UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-33401

CINEMARK HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware		20-5490327
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3900 Dallas Parkway
~~Suite 500~~
Plano, Texas		75093
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (972) 665-1000

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $.001 per share	CNK	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post such~~ files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated ~~filer”,~~filer,” “accelerated ~~filer”~~filer,” “smaller reporting company” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 31, 2017, 116,466,904~~May 15, 2020, 117,589,645 shares of common stock were issued and outstanding.

EXPLANATORY NOTE

Cinemark Holdings, Inc. (the “Company”, “we,” or “us”), is filing this Form 10-Q for the period ended March 31, 2020 after the May 11, 2020 deadline in reliance on the 45-day extension provided by the Securities and Exchange Commission (the “SEC”) Order Under Section 36 of the Securities Exchange Act of 1934 (the “Exchange Act”) Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies (Release No. 34-88465), dated March 25, 2020 (the “Order”). The COVID-19 pandemic has had an unprecedented impact on our business and operations including the furlough of 50% of our headquarter employees, reduction in work hours of the remaining employees due to a 50% pay reduction and temporary closure of our corporate headquarters due to our work from home policy issued for the safety of our employees and their families, following protective actions taken by state and local governments. Due to these operational challenges, we could not file this Form 10-Q within the time period specified under the Exchange Act.

Pursuant to the requirements of the Order, we filed a Form 8-K with the SEC on May 8, 2020 indicating our intention to rely upon the Order with respect to the filing of this Form 10-Q which is being filed within the 45-day extension period provided by the Order.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

			Page
PART I. FINANCIAL INFORMATION

	Item 1.	Financial Statements	4

		Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 (unaudited)	4

		Condensed Consolidated Statements of Income (Loss) for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 (unaudited)	5

		Condensed Consolidated Statements of Comprehensive Income (Loss) for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 (unaudited)	6

		Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 (unaudited)	7

		Notes to Condensed Consolidated Financial Statements (unaudited)	8

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2430

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3440

	Item 4.	Controls and Procedures	3440

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	3541

	Item 1A.	Risk Factors	3541

	Item 6.	Exhibits	3642

SIGNATURES			3743

Cautionary Statement Regarding Forward-Looking Statements

Certain matters within this Quarterly Report on Form 10Q include “forward–looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The “forward-looking statements” may include our current expectations, assumptions, estimates and projections about our business and our industry. They may include statements relating to future revenues, expenses and profitability, the future development and expected growth of our business, projected capital expenditures, attendance at movies generally or in any of the markets in which we operate, the number or diversity of popular movies released and our ability to successfully license and exhibit popular films, national and international growth in our industry, competition from other exhibitors and alternative forms of entertainment and determinations in lawsuits in which we are defendants. Forward-looking statements can be identified by the use of words such as “may,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “anticipates,” “believes,” “plans,” “expects,” “future” and “intends” and similar expressions. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict, including, among others, the impacts of COVID-19. Such risks and uncertainties could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. For a description of the risk factors, please review the “Risk Factors” section or other sections in the Company’s Annual Report on Form 10-K filed February ~~23, 2017 and quarterly reports~~21, 2020, as updated by the information related to COVID-19 that was included in a Form 8-K that was filed on ~~Form 10-Q, filed with~~April 13, 2020, including the ~~Securities and Exchange Commission.~~documents incorporated by reference therein. All forward-looking statements are expressly qualified in their entirety by such risk factors. We undertake no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I - ~~FINANCIAL~~FINANCIAL INFORMATION

Item 1.Financial Statements

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data, unaudited)

	September 30,			December 31,			March 31,			December 31,
	2017			2016			2020			2019
Assets
Current assets
Cash and cash equivalents	$	469,446		$	561,235		$	479,399		$	488,313
Inventories		16,844			16,961			17,972			21,686
Accounts receivable		82,650			74,993			51,641			83,722
Current income tax receivable		4,381			7,367			25,294			4,082
Prepaid expenses and other		17,010			15,761			13,361			37,187
Total current assets		590,331			676,317			587,667			634,990

Theatre properties and equipment		3,268,653			3,059,754			3,270,551			3,348,237
Less: accumulated depreciation and amortization		1,477,047			1,355,218			1,612,226			1,612,990
Theatre properties and equipment, net		1,791,606			1,704,536			1,658,325			1,735,247

Operating lease right-of-use assets, net								1,338,069			1,383,080

Other assets
Goodwill		1,294,342			1,262,963			1,268,559			1,283,371
Intangible assets - net		335,657			334,899
Intangible assets, net								318,657			321,769
Investment in NCM		204,347			189,995			265,371			265,792
Investments in and advances to affiliates		112,878			98,317			151,232			155,285
Long-term deferred tax asset		2,098			2,051			8,851			9,369
Deferred charges and other assets - net		40,391			37,555
Deferred charges and other assets, net								36,162			39,114
Total other assets		1,989,713			1,925,780			2,048,832			2,074,700

Total assets	$	4,371,650		$	4,306,633		$	5,632,893		$	5,828,017

Liabilities and equity

Current liabilities
Current portion of long-term debt	$	7,099		$	5,671		$	6,595		$	6,595
Current portion of capital lease obligations		24,836			21,139
Current portion of operating lease obligations								213,941			217,406
Current portion of finance lease obligations								15,693			15,432
Current income tax payable		7,893			5,071			3,969			5,195
Current liability for uncertain tax positions		11,714			10,085			13,446			13,446
Accounts payable and accrued expenses		341,132			401,259			346,783			450,726
Total current liabilities		392,674			443,225			600,427			708,800

Long-term liabilities
Long-term debt, less current portion		1,781,952			1,782,441			1,869,821			1,771,342
Capital lease obligations, less current portion		252,047			234,281
Operating lease obligations, less current portion								1,186,416			1,223,462
Finance lease obligations, less current portion								136,967			141,017
Long-term deferred tax liability		144,740			135,014			157,918			141,836
Long-term liability for uncertain tax positions		7,801			8,105			939			848
Deferred lease expenses		41,291			42,378
Deferred revenue - NCM		354,419			343,928
NCM screen advertising advances								350,104			348,354
Other long-term liabilities		44,906			44,301			64,736			44,036
Total long-term liabilities		2,627,156			2,590,448			3,766,901			3,670,895

Commitments and contingencies (see Note 16)

Commitments and contingencies (see Note 19)
Equity
Cinemark Holdings, Inc.'s stockholders' equity:
Common stock, $0.001 par value: 300,000,000 shares authorized, 120,992,302 shares issued and 116,467,227 shares outstanding at September 30, 2017 and 120,657,254 shares issued and 116,210,252 shares outstanding at December 31, 2016		121			121
Common stock, $0.001 par value: 300,000,000 shares authorized, 122,328,781 shares issued and 117,518,721 shares outstanding at March 31, 2020 and 121,863,515 shares issued and 117,151,656 shares outstanding at December 31, 2019								122			122
Additional paid-in-capital		1,137,897			1,128,442			1,174,150			1,170,039
Treasury stock, 4,525,075 and 4,447,002 shares, at cost, at September 30, 2017 and December 31, 2016, respectively		(76,354	)		(73,411	)
Treasury stock, 4,810,060 and 4,711,859 shares, at cost, at March 31, 2020 and December 31, 2019, respectively								(84,258	)		(81,567	)
Retained earnings		521,058			453,679			585,174			687,332
Accumulated other comprehensive loss		(242,894	)		(247,013	)		(421,908	)		(340,112	)
Total Cinemark Holdings, Inc.'s stockholders' equity		1,339,828			1,261,818			1,253,280			1,435,814
Noncontrolling interests		11,992			11,142			12,285			12,508
Total equity		1,351,820			1,272,960			1,265,565			1,448,322

Total liabilities and equity	$	4,371,650		$	4,306,633		$	5,632,893		$	5,828,017

The accompanying notes are an integral part of the condensed consolidated financial statements.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands, except per share data, unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2020			2019
Revenues
Admissions	$	425,128		$	472,842		$	1,351,477		$	1,364,737		$	292,462		$	395,540
Concession		247,027			261,391			777,573			752,798			190,356			251,324
Other		38,593			34,341			112,503			100,312			60,798			67,859
Total revenues		710,748			768,574			2,241,553			2,217,847			543,616			714,723

Cost of operations
Film rentals and advertising		226,229			249,766			725,603			733,101			156,617			210,077
Concession supplies		40,178			41,888			124,117			116,999			34,812			43,071
Salaries and wages		87,305			84,460			261,318			243,833			87,544			96,136
Facility lease expense		81,919			82,848			248,569			241,904			82,241			85,613
Utilities and other		92,341			94,999			271,751			265,506			100,523			110,637
General and administrative expenses		36,947			35,290			112,997			109,143			41,018			37,976
Depreciation and amortization		58,052			54,187			174,545			155,874			65,256			64,462
Impairment of long-lived assets		5,026			406			9,600			2,323			16,619			5,584
Loss on sale of assets and other		8,576			6,940			9,464			10,985
Loss on disposal of assets and other														1,905			3,799
Total cost of operations		636,573			650,784			1,937,964			1,879,668			586,535			657,355

Operating income		74,175			117,790			303,589			338,179
Operating income (loss)														(42,919	)		57,368

Other income (expense)
Interest expense		(26,317	)		(26,659	)		(79,208	)		(81,980	)		(24,666	)		(25,141	)
Loss on debt amendments and refinancing		—			—			(246	)		(13,284	)
Interest income		1,682			1,665			4,395			5,030			2,084			2,691
Foreign currency exchange gain		584			485			2,018			2,883
Foreign currency exchange gain (loss)														(4,848	)		22
Distributions from NCM		2,144			1,381			11,704			10,117			5,224			4,548
Interest expense - NCM														(5,891	)		(4,782	)
Equity in income of affiliates		10,902			12,390			26,767			24,597			8,486			10,404
Total other expense		(11,005	)		(10,738	)		(34,570	)		(52,637	)		(19,611	)		(12,258	)

Income before income taxes		63,170			107,052			269,019			285,542
Income (loss) before income taxes														(62,530	)		45,110
Income taxes		24,630			40,926			98,475			106,002			(3,108	)		11,917
Net income	$	38,540		$	66,126		$	170,544		$	179,540
Net income (loss)													$	(59,422	)	$	33,193
Less: Net income attributable to noncontrolling interests		401			471			1,438			1,454			169			465
Net income attributable to Cinemark Holdings, Inc.	$	38,139		$	65,655		$	169,106		$	178,086
Net income (loss) attributable to Cinemark Holdings, Inc.													$	(59,591	)	$	32,728

