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SEC Filings

10-Q
CINEMARK HOLDINGS, INC. filed this Form 10-Q on 08/09/2016
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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 six months ended June 30, 2016 and 2015.

 

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

Film rentals and advertising (1)

   $ 384.6       $ 376.0       $ 98.7       $ 109.8       $ 125.9       $ 483.3       $ 485.8   

Concession supplies

     51.7         47.4         23.4         26.0         29.6         75.1         73.4   

Salaries and wages

     119.9         108.3         39.5         37.4         50.9         159.4         145.7   

Facility lease expense

     119.2         119.3         39.9         42.7         49.5         159.1         162.0   

Utilities and other (1)

     121.1         122.9         49.4         52.8         63.5         170.5         175.7   

 

(1)  We made certain reclassifications from film rentals and advertising to utilities and other for the six months ended June 30, 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 $11.4 million and $3.8 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, which are non-GAAP measurements, 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 $384.6 million, or 56.3% of admissions revenues for the 2016 period compared to $376.0 million, or 56.0% of admissions revenues for the 2015 period. The increase in the film rentals and advertising rate was primarily due to the higher concentration of blockbuster films during the early part of the 2016 period. Concession supplies expense was $51.7 million, or 13.7% of concession revenues, for the 2016 period compared to $47.4 million, or 13.4% of concession revenues, for the 2015 period. The increase in the concession supplies rate was primarily due to the impact of our expanded concession offerings.

Salaries and wages increased to $119.9 million for the 2016 period from $108.3 million for the 2015 period primarily due to new theatres and increases in minimum wages. Facility lease expense decreased to $119.2 million for the 2016 period from $119.3 million for the 2015 period due to decreased common area maintenance expenses, partially offset by the impact of new theatres. Utilities and other costs decreased to $121.1 million for the 2016 period from $122.9 million for the 2015 period due to a decrease in projection and sound equipment maintenance and monitoring expenses.

 

    International. Film rentals and advertising costs were $98.7 million ($125.9 million in constant currency), or 47.2% of admissions revenues, for the 2016 period compared to $109.8 million, or 47.3% of admissions revenues, for the 2015 period. Concession supplies expense was $23.4 million ($29.6 million in constant currency), or 20.6% of concession revenues, for the 2016 period compared to $26.0 million, or 21.8% of concession revenues, for the 2015 period. The decrease in concession supplies rate was primarily due to price increases.

Salaries and wages were $39.5 million as reported, or $50.9 million in constant currency, for the 2016 period compared to $37.4 million for the 2015 period. The constant currency increase was due to incremental staffing to support the 7.4% increased attendance, increased wage rates, a payroll tax reserve recorded for an ongoing labor audit and new theatres. Facility lease expense was $39.9 million as reported, or $49.5 million in constant currency, for the 2016 period compared to $42.7 million for the 2015 period. The constant currency increase was due to increased percentage rent as a result of increased revenues and new theatres. Utilities and other costs were $49.4 million as reported, or $63.5 million in constant currency, for the 2016 period compared to $52.8 million for the 2015 period. The constant currency increase was primarily due to increased utilities costs, increased repairs and maintenance expenses and increased janitorial services.

General and Administrative Expenses. General and administrative expenses decreased to $73.9 million for the 2016 period from $77.2 million for the 2015 period. The decrease was primarily due to the impact of changes in foreign currency exchange rates in certain countries in which we operate, partially offset by increased salaries and incentive compensation expense.

 

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