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 September 30, 2015 was approximately 7.7 to 1.
Cinemark USA, Inc. 7.375% Senior Subordinated Notes
On June 3, 2011, Cinemark USA, Inc. issued $200.0 million aggregate principal amount of 7.375% senior subordinated notes due 2021, at par
value (the Senior Subordinated Notes). Interest on the Senior Subordinated Notes is payable on June 15 and December 15 of each year. The Senior Subordinated Notes mature on June 15, 2021.
The indenture to the Senior Subordinated Notes contains covenants including limitations on the amount of dividends that could be paid by
Cinemark USA, Inc. As of September 30, 2015, Cinemark USA, Inc. could have distributed up to approximately $1,979.3 million to its parent company and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the Senior
Subordinated Notes, subject to its available cash and other borrowing restrictions outlined in the indenture governing the Senior Subordinated Notes. The indenture 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 September 30, 2015
was approximately 7.5 to 1.
As of September 30, 2015, we believe we were in full compliance with all agreements, including all related covenants, governing 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 the summer, extending from May to July, and
during the holiday season, extending from early November through year-end. The unexpected emergence of a hit film during other periods can alter this seasonality trend. The timing 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.
||Quantitative and Qualitative Disclosures About Market Risk |
We have exposure to
financial market risks, including changes in interest rates, foreign currency exchange rates and other relevant market prices.
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 September 30, 2015, there was an aggregate of approximately $580.8 million of variable rate debt outstanding under these facilities, which excludes $100.0 million of Cinemark USA, Inc.s
term loan debt that is hedged with the Companys interest rate swap agreement in effect as of September 30, 2015 as discussed below. Based on the interest rates in effect on the variable rate debt outstanding at September 30, 2015, a
100 basis point increase in market interest rates would increase our annual interest expense by approximately $5.8 million.
rate swap agreement qualifies for cash flow hedge accounting. The fair value of the interest rate swap is recorded on our condensed 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 agreement as of September 30, 2015: