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SEC Filings

10-K
CINEMARK HOLDINGS, INC. filed this Form 10-K on 02/27/2015
Entire Document
 


Table of Contents

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, 2014, there was an aggregate of approximately $236.0 million of variable rate debt outstanding under these facilities, which excludes $450.0 million of Cinemark USA, Inc.’s term loan debt that is hedged with the Company’s interest rate swap agreements as discussed below. Based on the interest rates in effect on the variable rate debt outstanding at December 31, 2014, a 100 basis point increase in market interest rates would increase our annual interest expense by approximately $2.4 million.

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 effective portion of the interest rate swaps’ gains or losses reported as a component of accumulated other comprehensive loss and the ineffective portion reported in earnings.

Below is a summary of our interest rate swap agreements as of December 31, 2014:

 

Notional Amount

(in millions)

 

Effective Date

 

Pay Rate

 

Receive Rate

 

Expiration Date

$175.0   December 2010   1.3975%   1-month LIBOR   September 2015
$175.0   December 2010   1.4000%   1-month LIBOR   September 2015
$100.0   November 2011   1.7150%   1-month LIBOR   April 2016

 

       
$450.0        

 

       

The table below provides information about our fixed rate and variable rate long-term debt agreements as of December 31, 2014:

 

     Expected Maturity for the Twelve-Month Periods Ending December 31,
(in millions)
     Average
Interest
Rate
 
     2015      2016      2017      2018      2019      Thereafter      Total      Fair Value     

Fixed rate (1)

   $ 1.4       $ 1.4       $ 1.4       $ 1.4       $ 451.4       $ 1,130.0       $ 1,587.0       $ 1,557.4         5.1

Variable rate

     7.0         7.0         7.0         7.0         208.0         —           236.0         233.6         3.2
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total debt

   $ 8.4       $ 8.4       $ 8.4       $ 8.4       $ 659.4       $ 1,130.0       $ 1,823.0       $ 1,791.0      
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

(1) 

Includes $450.0 million of the Cinemark USA, Inc. term loan, which represents the debt currently hedged with the Company’s interest rate swap agreements.

Foreign Currency Exchange Rate Risk

We are also exposed to market risk arising from changes in foreign currency exchange rates as a result of our international operations. Generally, we export from the U.S. certain of the equipment and 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. Currency fluctuations in the countries in which we operate

 

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