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.
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 amended 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 amended 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 amended 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 may not be
able to generate additional revenues or continue to realize value from our investment in NCM.
As of December 31,
2014, we had an ownership interest in NCM of approximately 19%. 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, 2013 and 2014, the Company received approximately $8.0 million and $9.2 million in other revenues from NCM, respectively, and $20.7 million and $18.5 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 NCMs 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.
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 implement the latest technological innovations, such as digital
projection, 3-D 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.