Weighted average shares outstanding

Basic		115,823			115,601			115,746			115,475			116,496			116,179
Diluted		116,104			115,793			116,063			115,706			116,496			116,418

Earnings per share attributable to Cinemark Holdings, Inc.'s common stockholders
Earnings (loss) per share attributable to Cinemark Holdings, Inc.'s common stockholders
Basic	$	0.33		$	0.56		$	1.45		$	1.53		$	(0.51	)	$	0.28
Diluted	$	0.33		$	0.56		$	1.45		$	1.53		$	(0.51	)	$	0.28

Dividends declared per common share	$	0.29		$	0.27		$	0.87		$	0.81

The accompanying notes are an integral part of the condensed consolidated financial statements.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Net income

$
38,540

$
66,126

$
170,544

$
179,540

Other comprehensive income (loss), net of tax

Unrealized gain due to fair value adjustments on interest rate
   swap agreements, net of settlements, net of taxes of $0, $0,
   $0 and $138

—

—

—

234

Other comprehensive income (loss) in equity method
   investments

(11
)

(7
)

92

(183
)
Foreign currency translation adjustments

9,085

(3,669
)

5,578

34,998

Total other comprehensive income (loss), net of tax

9,074

(3,676
)

5,670

35,049

Total comprehensive income, net of tax

47,614

62,450

176,214

214,589

Comprehensive income attributable to noncontrolling interests

(401
)

(475
)

(1,438
)

(1,478
)
Comprehensive income attributable to Cinemark
   Holdings, Inc.

$
47,213

$
61,975

$
174,776

$
213,111

	Three Months Ended March 31,
	2020			2019
Net income (loss)	$	(59,422	)	$	33,193
Other comprehensive income (loss), net of tax
Unrealized loss due to fair value adjustments on interest rate swap agreements, net of taxes of $2,230 and $1,069, net of settlements		(24,171	)		(3,311	)
Other comprehensive loss in equity method investments		—			(71	)
Foreign currency translation adjustments		(57,625	)		755
Total other comprehensive loss, net of tax		(81,796	)		(2,627	)
Total comprehensive income (loss), net of tax		(141,218	)		30,566
Comprehensive income attributable to noncontrolling interests		(169	)		(465	)
Comprehensive income (loss) attributable to Cinemark Holdings, Inc.	$	(141,387	)	$	30,101

The accompanying notes are an integral part of the condensed consolidated financial statements.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2020			2019
Operating activities
Net income	$	170,544		$	179,540
Adjustments to reconcile net income to cash provided by operating activities:
Net income (loss)							$	(59,422	)	$	33,193
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities:
Depreciation		173,378			154,308			64,005			63,247
Amortization of intangible and other assets and favorable/unfavorable leases		1,167			1,566
Amortization of long-term prepaid rents		1,540			1,357
Amortization of intangible and other assets								1,251			1,215
Amortization of debt issue costs		4,619			4,068			1,328			1,328
Amortization of deferred revenues, deferred lease incentives and other		(12,037	)		(13,017	)
Amortization of NCM screen advertising advances and other deferred revenues								(7,852	)		(4,021	)
Interest accrued on NCM screen advertising advances								5,891			—
Impairment of long-lived assets		9,600			2,323			16,619			5,584
Share based awards compensation expense		9,487			10,247			4,111			2,970
Loss on sale of assets and other		9,464			10,985
Write-off of unamortized debt issue costs associated with early retirement of debt		—			2,369
Deferred lease expenses		(1,019	)		(809	)
Loss on disposal of assets and other								1,905			3,799
Non-cash rent expense								(591	)		(819	)
Equity in income of affiliates		(26,767	)		(24,597	)		(8,486	)		(10,404	)
Deferred income tax expenses		9,541			16,382			15,364			(10,964	)
Distributions from equity investees		17,321			9,660			16,606			14,342
Changes in assets and liabilities and other		(55,433	)		(76,102	)		(66,290	)		4,814
Net cash provided by operating activities		311,405			278,280
Net cash provided by (used for) operating activities								(15,561	)		104,284

Investing activities
Additions to theatre properties and equipment and other		(262,730	)		(230,346	)
Acquisitions of theatres in the U.S. and international markets		(41,000	)		(15,300	)
Additions to theatre properties and equipment								(34,143	)		(57,569	)
Proceeds from sale of theatre properties and equipment and other		14,816			3,398			55			57
Proceeds from sale of marketable securities		—			13,451
Investment in joint ventures and other		(1,178	)		(1,703	)
Investment in joint ventures and other, net								(50	)		—
Net cash used for investing activities		(290,092	)		(230,500	)		(34,138	)		(57,512	)

Financing activities
Dividends paid to stockholders		(101,304	)		(94,117	)		(42,311	)		(39,797	)
Payroll taxes paid as a result of restricted stock withholdings		(2,943	)		(6,828	)
Proceeds from issuance of Senior Notes, net of discount		—			222,750
Retirement of Senior Subordinated Notes		—			(200,000	)
Payroll taxes paid as a result of stock withholdings								(2,691	)		(1,947	)
Proceeds from revolving line of credit								98,800			—
Repayments of long-term debt		(2,855	)		(15,217	)		(1,649	)		(1,649	)
Payment of debt issue costs		(817	)		(4,504	)
Payments on capital leases		(15,814	)		(14,655	)
Proceeds from financing lease		10,200			—
Payments on finance leases								(3,789	)		(3,517	)
Other		(620	)		1,282			(392	)		(1,000	)
Net cash used for financing activities		(114,153	)		(111,289	)
Net cash provided by (used for) financing activities								47,968			(47,910	)

Effect of exchange rate changes on cash and cash equivalents		1,051			2,081			(7,183	)		110

Decrease in cash and cash equivalents		(91,789	)		(61,428	)		(8,914	)		(1,028	)

Cash and cash equivalents:
Beginning of period		561,235			588,539			488,313			426,222
End of period	$	469,446		$	527,111		$	479,399		$	425,194

Supplemental information (see Note 13)
Supplemental information (see Note 16)

The accompanying notes are an integral part of the condensed consolidated financial statements.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

1.	The Company and Basis of Presentation

~~Cinemark Holdings, Inc.~~The Company and its subsidiaries ~~(the “Company”) operates~~operate in the motion picture exhibition industry, with theatres in the United States (“U.S.”), Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao and Paraguay.

The accompanying condensed consolidated balance sheet as of December 31, ~~2016,~~2019, which was derived from audited financial statements, and the unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from these estimates. Majority-owned subsidiaries that the Company has control of are consolidated while those affiliates of which the Company owns between 20% and 50% and does not control are accounted for under the equity method. Those affiliates of which the Company owns less than 20% are generally accounted for under the cost method, unless the Company is deemed to have the ability to exercise significant influence over the affiliate, in which case the Company would account for its investment under the equity method. The results of these subsidiaries and affiliates are included in the condensed consolidated financial statements effective with their formation or from their dates of acquisition. Intercompany balances and transactions are eliminated in consolidation.

These condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and the notes thereto for the year ended December 31, ~~2016,~~2019, included in the Annual Report on Form 10-K filed February ~~23, 2017~~21, 2020 by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Operating results for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 are not necessarily indicative of the results to be achieved for the full year.

2.	Impact of COVID-19

The recent outbreak of the COVID-19 pandemic has had an unprecedented impact on the world and the movie exhibition industry. The situation continues to be volatile and the social and economic effects are widespread. As a movie exhibitor that operates spaces where patrons gather in close proximity, the Company’s business has been significantly impacted by protective actions that federal, state and local governments have taken to control the spread of the pandemic. These actions include, among other things, encouragement of social distancing, restrictions on freedom of movement, business closures, quarantines, and shelter-in-place and stay-at-home orders. As a result of these measures, the Company temporarily closed all of its theatres in the U.S. and Latin America effective March 18, 2020.

The Company believes it has sufficient cash to sustain its operations for the remainder of the year, even if its theatres remained closed for the remainder of the year. Nonetheless, the COVID-19 pandemic has had and may continue to have adverse effects on the Company’s business, results of operations, cash flows and financial condition. In light of the COVID-19 pandemic, the Company has been working to preserve cash and ensure sufficient liquidity to endure the impacts of the global crisis, even if prolonged. Some of the recent actions taken by the Company include the following:

~~New Accounting Pronouncements~~•

directors of the Company and its chief executive officer have elected to take 0 salary, and many of its executives have voluntarily reduced their salaries by 80% while the Company’s theatres remain closed;

~~In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~, (“ASU 2014-09”). The purpose of ASU 2014-09 is to clarify the principles for recognizing revenue and create a common revenue standard for U.S. GAAP and International Financial Reporting Standards. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The following subsequent Accounting Standards Updates either clarified or revised guidance set forth in ASU 2014-09:

~~In August 2015, the FASB issued Accounting Standards Update 2015-14,~~ ~~Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date~~, (“ASU 2015-14”). ASU 2015-14 deferred the effective date of ASU 2014-09. The guidance in ASU 2014-09 is now effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period.

~~In March 2016, the FASB issued Accounting Standards Update 2016-08,~~ ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenues Gross versus Net), (“ASU 2016-08”). The purpose of ASU 2016-08 is to clarify the implementation of revenue recognition guidance for principal versus agent considerations.~~

~~In April 2016, the FASB issued Accounting Standards Update 2016-10,~~ ~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, (“ASU 2016-10”). The purpose of ASU 2016-10 is to clarify certain aspects of identifying performance obligations and licensing implementation guidance.~~

~~In May 2016, the FASB issued Accounting Standards Update 2016-12,~~ ~~Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients~~, (“ASU 2016-12”). The purpose of ASU 2016-12 is to address certain narrow aspects of Accounting Standards Codification (“ASC”) Topic 606 including assessing collectability, presentation of sales taxes, noncash considerations, contract modifications and completed contracts at transition.

