
(21,706)
4,082 $
7,592 $
11,674
The impact of adoption of ASC 606 on the Company’s balance sheet as of December 31, 2018 was as follows:
Balance sheet line items:
Deferred revenue - NCM (1)
Long-term deferred tax liability
Other long-term liabilities
Retained earnings
Without
Adoption of
ASC 606
Impact of
Adoption of
ASC 606
As Reported
$
$
$
$
345,058 $
142,547 $
42,756 $
645,933 $
(57,709) $
13,079 $
7,592 $
40,526 $
287,349
155,626
50,348
686,459
(1)
Includes the cumulative effect of accounting change of $53,605 recorded on January 1, 2018 and the full year impact of the change in
amortization method of $4,104 during the year ended December 31, 2018.
The Company applied the practical expedient to exclude sales and other similar taxes collected from customers
from its transaction price for purposes of recording revenues. As such, revenues are presented net of such taxes.
F-16
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Disaggregation of Revenue
The following table presents revenues for the year ended December 31, 2018, disaggregated based on major type
of good or service and by reportable operating segment.
U.S.
Operating
Year Ended
December 31, 2018
International
Operating
Major Goods/Services
Admissions revenues
Concession revenues
Screen advertising and promotional
revenues
Other revenues
Total revenues
Segment (1)
$ 1,461,151 $
892,391
Segment
Consolidated
373,022 $ 1,834,173
1,108,793
216,402
78,591
106,824
$ 2,538,957 $
61,269
32,085
139,860
138,909
682,778 $ 3,221,735
(1) U.S. segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 19
for additional information on intercompany eliminations.
The following table presents revenues for the year ended December 31, 2018, disaggregated based on timing of
revenue recognition (as discussed above).
Goods and services transferred at a
point in time
Goods and services transferred over
time
Total
Year Ended
December 31, 2018
International
U.S.
Operating
Operating
Segment (1)
Segment
Consolidated
$ 2,453,313 $
608,347 $ 3,061,660
85,644
$ 2,538,957 $
74,431
160,075
682,778 $ 3,221,735
(1) U.S. segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 19
for additional information on intercompany eliminations.
Deferred Revenues
The following table presents changes in the Company’s deferred revenues for the year ended December 31,
2018.
Deferred Revenues
Balance at January 1, 2018
Impact of adoption of ASC Topic 606
Amounts recognized as accounts receivable
Cash received from customers in advance
Common units received from NCM (see Note 6)
Revenue recognized during period
Foreign currency translation adjustments
Balance at December 31, 2018
Deferred
Revenue -
NCM
Other
Deferred
Revenues (1)
Total
86,498 $ 438,204
$ 351,706 $
(53,605)
—
(53,605)
—
6,921
6,921
— 156,237 156,237
5,012
—
(15,764) (141,176) (156,940)
(2,405)
$ 287,349 $ 106,075 $ 393,424
(2,405)
5,012
—
(1)
Includes liabilities associated with outstanding gift cards and SuperSavers, points or rebates outstanding under the Company’s
loyalty and membership programs and revenues not yet recognized for screen advertising and other promotional activities.
Classified as accounts payable and accrued expenses or other long-term liabilities on the consolidated balance sheet.
F-17
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
The table below summarizes the aggregate amount of the transaction price allocated to performance obligations
that are unsatisfied as of December 31, 2018 and when the Company expects to recognize this revenue.
Remaining Performance Obligations
Deferred revenue - NCM
Deferred revenue - other
Total
Twelve Months Ended December 31,
2021
2020
2019
2022
$ 15,831 $15,831 $15,831 $15,831 $15,831 $208,194 $287,349
89,523 16,146
— 106,075
$105,354 $31,977 $16,038 $16,030 $15,831 $208,194 $393,424
Thereafter Total
199
207
—
2023
Accounts receivable as of December 31, 2018 included approximately $48,117 of receivables related to contracts
with customers. The Company did not record any assets related to the costs to obtain or fulfill a contract with
customers during the year ended December 31, 2018.
Significant Financing Component
As discussed further in Note 6, in connection with the completion of the NCM, Inc. (“NCMI”) initial public
offering, the Company amended and restated its ESA with NCM and received approximately $174,000 in cash
consideration from NCM. The proceeds were recorded as deferred revenue and are being amortized over the term of
the modified ESA, or through February 2037. In addition to the consideration received upon the ESA modification
during 2007, the Company also receives consideration in the form of common units from NCM, at each annual
common unit adjustment settlement, in exchange for exclusive access to the Company’s newly opened domestic
screens under the ESA. See Note 6 for additional information regarding the common unit adjustment and related
accounting. Due to the significant length of time between receiving the consideration from NCM and fulfillment of
the related performance obligation, the ESA includes an implied significant financing component, as per the guidance
in ASC Topic 606.
As a result of the significant financing component on deferred revenue - NCM, the Company recognized
incremental screen advertising revenue and an offsetting interest expense of $19,724 during the year ended December
31, 2018. The interest expense was calculated using the Company’s incremental borrowing rates at the time when the
cash and each tranche of common units were received from NCM, which ranged from 5.5% to 8.0%.
4.
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 by the weighted average number of shares of common stock and
unvested restricted stock outstanding during the reporting period. Diluted earnings per share is calculated using the
weighted average number of shares of common stock plus the potentially dilutive effect of common equivalent shares
outstanding determined under both the two class method and the treasury stock method.
Effective January 1, 2017, the Company adopted ASU 2016-09 on a prospective basis. In accordance with the
amendments in ASU 2016-09, the Company’s diluted earnings per share calculation for the year ended December 31,
2017 excludes the estimated income tax benefits and deficiencies in the application of the treasury stock method.
Excess income tax benefits or deficiencies related to share based awards are recognized as discrete items in the income
statement during the period in which they occur. See Note 15 for a discussion of share based awards and related
income tax benefits recognized during the years ended December 31, 2016, 2017 and 2018.
F-18
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
The following table presents computations of basic and diluted earnings per share under the two class method:
Year Ended
December 31,
2017
2018
2016
Numerator:
Net income attributable to Cinemark Holdings, Inc.
Earnings allocated to participating share-based
awards (1)
Net income attributable to common stockholders
Denominator (shares in thousands):
Basic weighted average shares outstanding
Common equivalent shares for restricted stock units
Diluted weighted average shares outstanding
Basic earnings per share attributable to common
stockholders
Diluted earnings per share attributable to common
stockholders
$
$
$ 255,091 $ 264,180 $ 213,827
(1,187)
(1,168)
$ 253,904 $ 262,830 $ 212,659
(1,350)
115,508 115,766 116,054
288
115,783 116,059 116,342
275
293
2.19 $
2.26 $
1.83
2.19 $
2.26 $
1.83
(1)
For the years ended December 31, 2016, 2017 and 2018, a weighted average of approximately 542 shares, 596 shares and 640 shares, of
unvested restricted stock, respectively, are considered participating securities.
5.
DIVIDENDS
Below is a summary of dividends declared for the fiscal periods indicated.
Declaration Date
2/24/2016
5/26/2016
8/18/2016
11/16/2016
2/23/2017
5/25/2017
8/10/2017
11/17/2017
2/23/2018
5/25/2018
8/23/2018
11/15/2018
Record Date
3/7/2016
6/8/2016
8/31/2016
12/2/2016
3/8/2017
6/8/2017
8/31/2017
12/1/2017
3/8/2018
6/8/2018
9/4/2018
12/4/2018
$
Payable Date
3/18/2016
6/22/2016
9/13/2016
12/16/2016
Total $
$
3/20/2017
6/22/2017
9/13/2017
12/15/2017
3/22/2018
6/22/2018
9/18/2018
12/18/2018
Total $
$
$
$
$
Total $
Amount per
Share of
Common Stock (1)
Total
Dividends (2)
0.27 $
0.27
0.27
0.27
1.08 $
0.29 $
0.29
0.29
0.29
1.16 $
0.32 $
0.32
0.32
0.32
1.28 $
31,544
31,459
31,473
31,568
126,044
33,912
33,904
33,911
33,910
135,637
37,471
37,523
37,530
37,592
150,116
(1)
(2)
Beginning with the dividend declared on February 24, 2016, the Company’s board of directors raised the quarterly dividend to $0.27 per
common share. Beginning with the dividend declared on February 23, 2017, the Company’s board of directors raised the quarterly dividend
to $0.29 per common share. Beginning with the dividend declared on February 23, 2018, the Company’s board of directors raised the
quarterly dividend to $0.32 per common share.
Of the dividends recorded during 2016, 2017 and 2018, $554, $558 and $624, respectively, were related to outstanding restricted stock units
and will not be paid until such units vest. See Note 15.
F-19
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
6.
INVESTMENT IN NATIONAL CINEMEDIA LLC
The Company has an investment in National CineMedia, LLC (“NCM”). NCM operates a digital in-theatre
network in the U.S. for providing cinema advertising and non-film events. Upon joining NCM, the Company entered
into an Exhibitor Services Agreement (“ESA”) with NCM, pursuant to which NCM provides advertising, promotion
and event services to our theatres. On February 13, 2007, National CineMedia, Inc. (“NCMI”), an entity that serves
as the sole manager of NCM, completed an IPO of its common stock. In connection with the NCMI initial public
offering, the Company amended its operating agreement and the ESA with NCMI. The ESA modification reflected a
shift from circuit share expense under the prior ESA, which obligated NCM to pay the Company a percentage of
revenue, to a monthly theatre access fee, which significantly reduced the contractual amounts paid to us by NCM. The
Company recorded the proceeds related to the ESA modification as deferred revenue. In consideration for NCM’s
exclusive access to the Company’s theatre attendees for on-screen advertising and use of off-screen areas within the
Company’s theatres for lobby entertainment and lobby promotions, the Company receives a monthly theatre access
fee under the 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 2016, 2017 and 2018, the annual payment per digital screen was one thousand two hundred forty-
one dollars, one thousand three hundred three dollars and one thousand three hundred sixty-eight dollars, respectively.
The theatre access fee paid in the aggregate to Regal Entertainment Group (“Regal”), AMC Entertainment, Inc.
(“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 expires in February 2037.
As a result of the application of a portion of the proceeds it received from the NCMI initial public offering, the
Company had a negative basis in its original membership units in NCM, which is referred to herein as the Company’s
Tranche 1 Investment. Following the NCMI IPO, the Company does not recognize undistributed equity in the earnings
on its Tranche 1 Investment until NCM's net earnings, less distributions received, surpass the amount of the excess
distribution. The Company recognizes equity in earnings on its Tranche 1 Investment only to the extent it receives
cash distributions from NCM. The Company recognizes cash distributions it receives from NCM on its Tranche 1
Investment as a component of earnings as Distributions from NCM. The Company believes that the accounting model
provided by ASC 323-10-35-22 for recognition of equity investee losses in excess of an investor's basis is analogous
to the accounting for equity income subsequent to recognizing an excess distribution.
Common Unit Adjustments
Pursuant to a Common Unit Adjustment Agreement dated as of February 13, 2007 between NCMI and the
Company, AMC and Regal, whom we refer to collectively as the Founding Members, adjustments are made annually
to the common membership units primarily based on increases or decreases in the number of theatre screens operated
and theatre attendance generated by each Founding Member. To account for the receipt of additional common units
under the Common Unit Adjustment Agreement, we follow the guidance in FASB ASC 323-10-35-29 (formerly
EITF 02-18, “Accounting for Subsequent Investments in an Investee after Suspension of Equity Loss Recognition”)
by analogy, which also refers to AICPA Technical Practice Aid 2220.14, which indicates that if a subsequent
investment is made in an equity method investee that has experienced significant losses, the investor must determine
if the subsequent investment constitutes funding of prior losses. The Company concluded that adding theatres to the
Company’s domestic circuit, which has led to the common unit adjustments, equates to making additional investments
in NCM. We evaluated the receipt of the additional common units in NCM and the assets exchanged for these
additional units and have determined that the right to use our incremental new screens would not be considered funding
of prior losses. We account for these additional common units, which we refer to herein as our Tranche 2 Investment,
as a separate investment than our Tranche 1 Investment. Our Tranche 2 Investment is accounted for following the
equity method, with undistributed equity earnings related to our Tranche 2 Investment included as equity in income
of affiliates on the consolidated statements of income and distributions received related to our Tranche 2 Investment
recorded as a reduction of the Company’s investment in NCM.
