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SEC Filings

10-Q
CINEMARK HOLDINGS, INC. filed this Form 10-Q on 11/05/2015
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Table of Contents

U.S. Film rentals and advertising costs were $567.5 million, or 57.3% of admissions revenues for the 2015 period compared to $505.5 million, or 55.7% of admissions revenues for the 2014 period. The increase in the film rentals and advertising rate was primarily due to the higher concentration of blockbuster films leading to stronger box office performance during the 2015 period and increased film presentation costs. The 2015 period included such blockbuster releases as Jurassic World, The Avengers: Age of Ultron, Furious 7, American Sniper, Inside Out and Minions, which grossed in excess of $650 million, $450 million, $350 million, $350 million, $350 million and $325 million, respectively. Concession supplies expense was $70.3 million, or 13.4% of concession revenues, for the 2015 period compared to $64.4 million, or 13.7% of concession revenues, for the 2014 period.

Salaries and wages increased to $165.4 million for the 2015 period from $149.8 million for the 2014 period primarily due to new theatres, increased staffing levels to support the increased attendance and increases in minimum wages. Facility lease expense increased to $179.1 million for the 2015 period from $176.2 million for the 2014 period primarily due to new theatres and increased percentage rent expense due to increased revenues. Utilities and other costs increased to $170.6 million for the 2015 period from $164.7 million for the 2014 period primarily due to new theatres and increases in property taxes, insurance costs and security expenses.

 

  International. Film rentals and advertising costs were $169.9 million, or 49.1% of admissions revenues, for the 2015 period compared to $159.9 million, or 48.2% of admissions revenues, for the 2014 period. The increase in the film rentals and advertising rate was due to the higher concentration of blockbuster films and higher box office performance during the 2015 period. Concession supplies expense was $39.1 million, or 21.6% of concession revenues, for the 2015 period compared to $34.5 million, or 21.7% of concession revenues, for the 2014 period.

Salaries and wages increased to $56.9 million for the 2015 period from $52.4 million for the 2014 period due to new theatres and increased staffing levels to support the increased attendance and increased wage rates. Facility lease expense increased to $63.5 million for the 2015 period from $63.4 million for the 2014 period as a result of increased percentage rent expense due to increased revenues and new theatres. Utilities and other costs increased to $74.5 million for the 2015 period from $69.3 million for the 2014 period due to increases in repairs and maintenance expenses, utility expenses and new theatres. All of the above-mentioned theatre operating costs were also impacted by changes in foreign currency exchanges rates in certain countries in which we operate.

General and Administrative Expenses. General and administrative expenses increased to $116.3 million for the 2015 period from $114.9 million for the 2014 period. The increase was primarily due to increases in salaries and incentive compensation expense, 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 $139.4 million for the 2015 period compared to $131.1 million for the 2014 period. The increase was primarily due to depreciation expense related to new theatres.

Impairment of Long-Lived Assets. We recorded asset impairment charges on assets held and used of $4.9 million for the 2015 period compared to $5.3 million for the 2014 period. 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. Impairment charges for the 2015 period consisted of U.S. theatre properties, impacting five of our twenty-seven reporting units, and intangible assets associated with these theatres. See Note 11 to our condensed consolidated financial statements.

Loss on Sale of Assets and Other. We recorded a loss on sale of assets and other of $3.9 million during the 2015 period compared to $8.7 million during the 2014 period. The loss recorded during the 2015 period included lease termination costs, contract termination costs and the retirement of assets due to theatre remodels and closures, partially offset by gains related to lease amendments that resulted in a reduction of certain capital lease liabilities, the sale of an investment in a Taiwan joint venture, and the sale of a land parcel in the U.S. The loss recorded during the 2014 period was primarily due to the replacement of certain theatre assets and lease termination charges recorded for theatre closures.

Interest Expense. Interest costs incurred, including amortization of debt issue costs, were $84.9 million for the 2015 period compared to $85.1 million for the 2014 period.

 

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