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SEC Filings

10-Q
CINEMARK HOLDINGS, INC. filed this Form 10-Q on 05/10/2016
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Table of Contents

Cost of Operations. The table below summarizes our theatre operating costs (in millions) by reportable operating segment for the three months ended March 31, 2016 and 2015.

 

                   International Operating Segment                
                                 Constant                
     U.S. Operating Segment                    Currency      Consolidated  
     2016      2015      2016      2015      2016 (2)      2016      2015  

Film rentals and advertising (1)

   $ 187.6       $ 160.0       $ 45.3       $ 47.7       $ 60.8       $ 232.9       $ 207.7   

Concession supplies

     24.9         21.0         11.0         11.5         14.6         35.9         32.5   

Salaries and wages

     58.7         51.5         16.4         17.7         22.4         75.1         69.2   

Facility lease expense

     59.9         59.7         18.9         19.9         24.6         78.8         79.6   

Utilities and other (1)

     58.8         59.3         22.6         24.1         30.4         81.4         83.4   

 

(1)  We made certain reclassifications from film rentals and advertising to utilities and other for the three months ended March 31, 2015 related to the maintenance and monitoring of projection and sound equipment, which results in a more clear presentation of film rental and advertising costs. Such expenses, which totaled $5.9 million and $2.1 million for the U.S. operating segment and the International operating segment, respectively, are now presented as utilities and other for all periods presented.
(2)  Constant currency expense amounts were calculated using the average exchange rate for the corresponding month for 2015. We translate the results of our international operating segment from local currencies into U.S. dollars using currency rates in effect at different points in time. Significant changes in foreign exchange rates from one period to the next can result in meaningful variations in reported results. We are providing constant currency amounts for our international operating segment to present a period-to-period comparison of business performance without the impact of foreign currency fluctuations.

 

  U.S. Film rentals and advertising costs were $187.6 million, or 55.6% of admissions revenues, for the first quarter of 2016 compared to $160.0 million, or 54.1% of admissions revenues, for the first quarter of 2015. The increase in film rentals and advertising costs as a percentage of admissions revenue was due to the higher box office concentration of top grossing films during the first quarter of 2016, including the carryover of Star Wars: The Force Awakens, compared to the first quarter of 2015. Concession supplies expense was $24.9 million, or 13.5% of concession revenues, for the first quarter of 2016 compared to $21.0 million, or 13.2% of concession revenues, for the first quarter of 2015. The increase in the concession supplies rate was primarily due to the mix of concession products sold and the impact of our expanded menu offerings at certain theatres.

Salaries and wages increased to $58.7 million for the first quarter of 2016 from $51.5 million for the first quarter of 2015 primarily due to increased minimum wages and benefits, incremental staffing for the 7.2% increased attendance and new theatres. Facility lease expense increased to $59.9 million for the first quarter of 2016 from $59.7 million for the first quarter of 2015 primarily due to increased percentage rent. Utilities and other costs decreased to $58.8 million for the first quarter of 2016 from $59.3 million for the first quarter of 2015 primarily due to decreases in utilities and maintenance costs for digital and sound equipment.

 

  International. Film rentals and advertising costs were $45.3 million ($60.8 million in constant currency), or 46.1% of admissions revenues, for the first quarter of 2016 compared to $47.7 million, or 45.5% of admissions revenues, for the first quarter of 2015. Concession supplies expense was $11.0 million ($14.6 million in constant currency), or 20.4% of concession revenues, for the first quarter of 2016 compared to $11.5 million, or 21.0% of concession revenues, for the first quarter of 2015.

Salaries and wages were $16.4 million as reported, or $22.4 million in constant currency, for the first quarter of 2016 compared to $17.7 million for the first quarter of 2015. The constant currency increase was due to incremental staffing for the 16.7% increased attendance, increased wage rates and new theatres. Facility lease expense was $18.9 million as reported, or $24.6 million in constant currency, for the first quarter of 2016 compared to $19.9 million for the first quarter of 2015. The constant currency increase was due to increased percentage rent as a result of increased revenues and new theatres. Utilities and other costs were $22.6 million as reported, or $30.4 million in constant currency, for the first quarter of 2016 compared to $24.1 million for the first quarter of 2015. The constant currency increase was primarily due to increased utilities costs.

General and Administrative Expenses. General and administrative expenses were consistent at $37.9 million for the first quarter of 2016 and for the first quarter of 2015. During the first quarter of 2016, increases in salaries and wages and share based award compensation expense were offset by the impact of changes in foreign currency exchange rates in certain countries in which we operate.

 

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