F-20
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Below is a summary of common units received by the Company under the Common Unit Adjustment (“CUA”)
Agreement during the years ended December 31, 2016, 2017 and 2018:
Event
2016 annual common unit adjustment
2017 annual common unit adjustment
2018 annual common unit adjustment
Number of
Common
Units
Date
Common
Units
Received
Fair Value
of Common
Units
Received
3/31/2016 753,598 $ 11,111
3/31/2017 1,487,218 $ 18,363
3/29/2018 908,042 $ 5,012
Received
Each common unit received by the Company is convertible into one share of NCMI common stock. The fair
value of the common units received was estimated based on the market price of NCMI stock at the time that the
common units were received, adjusted for volatility associated with the estimated period of time it would take to
convert the common units and register the respective NCMI shares. The fair value measurement used for the common
units falls under Level 2 of the U.S. GAAP fair value hierarchy as defined by ASC Topic 820-10-35. The Company
records the additional common units it receives as part of its Tranche 2 Investment at estimated fair value with a
corresponding adjustment to deferred revenue. The deferred revenue is amortized over the remaining term of the
ESA.
Acquisition of Common Units
On July 5, 2018, the Company acquired 10,738,740 common units of NCM from AMC for $78,393 in cash, or
approximately $7.30 per common unit. As a result of the acquisition of these shares, the Company’s ownership of
NCM increased from approximately 18% to 25%. The amount paid for the additional common units was recorded as
an increase in the Company’s Tranche 2 investment in NCM.
As of December 31, 2018, the Company owned a total of 39,518,644 common units of NCM, which represented
an interest of approximately 25%. The estimated fair value of the Company’s investment in NCM was approximately
$256,081 based on NCMI’s stock price as of December 31, 2018 of $6.48 per share (Level 1 input as defined in FASB
ASC Topic 820), which was less than the Company’s carrying value of $275,592. The Company does not believe that
the decline in NCMI’s stock price is other than temporary and therefore, no impairment of the Company’s investment
in NCM was recorded during the year ended December 31, 2018. The market value of NCMI’s stock price may
continue to vary due to the performance of the business, industry trends, general and economic conditions and other
factors.
F-21
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Summary of Activity with NCM
Below is a summary of activity with NCM included in the Company’s consolidated financial statements for the
periods indicated. See Note 3 for discussion of impact of new revenue recognition accounting pronouncements.
Balance as of January 1, 2016
Receipt of common units due to annual common unit
adjustment
Revenues earned under ESA (1)
Receipt of excess cash distributions
Receipt under tax receivable agreement
Equity in earnings
Amortization of deferred revenue
Balance as of and for the twelve months ended
December 31, 2016
Receipt of common units due to annual common unit
adjustment
Revenues earned under ESA (1)
Receipt of excess cash distributions
Receipt under tax receivable agreement
Equity in earnings
Amortization of deferred revenue
Balance as of and for the twelve months ended
December 31, 2017
Impact of adoption of ASC Topic 606 (2)
Receipt of common units due to annual common unit
adjustment
Purchase of additional common units
Revenues earned under ESA (1)(3)
Receipt of excess cash distributions
Receipt under tax receivable agreement
Equity in earnings
Amortization of deferred revenue (2)
Balance as of and for the twelve months ended
December 31, 2018
Investment
in NCM
Deferred
Revenue
183,755 $(342,134)
$
Distributions
from NCM
Equity
in
Earnings
Other
Revenue
Interest
Expense
- NCM
(3)
Cash
Received
(Paid)
11,111
—
(11,233)
(2,985)
9,347
—
(11,111) $
—
—
—
—
9,317
— $
—
(11,483)
(3,173)
—
—
— $
— $
— (11,048)
—
—
—
—
(9,347)
—
(9,317)
—
—
— $
— 11,048
— 22,716
6,158
—
—
—
—
—
$
189,995 $(343,928) $
(14,656) $ (9,347) $(20,365) $
— $ 39,922
18,363
—
(15,093)
(2,265)
9,550
—
(18,363) $
—
—
—
—
10,585
— $
—
(14,158)
(2,249)
—
—
— $
— $
— (11,274)
—
—
—
—
—
(9,550)
— (10,585)
— $
—
— 11,274
— 29,251
4,514
—
—
—
—
—
$
200,550 $(351,706) $
(16,407) $ (9,550) $(21,859) $
— $ 45,039
—
53,605 $
— $
— $
— $
— $
—
5,012
78,393
—
(19,786)
(2,419)
13,842
—
(5,012)
—
—
—
—
—
15,764
—
—
—
—
—
—
—
(13,231)
(2,158)
—
—
—
—
— (31,867) 19,724 12,143
— 33,017
—
4,577
—
—
—
—
— (13,842)
—
—
—
—
—
—
— (15,764)
$
275,592 $(287,349) $
(15,389) $ (13,842) $(47,631) $ 19,724 $ 49,737
(1)
(2)
(3)
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 $10,523, $11,110 and $11,965 for the years ended December 31, 2016,
2017 and 2018, respectively.
As a result of adoption of ASC Topic 606, the Company determined that the deferred revenue associated with the ESA and CUA agreement
should be amortized on a straight-line basis versus the units of revenue method followed prior to adoption. The Company recorded a
reduction in the deferred revenue balance and a cumulative effect of a change in accounting principle in retained earnings. See Note 3 for
further discussion of the impact of the adoption of ASC Topic 606.
Reflects the impact of significant financing component related to amounts received in advance under the ESA and CUA agreement. See
Note 3.
The Company made payments to NCM of approximately $49, $102 and $74 during the years ended December
31, 2016, 2017 and 2018, respectively, related to certain equipment used for digital advertising, which is included in
theatre furniture and equipment on the consolidated balance sheets.
F-22
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
The tables below present summary financial information for NCM for the periods indicated:
Revenues
Operating income
Net income
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
Members' deficit
Year Ended
Year Ended
December 29, 2016 December 28, 2017 December 27, 2018
441,400
$
154,300
$
98,400
$
426,100 $
153,900 $
101,900 $
447,600 $
173,000 $
109,300 $
Year Ended
As of
December 28, 2017
$
$
$
$
$
174,400 $
758,300 $
123,300 $
925,400 $
(116,000) $
As of
December 27, 2018
172,700
726,800
115,200
924,900
(140,600)
7.
OTHER INVESTMENTS
Below is a summary of activity for each of the Company’s other investments for the periods indicated:
Balance at January 1, 2016
Cash contributions
Equity in income
Equity in comprehensive income
Sale of investment (1)
Cash distributions received
Other (2)
Balance at December 31, 2016
Cash contributions
Equity in income
Equity in comprehensive income
Cash distributions received
Other
Balance at December 31, 2017
Cash contributions
Equity in income (loss)
Equity in comprehensive loss
Cash distributions received
Other (2)
Balance at December 31, 2018
(1)
Other
Total
RealD
DCIP
$ 71,579 $ 12,900 $
—
—
—
(12,900)
—
—
— $
—
—
—
—
—
— $
—
—
—
—
—
— $
717
21,434
89
—
(6,000)
—
$ 87,819 $
1,112
22,900
248
(5,864)
—
$ 106,215 $
2,076
22,899
(139)
(5,799)
—
$ 125,252 $
AC JV,
LLC DCDC
2,562
—
870
—
—
(98)
(584)
2,750
—
1,199
—
(351)
—
3,598
—
1,313
—
(219)
(2,437)
2,255
7,269 $
—
311
—
—
(1,600)
—
5,980 $
—
2,336
—
(2,400)
—
5,916 $
—
1,270
—
(1,920)
—
5,266 $
$
FE
Concepts
$
— $
—
—
—
—
—
—
— $
104
—
—
—
—
104 $
20,000
(82)
—
—
(104)
$ 19,918 $
$
663 $ 94,973
1,132
415
22,615
—
89
—
(12,900)
—
(7,698)
—
106
690
1,768 $ 98,317
3,715
2,499
26,435
—
248
—
(8,615)
—
(55)
(55)
4,212 $ 120,045
22,076
—
25,400
—
(139)
—
(7,938)
—
(137)
(2,678)
4,075 $ 156,766
(2)
See further discussion of the sale of the investment held by the Company under RealD, Inc. below.
Other activity for DCDC for the years ended December 31, 2016 and 2018 consisted of returns of capital originally contributed by the
Company.
Digital Cinema Implementation Partners LLC (“DCIP”)
On February 12, 2007, the Company, AMC and Regal entered into a joint venture known as DCIP to facilitate
the implementation of digital cinema in the Company’s theatres and to establish agreements with major motion picture
studios for the financing of digital cinema. As of December 31, 2018, 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.
F-23
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Below is summary financial information for DCIP as of and for the years ended December 31, 2016, 2017 and
2018:
Revenues
Operating income
Net income
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
Members' equity
2016
Year ended December 31,
2017
$ 178,836 $ 177,382 $ 172,534
$ 107,919 $ 106,687 $ 102,236
94,757
$
89,152 $
93,103 $
2018
As of
December 31, 2017 December 31, 2018
57,907
$
684,545
$
67,408
$
125,596
$
549,448
$
56,296 $
772,438 $
59,153 $
296,889 $
472,692 $
The digital projection systems are being leased from Kasima LLC (“Kasima”), which is an indirect subsidiary
of DCIP and a related party to the Company, 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 annual rent of one thousand dollars per digital projection
system. 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, 2018, the Company had 3,837 digital projection systems
being leased under the master equipment lease agreement with Kasima. The Company had the following transactions
with DCIP during the years ended December 31, 2016, 2017 and 2018:
Equipment lease payments
Warranty reimbursements from DCIP
Management services fees
RealD, Inc. (“RealD”)
Year Ended December 31,
2017
2018
2016
$
$
$
5,217 $
(6,091) $
825 $
5,743 $
4,862
(8,511) $ (10,800)
730
823 $
The Company licenses 3-D systems from RealD. Under its license agreement with RealD, the Company earned
options to purchase shares of RealD common stock as it installed a certain number of 3-D systems as outlined in the
license agreement. During 2010 and 2011, the Company vested in a total of 1,222,780 RealD options. Upon vesting
in these options, the Company recorded an investment in RealD and a deferred lease incentive liability using the
estimated fair value of the RealD options at the time of vesting. During March 2011, the Company exercised all of its
options to purchase shares of common stock in RealD for $0.00667 per share.
The Company owned 1,222,780 shares of RealD and accounted for its investment in RealD as a marketable
security, specifically an available-for-sale security, in accordance with ASC Topic 320-10-35-1, therefore unrealized
holding gains and losses were reported as a component of accumulated other comprehensive loss until realized.
On March 22, 2016, an affiliate of Rizvi Traverse Management, LLC acquired RealD for $11.00 per share. As
a result of the transaction, the Company sold its shares for approximately $13,451 and recognized a gain of $3,742,
which included the recognition of a cumulative unrealized holding gain of $3,191 previously recorded in accumulated
other comprehensive loss. The gain is reflected within loss on disposal of assets and other on the consolidated
statement of income for the year ended December 31, 2016. The Company used the proceeds to make a pre-payment
on its term loan in accordance with the terms of its senior secured credit facility.