•

~~In December 2016,~~halted all non-essential operating and capital expenditures, such as marketing promotions and initiatives, travel and entertainment, system enhancements and related consulting projects, recliner conversions, XD expansions and certain other theatre enhancements, which will significantly reduce utilities and other costs, general and administrative expenses and capital expenditures on a temporary basis;

•

suspended the ~~FASB issued Accounting Standards Update 2016-20,~~ ~~Technical Corrections~~quarterly dividend;

•

implemented a formal daily review and ~~Improvements to Topic 606, Revenue from Contracts with Customers, (“ASU 2016-20”). The purpose~~approval process by the Company’s chief financial officer for all outgoing procurement and payment requests;

•

laid off over 17,500 domestic hourly theatre employees, furloughed 50% of ~~ASU 2016-20 is to amend certain narrow aspects~~headquarter employees at 20% of ~~the guidance issued~~salary (with full benefits) and reduced salaries of remaining employees by 50% and pursued similar actions in ~~ASU 2014-09 related~~international markets to the ~~disclosure~~extent permitted by local laws; which will significantly reduce salaries and wages expenses and general administrative expenses while theatres are closed; and

•

started working actively with landlords and major suppliers to modify the timing of ~~performance obligations, as well as~~certain contractual payments.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

~~other amendments related to loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples.~~

The amendments in these accounting standards updates may be applied either using a modified retrospective transition method by means of a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is effective or retrospectively to each period presented. Early adoption is permitted.

The Company ~~will adopt the amendments within these accounting standards updates in the first quarter of 2018 using the modified retrospective transition method. The Company is continuing~~continues to evaluate the impact of ~~these accounting standards updates~~certain tax-related benefits available under the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “Cares Act”) signed into U.S. federal law on ~~its condensed consolidated financial statements, specifically with respect~~March 27, 2020. The Cares Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer social security payments, net operating loss (“NOL”) utilization and carryback periods, modifications to the ~~Company’s Exhibitor Services Agreement (“ESA”) with NCM, loyalty program accounting, breakage income~~net interest deduction limitations and a technical correction to the 2017 Tax Cuts and Jobs Act, which makes certain qualified improvement property eligible for ~~stored value cards~~bonus depreciation. Based upon a review of the Cares Act, the Company expects to:

•

receive an approximately $20,000 cash tax refund in 2020 related to qualified improvement property expenditures from 2018 and 2019;

•

benefit from the ability to defer social security payroll tax matches that would otherwise be required in 2020;

•

receive a payroll tax credit in 2020 for expenses related to paying wages and health benefits to employees who are not working as a result of closures and reduced receipts associated with COVID-19; and

•

apply any tax loss incurred in 2020 to prior year income for a refund when our 2020 tax return is filed.

The Company continues to review, and intends to seek, any other available potential benefits under the Cares Act as well as other ancillary and contractual revenues. The Company believes its ESA with NCM includes a significant financing component and, as a result, other revenues will increase with a similar offsetting increase in interest expense each year untilany future legislation signed into law during 2020.

3.	New Accounting Pronouncements

ASU 2019-12, Income Taxes (Topic 740): Simplifying the ESA term expires. In addition, the amortization method used to amortize the deferred revenue associated with the ESA will change to straight-line under the new accounting standards due to the nature of the Company’s performance obligation under the ESA. The change in amortization method will result in a cumulative effect adjustment upon adoption, the value of which the Company is currently evaluating.

~~In February 2016, the FASB issued~~ Accounting ~~Standards Update 2016-02,~~ ~~Leases (Topic 842)~~for Income Taxes, (“ASU ~~2016-02”~~2019-12”). The purpose of ASU ~~2016-02~~2019-12 is to ~~provide financial statement users a better understanding of~~simplify the ~~amount, timing,~~accounting for income taxes. The improvements in ASU 2019-12 include removing certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and ~~uncertainty of cash flows arising from leases. The adoption of~~calculating income taxes in interim periods. ASU ~~2016-02 will result~~2019-12 also adds guidance to reduce complexity in ~~the recognition~~certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a right-of-use asset and a lease liability for most operating leases. New disclosure requirements include qualitative and quantitative information about the amounts recorded in the financial statements.consolidated group. ASU ~~2016-02~~2019-12 is effective for fiscal years beginning after December 15, 2018. ASU 2016-02 requires a modified retrospective transition by means of a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is effective with the option to elect certain practical expedients. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2016-02 on its condensed consolidated financial statements. The most significant impact of the amendments in ASU 2016-02 will be the recognition of new right-of-use assets and lease liabilities for assets currently subject to operating leases. The Company will adopt the amendments in ASU 2016-02 in the first quarter of 2019.

~~In March 2016, the FASB issued Accounting Standards Update 2016-09,~~ ~~Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~, (“ASU 2016-09”). The purpose of ASU 2016-09 is to simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification of such activity on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016,2020, including interim periods within that year. ~~Prospective, retrospective, or modified retrospective application may~~The amendments in ASU 2019-12 should be ~~used dependent~~applied prospectively. The Company is evaluating the impact of ASU 2019-12 and does not expect ASU-2019-12 to have a significant impact on the ~~specific requirements~~condensed consolidated financial statements.

ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the ~~amendments within ASU 2016-09. Effective January 1, 2017, the Company adopted ASU 2016-09~~Effects of Reference Rate Reform on ~~a prospective basis (see Note 3). As such, prior periods have not been adjusted.~~

~~In August 2016, the FASB issued Accounting Standards Update 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments – a consensus of the FASB Emerging Issues Task Force~~Financial Reporting, (“ASU ~~2016-15”~~2020-04”). The purpose of ASU ~~2016-15~~2020-04 is to ~~reduce~~provide optional guidance for a limited period of time to ease the ~~diversity~~potential burden in ~~practice regarding how certain cash receipts and cash payments are presented and classified in~~accounting for (or recognizing the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within that year. A retrospective transition method should be used in the application ofeffects of) reference rate reform on financial reporting. More specifically, the amendments ~~within~~in ASU ~~2016-15. Early adoption is permitted.~~2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 are effective as of March 12, 2020 through December 31, 2022. The Company ~~does not expect~~is evaluating the impact of ASU ~~2016-15 to have a material~~2020-04 and its impact on ~~its~~the condensed consolidated financial statements.

~~In January 2017, the FASB issued Accounting Standards Update 2017-04,~~ ~~Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~, (“ASU 2017-04”). The purpose of ASU 2017-04 is to simplify the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendments should be applied on a prospective basis. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, including interim periods within that year. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted the amendments in ASU 2017-04 during the second quarter of 2017 in order to reduce the complexity of performing its goodwill impairment tests. As discussed in Note 9, these tests are generally performed in the fourth quarter of each year. The Company does not expect ASU 2017-04 to have a material impact on its condensed consolidated financial statements.

~~In May 2017, the FASB issued Accounting Standards Update 2017-09,~~ ~~Compensation – Stock Compensation (Topic 718): Scope Modification Accounting~~, (“ASU 2017-09”). The amendments in ASU 2017-09 provide guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting as described in ASC Topic

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

4.	Lease Accounting

~~718.~~ The ~~amendments should~~following table represents the Company’s aggregate lease costs, by lease classification, for the periods presented.

		Three Months Ended
		March 31,
Lease Cost	Classification	2020		2019
Operating lease costs
Equipment ⁽¹⁾	Utilities and other	$	1,541	$	1,743
Real Estate ⁽²⁾⁽³⁾	Facility lease expense		81,658		84,785
Total operating lease costs		$	83,199	$	86,528

Finance lease costs
Amortization of leased assets	Depreciation and amortization	$	3,707	$	3,740
Interest on lease liabilities	Interest expense		1,851		2,021
Total finance lease costs		$	5,558	$	5,761

(1)	Includes approximately $413 and $620 of short-term lease payments for the three months ended March 31, 2020 and 2019, respectively.

(2)	Includes approximately $12,247 and $15,934 of variable lease payments based on a change in index, such as CPI or inflation, variable payments based on revenues or attendance and variable common area maintenance costs for the three months ended March 31, 2020 and 2019, respectively.

(3)	Approximately $460 and $402 of lease payments are included in general and administrative expenses primarily related to office leases for the three months ended March 31, 2020 and 2019, respectively.

The following table represents the minimum cash lease payments included in the measurement of lease liabilities and the non-cash addition of assets for the periods indicated.

	Three Months Ended
	March 31,
Other Information	2020		2019
Cash paid for amounts included in the measurement of lease liabilities
Cash outflows for operating leases	$	70,539	$	69,974
Cash outflows for finance leases - operating activities	$	1,811	$	1,974
Cash outflows for finance leases - financing activities	$	3,789	$	3,517
Non-cash amount of leased assets obtained in exchange for:
Operating lease liabilities - real estate	$	37,615	$	—
Operating lease liabilities - equipment	$	188	$	101
Finance lease liabilities	$	—	$	—

As of March 31, 2020, the Company had signed lease agreements with total noncancelable lease payments of approximately $220,403 related to theatre leases that had not yet commenced. The timing of lease commencement is dependent on the completion of construction of the related theatre facility. Additionally, these amounts are based on estimated square footage and costs to construct each facility and may be applied on a prospective basis. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017, including interim periods within that year. Early adoption is permitted. The Company doessubject to adjustment upon final completion of each construction project. In accordance with ASC Topic 842, fixed minimum lease payments related to these theatres are not ~~expect ASU 2017-09~~included in the right-of-use assets and lease liabilities as of March 31, 2020. There were 0 noncancelable lease agreements signed, but not yet commenced, related to ~~have a material impact on its condensed consolidated financial statements.~~ equipment leases as of March 31, 2020.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In ~~August 2017, the FASB issued Accounting Standards Update 2017-12,~~ ~~Derivatives~~thousands, except share and ~~Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~, (“ASU 2017-12”). The amendments in ASU 2017-12 improve the financial reporting of hedging relationships to better reflect the economic results of an entity’s risk management activities in its financial statements. Additionally, the amendments in ASU 2017-12 simplify certain steps of applying hedge accounting guidance. ASU 2017-04 is effective for fiscal years beginning after December 15, 2017, including interim periods within that year. Early adoption is permitted. The Company does not expect ASU 2017-12 to have a material impact on its condensed consolidated financial statements.per share data

3.5.	Revenue Recognition

The Company’s patrons have the option to purchase movie tickets well in advance of a movie showtime or right before the movie showtime, or at any point in between those two timeframes depending on seat availability. The Company recognizes such admissions revenues when the showtime for a purchased movie ticket has passed. Concession revenues are recognized when products are sold to the consumer. Other revenues primarily consist of screen advertising and screen rental revenues, promotional income, studio trailer placements and transactional fees. The Company sells gift cards and discount ticket vouchers, the proceeds from which are recorded as deferred revenues. Deferred revenues for gift cards and discount ticket vouchers are recognized when they are redeemed for concession items or, if redeemed for movie tickets, when the showtime has passed. The Company offers a subscription program in the U.S. whereby patrons can pay a monthly fee to receive a monthly credit for use towards a future movie ticket purchase. The Company records the monthly subscription program fees as deferred revenues and records admissions revenues when the showtime for a movie ticket purchased with a credit has passed. The Company has loyalty programs in the U.S. and many of its international locations that either have a prepaid annual membership fee or award points to customers as purchases are made. For those loyalty programs that have an annual membership fee, the Company recognizes the fee collected as other revenues on a straight-line basis over the term of the membership. For those loyalty programs that award points to customers based on their purchases, the Company records a portion of the original transaction proceeds as deferred revenues based on the number of reward points issued to customers and recognizes the deferred revenues when the customer redeems such points. The value of loyalty points issued is based on the estimated fair value of the rewards offered. The Company records breakage revenue on gift cards and discount ticket vouchers generally based on redemption activity and historical experience with unused balances. The Company records breakage revenue upon the expiration of loyalty points and subscription credits. Advances collected on concession and other contracts are deferred and recognized during the period in which the Company satisfies the related performance obligations, which may differ from the period in which the advances are collected. These advances are recognized on either a straight-line basis over the term of the contracts or as the Company meets its performance obligations in accordance with the terms of the contracts.

