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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

Distributions from NCM. We recorded distributions from NCM of $13.1 million during the 2015 period and $14.2 million during the 2014 period, which were in excess of the carrying value of our Tranche 1 investment. NCM did not distribute any excess cash during the second quarter of 2015 due to expenses incurred as the result of the termination of a proposed merger. See Note 6 to our condensed consolidated financial statements.

Equity in Income of Affiliates. We recorded equity in income of affiliates of $20.4 million during the 2015 period compared to $17.5 million during the 2014 period. See notes 6 and 7 to our condensed consolidated financial statements for information about our equity investments.

Income Taxes. Income tax expense of $99.3 million was recorded for the 2015 period compared to $70.5 million recorded for the 2014 period. The effective tax rate was 38.2% for the 2015 period compared to 32.5% for the 2014 period. The effective tax rate for the 2014 period reflects the impact of items related to our Mexican subsidiaries. Income tax provisions for interim (quarterly) periods are based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.

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, nearly all of our theatres provide the patron a choice of using a credit card, debit card or advanced-sale type certificates such as a gift card, in place of cash. Because our revenues are received in cash prior to the payment of related expenses, we have an operating “float” and historically have not required traditional working capital financing. Cash provided by operating activities was $226.3 million for the nine months ended September 30, 2015 compared to $223.1 million for the nine months ended September 30, 2014.

Investing Activities

Our investing activities have been principally related to the development, remodel and acquisition of theatres. New theatre openings and acquisitions historically have been financed with internally generated cash and by debt financing, including borrowings under our senior secured credit facility. Cash used for investing activities was $231.9 million for the nine months ended September 30, 2015 compared to $156.1 million for the nine months ended September 30, 2014. The increase in cash used for investing activities is primarily related to an increase in capital expenditures.

Capital expenditures for the nine months ended September 30, 2015 and 2014 were as follows (in millions):

 

Period

   New
Theatres
     Existing
Theatres
    Total  

Nine Months Ended September 30, 2015

   $ 90.8       $  141.6 (a)    $ 232.4   

Nine Months Ended September 30, 2014

   $ 70.5       $ 85.7      $ 156.2  

 

(a)  Includes approximately $26.3 million for the purchase of our corporate headquarters building in Plano, TX.

Our U.S. theatre circuit consisted of 4,489 screens at September 30, 2015. During the nine months ended September 30, 2015, we built four new theatres with 50 screens and closed five theatres with 60 screens. At September 30, 2015, we had signed commitments to open five new theatres with 49 screens in domestic markets during the remainder of 2015 and open ten new theatres with 112 screens subsequent to 2015. We estimate the remaining capital expenditures for the development of these 161 domestic screens will be approximately $89 million. Actual expenditures for continued theatre development and acquisitions are subject to change based upon the availability of attractive opportunities.

Our international theatre circuit consisted of 1,257 screens at September 30, 2015. During the nine months ended September 30, 2015, we built ten new theatres with 62 screens, acquired three theatres with 19 screens and closed one screen. At September 30, 2015, we had signed commitments to open two new theatres and 17 screens in international markets during the remainder of 2015 and open six new theatres and 51 screens subsequent to 2015. We estimate the remaining capital expenditures for the development of these 68 international screens will be approximately $52 million. Actual expenditures for continued theatre development and acquisitions are subject to change based upon the availability of attractive opportunities.

 

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