AC JV, LLC
During December 2013, the Company, Regal, AMC (the “AC Founding Members”) and NCM entered into a
series of agreements that resulted in the formation of AC JV, LLC (“AC”), a joint venture that owns “Fathom Events”
F-24
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
(consisting of Fathom Events and Fathom Consumer Events) formerly operated by NCM. The Fathom Events
business focuses on the marketing and distribution of live and pre-recorded entertainment programming to various
theatre operators to provide additional programs to augment their feature film schedule. The Company paid event fees
to AC of $10,871, $13,950 and $12,481 for the years ended December 31, 2016, 2017 and 2018, respectively, which
are included in film rentals and advertising costs on the consolidated statements of income. The Company accounts
for its investment in AC under the equity method of accounting.
AC was formed by the AC Founding Members and NCM. NCM contributed the assets associated with its
Fathom Events division to AC. Each of the Founding Members contributed cash of approximately $268 and a six-
year promissory note in the amount of $8,333 in exchange for 32% of Class A Units in AC. Each of the Founding
Members’ Promissory Notes bear interest at 5% per annum and require annual principal and interest payments. The
remaining outstanding balance of the note payable from the Company to NCM as of December 31, 2018 was $1,389.
Digital Cinema Distribution Coalition
The Company is a party to a joint venture with certain exhibitors and distributors called Digital Cinema
Distribution Coalition (“DCDC”). DCDC operates a satellite distribution network that distributes all digital content
to U.S. theatres via satellite. The Company has an approximate 14.6% ownership in DCDC. The Company paid
approximately $939, $848 and $927 to DCDC during the years ended December 31, 2016, 2017 and 2018,
respectively, related to content delivery services, which is included in film rentals and advertising costs on the
consolidated statements of income. The Company accounts for its investment in DCDC under the equity method of
accounting.
FE Concepts, LLC
During April 2018, the Company, through its wholly-owned indirect subsidiary CNMK Texas Properties, LLC
(“CNMK”), formed a joint venture, FE Concepts, LLC (“FE Concepts”) with AWSR Investments, LLC (“AWSR”),
an entity owned by Lee Roy Mitchell and Tandy Mitchell. FE Concepts will develop and operate a family
entertainment center that offers bowling, gaming, movies and other amenities. The Company and AWSR each
invested approximately $20,000 and each have a 50% voting interest in FE Concepts. The Company accounts for its
investment in FE Concepts under the equity method of accounting.
8.
GOODWILL AND OTHER INTANGIBLE ASSETS — NET
The Company’s goodwill was as follows:
Balance at December 31, 2016 (1)
Acquisitions of theatres (2)
Foreign currency translation
adjustments
Balance at December 31, 2017 (1)
Acquisitions of theatres (3)
Foreign currency translation
adjustments
$
$
Balance at December 31, 2018 (1)
$
U.S.
Operating
Segment
International
Operating
Segment
1,164,163 $
9,878
98,800 $
13,211
Total
1,262,963
23,089
—
1,174,041 $
—
(1,973)
110,038 $
7,204
(1,973)
1,284,079
7,204
—
1,174,041 $
(14,959)
102,283 $
(14,959)
1,276,324
(1)
(2)
(3)
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.
Acquisition of theatres in the U.S. and international markets.
Amount represents preliminary purchase price allocation for theatres acquired in Brazil.
F-25
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
As of December 31, intangible assets-net, consisted of the following:
Balance at
January 1,
Balance at
December 31,
2017
Additions (1) Amortization Other (2)
2017
Intangible assets with finite lives:
Gross carrying amount
Accumulated amortization
Total net intangible assets with finite lives
Intangible assets with indefinite lives:
Tradename
Total intangible assets — net
$
$
$
99,796 $
(64,606)
35,190 $
11,584 $
—
11,584 $
— $ (5,485) $ 105,895
(68,869)
37,026
(5,563)
1,300
(5,563) $ (4,185) $
299,709
334,899 $
—
11,584 $
—
299,735
(5,563) $ (4,159) $ 336,761
26
Intangible assets with finite lives:
Gross carrying amount
Accumulated amortization
Total net intangible assets with finite lives
Intangible assets with indefinite lives:
Tradename and other
Total intangible assets — net
Balance at
January 1,
Balance at
December 31,
2018
Additions (3) Amortization Other (2)
2018
$ 105,895 $
(68,869)
$ 37,026 $
1,203 $
—
1,203 $
— $ (1,842) $ 105,256
(74,603)
(5,734)
—
30,653
(5,734) $ (1,842) $
299,735
$ 336,761 $
853
2,056 $
—
300,257
(5,734) $ (2,173) $ 330,910
(331)
(1)
(2)
(3)
Activity for 2017 represent fair values allocated to intangible assets acquired as part of acquisitions of theatres in the U.S. and international
markets.
Amounts represent foreign currency translation adjustments and the write-off of certain lease intangibles for theatre closures and lease
amendments.
Amount for intangible assets with finite lives represents preliminary purchase price allocation for theatres acquired in Brazil.
Estimated aggregate future amortization expense for intangible assets is as follows(1):
$
For the year ended December 31, 2019
4,785
For the year ended December 31, 2020
5,053
For the year ended December 31, 2021
2,904
For the year ended December 31, 2022
2,812
For the year ended December 31, 2023
3,161
Thereafter
11,938
30,653
Total
(1) Represents amounts before the adoption of ASC Topic 842 – Leases. See Note 2 for
discussion of the expected impact of adoption.
$
9.
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 policy.
F-26
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
The Company’s long-lived asset impairment losses are summarized in the following table:
U.S. theatre properties
International theatre properties
Impairment of long-lived assets
$
$
2016
1,929 $
907
2,836 $
Year Ended
December 31,
2017
5,227 $
9,857
15,084 $
2018
18,597
13,775
32,372
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, 2018,
the estimated aggregate remaining fair value of the long-lived assets impaired during the year ended December 31,
2018 was approximately $16,295.
10. DEFERRED CHARGES AND OTHER ASSETS — NET
As of December 31, deferred charges and other assets — net consisted of the following:
December 31,
2018
Long-term prepaid rents (1)
15,943
8,183
Construction and other deposits
10,466
Equipment to be placed in service
6,463
Other
Total
41,055
(1) See Note 2 for discussion of the expected impact of the adoption of new lease accounting
7,762 $
12,167
13,868
5,970
39,767 $
2017
$
$
pronouncements.
11. LONG-TERM DEBT
As of December 31, long-term debt consisted of the following:
December 31,
2017
2018
Cinemark USA, Inc. term loan
Cinemark USA, Inc. 5.125% senior notes due 2022
Cinemark USA, Inc. 4.875% senior notes due 2023
Other (1)
Total long-term debt
Less current portion
Less debt issuance costs, net of accumulated
amortization of $25,549 and $30,289, respectively
Long-term debt, less current portion
400,000
755,000
2,778
$ 659,517 $ 652,922
400,000
755,000
1,389
1,817,295 1,809,311
7,984
7,099
29,815
28,700
$ 1,780,381 $ 1,772,627
(1)
Represents debt owed to NCM in relation to the joint venture AC JV, LLC. See Note 7.
Senior Secured Credit Facility
Cinemark USA, Inc. has a senior secured credit facility that includes a $700,000 term loan and a $100,000
revolving credit line (the “Credit Agreement”).
F-27
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Cinemark USA, Inc. made the following amendments to its Credit Agreement as follows during 2016, 2017 and
2018:
Effective Date
June 13, 2016
December 15, 2016
June 16, 2017
November 28, 2017
March 29, 2018
Nature of Amendment
Reduced term loan interest rate by 0.25% $
Reduced term loan interest rate by 0.50% $
Reduced term loan interest rate by 0.25%;
modified certain definitions and other
provisions in the Credit Agreement
Extended maturity of revolving credit line
to December 2022; reduced the interest
rate applicable to borrowings under the
credit line
Extended maturity of term loan to March
2025; reduced term loan interest rate by
0.25%; reduced real property mortgage
requirements
$
$
$
Debt Issue
Costs Paid (1)
783
2,446
Loss on Debt
Amendment (2)
$
$
249
161
521
$
190
330
$
331
4,962
$
1,484
(1)
(2)
Reflected as a reduction of long term debt on the consolidated balance sheet.
Reflected as a loss on debt amendments and refinancing on the consolidated statement of income for the year in which the amendments
were effective.
Under the amended Credit Agreement, quarterly principal payments of $1,649 are due on the term loan through
December 31, 2024, with a final principal payment of $613,351 due on March 29, 2025.
Subsequent to the March 29, 2018 amendment noted above, interest on the term loan accrues at Cinemark USA,
Inc.’s option at: (A) the base rate equal to the greater of (1) the US “Prime Rate” as quoted in The Wall Street Journal
or if no such rate is quoted therein, in a Federal Reserve Board statistical release, (2) the federal funds effective rate
plus 0.50%, and (3) a one-month Eurodollar-based rate plus 1.0%, plus, in each case, a margin of 0.75% per annum,
or (B) a Eurodollar-based rate for a period of 1, 2, 3, 6, 9 or 12 months plus a margin of 1.75% per annum. Interest on
the revolving credit line accrues, at our option, at: (A) a base rate equal to the greater of (1) the US “Prime Rate” as
quoted in The Wall Street Journal or if no such rate is quoted therein, in a Federal Reserve Board statistical release,
(2) the federal funds effective rate plus 0.50%, and (3) a one-month Eurodollar-based rate plus 1.0%, plus, in each
case, a margin that ranges from 0.50% to 1.25% per annum, or (B) a Eurodollar-based rate for a period of 1, 2, 3, 6, 9
or 12 months plus a margin that ranges from 1.50% to 2.25% per annum. The margin of the revolving credit line is
determined by the consolidated net senior secured leverage ratio as defined in the Credit Agreement.
At December 31, 2018, there was $652,922 outstanding under the term loan and no borrowings outstanding
under the revolving credit line. Cinemark USA, Inc. had no borrowings under the revolving credit line during the
years ended December 31, 2017 or 2018. After giving effect to a letter of credit outstanding as of December 31, 2018.
Cinemark USA, Inc. had $98,846 in available borrowing capacity on the revolving credit line. The average interest
rate on outstanding term loan borrowings under the Credit Agreement at December 31, 2018 was approximately
4.4% per annum.
F-28
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Cinemark USA, Inc.’s obligations under the Credit Agreement 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 Credit Agreement 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 our
ability, to consolidate or merge or liquidate, wind up or dissolve; substantially change the nature of its business; sell,
transfer or dispose of assets; create or incur indebtedness; create liens; pay dividends or repurchase stock; and make
capital expenditures and investments. If Cinemark USA, Inc. has borrowings outstanding on the revolving credit line,
it is required to keep a consolidated net senior secured leverage ratio, as defined in the Credit Agreement, not to exceed
5.0 to 1. As of December 31, 2018, the Company’s actual ratio was 2.9 to 1.
The dividend restriction contained in the Credit Agreement 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 Cinemark USA, Inc. to be in default, under the Credit Agreement; and (2) the
aggregate amount of certain dividends, distributions, investments, redemptions and capital expenditures made since
December 18, 2012, including dividends declared by the 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 December 18, 2012, (b) Cinemark USA, Inc.’s consolidated EBITDA minus 1.75 times its consolidated interest
expense, each as defined in the Credit Agreement, and (c) certain other defined amounts. As of December 31, 2018,
Cinemark USA, Inc. could have distributed up to approximately $2,918,142 to its parent company and sole
stockholder, Cinemark Holdings, Inc.
4.875% Senior Notes
On May 24, 2013, Cinemark USA, Inc. issued $530,000 aggregate principal amount of 4.875% senior notes
due 2023, at par value, (the “4.875% Senior Notes”). Interest on the 4.875% Senior Notes is payable on June 1 and
December 1 of each year. The 4.875% Senior Notes mature on June 1, 2023.
On March 21, 2016, Cinemark USA, Inc. issued an additional $225,000 aggregate principal amount of the
4.875% Senior Notes, at 99.0% of the principal amount plus accrued and unpaid interest from December 1, 2015.