Accounts receivable as of March 31, 2020 and December 31, 2019 included approximately $19,016 and $31,620 of receivables, respectively, related to contracts with customers. The Company did 0t record any assets related to the costs to obtain or fulfill a contract with customers during the three months ended March 31, 2020 or March 31, 2019.

Disaggregation of Revenue

The following table presents revenues for the three months ended March 31, 2020 and 2019, disaggregated based on major type of good or service and by reportable operating segment.

	Three Months Ended
	March 31, 2020
	U.S.		International
	Operating		Operating
Major Goods/Services	Segment ⁽¹⁾		Segment		Consolidated
Admissions revenues	$	232,326	$	60,136	$	292,462
Concession revenues		152,758		37,598		190,356
Screen advertising, screen rental and promotional revenues		18,209		12,446		30,655
Other revenues		24,150		5,993		30,143
Total revenues	$	427,443	$	116,173	$	543,616

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

	Three Months Ended
	March 31, 2019
	U.S.		International
	Operating		Operating
Major Goods/Services	Segment ⁽¹⁾		Segment		Consolidated
Admissions revenues	$	308,839	$	86,701	$	395,540
Concession revenues		199,386		51,938		251,324
Screen advertising, screen rental and promotional revenues		20,580		14,038		34,618
Other revenues		26,011		7,230		33,241
Total revenues	$	554,816	$	159,907	$	714,723

(1)

U.S. segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 17 for additional information on intercompany eliminations.

The following table presents revenues for the three months ended March 31, 2020 and 2019, disaggregated based on timing of revenue recognition.

	Three Months Ended
	March 31, 2020
	U.S.		International
	Operating		Operating
	Segment ⁽¹⁾		Segment		Consolidated
Goods and services transferred at a point in time	$	401,442	$	101,252	$	502,694
Goods and services transferred over time		26,001		14,921		40,922
Total	$	427,443	$	116,173	$	543,616

	Three Months Ended
	March 31, 2019
	U.S.		International
	Operating		Operating
	Segment ⁽¹⁾		Segment		Consolidated
Goods and services transferred at a point in time	$	532,183	$	143,109	$	675,292
Goods and services transferred over time		22,633		16,798		39,431
Total	$	554,816	$	159,907	$	714,723

(1)

U.S. segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 17 for additional information on intercompany eliminations.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

Deferred Revenues

The following table presents changes in the Company’s advances and deferred revenues for the three months ended March 31, 2020.

	NCM screen advertising advances⁽¹⁾			Other Deferred Revenues ⁽²⁾			Total
Balance at January 1, 2020	$	348,354		$	138,426		$	486,780
Amounts recognized as accounts receivable		—			1,354			1,354
Cash received from customers in advance		—			44,870			44,870
Common units received from NCM (see Note 9)		3,620			—			3,620
Interest accrued related to significant financing component		5,891			—			5,891
Revenue recognized during period		(7,761	)		(43,943	)		(51,704	)
Foreign currency translation adjustments		—			(1,595	)		(1,595	)
Balance at March 31, 2020	$	350,104		$	139,112		$	489,216

(1)

See Note 9 for the maturity of balance as of March 31, 2020.

(2)

Includes liabilities associated with outstanding gift cards and discount ticket vouchers, points or rebates outstanding under the Company’s loyalty and membership programs and revenues not yet recognized for screen advertising, screen rental and other promotional activities. Classified as accounts payable and accrued expenses or other long-term liabilities on the condensed consolidated balance sheet.

The table below summarizes the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied as of March 31, 2020 and when the Company expects to recognize this revenue.

	Twelve Months Ended March 31,
Remaining Performance Obligations	2021		2022		2023		2024		2025		Thereafter			Total
Other Deferred revenue		124,099		14,868		145		—		—		—	$		139,112

6.	Earnings Per Share

The Company considers its unvested ~~restricted stock~~share based payment awards, which contain non-forfeitable rights to dividends, participating securities, and includes such participating securities in its computation of earnings per share pursuant to the two-class method. Basic earnings per share for the two classes of stock (common stock and unvested restricted stock) is calculated by dividing net income by the weighted average number of shares of common stock and unvested restricted stock outstanding during the reporting period. Diluted earnings per share is calculated using the weighted average number of shares of common stock plus the potentially dilutive effect of common equivalent shares outstanding determined under both the two class method and the treasury stock method.

Effective January 1, 2017, the Company adopted ASU 2016-09 on a prospective basis. In accordance with the amendments in ASU 2016-09, the Company’s diluted earnings per share calculation for the three and nine months ended September 30, 2017 excludes the estimated income tax benefits and deficiencies in the application of the treasury stock method. Excess income tax benefits or deficiencies related to share based awards are recognized as discrete items in the income statement during the period in which they occur. See Note 8 for a discussion of share based awards and related income tax benefits recognized during the nine months ended September 30, 2017 and 2016.

The following table presents computations of basic and diluted earnings per share under the two-class method:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Numerator:

Net income attributable to Cinemark Holdings, Inc.

$
38,139

$
65,655

$
169,106

$
178,086

Earnings allocated to participating share-based awards ⁽¹⁾

(209
)

(336
)

(842
)

(805
)
Net income attributable to common stockholders

$
37,930

$
65,319

$
168,264

$
177,281

Denominator (shares in thousands):

Basic weighted average common stock outstanding

115,823

115,601

115,746

115,475

Common equivalent shares for restricted stock units

281

192

317

231

Diluted

116,104

115,793

116,063

115,706

Basic earnings per share attributable to common
stockholders

$
0.33

$
0.56

$
1.45

$
1.53

Diluted earnings per share attributable to common
stockholders

$
0.33

$
0.56

$
1.45

$
1.53

	Three Months Ended
	March 31,
	2020			2019
Numerator:
Net income (loss) attributable to Cinemark Holdings, Inc.	$	(59,591	)	$	32,728
Loss (earnings) allocated to participating share-based awards ⁽¹⁾		350			(183	)
Net income (loss) attributable to common stockholders	$	(59,241	)	$	32,545

Denominator (shares in thousands):
Basic weighted average common stock outstanding		116,496			116,179
Common equivalent shares for restricted stock units ⁽²⁾	$	—			239
Diluted common equivalent shares		116,496			116,418

Basic earnings (loss) per share attributable to common stockholders	$	(0.51	)	$	0.28
Diluted earnings (loss) per share attributable to common stockholders	$	(0.51	)	$	0.28

~~(1)~~

(1)

For the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, a weighted average of approximately ~~643~~683 and ~~596~~659 shares of ~~unvested~~ restricted stock, respectively, were considered participating securities.

(2)

For the ~~nine~~three months ended ~~September 30, 2017 and 2016, a weighted average of~~March 31, 2020, approximately ~~581 and 526~~92 common equivalent shares ~~of unvested~~for restricted stock ~~respectively,~~units were ~~considered participating securities.~~excluded because they were anti-dilutive.

1013

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

4.7.	Long Term Debt Activity

Senior Secured Credit Facility

~~On June 16, 2017,~~ Cinemark USA, Inc.~~, our wholly-owned subsidiary, amended its~~ has a senior secured credit facility ~~to reduce~~that includes a $700,000 term loan and a $100,000 revolving credit line (the “Credit Agreement”). On March 25, 2020, the ~~rate at which~~Company borrowed $98,800 under the revolving credit line of the Credit Agreement.

As of March 31, 2020, there was $644,678 outstanding under the term loan ~~bears~~and $98,800 outstanding under the revolving credit line. As of March 31, 2020, approximately $71 was available for borrowing after giving effect to a letter of credit outstanding. On April 3, 2020, the letter of credit was cancelled and was no longer outstanding. Quarterly principal payments of $1,649 are due on the term loan through December 31, 2024, with a final principal payment of $613,351 due on March 29, 2025. The revolving credit line matures November 28, 2022.

The average interest ~~by 0.25%~~rate on outstanding term loan borrowings under the Credit Agreement at March 31, 2020 was approximately 3.5% per annum, after giving effect to the interest rate swap agreements discussed below. The average interest rate on the outstanding revolver borrowings was 2.9% at March 31, 2020.

Interest Rate Swap Agreements

During the three months ended March 31, 2020, the Company amended and extended its 3 existing interest rate swap agreements and entered into a new interest rate swap agreement, all of which are used to ~~modify certain covenant definitions within~~hedge a portion of the ~~agreement. The Company incurred debt issue costs of approximately $521 in connection~~interest rate risk associated with the ~~amendment, which~~variable interest rates on the Company’s term loan debt and qualify for cash flow hedge accounting. Below is a summary of the Company’s interest rate swap agreements designated as cash flow hedges as of March 31, 2020:

						Estimated
						Fair Value at
Notional						March 31,
Amount		Effective Date	Pay Rate	Receive Rate	Expiration Date	2020 ⁽¹⁾
$	137,500	December 31, 2018	2.12%	1-Month LIBOR	December 31, 2024	$	11,332
$	175,000	December 31, 2018	2.12%	1-Month LIBOR	December 31, 2024		14,447
$	137,500	December 31, 2018	2.19%	1-Month LIBOR	December 31, 2024		11,800
$	150,000	March 31, 2020	0.57%	1-Month LIBOR	March 31, 2022		881
					Total	$	38,460

(1)

Approximately $8,949 of the total is included in accounts payable and accrued expenses and $29,511 is included in other long-term liabilities on the condensed consolidated balance sheet as of March 31, 2020.