Proceeds, after payment of fees, were used to finance the redemption of Cinemark, USA, Inc.’s previously outstanding
$200,000 7.375% senior subordinated notes due 2021 (the “7.375% Senior Subordinated Notes”), as discussed below.
These additional notes have identical terms, other than the issue date, the issue price and the first interest payment
date, and constitute part of the same series as Cinemark USA, Inc.’s existing 4.875% Senior Notes. The aggregate
principal amount of $755,000 of 4.875% Senior Notes mature on June 1, 2023. The Company incurred debt issue
costs of approximately $3,702 in connection with the issuance of the additional notes, which, along with the discount
of $2,250, are reflected as a reduction of long term debt, net of accumulated amortization, on the consolidated balance
sheets as of December 31, 2017 and 2018.
The 4.875% 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 4.875% 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 senior subordinated debt. The 4.875% 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 Credit Agreement. The 4.875% Senior
Notes and the guarantees are structurally subordinated to all existing and future debt and other liabilities of Cinemark
USA, Inc.’s subsidiaries that do not guarantee the 4.875% Senior Notes.
F-29
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
The indenture to the 4.875% Senior Notes contains covenants that limit, among other things, the ability of
Cinemark USA, Inc. and certain of its subsidiaries to (1) make investments or other restricted payments, including
paying dividends, making other distributions or repurchasing subordinated debt or equity, (2) incur additional
indebtedness and issue preferred stock, (3) enter into transactions with affiliates, (4) enter new lines of business,
(5) merge or consolidate with, or sell all or substantially all of its assets to, another person and (6) create liens. As of
December 31, 2018, Cinemark USA, Inc. could have distributed up to approximately $2,980,550 to its parent company
and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the 4.875% Senior Notes, subject
to its available cash and other borrowing restrictions outlined in the indenture. Upon a change of control, as defined
in the indenture governing the 4.875% Senior Notes, Cinemark USA, Inc. would be required to make an offer to
repurchase the 4.875% Senior Notes at a price equal to 101% of the aggregate principal amount outstanding plus
accrued and unpaid interest, if any, through the date of repurchase. The indenture governing the 4.875% 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, 2018 was approximately 6.3 to 1.
5.125% Senior Notes
On December 18, 2012, Cinemark USA, Inc. issued $400,000 aggregate principal amount of 5.125% senior
notes due 2022, at par value (the “5.125% Senior Notes”). Interest on the 5.125% Senior Notes is payable on June 15
and December 15 of each year. The 5.125% Senior Notes mature on December 15, 2022.
The 5.125% 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 5.125% 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 5.125% 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 Credit Agreement. The 5.125% Senior
Notes and the guarantees are structurally subordinated to all existing and future debt and other liabilities of Cinemark
USA, Inc.’s subsidiaries that do not guarantee the 5.125% Senior Notes.
The indenture to the 5.125% Senior Notes contains covenants that limit, among other things, the ability of
Cinemark USA, Inc. and certain of its subsidiaries to (1) make investments or other restricted payments, including
paying dividends, making other distributions or repurchasing subordinated debt or equity, (2) incur additional
indebtedness and issue preferred stock, (3) enter into transactions with affiliates, (4) enter new lines of business,
(5) merge or consolidate with, or sell all or substantially all of its assets to, another person and (6) create liens. As of
December 31, 2018, Cinemark USA, Inc. could have distributed up to approximately $2,985,833 to its parent company
and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the 5.125% Senior Notes, subject
to its available cash and other borrowing restrictions outlined in the indenture. Upon a change of control, as defined
in the indenture governing the 5.125% Senior Notes, Cinemark USA, Inc. would be required to make an offer to
repurchase the 5.125% Senior Notes at a price equal to 101% of the aggregate principal amount outstanding plus
accrued and unpaid interest, if any, through the date of repurchase. The indenture governing the 5.125% 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, 2018 was approximately 6.3 to 1.
7.375% Senior Subordinated Notes
On June 3, 2011, Cinemark USA, Inc. issued $200,000 aggregate principal amount of 7.375% senior
subordinated notes due 2021, at par value (the “Senior Subordinated Notes”).
F-30
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
On March 21, 2016, Cinemark USA, Inc. redeemed its Senior Subordinated Notes at a make-whole premium of
approximately 104% plus accrued and unpaid interest, utilizing the proceeds from the issuance of the additional
$225,000 Cinemark USA, Inc. 4.875% Senior Notes discussed above. As a result of the redemption, the Company
wrote-off approximately $2,369 in unamortized debt issue costs, paid a make-whole premium of $9,444 and paid other
fees of $1,222, all of which are reflected in loss on debt amendments and refinancing during the year ended December
31, 2016.
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 $1,817,295 and $1,809,311 as of December 31, 2017 and 2018, respectively,
excluding debt issuance costs of $29,815 and $28,700, respectively. The fair value of the Company’s long term debt
was $1,840,918 and $1,774,066 as of December 31, 2017 and 2018, respectively.
Covenant Compliance and Debt Maturity
As of December 31, 2018, the Company believes it was in full financial compliance with all agreements,
including related covenants, governing its outstanding debt.
The Company’s long-term debt, excluding unamortized debt issuance costs, at December 31, 2018 matures as
follows:
2019
2020
2021
2022
2023
Thereafter
Total
$
$
7,984
6,595
6,595
406,595
761,595
619,947
1,809,311
Interest Rate Swap Agreements
The Company is currently a party to three interest rate swap agreements that are used to hedge a portion of the
interest rate risk associated with the variable interest rates on the Company’s term loan debt and qualify for cash flow
hedge accounting. The fair values of the interest rate swaps are recorded on the Company’s consolidated balance sheet
as an asset or liability with the related gains or losses reported as a component of accumulated other comprehensive
loss. The changes in fair value are reclassified from accumulated other comprehensive loss into earnings in the same
period that the hedged items affect earnings.
The valuation technique used to determine fair value is the income approach and under this approach, the
Company uses projected future interest rates as provided by counterparty to the interest rate swap agreement and the
fixed rates that the Company is obligated to pay under the agreement. Therefore, the Company’s measurements use
significant unobservable inputs, which fall in Level 3 of the U.S. GAAP hierarchy as defined by FASB ASC Topic
820-10-35. See Note 12 for a summary of unrealized gains or losses recorded in accumulated other comprehensive
loss.
F-31
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Below is a summary of the Company’s interest rate swap agreements designated as cash flow hedges as of
December 31, 2018:
Notional
Amount
Effective Date
$ 175,000 December 31, 2018
$ 137,500 December 31, 2018
$ 137,500 December 31, 2018
Estimated
Fair Value at
December 31,
Pay Rate
2.751%
2.765%
2.746%
Receive Rate
Expiration Date
2018 (1)
1-Month LIBOR
1-Month LIBOR
1-Month LIBOR
December 31, 2022 $
December 31, 2022 $
December 31, 2022 $
$
Total
1,983
1,624
1,486
5,093
(1)
Included in other long-term liabilities on the consolidated balance sheet as of December 31, 2018.
The total estimated fair value of the interest rate swaps of $5,093, net of deferred taxes of $1,243, is reflected in
accumulated other comprehensive loss for the year ended December 31, 2018.
12. 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 liabilities measured at fair value on a recurring basis by the Company under FASB ASC
Topic 820 as of December 31, 2018:
Description
Interest rate swap liabilities
Carrying
Value
Level 1
Fair Value
Level 2
Level 3
$
(5,093) $
— $
— $
(5,093)
Below is a reconciliation of the beginning and ending balance for liabilities measured at fair value on a recurring
basis using significant unobservable inputs (Level 3):
Beginning balance - January 1
Interest rate swaps effective December 31, 2018
Ending balance - December 31
(1) Represents interest rate swap liabilities. See Note 11 for further discussion.
Liabilities (1)
2018
$
$
—
5,093
5,093
F-32
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
The Company also uses the market approach for fair value measurements on a nonrecurring basis in the
impairment evaluations of its long-lived assets (see Note 1 and Note 9). Additionally, the Company uses the market
approach to estimate the fair value of its long-term debt (see Note 11). There were no changes in valuation techniques
during the period. There were no transfers in or out of Level 1, Level 2 or Level 3 during the years ended December
31, 2016, 2017 and 2018.
13. FOREIGN CURRENCY TRANSLATION
The accumulated other comprehensive loss account in stockholders’ equity of $253,282 and $319,007 at
December 31, 2017 and 2018, respectively, includes the cumulative foreign currency losses of $253,565 and $315,300,
respectively, from translating the financial statements of the Company’s international subsidiaries and the change in
fair values of the Company’s interest rate swap agreements designated as hedges.
As of December 31, 2018, all foreign countries where the Company has operations, other than Argentina, are
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 loss. The Company deemed Argentina to be highly inflationary beginning July 1, 2018. A
highly inflationary economy is defined as an economy with a cumulative inflation rate of approximately 100 percent
or more over a three-year period. If a country’s economy is classified as highly inflationary, the financial statements
of the foreign entity operating in that country must be remeasured to the functional currency of the reporting entity.
The financial statements of the Company’s Argentina subsidiaries has been remeasured in U.S. dollars in accordance
with ASC Topic 830, Foreign Currency Matters, effective beginning July 1, 2018.
Below is a summary of the impact of translating the financial statements of all of the Company’s international
subsidiaries as of and for the years ended December 31, 2016, 2017 and 2018.
Exchange Rate as of December 31,
2018
2017
2016
Other Comprehensive
Income (Loss)
For the Year Ended December 31,
2016
2017
Country
Brazil
Argentina (1)
Colombia
Chile
Peru
All other
(1)
3.26
16.04
3.31
18.65
3,000.71 2,936.67
615.97
3.24
(4,567)
(8,200)
246
5,672
2,752
(869)
(4,966) $
Amount represents the cumulative comprehensive loss recorded for Argentina through June 30, 2018. The impact of translating
Argentina financial results to U.S. dollars, beginning July 1, 2018, which was not significant, has been recorded in foreign
currency exchange gain (loss) on the Company’s consolidated statement of income.
37,286
(13,362)
1,278
1,855
87
(783)
26,361 $
3.88 $
37.68
3,249.75
694.74
3.39
679.09
3.45
$
$
$
2018
(34,086)
(14,357)
(1,795)
(8,924)
(2,136)
(955)
(62,253)
During the year ended December 31, 2017, the Company reclassified $1,551 of cumulative foreign currency
translation adjustments, related to a Canadian subsidiary that was liquidated, from accumulated other comprehensive
loss to foreign currency exchange gain (loss) on the consolidated statement of income.
During the year ended December 31, 2018, the Company reclassified $518 of cumulative foreign currency
translation adjustments, related to the settlement of an intercompany note between a domestic and an international
subsidiary, from accumulated other comprehensive loss to foreign currency exchange gain (loss) on the consolidated
statement of income.
F-33
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
14. NONCONTROLLING INTERESTS IN SUBSIDIARIES
Noncontrolling interests in subsidiaries of the Company were as follows at December 31:
Cinemark Partners II — 24.6% interest (in one
theatre)
Laredo Theatres – 25% interest (in two theatres)
Greeley Ltd. — 49% interest (in one theatre)
Other
Total
December 31,
2017
2018
$
8,795
$
8,152
1,746
843
509
11,893 $
2,308
1,411
508
12,379
$
During December 2016 the Company purchased the remaining 25% noncontrolling interest of one of its Chilean
subsidiaries, Flix Impirica S.A. (“Flix Impirica”), for approximately $450 in cash. The increase in the Company’s
ownership interest in the Chilean subsidiary was accounted for as an equity transaction in accordance with ASC Topic
810-10-45-23. The Company recorded a decrease in additional paid-in-capital of approximately $27, which
represented the difference between the cash paid and the book value of the Chilean subsidiary’s noncontrolling interest
account, which was approximately $423. As a result of this transaction, the Company now owns 100% of the shares
in Flix Impirica.
Below is a summary of the impact of changes in the Company’s ownership interest in its subsidiaries on its
equity:
Net income attributable to Cinemark Holdings, Inc.
Transfers from noncontrolling interests
Decrease in Cinemark Holdings, Inc. additional
paid-in-capital for the buyout of Flix Impirica
non-controlling interest
Net transfers from non-controlling interests
Change from net income attributable to Cinemark
Holdings, Inc. and transfers from noncontrolling
interests
Year ended December 31,
2017
$ 255,091 $ 264,180 $ 213,827
2016
2018
(27)
(27)
—
—
—
—
$ 255,064 $ 264,180 $ 213,827
15. 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 dividends 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 subsidiary’s indentures and senior secured credit facility, which also significantly restricts the ability of certain
of the Company’s subsidiaries to pay dividends directly or indirectly to the Company. See Note 11 for discussion of
restrictions contained within the debt agreements of the Company’s subsidiaries.
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.
F-34
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Below is a summary of the Company’s treasury stock activity for the years ended December 31, 2016, 2017 and
2018.
Balance at January 1, 2016
Restricted stock withholdings (1)
Restricted stock forfeitures (2)
Balance at December 31, 2016
Restricted stock withholdings (1)
Restricted stock forfeitures (2)
Balance at December 31, 2017
Restricted stock withholdings (1)
Restricted stock forfeitures (2)
Balance at December 31, 2018
Number of
Treasury
Shares
4,183,504 $
206,690
56,808
4,447,002 $
68,527
10,341
4,525,870 $
75,801
24,520
4,626,191 $
Cost
66,577
6,834
—
73,411
2,943
—
76,354
2,905
—
79,259
(1)
(2)
The Company withheld restricted shares as a result of the election by certain employees to satisfy their tax liabilities upon vesting in
restricted stock and restricted stock units. The Company determined the number of shares to be withheld based upon market values that
ranged from $29.17 to $44.44 per share.
The Company repurchased forfeited restricted shares at a cost of $0.001 per share in accordance with the 2017 Omnibus Plan.
As of December 31, 2018, the Company had no plans to retire any shares of its treasury stock.
Restricted Stock — Below is a summary of restricted stock activity for the years ended December 31, 2016,
2017 and 2018:
Year Ended
Year Ended
Year Ended
December 31, 2016
December 31, 2017
December 31, 2018
Outstanding at January 1
Granted
Vested
Forfeited
Outstanding at December 31
Shares of
Restricted
Stock
757,775 $
335,707 $
(430,056) $
(56,808) $
606,618 $
Weighted
Average
Grant Date
Fair Value
Shares of
Restricted
Stock
Weighted
Average
Grant Date
Fair Value
Shares of
Restricted
Stock
30.73 606,618 $
30.98 246,534 $
26.60 (192,230) $
33.81 (10,341) $
33.51 650,581 $
33.51 650,581 $
41.70 328,734 $
36.26 (250,442) $
33.48 (24,520) $
35.81 704,353 $
Weighted
Average
Grant Date
Fair Value
35.81
38.72
31.27
38.62
38.68
During the year ended December 31, 2018, the Company granted 328,734 shares of restricted stock to directors
and employees of the Company. The fair value of the restricted stock granted was determined based on the market
value of the Company’s common stock on the dates of grant, which ranged from $35.80 to $39.26 per share. The
Company assumed forfeiture rates ranging from 0% to 10% for the restricted stock awards. Restricted stock granted
to directors vests over a one-year period. Restricted stock granted to employees vests over periods ranging from one
year to four years based on continued service. 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.
F-35
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Below is a summary of restricted stock award activity recorded for the periods indicated.
Compensation expense recognized during the period $
Fair value of restricted shares that vested during the
period
Income tax deduction upon vesting of restricted
stock awards
$
$
Year Ended December 31,
2017
2018
2016
8,250 $
8,384 $
9,655
14,662
$
8,172
$
9,501
5,555
$
2,667
$
1,744
As of December 31, 2018, the remaining unrecognized compensation expense related to these restricted stock
awards was approximately $15,174. The weighted average period over which this remaining compensation expense
will be recognized is approximately two years.
Restricted Stock Units — During the years ended December 31, 2016, 2017 and 2018, the Company granted
restricted stock units representing 253,661, 175,634 and 228,194 hypothetical shares of common stock, respectively,
to employees. 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”) for a two year measurement period, as defined in the award agreement, 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 and vest on a prorata basis according to the IRR achieved by the Company
during the performance period. As an example, if the Company achieves an IRR equal to 9.0% for the 2016 grant, the
number of restricted stock units that shall vest will be greater than the target but less than the maximum number that
would have vested had the Company achieved the highest IRR. All payouts of restricted stock units that vest will be
subject to an additional 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.
The financial performance factors and respective vesting rates for each of the 2016, 2017 and 2018 grants are
as follows:
Threshold IRR
Target IRR
Maximum IRR
2016
Year Ended December 31,
2017
6.0% 7.0% 7.0%
8.0% 9.5% 9.5%
10.0% 13.0% 13.0%
2018
Percentage of
Shares Vesting
33.3%
66.6%
100.0%
At the time of each of the restricted stock unit grants, the Company assumes the IRR level to be reached for the
defined measurement period will be the target IRR level in determining the amount of compensation expense to record
for such grants. If and when additional information becomes available to indicate that something other than the target
IRR level will be achieved, the Company adjusts compensation expense on a prospective basis over the remaining
service period. The Company assumed a forfeiture rate of 5% for the restricted stock unit awards granted during 2018.
Restricted stock unit award participants are eligible to receive dividend equivalent payments if and at the time the
restricted stock unit awards vest.
F-36
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Below is a table summarizing the potential number of units that could vest under restricted stock unit awards
granted during the years ended December 31, 2016, 2017 and 2018 at each of the three levels of financial performance
(excluding forfeitures):
at threshold IRR
at target IRR
at maximum IRR
2016
Granted During the Year Ended December 31,
2017
Number of Value at Number of Value at Number of Value at
Grant(1)
2,967
5,938
8,906
Grant(1) Units
2,481
4,961
7,442
Grant(1) Units
2,522
5,044
7,568
76,065 $
152,129 $
228,194 $
58,545 $
117,089 $
175,634 $
84,554 $
169,107 $
253,661 $
Units
2018
(1)
The grant date fair values for units issued during the years ended December 31, 2016 and 2017 were $29.83 and $42.37, respectively. The
grant date fair values for the units issued during the year ended December 31, 2018 ranged from $37.55 to $39.03.
Below is a summary of activity for restricted stock unit awards for the periods indicated:
Year Ended December 31,
2017
2018
2016
Number of restricted stock unit awards that vested
during the period
Fair value of restricted stock unit awards that vested
during the period
Accumulated dividends paid upon vesting of
restricted stock unit awards
$
Compensation expense recognized during the period $
Income tax benefit recognized upon vesting of
restricted stock unit awards
$
$
213,984
97,115 127,084
7,260 $
4,155 $
4,846
662 $
5,144 $
558 $
4,297 $
526
4,681
3,049 $
1,745 $
708
During the year ended December 31, 2016, the Compensation Committee of the Board of Directors approved a
modification to the 2015 restricted stock unit grants. The modification resulted in a cap on the foreign currency
exchange rate devaluation impact to be used in calculating the IRR for the respective measurement periods. The
Company revalued each of the grants based on the Company’s stock price at the date of modification, which was
$37.98. The modifications resulted in incremental compensation expense of approximately $562 for the year ended
December 31, 2016.
As of December 31, 2018, the Company had restricted stock units outstanding that represented a total 594,266
hypothetical shares of common stock, net of actual cumulative forfeitures of 18,667 units, assuming the maximum
IRR is achieved for all of the outstanding restricted stock unit awards.
As of December 31, 2018, the remaining unrecognized compensation expense related to the outstanding
restricted stock unit awards was $8,416, which reflects the maximum IRR level that was achieved for the 2015 grant,
an IRR level of 7.2% that was achieved for the 2016 grant, an IRR level of 11.2% that is estimated for the 2017 grant
and an IRR level of 9.5% that is estimated for the 2018 grants. The weighted average period over which this remaining
compensation expense will be recognized is approximately two years.
F-37
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
16.
SUPPLEMENTAL CASH FLOW INFORMATION
The following is provided as supplemental information to the consolidated statements of cash flows:
Cash paid for interest
Cash paid for income taxes, net of refunds received
Noncash investing and financing activities:
Change in accounts payable and accrued expenses for the
acquisition of theatre properties and equipment (1)
Theatre properties acquired under capital and finance leases
Investment in NCM – receipt of common units (see
Note 6)
Interest expense – NCM (see Note 3)
Dividends accrued on unvested restricted stock unit awards
Year Ended December 31,
2017
99,232 $ 98,411
95,043 $ 64,199
2016
$ 108,101 $
93,368 $
$
2018
$ (29,471) $
33,282 $
$
9,349 $ (5,728)
46,727 $ 18,851
$
$
$
11,111 $
— $
(554) $
18,363 $
5,012
— $ (19,724)
(624)
(558) $
(1)
Additions to theatre properties and equipment included in accounts payable as of December 31, 2017 and 2018
were $31,276 and $37,004, respectively.
17. INCOME TAXES
On December 22, 2017, the U.S. government enacted comprehensive tax legislation, the Tax Cuts and Jobs Act
(the "Tax Act"). The Tax Act made changes to the U.S. tax code, which included (1) reduced U.S. corporate tax rate
from 35 percent to 21 percent, (2) generally eliminated U.S. federal income taxes on dividends from foreign
subsidiaries, (3) a one-time transition tax on certain undistributed earnings of foreign subsidiaries, and (4) created
new taxes on certain foreign-sourced earnings.
As of December 31, 2018, the amounts recorded for the Tax Act are final for the 2017 transition tax, the re-
measurement of deferred taxes, and the Company’s reassessment of valuation allowances. The Company recorded a
net additional charge as a result of the Tax Act and its recently issued guidance of $19,180, all non-cash, including a
true up of the re-measurement of deferred tax liabilities using the lower U.S. corporate income tax rate and a reduction
in a deferred tax asset with regard to foreign tax credit carryforwards.
The Company’s provision for federal and foreign income tax expense for continuing operations consisted of the
following:
Year Ended December 31,
2017
2018
2016
$ 274,756 $ 280,535 $ 289,727
21,007
$ 360,646 $ 345,377 $ 310,734
85,890
64,842
Income before income taxes:
U.S.
Foreign
Total
F-38
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Current and deferred income taxes were as follows:
Year Ended December 31,
2017
2018
2016
Current:
Federal
Foreign
State
Total current expense
Deferred:
Federal
Foreign
State
Total deferred taxes
Income taxes
$
65,303 $
32,047
11,936
$ 109,286 $
54,435 $
29,306
10,632
94,373 $
$ (13,667) $ (14,046) $
1,674
(4,270)
3,301
6,526
(5,467) $ (15,015) $
79,358 $
$
$ 103,819 $
46,826
11,822
13,594
72,242
27,055
(6,166)
2,298
23,187
95,429
A reconciliation between income tax expense and taxes computed by applying the applicable statutory federal
income tax rate to income before income taxes follows:
Computed statutory tax expense
Foreign inflation adjustments
State and local income taxes, net of federal income
tax impact
Foreign losses not benefited and changes in
valuation allowance
Foreign tax rate differential
Foreign dividends
Foreign tax credits
Impacts related to 2017 Tax Act (1)(2)
Changes in uncertain tax positions
Other — net
Income taxes
Year Ended December 31,
2017
2016
$ 126,226 $ 120,882 $
(281)
—
2018
65,254
—
11,999
12,786
12,611
(34,757)
(942)
68,684
(62,815)
—
921
(5,216)
$ 103,819 $
249
(245)
13,662
(21,647)
(44,889)
983
(2,423)
79,358 $
822
2,235
-
3,927
19,180
(6,139)
(2,461)
95,429
(1)
(2)
The amount for the year ended December 31, 2018 includes a one-time charge to true-up deferred taxes of $1,913 and a reduction in deferred
tax assets with regard to foreign tax credit carryforwards of $17,267.