Upon amending the interest rate swap agreements, the Company determined that the interest payments hedged with the agreements are ~~reflected as~~still probable to occur, therefore the loss that accumulated on the swaps prior to the amendments of $29,359 will be amortized on a ~~reduction~~straight-line basis to interest expense through December 31, 2022, the original maturity dates of ~~long term debt~~the swaps. The fair values of the amended interest rate swaps and the new interest rate swap are recorded on the Company’s condensed consolidated balance sheet as an asset or liability with the related gains or losses reported as a component of ~~September 30, 2017. In addition,~~accumulated other comprehensive loss. The changes in fair value are reclassified from accumulated other comprehensive loss into earnings in the same period that the hedged items affect earnings. The valuation technique used to determine fair value is the income approach. Under this approach, the Company ~~incurred approximately $246~~uses projected future interest rates, which fall in ~~legal fees~~Level 2 of the U.S. GAAP hierarchy as defined by FASB ASC Topic 820-10-35, as provided by counterparties to the interest rate swap agreements and the fixed rates that ~~are reflected as loss on debt amendments and refinancing on~~ the ~~condensed consolidated statements of income for~~Company is obligated to pay under the ~~nine months ended September 30, 2017.~~ agreements.

Fair Value of Long-Term Debt

The Company estimates the fair value of its long-term debt using the market approach, which utilizes quoted market prices that fall under Level 2 of the U.S. GAAP fair value hierarchy as defined by ASC 820, Fair Value Measurement (“ASC Topic ~~820.~~820”). The carrying value of the Company’s long-term debt was ~~$1,820,112~~$1,898,478 and ~~$1,822,966~~$1,801,327 as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively, excluding unamortized debt discounts and debt issue costs. The fair value of the Company’s long-term debt was ~~$1,840,641~~$1,490,842 and ~~$1,850,212~~$1,826,503 as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

5.8.

Equity

Below is a summary of changes in stockholders’ equity attributable to Cinemark Holdings, Inc., noncontrolling interests and total equity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016:~~2019:

	Common Stock		Treasury Stock			Additional Paid-In-Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Cinemark Holdings, Inc. Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance at January 1, 2020	$	122	$	(81,567	)	$	1,170,039	$	687,332		$	(340,112	)	$	1,435,814		$	12,508		$	1,448,322
Issuance of share based awards and share based awards compensation expense		—		—			4,111		—			—			4,111			—			4,111
Stock withholdings related to share based awards that vested during the three months ended March 31, 2020		—		(2,691	)		—		—			—			(2,691	)		—			(2,691	)
Dividends paid to stockholders, $0.36 per common share ⁽¹⁾		—		—			—		(42,311	)		—			(42,311	)		—			(42,311	)
Dividends paid to noncontrolling interests		—		—			—		—			—			—			(392	)		(392	)
Dividends accrued on unvested restricted stock unit awards ⁽¹⁾		—		—			—		(256	)		—			(256	)		—			(256	)
Net income (loss)		—		—			—		(59,591	)		—			(59,591	)		169			(59,422	)
Unrealized loss due to fair value adjustments on interest rate swap agreements, net of taxes, net of settlements		—		—			—		—			(24,171	)		(24,171	)		—			(24,171	)
Foreign currency translation adjustments		—		—			—		—			(57,625	)		(57,625	)		—			(57,625	)
Balance at March 31, 2020	$	122	$	(84,258	)	$	1,174,150	$	585,174		$	(421,908	)	$	1,253,280		$	12,285		$	1,265,565

Cinemark

Holdings, Inc.

Stockholders’

Noncontrolling

Total

Equity

Interests

Equity

Balance at January 1, 2017

$
1,261,818

$
11,142

$
1,272,960

Share based awards compensation expense

9,487

—

9,487

Stock withholdings related to share based awards that
vested during the nine months ended September 30, 2017

(2,943
)

—

(2,943
)
Tax expense related to share based awards vesting

(32
)

―

(32
)
Dividends paid to stockholders ⁽¹⁾

(101,304
)

—

(101,304
)
Dividends accrued on unvested restricted stock unit
awards ⁽¹⁾

(423
)

—

(423
)
Dividends paid to noncontrolling interests

—

(588
)

(588
)
Net income

169,106

1,438

170,544

Other comprehensive income in equity method investees

92

—

92

Foreign currency translation adjustments (see Note 12)

4,027

—

4,027

Balance at September 30, 2017

$
1,339,828

$
11,992

$
1,351,820

	Common Stock		Treasury Stock			Additional Paid-In-Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Cinemark Holdings, Inc. Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance at January 1, 2019	$	121	$	(79,259	)	$	1,155,424	$	638,912		$	(319,007	)	$	1,396,191		$	12,379		$	1,408,570
Cumulative effect of change in accounting principle, net of taxes of $6,054		—		—			—		16,985			—			16,985			—			16,985
Issuance of share based awards and share based awards compensation expense		—		—			2,970					—			2,970			—			2,970
Stock withholdings related to share based awards that vested during the three months ended March 31, 2019		—		(1,947	)		—		—			—			(1,947	)		—			(1,947	)
Dividends paid to stockholders, $0.34 per common share ⁽¹⁾		—		—			—		(39,797	)		—			(39,797	)		—			(39,797	)
Dividends paid to noncontrolling interests		—		—			—		—			—			—			(1,000	)		(1,000	)
Dividends accrued on unvested restricted stock unit awards ⁽¹⁾		—		—			—		(108	)		—			(108	)		—			(108	)
Net income		—		—			—		32,728			—			32,728			465			33,193
Unrealized loss due to fair value adjustments on interest rate swap agreements, net of taxes, net of settlements		—		—			—		—			(3,311	)		(3,311	)		—			(3,311	)
Other comprehensive loss in equity method investees		—		—			—		—			(71	)		(71	)		—			(71	)
Foreign currency translation adjustments		—		—			—		—			755			755			—			755
Balance at March 31, 2019	$	121	$	(81,206	)	$	1,158,394	$	648,720		$	(321,634	)	$	1,404,395		$	11,844		$	1,416,239

(1)

Below is a summary of dividends paid to stockholders and accrued on unvested restricted stock unit awards during the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2020 and 2019:

Amount per Share

Declaration Date

Record Date

Payable Date

of Common Stock

Total

2/23/2017

3/8/2017

3/20/2017

$
0.29

$
33,912

5/25/2017

6/8/2017

6/22/2017

0.29

33,904

8/10/2017

8/31/2017

9/13/2017

0.29

33,911

Total

$
0.87

$
101,727

			Amount per Share
Declaration Date	Record Date	Payable Date	of Common Stock		Total
2/21/2020	3/6/2020	3/20/2020	$	0.36	$	42,567

2/22/2019	3/8/2019	3/22/2019	$	0.34	$	39,905

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

9.	National CineMedia

Below is a summary of activity with NCM included in the Company’s condensed consolidated financial statements:

Cinemark

Holdings, Inc.

Stockholders’

Noncontrolling

Total

Equity

Interests

Equity

Balance at January 1, 2016

$
1,099,708

$
11,105

$
1,110,813

Share based awards compensation expense

10,247

―

10,247

Stock withholdings related to share based awards that
   vested during the nine months ended September 30, 2016

(6,828
)

―

(6,828
)
Issuance of common stock related to restricted stock units
   that vested during the nine months ended September 30, 2016

1

―

1

Tax benefit related to share based awards vesting

1,797

―

1,797

Dividends paid to stockholders ⁽²⁾

(94,117
)

―

(94,117
)
Dividends accrued on unvested restricted stock unit
   awards ⁽²⁾

(360
)

―

(360
)
Dividends paid to noncontrolling interests

―

(515
)

(515
)
Net income

178,086

1,454

179,540

Fair value adjustments on interest rate swap agreements
   designated as hedges, net of settlements, net of
   taxes of  $138

234

―

234

Gain realized on available-for-sale securities, net of
   taxes of $1,180

(2,011
)

―

(2,011
)
Other comprehensive loss in equity method investees

(183
)

―

(183
)
Foreign currency translation adjustments

34,974

24

34,998

Balance at September 30, 2016

$
1,221,548

$
12,068

$
1,233,616

	Investment in NCM			NCM Screen Advertising Advances			Distributions from NCM			Equity in Earnings			Other Revenue			Interest Expense - NCM		Cash Received
Balance as of January 1, 2020	$	265,792		$	(348,354	)
Receipt of common units due to annual common unit adjustment ("CUA")		3,620			(3,620	)	$	—		$	—		$	—		$	—	$	—
Screen rental revenues earned under ESA ⁽¹⁾		—			—			—			—			(3,461	)		—		3,461
Interest accrued related to significant financing component		—			(5,891	)		—			—			—			5,891		—
Receipt of excess cash distributions		(10,567	)		—			(5,224	)		—			—			—		15,791
Equity in earnings		6,526			—			—			(6,526	)		—			—		—
Amortization of screen advertising advances		—			7,761			—			—			(7,761	)		—		—
Balance as of and for the three months ended March 31, 2020	$	265,371		$	(350,104	)	$	(5,224	)	$	(6,526	)	$	(11,222	)	$	5,891	$	19,252

(1)

~~(2)~~

~~Below is a summary~~Amounts include the per patron and per digital screen theatre access fees due to the Company, net of ~~dividends paid~~amounts due to ~~stockholders and accrued on unvested restricted stock unit awards during~~NCM for on-screen advertising time provided to the ~~nine months ended September 30, 2016:~~

Amount per Share

Declaration Date

Record Date

Payable Date

of Common Stock

Total

2/24/2016

3/7/2016

3/18/2016

$
0.27

$
31,367

5/26/2016

6/8/2016

6/22/2016

0.27

31,373

8/18/2016

8/31/2016

9/13/2016

0.27

31,737

Total

$
0.81

$
94,477

6.	~~Investment in National CineMedia~~Company’s beverage concessionaire of approximately $2,134.

~~The Company has an investment~~

Investment in National CineMedia ~~LLC (“NCM”).~~

NCM operates a digital in-theatre network in the U.S. for providing cinema advertising. ~~Upon joining NCM, the~~The Company entered into an Exhibitor Services Agreement with NCM (“ESA”), pursuant to which NCM primarily provides advertising ~~and promotions~~ to our theatres.As described ~~further~~ in Note 57 to the Company’s financial statements as included in its ~~2016~~2019 Annual Report on Form 10-K, on February 13, 2007, National ~~CineMedia,~~Cinemedia, Inc. (“~~NCM, Inc.”~~NCMI”), an entity that serves as the sole manager of NCM, completed an initial public offering (“IPO”) of its common stock. In connection with the ~~NCM, Inc.~~NCMI initial public offering, the Company amended its operating agreement and the ESA. At the time of the NCMI IPO and as a result of amending the ESA, the Company received approximately $174,000 in cash consideration from NCM. The proceeds were recorded as deferred revenue or NCM screen advertising advances and was being amortized over the term of the Amended and Restated ESA, or through February 2041. Following the ~~NCM, Inc.~~NCMI IPO, the Company does not recognize undistributed equity in the earnings on its original NCM membership units (referred to herein as the Company’s Tranche 1 Investment) until NCM’s future net earnings, less distributions received, surpass the amount of the excess distribution. The Company recognizes equity in earnings on its Tranche 1 Investment only to the extent it receives cash distributions from NCM. The Company recognizes cash distributions it receives from NCM on its Tranche 1 Investment as a component of earnings as Distributions from NCM. The Company believes that the accounting model provided by ASC Topic 323-10-35-22 for recognition of equity investee losses in excess of an investor’s basis is analogous to the accounting for equity income subsequent to recognizing an excess distribution.

~~CINEMARK HOLDINGS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~Common Unit Adjustments

In ~~thousands, except share~~addition to the consideration received upon the NCMI IPO and ~~per share data~~

~~Below is a summary of activity with NCM included~~ESA modification in 2007, the Company also periodically receives consideration in the ~~Company’s condensed consolidated financial statements:~~

Distributions

Investment

Deferred

from

Equity in

Other

Cash

in NCM

Revenue

NCM

Income

Revenue

Received

Balance as of January 1, 2017

$
189,995

$
(343,928
)

Receipt of common units due to annual common
unit adjustment

18,363

(18,363
)

$
—

$
—

$
—

$
—

Revenues earned under ESA ⁽¹⁾

—

—

—

—

(8,446
)

8,446

Receipt of excess cash distributions

(10,020
)

—

(9,630
)

—

—

19,650

Receipt under tax receivable agreement

(2,089
)

—

(2,074
)

—

—

4,163

Equity in earnings

8,098

—

—

(8,098
)

—

—

Amortization of deferred revenue

—

7,872

—

—

(7,872
)

—

Balance as of and for the nine months ended September 30, 2017

$
204,347

$
(354,419
)

$
(11,704
)

$
(8,098
)

$
(16,318
)

$
32,259

~~(1)~~

Amount includes the per patron and per digital screen theatre access fees due to the Company, net of amounts paid to NCM for on-screen advertising time provided to the Company’s beverage concessionaire of approximately $8,382.

~~During the three months ended September 30, 2017 and 2016, the Company recorded equity in earnings~~form of ~~approximately $5,032 and $5,815, respectively. During the nine months ended September 30, 2017 and 2016, the Company recorded equity in earnings of approximately $8,098 and $7,660, respectively.~~

The Company made payments to NCM of approximately $75 and $41 during the nine months ended September 30, 2017 and 2016, respectively, related to installation of certain equipment used for digital advertising, which is included in theatre properties and equipment on the condensed consolidated balance sheets.

common units from NCM. Pursuant to a Common Unit Adjustment Agreement dated as of February 13, 2007 between ~~NCM, Inc.~~NCMI and the Company, ~~AMC Entertainment, Inc. (“AMC”) and Regal Entertainment Group (“Regal”) (collectively, “Founding Members”),~~ annual adjustments to the common membership units are made primarily based on increases or decreases in the number of theatre screens operated and theatre attendance ~~generated by each Founding Member.~~generated. As ~~further~~ discussed in Note 57 to the Company’s financial statements as included in its ~~2016~~2019 Annual Report on Form 10-K, the common units received (collectively referred to as the Company’s “Tranche 2 Investment”) are recorded at estimated fair value as an increase in the Company’s investment in NCM with an offset to ~~deferred revenue.~~NCM screen advertising advances. The ~~deferred revenue~~Company’s Tranche 2 Investment is ~~amortized over~~accounted for following the ~~remaining term~~equity method, with undistributed equity earnings related to its Tranche 2 Investment included as a component of ~~the ESA.~~ earnings in equity in income of affiliates and distributions received related to its Tranche 2 Investment are recorded as a reduction of investment basis.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

During March ~~2017,~~2020, NCM performed its annual common unit adjustment calculation under the Common Unit Adjustment Agreement. As a result of the calculation, on March ~~30, 2017,~~31, 2020, the Company received an additional ~~1,487,218~~1,112,368 common units of NCM, each of which is convertible into ~~one~~1 share of ~~NCM, Inc.~~NCMI common stock. The Company recorded the additional common units received at estimated fair value with a corresponding adjustment to ~~deferred revenue~~NCM screen advertising advances of approximately ~~$18,363.~~$3,620. The fair value of the common units received was estimated based on the market price of ~~NCM, Inc.~~NCMI common stock at the time the common units were determined, adjusted for volatility associated with the estimated time period it would take to convert the common units and register the respective shares. ~~The deferred revenue will be recognized over the remaining term of the ESA, which is approximately 19 years.~~

As of ~~September 30, 2017,~~March 31, 2020, the Company owned a total of ~~27,871,862~~40,850,068 common units of NCM, representing an ownership interest of approximately ~~18%~~25%. ~~The~~Each of the Company’s common units in NCM is convertible into 1 share of NCM, Inc. common stock. As of March 31, 2020, the estimated fair value of the Company’s investment in NCM was approximately ~~$194,546~~$133,171 based on NCM, Inc.’s stock price as of ~~September 30, 2017~~March 31, 2020 of ~~$6.98~~$3.26 per share (Level 1 input as defined in FASB ASC Topic 820), which was ~~less than~~below the Company’s carrying value of ~~$204,347.~~$265,371. The market value of NCM, Inc.’s stock price may vary due to the performance of the business, industry trends, general and economic conditions and other factors, including those resulting from the impact of COVID-19 (see Note 2). The Company does not believe that the decline in NCM, Inc.’s stock price is other than temporaryas the Company and ~~therefore, no~~other industry participants, who are also members of the NCM network, are planning to reopen theatres in the next few months, and the Company expects industry attendance to recover gradually over time. Therefore, 0 impairment of the Company’s investment in NCM was recorded during the ~~nine~~three months ended March 31, 2020.

Exhibitor Services Agreement

As discussed above, the Company’s domestic theatres are part of the in-theatre digital network operated by NCM under the ESA. NCM provides advertising to the Company’s theatres through its branded “Noovie” pre-show entertainment program and also handles lobby promotions and displays for our theatres. The Company receives a monthly theatre access fee for participation in the NCM network and also earns screen advertising revenue on a per patron basis. Prior to September ~~30, 2017.~~17, 2019, the ESA was accounted for under ASC Topic 606, Revenue from Contracts with Customers. Effective September 17, 2019, the Company signed an amendment to the ESA, under which the Company will provide incremental advertising time to NCM and has extended the term through February 2041. Subsequent to the amendment, the ESA is accounted for as a lease under ASC Topic 842. The ~~market value~~Company leases nonconsecutive periods of use of its domestic theatre screens to NCM ~~Inc.’s stock price may change~~for purposes of showing third party advertising content. The lease requires variable lease payments based on the number of patrons attending the showtimes during which such advertising is shown. The screen advertising revenues earned under the ESA, both before and after the amendment, are reflected in other revenue on the condensed consolidated income statement.

The recognition of revenue related to the NCM screen advertising advances will be recorded on a straight-line basis through February 2041.

	Twelve Months Ended March 31,
Remaining Maturity	2021		2022		2023		2024		2025		Thereafter		Total
NCM screen advertising advances	$	7,865	$	8,407	$	8,989	$	9,612	$	10,279	$	304,952	$	350,104

Significant Financing Component

Prior to the September 17, 2019 amendment of the ESA, the Company applied a significant financing component, as required by ASC Topic 606, due to the ~~performance~~significant length of time between receiving the NCM screen advertising advances (the $174,000 received at the NCMI IPO and the periodic common unit adjustments) and completion of the ~~business, industry trends, general~~performance obligation. Effective September 17, 2019, upon the Company’s evaluation and determination that ASC Topic 842 applies to the amended ESA, the Company determined it acceptable to apply the significant financing component guidance from ASC Topic 606 by analogy as the economic ~~conditions~~substance of the agreement represents a financing arrangement. As a result of the significant financing component, the Company recognized incremental screen rental revenue and ~~other factors.~~ an offsetting interest expense of $5,891 and $4,782 during the three months ended March 31, 2020 and 2019, respectively. The interest expense was calculated using the Company’s incremental borrowing rates at the time when the cash and each tranche of common units were received from NCM, which ranged from 4.3% to 8.3%.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

NCM Financial Information

Below is summary financial information for NCM for the ~~three and six months ended June 29, 2017 (the financial information for the three and nine months ended September 28, 2017 is not yet available) and the three and nine months ended September 29, 2016:~~periods indicated:

	Three Months Ended			Three Months Ended
	March 26, 2020			March 28, 2019
Gross revenues	$	64,700		$	76,900
Operating income	$	4,900		$	10,900
Net loss	$	(8,600	)	$	(2,900	)

Three Months

Six Months Ended

Three Months Ended

Nine Months Ended

Ended
June 29, 2017

June 29, 2017

September 29, 2016

September 29, 2016

Gross revenues

$
97,042

$
168,962

$
113,476

$
305,101

Operating income

$
28,430

$
33,500

$
48,481

$
100,911

Net income

$
15,377

$
7,465

$
23,909

$
49,619

	As of			As of
	March 26, 2020			December 26, 2019
Current assets	$	248,900		$	185,400
Noncurrent assets	$	710,100		$	706,600
Current liabilities	$	68,600		$	125,500
Noncurrent liabilities	$	1,075,600		$	947,800
Members deficit	$	(185,200	)	$	(181,300	)

7.10.