The amount for the year ended December 31, 2017 includes a one-time benefit due to re-measurement of net deferred tax liabilities using a
lower U.S. corporate tax rate and a reassessment of permanently reinvested earnings of ($79,834), a deemed repatriation tax of $14,512,
and a reduction in deferred tax assets with regard to foreign tax credit carryforwards of $20,433.
As of December 31, 2018, all earnings invested offshore subject to the Tax Act have been included in the
transition tax. As of December 31, 2018, the Company had approximately $415,323 of accumulated undistributed
earnings and profits, approximately $373,768 of which was subject to the one-time transition tax pursuant to the Tax
Act. Any additional tax due on the repatriation of previously taxed earnings would generally be foreign withholding
and U.S. state income taxes. The Company does not intend to repatriate these offshore earnings and profits, and
therefore has not recorded any deferred taxes on such earnings. The Company considers any excess of the amount for
financial reporting over the tax basis of its investment in its foreign subsidiaries to be indefinitely reinvested. At this
time, the determination of deferred tax liabilities on this amount is not practicable.
F-39
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
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, 2017 and 2018 consisted of the following:
Deferred liabilities:
Theatre properties and equipment
Intangible asset — other
Intangible asset — tradenames
Investment in partnerships
Total deferred liabilities
December 31,
2017
2018
$
147,208 $
30,770
72,967
67,449
318,394
158,797
33,561
73,261
63,217
328,836
Deferred assets:
Deferred lease expenses
Exchange loss
Deferred revenue - NCM
Capital lease obligations
Tax impact of items in accumulated other
comprehensive income
Other tax loss carryforwards
Other tax credit carryforwards
Other expenses, not currently deductible for tax
purposes
Total deferred assets
Net deferred income tax liability before valuation
allowance
Valuation allowance against deferred assets –
non-current
Net deferred income tax liability
Net deferred tax (asset) liability — Foreign
Net deferred tax liability — U.S.
Total
$
$
$
14,714
220
85,816
67,369
—
15,564
38,436
13,464
1,306
70,688
63,895
2,237
15,608
42,989
13,801
235,920
26,776
236,963
82,474
91,873
35,246
117,720 $
3,073 $
114,647
117,720 $
54,725
146,598
(5,449)
152,047
146,598
A significant portion of our foreign tax credit carryforwards expire in 2023. Some foreign net operating losses
expired in 2018; 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 2037.
The Company’s valuation allowance changed from $35,246 at December 31, 2017 to $54,725 at December 31,
2018 (see Note 21). The increase was a result of recently issued guidance for the Tax Act and the impact on the
estimated usage of foreign tax credit carryforwards before their expiration.
F-40
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
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, 2016, 2017 and 2018:
Balance at January 1,
Gross increases - tax positions in prior periods
Gross decreases - tax positions in prior periods
Gross increases - current period tax positions
Settlements
Foreign currency translation adjustments
Balance at December 31,
$
$
Year Ended December 31,
2017
17,403 $
2016
17,133 $
13
—
923
(924)
258
17,403 $
2018
18,266
—
(143)
424
(7,191)
(795)
10,561
92
(12)
265
(177)
695
18,266 $
The Company had $20,231 and $13,953 of unrecognized tax benefits, including interest and penalties, as of
December 31, 2017 and 2018, respectively. Of these amounts, $20,231 and $13,953 represent the amount of
unrecognized tax benefits that, if recognized, would impact the effective income tax rate for the years ended December
31, 2017 and 2018, respectively. The Company had $5,288 and $3,390 accrued for interest and penalties as of
December 31, 2017 and 2018, respectively.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and in certain state and
foreign jurisdictions and are 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 2015. Additionally, the Company began and concluded an audit from the
Internal Revenue Service for the year 2016, with no changes. The Company is no longer subject to state income tax
examinations by tax authorities in its major state jurisdictions for years before 2014. 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 2005.
The Company is currently under audit in the non-U.S. tax jurisdiction of Brazil. The Company concluded an
audit in Chile in 2018 and recorded a tax benefit of $6,802.
18. COMMITMENTS AND CONTINGENCIES
Leases — The Company conducts a significant part of its theatre operations in leased properties under
noncancelable 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 some 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 $40,929 and $39,235
at December 31, 2017 and 2018, respectively, has been provided to account for lease expenses on a straight-line basis,
where lease payments are not made on such a basis. Theatre rent expense was as follows:
Year Ended December 31,
2016
2017
2018
Fixed rent expense
$ 242,927 $ 247,908 $ 248,543
Contingent rent and other facility lease expenses
78,367
80,289
74,773
Total facility lease expense
$ 321,294 $ 328,197 $ 323,316
F-41
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Future minimum lease payments under noncancelable operating and capital leases at December 31, 2018 are as
follows(1):
2019
2020
2021
2022
2023
Thereafter
Total
Amounts representing interest payments
Present value of future minimum payments
Current portion of capital lease obligations
Operating Capital
Leases
Leases
$ 253,323 $
42,434
242,336
41,502
230,396
34,589
204,628
32,462
176,802
28,534
677,091
166,375
$ 1,784,576
345,896
(86,364)
259,532
(27,065)
Capital lease obligations, less current portion
$ 232,467
(1) Represents amounts before the adoption of ASC Topic 842 – Leases. See Note 2 for discussion
of the expected impact of adoption.
Employment Agreements — As of December 31, 2018, the Company had employment agreements with Lee
Roy Mitchell, Mark Zoradi, Sean Gamble, Valmir Fernandes and Michael Cavalier. The employment agreements are
subject to automatic extensions for a one year period, unless the employment agreements are terminated. The base
salaries stipulated in the employment agreements are subject to review at least annually during the term of the
agreements for increase (but not decrease) 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 the Compensation Committee within the first 90 days of the fiscal
year.
Effective February 20, 2018, the Company and Mr. Zoradi amended his employment agreement extending the
term to December 31, 2019.
Effective January 2, 2018, Robert Carmony, Executive Vice President – Innovation, retired from the Company
and his employment agreement was terminated.
Retirement Savings Plan — The Company has a 401(k) retirement savings plan (“401(k) Plan”) for the benefit
of all eligible employees and makes matching contributions as determined annually in accordance with the 401(k)
Plan. Employer matching contribution payments of $6,380 and $5,076 were made during 2017 and 2018, respectively.
A liability of approximately $1,374 was recorded at December 31, 2018 for employer contribution payments to be
made in 2019 for the remaining amounts owed for plan year 2018.
F-42
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
Silken Brown v. Cinemark USA, Inc., Case No. 3:13cv05669, In the United States District Court for the Northern
District of California, San Francisco Division. The case presents putative class action claims for penalties and
attorney's fees arising from alleged violations of the California wage statement law. The claim is also asserted as a
representative action under the California Private Attorney General Act (PAGA) for penalties. The Court granted class
certification. The company denies the claims, denies that class certification is appropriate, denies that the plaintiff has
standing to assert the claims alleged and is vigorously defending against the claims. The company denies the claims,
denies that class certification is appropriate, denies that the plaintiff has standing to assert the claims alleged and is
vigorously defending against the claims. The Company denies any violation of law; however, to avoid the cost and
uncertainty associated with litigation the Company and the plaintiff entered into a Joint Stipulation of Class Action
Settlement and Release of Claims (the “Settlement Agreement”) to fully and finally dismiss all claims that would be
brought in the case. The Settlement Agreement must be approved by the Court. During the year ended December 31,
2018, the Company recorded a litigation reserve based on the proposed Settlement Agreement in loss on disposal of
assets and other on the consolidated income statement.
Flagship Theatres of Palm Desert, LLC d/b/a Cinemas Palme D’Or v. Century Theatres, Inc., and Cinemark
USA, Inc.; Superior Court of the State of California, County of Los Angeles. Plaintiff in this case alleges that the
Company violated California antitrust and unfair competition laws by engaging in “circuit dealing” with various
motion picture distributors and tortuously interfered with Plaintiff’s business relationships. Plaintiff seeks
compensatory damages, trebling of those damages under California law, punitive damages, injunctive relief, attorneys’
fees, costs and interest. Plaintiff also alleges that the Company’s conduct ultimately resulted in closure of its theatre
in June 2016. The Company denied the allegations. In 2008, the Company moved for summary judgment on
Plaintiff’s claims, arguing primarily that clearances between the theatres at issue were lawful and that Plaintiff lacked
proof sufficient to support certain technical elements of its antitrust claims. The trial court granted that motion and
dismissed Plaintiff’s claims. Plaintiff appealed and, in 2011, the Court of Appeal reversed, holding, among other
things, that Plaintiff’s claims were not about the illegality of clearances but were focused, instead, on “circuit dealing.”
Having re-framed the claims in that manner, the Court of Appeal held that the trial court’s decision to limit discovery
to the market where the theatres at issue operated was an error, as “circuit dealing” necessarily involves activities in
different markets. Upon return to the trial court, the parties engaged in additional, broadened discovery related to
Plaintiff’s “circuit dealing” claim. Thereafter, the Company moved again for summary judgment on all of Plaintiff’s
claims. That new motion for summary judgment was pending when, on or about April 11, 2014, the trial court granted
the Company’s motion for terminating sanctions and entered a judgment dismissing the case with prejudice. Plaintiff
then appealed that second dismissal, seeking to have the judgment reversed and the case remanded to the trial court.
The Court of Appeal issued a ruling on May 24, 2016, reversing the granting of terminating sanctions and instead
imposed a lesser evidentiary and damages preclusion sanction. The case returned to the trial court on October 6, 2016.
On May 10, 2018, after a five-week jury trial, the jury found no liability on one circuit dealing claim and awarded
Plaintiff damages on the other claim, which are tripled for antitrust damage awards. Plaintiff would also be entitled
to certain court costs and to seek at least some portion of its attorney’s fees. During the year ended December 31,
2018, the Company recorded a litigation reserve based on an estimate of the jury award, which is reflected in loss on
disposal of assets and other on the consolidated income statement. The trial court denied a motion for a judgment
notwithstanding the verdict and a motion for a new trial. The Company intends to appeal the judgment. Although the
Company denies that it engaged in any form of circuit dealing, it cannot predict the outcome of its pending motions
or future appeals.
The Company received a Civil Investigative Demand (“CID”) from the Antitrust Division of the United States
Department of Justice. The CID relates to an investigation under Sections 1 and 2 of the Sherman Act. The Company
also received CIDs from the Antitrust Section of the Office of the Attorney General of the State of Ohio and later from
other states regarding similar inquiries under state antitrust laws. The CIDs request the Company to answer
interrogatories, and produce documents, or both, related to the investigation of matters including film clearances,
potential coordination and/or communication with other major theatre circuits and related joint ventures. The
Company intends to fully cooperate with all federal and state government agencies. Although the Company does not
believe that it has violated any federal or state antitrust or competition laws, it cannot predict the ultimate scope,
duration or outcome of these investigations.
F-43
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
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.
19. SEGMENTS
The Company manages its international market and its U.S. market as separate reportable operating segments,
with the international segment consisting of operations in Brazil, Argentina, Chile, Colombia, Peru, Ecuador,
Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao and Paraguay. Each segment’s
revenue is derived from admissions and concession sales and other ancillary revenues. The Company uses Adjusted
EBITDA, as shown in the reconciliation table below, because we believe it provides management and investors with
additional information to measure the Company’s performance and liquidity, estimate the Company’s value and
evaluate the Company’s ability to service debt. In addition, the Company uses Adjusted EBITDA for incentive
compensation purposes. The Company does not report asset information by segment because that information is not
used to evaluate Company performance or allocate resources between segments.