Other Investments

Below is a summary of activity for each of the Company’s other investments for the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2020:

DCIP

AC JV,
LLC

DCDC

Other

Total

Balance at January 1, 2017

$
87,819

$
5,980

$
2,750

$
1,768

$
98,317

Cash contributions

1,109

—

—

68

1,177

Cash distributions

(5,212
)

—

—

—

(5,212
)
Equity in income

16,820

996

853

—

18,669

Equity in other comprehensive income

92

—

—

—

92

Other

—

—

—

(165
)

(165
)
Balance at September 30, 2017

$
100,628

$
6,976

$
3,603

$
1,671

$
112,878

	DCIP			AC JV, LLC		DCDC			FE Concepts			Other			Total
Balance at January 1, 2020	$	124,696		$	5,022	$	3,169		$	19,519		$	2,879		$	155,285
Cash distributions received		(5,161	)		—		(878	)		—			—			(6,039	)
Equity in income (loss)		1,249			740		194			(223	)		—			1,960
Other		50			—		—			—			(24	)		26
Balance at March 31, 2020	$	120,834		$	5,762	$	2,485		$	19,296		$	2,855		$	151,232

Digital Cinema Implementation Partners LLC (“DCIP”)

On February 12, 2007, the Company, AMC and Regal (the “Exhibitors”) entered into a joint venture known as DCIP to facilitate the implementation of digital cinema in the Company’s theatres and to establish agreements with major motion picture studios for the financing of digital cinema. On March 10, 2010, DCIP and its subsidiaries completed an initial financing transaction to enable the purchase, deployment and leasing of digital projection systems to the Exhibitors under equipment lease and installation agreements. On March 31, 2011, DCIP obtained incremental financing necessary to complete the deployment of digital projection systems. DCIP also entered into long-term Digital Cinema Deployment Agreements (“DCDAs”) with 6 major motion picture studios pursuant to which Kasima LLC, one of DCIP’s subsidiaries, receives a virtual print fee ("VPF") each time the studio books a film or certain other content on the leased digital projection systems. Other content distributors entered into similar DCDAs that provide for the payment of VPFs for bookings of the distributor's content on a leased digital projection system. The DCDAs end on the earlier to occur of (i) the tenth anniversary of the "mean deployment date" for all digital projection systems scheduled to be deployed over a period of up to five years, or (ii) the date DCIP achieves "cost recoupment", each as defined in the DCDAs. Cost recoupment occurs when revenues attributable to the digital projection systems exceed the financing, deployment, administration and other costs associated with the purchase of the digital projection systems. DCIP expects cost recoupment to occur during 2021. The timing of cost recoupment is dependent on VPF payments from studios. Pursuant to the operating agreement between the Exhibitors and DCIP, DCIP began to distribute excess cash to the Exhibitors upon the payoff of its outstanding debt, which occurred during the year ended December 31, 2019.

As of ~~September 30, 2017,~~March 31, 2020, the Company had a 33% voting interest in DCIP and a 24.3% economic interest in DCIP. The Company accounts for its investment in DCIP and its subsidiaries under the equity method of accounting.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

Below is summary financial information for DCIP for the ~~three and nine months ended September 30, 2017 and 2016.~~periods indicated:

Three Months Ended

Nine Months Ended

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

Gross revenues

$
39,961

$
48,274

$
132,535

$
133,675

Operating income

$
22,702

$
31,180

$
80,574

$
82,369

Net income

$
19,701

$
26,949

$
69,458

$
67,728

	Three Months Ended
	March 31, 2020			March 31, 2019
Gross revenues	$	32,510		$	44,774
Operating income (loss)	$	(5,239	)	$	20,208
Net income (loss)	$	(11,140	)	$	18,485

	As of
	March 31, 2020		December 31, 2019
Current assets	$	40,241	$	51,382
Noncurrent assets	$	531,867	$	581,547
Current liabilities	$	55,737	$	70,515
Noncurrent liabilities	$	159	$	190
Members' equity	$	516,212	$	562,224

As of ~~September 30, 2017,~~March 31, 2020, the Company had ~~3,796~~3,866 digital projection systems being leased under the master equipment lease agreement with Kasima LLC, which is an indirect subsidiary of DCIP and a related party to the Company. The Company had the following transactions with DCIP, reflected in utilities and other costs on the condensed consolidated statements of income, ~~statement, with DCIP~~ during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016:~~2019:

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016			March 31, 2020			March 31, 2019
Equipment lease payments	$	1,452		$	1,333		$	4,333		$	3,864		$	1,038		$	1,121
Warranty reimbursements from DCIP	$	(2,234	)	$	(1,608	)	$	(6,141	)	$	(4,367	)	$	(3,123	)	$	(2,938	)
Management service fees	$	207		$	207		$	619		$	619		$	84		$	158

~~CINEMARK HOLDINGS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~In thousands, except share and per share data~~

AC JV, LLC

During December 2013, the Company, Regal, AMC (the “AC Founding Members”) and NCM entered into a series of agreements that resulted in the formation of AC JV, LLC (“AC”), a joint venture that owns “Fathom Events” ~~(consisting of Fathom Events and Fathom Consumer Events)~~ formerly operated by NCM. The Fathom Events business focuses on the marketing and distribution of live and pre-recorded entertainment programming to various theatre operators, ~~to provide additional programs that augment their feature film schedule. The Fathom Consumer Events business includes live and pre-recorded~~including concerts, ~~featuring contemporary music,~~ opera and symphony, DVD product releases and marketing events, theatrical premieres, Broadway plays, live sporting events and other special events. The Company paid event fees to AC of ~~$9,448~~$1,673 and ~~$7,808~~$5,317 for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively, which are included in film rentals and advertising costs on the condensed consolidated statements of income.

~~AC was formed by the AC Founding Members and NCM. NCM, under a contribution agreement, contributed the assets associated with~~ The Company accounts for its Fathom Events division to AC in exchange for 97% ownership of the Class A Units of AC. Under a separate contribution agreement, the Founding Members each contributed cash of approximately $268 to AC in exchange for 1% of the Class A Units of AC. Subsequently, NCM and the Founding Members entered into a Membership Interest Purchase Agreement, under which NCM sold each of the Founding Members 31% of its Class A Unitsinvestment in AC under the ~~aggregate value~~equity method of which was determined to be $25,000, in exchange for a six-year promissory note. Each of the Founding Members’ promissory notes were originally for $8,333, bear interest at 5% per annum and require annual principal and interest payments. The remaining outstanding balance of the note payable from the Company to NCM as of September 30, 2017 was $4,167.accounting.

Digital Cinema Distribution Coalition

Digital Cinema Distribution Coalition (“DCDC”) is a joint venture among the Company, Universal, Warner Bros., AMC and Regal. DCDC operates a satellite distribution network that distributes all digital content to U.S. theatres via satellite. The Company has an approximate 14.6% ownership in DCDC. The Company paid approximately ~~$637~~$105 and ~~$707~~$263 to DCDC during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively, related to content delivery services provided by DCDC. These fees are included in film rentals and advertising costs on the condensed consolidated statements of income. The Company accounts for its investment in DCDC under the equity method of accounting.

FE Concepts, LLC

During April 2018, the Company, through its wholly-owned indirect subsidiary CNMK Texas Properties, LLC (“CNMK”), formed a joint venture, FE Concepts, LLC (“FE Concepts”) with AWSR Investments, LLC (“AWSR”), an entity owned by Lee Roy Mitchell and Tandy Mitchell. FE Concepts operates a family entertainment center that offers bowling, gaming, movies and other amenities that opened during December 2019. The Company and AWSR each invested approximately $20,000 and each have a 50% voting interest in FE Concepts. The Company accounts for its investment in FE Concepts under the equity method of accounting. The Company has a theatre services agreement with FE Concepts under which it provides film booking and equipment monitoring services. The Company recorded $10 of theatre services revenue under the agreement during the three months ended March 31, 2020.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

Additional Considerations

Each of the investments above have been temporarily impacted by the COVID-19 pandemic (see Note 2) due to the temporary closure of theatres across the U.S. The Company does not believe that any resulting decline in value of the underlying investments is other than temporary as the Company and other industry participants, who also have equity ownership interests in certain of the above investments, are planning to reopen theatres during the next few months, and the Company expects industry attendance to recover gradually over time.

8.11.

Treasury Stock and Share Based Awards

Treasury Stock — Treasury stock represents shares of common stock repurchased or withheld by the Company and not yet retired. The Company has applied the cost method in recording its treasury shares. Below is a summary of the Company’s treasury stock activity for the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2020:

	Number of				Number of
	Treasury				Treasury
	Shares		Cost		Shares		Cost
Balance at January 1, 2017		4,447,002	$	73,411
Balance at January 1, 2020						4,711,859	$	81,567
Restricted stock withholdings ⁽¹⁾		68,523		2,943		86,957		2,691
Restricted stock forfeitures		9,550		—		11,244		—
Balance at September 30, 2017		4,525,075	$	76,354
Balance at March 31, 2020						4,810,060	$	84,258

(1)

The Company withheld restricted shares as a result of the election by certain employees to satisfy their tax liabilities upon vesting in restricted stock and restricted stock units. The Company determined the number of shares to be withheld based upon market values ranging from ~~$33.36~~$12.30 to ~~$44.44~~$32.12 per share.

As of ~~September 30, 2017,~~March 31, 2020, the Company had no plans to retire any shares of treasury stock.

Restricted Stock – During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, the Company granted ~~237,933~~353,196 shares of restricted stock to ~~directors and~~ employees. The fair value of the restricted stock granted was determined based on the market value of the Company’s common stock on the ~~dates~~date of grant, which ~~ranged from $38.65 to $42.37~~was $32.12 per share. The Company assumed forfeiture rates for the restricted stock awards that ranged from 0% to 10% ~~for the restricted stock awards.~~. The restricted stock ~~granted~~awards vest over periods ranging from one to ~~directors vests over a one year service period. The restricted stock granted to employees vests over a~~ four ~~year service period.~~years. The recipients of restricted stock are entitled to receive non-forfeitable dividends and to vote their respective shares, however, the sale and transfer of the restricted shares is prohibited during the restriction period.