Below is a breakdown of select financial information by reportable operating segment:
Year Ended December 31,
2017
2018
2016
Revenues
U.S.
International
Eliminations
Total revenues
Adjusted EBITDA (1)
U.S.
International
Total Adjusted EBITDA
Capital expenditures
U.S.
International
Total capital expenditures
$2,230,693 $2,236,237 $2,551,719
682,778
(12,762)
$2,918,765 $2,991,547 $3,221,735
769,436
(14,126)
701,573
(13,501)
$ 548,413 $ 558,182 $ 648,576
132,941
$ 706,103 $ 723,758 $ 781,517
165,576
157,690
$ 242,271 $ 321,040 $ 270,870
75,203
$ 326,908 $ 380,862 $ 346,073
59,822
84,637
(1)
Distributions from equity investees are reported entirely within the U.S. operating segment.
F-44
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
The following table sets forth a reconciliation of net income to Adjusted EBITDA:
Net income
Add (deduct):
Income taxes
Interest expense (1)
Loss on debt amendments and refinancing
Other income (2)
Other cash distributions from equity investees (3)
Depreciation and amortization
Impairment of long-lived assets
Loss on disposal of assets and other
Deferred lease expenses
Amortization of long-term prepaid rents
Share based awards compensation expense
Adjusted EBITDA
Year Ended December 31,
2017
$ 256,827 $ 266,019 $ 215,305
2016
2018
79,358
521
(43,127)
25,973
13,445
(44,813)
21,916
103,819
95,429
108,313 105,918 109,994
1,484
(18,472)
30,143
209,071 237,513 261,162
32,372
38,702
(1,320)
2,382
14,336
$ 706,103 $ 723,758 $ 781,517
2,836
20,459
(990)
1,826
13,394
15,084
22,812
(1,268)
2,274
12,681
(1)
(2)
(3)
Includes amortization of debt issue costs.
Includes interest income, foreign currency exchange gain (loss), interest expense – NCM and equity in income of affiliates
and excludes distributions from NCM.
Includes distributions received from equity investees that were recorded as a reduction of the respective investment balances.
Financial Information About Geographic Area
Below is a breakdown of select financial information by geographic area:
Year Ended December 31,
2017
2018
2016
Revenues
U.S.
Brazil
Other international countries
Eliminations
Total
$2,230,693 $2,236,237 $2,551,719
283,009
399,769
(12,762)
$2,918,765 $2,991,547 $3,221,735
341,485
427,951
(14,126)
304,407
397,166
(13,501)
Theatre Properties and Equipment-net
U.S.
Brazil
Other international countries
Total
December 31,
2017
December 31,
2018
$ 1,439,168 $ 1,479,603
140,570
212,960
$ 1,828,054 $ 1,833,133
179,669
209,217
F-45
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
20. RELATED PARTY TRANSACTIONS
The Company manages theatres for Laredo Theatres, 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. Lee
Roy Mitchell is the Company’s Chairman of the Board and directly and indirectly owns approximately 8% of the
Company’s common stock. 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 $506, $586 and $654 of management fee revenues during the years ended December 31, 2016, 2017 and
2018, 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, 2016, 2017 and 2018, the aggregate amounts paid to Copper Beech Capital,
LLC for the use of the aircraft was approximately $110, $131 and $68, respectively.
The Company holds events for its employees and their families at Pinstack, an entertainment facility, at various
times throughout the year. Pinstack is majority-owned by Mr. Mitchell and his wife, Tandy Mitchell. In connection
with the event, the Company paid Pinstack approximately $70, $36 and $5 during the years ended December 31, 2016,
2017 and 2018, respectively.
The Company currently leases 14 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 15 leases, 14 have fixed minimum annual rent. The one lease without minimum annual rent has rent based
upon a specified percentage of gross sales as defined in the lease. For the years ended December 31, 2016, 2017 and
2018, the Company paid total rent of approximately $21,124, $22,483 and $23,447, respectively, to Syufy.
The Company has a 50% voting interest in FE Concepts, a joint venture with AWSR, an entity owned by Lee
Roy Mitchell and Tandy Mitchell. FE Concepts will develop and operate a family entertainment center that offers
bowling, gaming, movies and other amenities. See Note 7 for further discussion.
21. VALUATION AND QUALIFYING ACCOUNTS
The Company’s valuation allowance for deferred tax assets for the years ended December 31, 2016, 2017 and
2018 were as follows:
Balance at January 1, 2016
Additions
Deductions
Balance at December 31, 2016
Additions
Deductions
Balance at December 31, 2017
Additions (1)
Deductions
Balance at December 31, 2018
Valuation Allowance
for Deferred Taxes
$
$
$
$
50,636
483
(36,595)
14,524
21,347
(625)
35,246
22,005
(2,526)
54,725
(1)
A valuation allowance was provided against certain deferred tax assets arising from carryforwards of unused
foreign tax credit benefits.
F-46
CINEMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In thousands, except share and per share data
22. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
First
Quarter
$ 779,610
Revenues
$ 131,193
Operating income
Net income
$ 80,194
Net income attributable to Cinemark Holdings, Inc. $ 79,728
Net income per share attributable to Cinemark
Holdings, Inc.’s common stockholders:
Second
Quarter
$ 751,195
$ 98,221
$ 51,810
$ 51,239
2017
Third
Quarter
$ 710,748
$ 74,175
$ 38,540
$ 38,139
Fourth
Quarter
$ 749,994
$ 88,693
$ 95,475
$ 95,074
Full
Year
$2,991,547
$ 392,282
$ 266,019
$ 264,180
Basic
Diluted
$
$
0.68
0.68
$
$
0.44
0.44
$
$
0.33
0.33
$
$
0.82
0.82
$
$
2.26
2.26
Revenues
Operating income
Net income
Net income attributable to Cinemark Holdings,
Inc.
Net income per share attributable to Cinemark
Holdings, Inc.’s common stockholders:
First
Quarter
$ 779,971
$ 102,242
62,177
$
Second
Quarter
$ 889,053
$ 126,668
82,464
$
2018 (1)
Third
Quarter
$ 754,235
82,738
$
50,621
$
Fourth
Quarter
$ 798,476
76,703
$
20,043
$
Full
Year
$3,221,735
$ 388,351
$ 215,305
$
62,021
$
82,135
$
50,228
$
19,443
$ 213,827
Basic
Diluted
$
$
0.53
0.53
$
$
0.70
0.70
$
$
0.43
0.43
$
$
0.17
0.17
$
$
1.83
1.83
(1) See Note 3 for discussion of the adoption of ASC 606 and its impact on the income statement beginning in 2018.
23.
SUBSEQUENT EVENTS
On February 22, 2019, the Company’s board of directors approved a cash dividend for the fourth quarter of
2018 of $0.34 per share of common stock payable to stockholders of record on March 8, 2019. The dividend will be
paid on March 22, 2019.
*****
F-47
SCHEDULE 1 - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CINEMARK HOLDINGS, INC.
PARENT COMPANY BALANCE SHEETS
(In thousands, except share data)
Assets
Cash and cash equivalents
Prepaid assets and other
Investment in subsidiaries
Total assets
Liabilities and equity
Liabilities
Accrued other current liabilities, including accounts payable to subsidiaries
Other long-term liabilities
Total liabilities
Commitments and contingencies (see Note 6)
Equity
Common stock, $0.001 par value: 300,000,000 shares authorized, 121,000,903
shares issued and 116,475,033 shares outstanding at December 31, 2017 and
121,456,721 shares issued and 116,830,530 shares outstanding at December
31, 2018
Additional paid-in-capital
Treasury stock, 4,525,870 and 4,626,191 shares, at cost, at December 31, 2017
and December 31, 2018, respectively
Retained earnings
Accumulated other comprehensive loss
Total equity
Total liabilities and equity
December 31,
December 31,
2017
2018
$
$
$
132 $
—
1,409,605
1,409,737 $
6
11
1,464,803
1,464,820
15,208 $
734
15,942
20,165
917
21,082
121
1,141,088
121
1,155,424
(76,354)
582,222
(253,282)
1,393,795
1,409,737 $
(79,259)
686,459
(319,007)
1,443,738
1,464,820
$
The accompanying notes are an integral part of the condensed financial information of the registrant.
S-1
CINEMARK HOLDINGS, INC.
PARENT COMPANY STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2016, 2017 and 2018
(in thousands)
2016
2017
2018
Revenues
Cost of operations
Operating loss
Other income
Loss before income taxes and equity in income of subsidiaries
Income taxes
Equity in income of subsidiaries, net of taxes
Net income
$
$
$
—
2,717
(2,717)
—
(2,717)
1,033
256,775
255,091
$
$
—
2,367
(2,367)
6
(2,361)
897
265,644
264,180
$
—
2,535
(2,535)
22
(2,513)
605
215,735
213,827
The accompanying notes are an integral part of the condensed financial information of the registrant.
S-2
CINEMARK HOLDINGS, INC.
PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2016, 2017 and 2018
(In thousands)
$
Net income
Other comprehensive income (loss), net of tax
Unrealized gain (loss) due to fair value adjustments on interest rate
swap agreements, net of taxes of $138, $0 and $1,243, net of
settlements
Other comprehensive income (loss) in equity method investments
Foreign currency translation adjustments
Total other comprehensive income (loss), net of tax
Comprehensive income attributable to Cinemark Holdings, Inc. $
2016
255,091
$
2017
264,180
$
2018
213,827
234
89
26,361
26,684
281,775
$
-
248
(4,966)
(4,718)
259,462
$
(3,851)
(139)
(62,253)
(66,243)
147,584
The accompanying notes are an integral part of the condensed financial information of the registrant.
S-3
CINEMARK HOLDINGS, INC.
PARENT COMPANY STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2016, 2017 and 2018
(in thousands)
Operating Activities
Net income
Adjustments to reconcile net income to cash provided by operating
activities:
Share based awards compensation expense
Equity in income of subsidiaries
Changes in other assets and liabilities
$
Net cash provided by operating activities
Investing Activities
Dividends received from subsidiaries
Net cash provided by investing activities
Financing Activities
Dividends paid to stockholders
Payroll taxes paid as a result of noncash stock option exercises and
restricted stock withholdings
Net cash used for financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents:
Beginning of period
End of period
$
2016
2017
2018
255,091
$
264,180
$
213,827
981
(256,775)
8,188
7,485
857
(265,644)
4,164
3,557
124,900
124,900
134,500
134,500
920
(215,735)
4,509
3,521
148,750
148,750
(125,490)
(135,079)
(149,492)
(6,834)
(132,324)
(2,943)
(138,022)
61
36
97
$
35
97
132
$
(2,905)
(152,397)
(126)
132
6
The accompanying notes are an integral part of the condensed financial information of the registrant.
S-4
CINEMARK HOLDINGS, INC.
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
In thousands, except share and per share data
1.
BASIS OF PRESENTATION
Cinemark Holdings, Inc. conducts substantially all of its operations through its subsidiaries. These statements
should be read in conjunction with the Company’s consolidated financial statements and notes included elsewhere in
this annual report on Form 10-K. There are significant restrictions over Cinemark Holdings, Inc.’s ability to obtain
funds from its subsidiaries through dividends, loans or advances as contained in Cinemark USA, Inc.’s senior secured
credit facility and the indentures to each of the 4.875% Senior Notes and the 5.125% Senior Notes (collectively
referred to herein as the “Notes”). These condensed parent company financial statements have been prepared in
accordance with Rule 12-04, Schedule I of Regulation S-X, as the restricted net assets of Cinemark Holdings, Inc.’s
subsidiaries under each of the debt agreements previously noted exceeds 25 percent of the consolidated net assets of
Cinemark Holdings, Inc. As of December 31, 2018, the restricted net assets totaled approximately $1,155,042 and
$1,174,247 under the senior secured credit facility and the Notes, respectively. See Note 11 to the Company’s
consolidated financial statements included elsewhere in this annual report on Form 10-K.
2.
DIVIDEND PAYMENTS
Below is a summary of dividends declared for the fiscal periods indicated.
Declaration Date
2/24/2016
5/26/2016
8/18/2016
11/16/2016
2/23/2017
5/25/2017
8/10/2017
11/17/2017
2/23/2018
5/25/2018
8/23/2018
11/15/2018
Record Date
3/7/2016
6/8/2016
8/31/2016
12/2/2016
3/8/2017
6/8/2017
8/31/2017
12/1/2017
3/8/2018
6/8/2018
9/4/2018
12/4/2018
$
Payable Date
3/18/2016
6/22/2016
9/13/2016
12/16/2016
Total $
$
3/20/2017
6/22/2017
9/13/2017
12/15/2017
3/22/2018
6/22/2018
9/18/2018
12/18/2018
Total $
$
$
$
$
Total $
Amount per
Share of
Total
Common Stock (1)
Dividends (2)
0.27 $
0.27
0.27
0.27
1.08 $
0.29 $
0.29
0.29
0.29
1.16 $
0.32 $
0.32
0.32
0.32
1.28 $
31,544
31,459
31,473
31,568
126,044
33,912
33,904
33,911
33,910
135,637
37,471
37,523
37,530
37,592
150,116
(1)
(2)
Beginning with the dividend declared on February 23, 2017, the Company’s board of directors raised the quarterly dividend to $0.29 per
common share. Beginning with the dividend declared on February 23, 2018, the Company’s board of directors raised the quarterly dividend
to $0.32 per common share.
Of the dividends recorded during 2016, 2017 and 2018, $554, $558 and $624, respectively, were related to outstanding restricted stock units
and will not be paid until such units vest.
3.
DIVIDENDS RECEIVED FROM SUBSIDIARIES
During the years ended December 31, 2016, 2017 and 2018, Cinemark Holdings, Inc. received cash dividends
of $124,900, $134,500 and $148,750, respectively, from its subsidiary, Cinemark USA, Inc.
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 11 to the Company’s consolidated financial
statements included elsewhere in this annual report on Form 10-K.
S-5
CINEMARK HOLDINGS, INC.
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
In thousands, except share and per share data
5.
CAPITAL STOCK
Cinemark Holdings, Inc.’s capital stock along with its long-term incentive plan and related activity are discussed
in Note 15 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 18 of
the Company’s consolidated financial statements included elsewhere in this annual report on Form 10-K
*****
S-6
CINEMARK HOLDINGS, INC.
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
In thousands, except share and per share data
SUBSIDIARIES OF CINEMARK HOLDINGS, INC.
EXHIBIT 21
United States
Cinemark USA, Inc., a Texas corporation
Cinemark, L.L.C., a Cayman corporation
Sunnymead Cinema Corp., a California corporation
Cinemark Properties, Inc., a Texas corporation
Greeley Holdings, Inc., a Texas corporation
Greeley, Ltd., a Texas limited partnership
Cinemark Concessions, L.L.C., a Florida limited liability company
Cinemark International, L.L.C., a Texas limited liability company
Cinemark Mexico (USA), Inc., a Delaware corporation
Cinemark Partners I, Inc., a Texas corporation
Cinemark Partners II, Ltd., a Texas limited partnership
Cinemark Investments Corporation, a Delaware corporation
CNMK Brazil Investments, Inc., a Delaware corporation
CNMK Investments, Inc., a Delaware corporation
CNMK Texas Properties, L.L.C., a Texas corporation
Laredo Theatre, Ltd., a Texas limited partnership
Brasil Holdings, L.L.C., a Delaware limited liability company
Brazil Holdings II, L.L.C., a Delaware limited liability company
Cinemark Media, Inc., a Delaware corporation
Cinemark Latin America Ventures, L.L.C., a Delaware limited liability company
Cinemark Prodecine Holdings, L.L.C., a Delaware limited liability company
Brazil Transition Holdings, L.L.C., a Delaware limited liability company
Century Theatres, Inc., a California corporation
Marin Theatre Management, L.L.C., a California limited liability company
Century Theatres NG, L.L.C., a California limited liability company
CineArts, L.L.C., a California limited liability company
CineArts of Sacramento, L.L.C., a California limited liability company
Corte Madera Theatres, L.L.C., a California limited liability company
Novato Theatres, L.L.C., a California limited liability company
San Rafael Theatres, L.L.C., a California limited liability company
Northbay Theatres, L.L.C., a California limited liability company
Century Theatres Summit Sierra, L.L.C., a California limited liability company
Century Theatres Seattle, L.L.C., a California limited liability company
Cinemark AB, Inc., a Maryland Corporation
FM Delaware I, LLC, a Delaware limited liability company
FM Delaware II, LLC, a Delaware limited liability company
ARGENTINA
Cinemark Argentina, S.R.L., an Argentine limited liability company
Prodecine S.R.L., an Argentine limited liability company
Bulnes 2215, S.R.L., an Argentine limited liability company
Cinemark Argentina Holdings, Inc., a Cayman corporation
BOCA Holdings, Inc., a Cayman corporation
Hoyts Cinema de Argentina S.A., an Argentine corporation
BRAZIL
Cinemark Brasil S.A., a Brazilian corporation
Cinestar Cinemas Ltda., a Brazilian corporation
Flix Media Publicidade e Entreternimento Ltda., a Brazilian limited partnership
S-7
CINEMARK HOLDINGS, INC.
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
In thousands, except share and per share data
Cinespaco S.A., a Brazilian corporation
CANADA
Century Theatres of Canada, ULC, a Canadian corporation
CENTRAL AMERICA
Cinemark Panama, S.A., a Panamanian joint stock company
Cinemark Equity Holdings Corporation, a British Virgin Islands corporation
Cinemark Costa Rica, S.R.L., a Costa Rican limited liability company
Cinemark El Salvador, Ltda de C.V., an El Salvadorian limited liability company
Cinemark Nicaragua y Cia, Ltda., a Nicaraguan limited liability company
Cinemark Honduras S. de R.L., a Honduran limited liability company
Cinemark Guatemala Ltda., a Guatemalan limited company
Flix Media Holdings Corporation, a British Virgin Islands corporation
Flix Cinevision Honduras S.R.L, a Honduran limited liability company
Flix Cinevision Costa Rica S.R.L, a Costa Rican limited liability company
Flix Cinevision Nicaragua S.R.L, a Nicaraguan limited liability company
Flix Cinevision Guatemala S.R.L, a Guatemalan limited liability company
Flix Cinevision Panama S.R.L, a Panamanian limited liability company
Flix Cinevision El Salvador S.R.L, an El Salvadorian limited liability company
Cine Food Services S.A., a Panamanian join stock company
CHILE
Cinemark Chile S.A., a Chilean corporation
Inversiones Cinemark, S.A., a Chilean corporation
Worldwide Invest, Inc., a British Virgin Islands corporation
Flix Media S.A., a Chilean corporation
COLOMBIA
Cinemark Colombia S.A.S., a Colombian corporation
Flix Cinevision Colombia S.A.S., a Colombian corporation
ECUADOR
Cinemark del Ecuador S.A., an Ecuadorian corporation
MEXICO
Cinemark Plex, S. de R.L. de C.V., a Mexican limited liability company
PERU
Cinemark del Peru S.R.L., a Peruvian limited liability company
BOLIVIA
Cinemark Bolivia, S.R.L., a Bolivian corporation
PARAGUAY
Cinemark Paraguay, S.R.L, a Paraguayan limited liability company
CURACAO
Cinemark Curacao, B.V., a Dutch Caribbean limited liability company
SPAIN
Cinemark Holdings Spain, S.L., a Spanish limited liability company
S-8
CINEMARK HOLDINGS, INC.
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
In thousands, except share and per share data
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-146349, 333-153273, and 333-
218697 on Form S-8 of our reports dated February 28, 2019, relating to the financial statements and financial statement
schedule of Cinemark Holdings, Inc., and the effectiveness of Cinemark Holdings, Inc.’s internal control over financial
reporting, appearing in this Annual Report on Form 10-K of Cinemark Holdings, Inc. for the year ended December
31, 2018.
EXHIBIT 23.1
/s/ Deloitte & Touche LLP
Dallas, Texas
February 28, 2019
S-9
CINEMARK HOLDINGS, INC.
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
In thousands, except share and per share data
CEO CERTIFICATION
PURSUANT TO SECTION 302 OF THE
SARBANES - OXLEY ACT OF 2002
EXHIBIT 31.1
I,
1.
2.
3.
4.
Mark Zoradi, certify that:
I have reviewed this annual report on Form 10-K of Cinemark Holdings, Inc.;
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this annual
report;
Based on my knowledge, the financial statements, and other financial information included in this
annual report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this annual report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)) for the
registrant and have:
a)
b)
c)
d)
designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, 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;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s
board of directors (or persons performing the equivalent functions):
a)
b)
all significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant’s internal control over financial reporting.
Date: February 28, 2019
CINEMARK HOLDINGS, INC.
By:
/s/ Mark Zoradi
Mark Zoradi
Chief Executive Officer
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CINEMARK HOLDINGS, INC.
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
In thousands, except share and per share data
CFO CERTIFICATION
PURSUANT TO SECTION 302 OF THE
SARBANES - OXLEY ACT OF 2002
EXHIBIT 31.2
I,
1.
2.
3.
4.
Sean Gamble, certify that:
I have reviewed this annual report on Form 10-K of Cinemark Holdings, Inc.;
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this annual report;
Based on my knowledge, the financial statements, and other financial information included in this annual
report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this annual report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)) for the registrant
and have:
a)
b)
c)
d)
designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, 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;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s
board of directors (or persons performing the equivalent functions):
a)
c)
all significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant’s internal control over financial reporting.
Date:February 28, 2019
CINEMARK HOLDINGS, INC.
By:
/s/ Sean Gamble
Sean Gamble
Chief Financial Officer
S-11
CINEMARK HOLDINGS, INC.
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
In thousands, except share and per share data
CEO CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADDED BY
SECTION 906 OF THE SARBANES - OXLEY ACT OF 2002
EXHIBIT 32.1
This certification is provided pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-
Oxley Act of 2002, and accompanies the annual report on Form 10-K (the “Form 10-K”) for the year ended December
31, 2018 of Cinemark Holdings, Inc. (the “Issuer”).
I, Mark Zoradi, the Chief Executive Officer of Issuer certify that to the best of my knowledge:
(i)
(ii)
the Form 10-K fully complies with the requirements of section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
the information contained in the Form 10-K fairly presents, in all material respects, the financial condition
and results of operations of the Issuer.
Dated: February 28, 2019
/s/Mark Zoradi
Mark Zoradi
Chief Executive Officer
Subscribed and sworn to before me this 28th day of February 2019.
/s/Julie Martinez
Name: Julie Martinez
Title: Notary Public
My commission expires: 09/25/2021
A signed original of this written statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
S-12
CINEMARK HOLDINGS, INC.
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
In thousands, except share and per share data
CFO CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADDED BY
SECTION 906 OF THE SARBANES – OXLEY ACT OF 2002
EXHIBIT 32.2
This certification is provided pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-
Oxley Act of 2002, and accompanies the annual report on Form 10-K (the “Form 10-K”) for the year ended December
31, 2018 of Cinemark Holdings, Inc. (the “Issuer”).
I, Sean Gamble, the Chief Financial Officer of Issuer certify that to the best of my knowledge:
(i)
(ii)
the Form 10-K fully complies with the requirements of section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
the information contained in the Form 10-K fairly presents, in all material respects, the financial
condition and results of operations of the Issuer.
Dated: February 28, 2019
/s/Sean Gamble
Sean Gamble
Chief Financial Officer
Subscribed and sworn to before me this 28th day of February 2019.
/s/Julie Martinez
Name: Julie Martinez
Title: Notary Public
My commission expires: 09/25/2021
A signed original of this written statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
S-13