15Below is a summary of restricted stock activity for the three months ended March 31, 2020:

	Shares of			Weighted Average
	Restricted			Grant Date
	Stock			Fair Value
Outstanding at January 1, 2020		783,823		$	37.53
Granted		353,196		$	32.12
Vested		(260,278	)	$	35.05
Forfeited		(11,244	)	$	37.52
Outstanding at March 31, 2020		865,497		$	36.07
Unvested restricted stock at March 31, 2020		865,497		$	36.07

	March 31,
	2020		2019
Compensation expense recognized during the period	$	2,691	$	2,433
Fair value of restricted shares that vested during the period	$	8,029	$	5,745
Income tax benefit recognized upon vesting of restricted stock awards	$	2,418	$	1,002

As of March 31, 2020, the estimated remaining unrecognized compensation expense related to unvested restricted stock awards was $22,864 and the weighted average period over which this remaining compensation expense will be recognized is approximately three years.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

~~Below is a summary of restricted stock activity for the nine months ended September 30, 2017:~~

Shares of

Weighted
Average

Restricted

Grant Date

Stock

Fair Value

Outstanding at January 1, 2017

606,618

$
33.51

Granted

237,933

$
41.94

Vested

(192,152
)

$
36.26

Forfeited

(9,550
)

$
33.00

Outstanding at September 30, 2017

642,849

$
35.82

Unvested restricted stock at September 30, 2017

642,849

$
35.82

Nine Months Ended
September 30,

2017

2016

Compensation expense recognized during the period

$
6,298

$
6,551

Fair value of restricted shares that vested during the period

$
8,169

$
14,662

Income tax benefit recognized upon vesting of restricted stock awards

$
2,665

$
5,555

~~As of~~ ~~September 30, 2017~~, the estimated remaining unrecognized compensation expense related to unvested restricted stock awards was $15,335 and the weighted average period over which this remaining compensation expense will be recognized is approximately two years.

Restricted Stock Units – During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, the Company granted restricted stock units representing ~~175,634~~436,681 hypothetical shares of common stock to employees. The restricted stock units vest based on a combination of financial performance factors and continued service. The financial performance factors are based on an implied equity value concept that determines an internal rate of return (“IRR”) during the two fiscal year periods ending December 31, ~~2018~~2021 based on a formula utilizing a multiple of Adjusted EBITDA subject to certain ~~specified~~ adjustments as specified by the Compensation Committee prior to the grant date. The financial performance factors for the restricted stock units have a threshold, target and maximum level of payment opportunity and vest on a prorata basis according to the IRR achieved by the Company during the performance period. If the IRR for the two-year period is at least 7%6%, which is the threshold, one-third of the maximum restricted stock units vest. If the IRR for the two-year period is at least ~~9.5%~~8%, which is the target, two-thirds of the maximum restricted stock units vest. If the IRR for the two-year period is at least ~~13%~~14%, which is the maximum, 100% of the maximum restricted stock units vest. Grantees are eligible to receive a ratable portion of the common stock issuable if the IRR is within the targets previously noted. Further, as an example, if the Company achieves an IRR equal to 11%, the number of restricted stock units that shall vest will be greater than the target but less than the maximum number that would have vested had the Company achieved the highest IRR. All restricted stock units granted during ~~2017~~2020 will vest subject to an additional two-year service requirement and will be paid in the form of common stock if the participant continues to provide services through ~~February 2021, which is~~ the fourth anniversary of the grant date. Restricted stock unit award participants are eligible to receive dividend equivalent payments from the grant date if, and at the time that, the restricted stock unit awards vest.

Below is a table summarizing the potential number of shares that could vest under restricted stock unit awards granted during the ~~nine~~three months ended ~~September 30, 2017~~ March 31, 2020at each of the three target levels of financial performance (excluding forfeiture assumptions):

Number of

Shares

Value at

Vesting

Grant

at IRR of at least 7%

58,545

$
2,481

at IRR of at least 9.5%

117,089

$
4,961

at IRR of at least 13%

175,634

$
7,442

	Number of
	Shares		Value at
	Vesting		Grant
at IRR of at least 6%		190,707	$	6,125
at IRR of at least 8%		286,060	$	9,188
at IRR of at least 14%		436,681	$	14,026

Due to the fact that the IRR for the two-year performance period could not be determined at the time of the ~~2017~~2020 grant, the Company estimated that the most likely outcome is the achievement of the target IRR level. The fair value of the restricted stock unit

~~CINEMARK HOLDINGS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~In thousands, except share and per share data~~

awards was determined based on the closing price of the Company’s common stock on the date of grant, which was ~~$42.37~~$32.12 per share. The Company assumed a forfeiture rate of 5% for the restricted stock unit awards. If during the service period, additional information becomes available to lead the Company to believe a different IRR level will be achieved for the two-year performance period, the Company will reassess the number of units that ~~will~~are expected to vest for the grant and adjust its compensation expense accordingly on a prospective basis over the remaining service period.

Nine Months Ended September 30,

2017

2016

Number of restricted stock unit awards that vested during
   the period

97,115

213,984

Fair value of restricted stock unit awards that vested during
   the period

$
4,155

$
7,260

Accumulated dividends paid upon vesting of restricted stock
   unit awards

$
313

$
662

Compensation expense recognized during the period

$
3,189

$
3,696

Income tax benefit recognized upon vesting of restricted stock
   unit awards

$
1,745

$
3,049

	March 31,
	2020		2019
Number of restricted stock unit awards that vested during the period		112,070		88,074
Fair value of restricted stock unit awards that vested during the period	$	3,554	$	3,550
Accumulated dividends paid upon vesting of restricted stock unit awards	$	544	$	375
Compensation expense recognized during the period	$	1,420	$	537
Income tax benefit recognized upon vesting of restricted stock unit awards	$	821	$	170

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

As of ~~September 30, 2017,~~March 31, 2020, the estimated remaining unrecognized compensation expense related to the outstanding restricted stock unit awards was ~~$8,314.~~$17,185. The weighted average period over which this remaining compensation expense will be recognized is approximately ~~two~~three years. As of ~~September 30, 2017~~,March 31, 2020, the Company had restricted stock units outstanding that represented a total of ~~628,189~~1,008,288 hypothetical shares of common stock, net of ~~actual cumulative~~ forfeitures, assuming an IRR of ~~7,407 units, assuming~~9.3% was achieved for the 2017 grants, an IRR of 8.6% was achieved for the 2018 grants and the maximum IRR level is achieved for all other grants outstanding.

9.12.

Goodwill and Other Intangible Assets

The Company’s goodwill was as follows:

U.S.
Operating
Segment

International
Operating
Segment

Total

Balance at January 1, 2017 ⁽¹⁾

$
1,164,163

$
98,800

$
1,262,963

Acquisitions of theatres ⁽²⁾

9,878

20,401

30,279

Foreign currency translation adjustments

—

1,100

1,100

Balance at September 30, 2017 ⁽¹⁾

$
1,174,041

$
120,301

$
1,294,342

	U.S. Operating Segment		International Operating Segment			Total
Balance at January 1, 2020 ⁽¹⁾	$	1,182,853	$	100,518		$	1,283,371
Foreign currency translation adjustments		—		(14,812	)		(14,812	)
Balance at March 31, 2020 ⁽¹⁾	$	1,182,853	$	85,706		$	1,268,559

(1)

Balances are presented net of accumulated impairment losses of $214,031 for the U.S. operating segment and $27,622 for the international operating segment.

~~(2)~~

~~Represents preliminary purchase price allocations associated with the acquisitions of theatres.~~

The Company evaluates goodwill for impairment annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value of the goodwill may not be fully recoverable. Due to the temporary closure of the Company’s domestic theatres effective March 17, 2020 and international theatres effective March 18, 2020 as a result of the COVID-19 pandemic (see Note 2), the Company performed a quantitative goodwill impairment evaluation for all reporting units during the three months ended March 31, 2020. The Company evaluates goodwill for impairment at the reporting unit level and has allocated goodwill to the reporting unit based on an estimate of its relative fair value. Management considers the reporting unit to be each of its ~~nineteen~~20 regions in the U.S. and ~~seven~~7 countries internationally with Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala considered one reporting unit (the Company does not have goodwill recorded for all of its international locations). ~~For~~Under the ~~year ended December 31, 2016,~~quantitative analysis, the Company estimated the fair value of each reporting unit and compared it with its carrying value. Fair value was determined using the market approach and based on a multiple of cash flows for each reporting unit, which was 8 times for the evaluations performed ~~a qualitative~~during the three months ended March 31, 2020. The market approach is the most common valuation approach for the Company’s industry. The Company also performed its goodwill impairment analysis using the income approach to further validate the results of the assessment ~~on all reporting units,~~results under the market approach. Significant judgment, including management’s estimate of the impact of temporary theatre closures and other considerations as a result of COVID-19, was involved in ~~accordance with~~estimating cash flows and fair value. The Company’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic ~~350-20-35. No events or changes in circumstances occurred during the nine months ended September 30, 2017 that indicated the~~820-10-35, are based on projected operating performance of each reporting unit, market transactions and industry trading multiples. The carrying value of ~~goodwill might~~the Company’s reporting units did not exceed ~~its~~ estimated fair ~~value.~~values at March 31, 2020. The estimated fair value of one of the Company’s reporting units exceeded its carrying value by less than 10%.

17Intangible assets consisted of the following:

	Balance at January 1, 2020			Amortization			Other ⁽¹⁾			Balance at March 31, 2020
Intangible assets with finite lives:
Gross carrying amount	$	85,007		$	—		$	(1,798	)	$	83,209
Accumulated amortization		(63,924	)		(1,241	)		—			(65,165	)
Total net intangible assets with finite lives	$	21,083		$	(1,241	)	$	(1,798	)	$	18,044

Intangible assets with indefinite lives:
Tradename and other		300,686			—			(73	)		300,613
Total intangible assets — net	$	321,769		$	(1,241	)	$	(1,871	)	$	318,657

(1)

Amount primarily represents foreign currency translation adjustments.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

~~Intangible assets consisted~~Due to the temporary closure of the ~~following:~~

Balance at

Balance at

January 1,

September 30,

2017

Additions ⁽¹⁾

Amortization

Other ⁽²⁾

2017

Intangible assets with finite lives:

Gross carrying amount

$
99,796

$
4,453

$
—

$
(1,332
)

$
102,917

Accumulated amortization

(64,606
)

―

(3,606
)

1,162

(67,050
)
Total net intangible assets with finite lives

$
35,190

$
4,453

$
(3,606
)

$
(170
)

$
35,867

Intangible assets with indefinite lives:

Tradename

299,709

―

―

81

299,790

Total intangible assets — net

$
334,899

$
4,453

$
(3,606
)

$
(89
)

$
335,657

~~(1)~~

~~Amount represents preliminary fair values allocated to intangible assets acquired as part~~Company’s theatres effective March 18, 2020 as a result of ~~the acquisitions of theatres.~~

~~(2)~~

~~Amounts represent foreign currency translation adjustments and the write-off of a favorable lease associated with a closed domestic theatre.~~

~~For~~ the ~~year ended December 31, 2016, the Company performed a qualitative assessment for all indefinite-lived tradename assets other than its tradename in Ecuador, for which~~COVID-19 pandemic (see Note 2), the Company performed a quantitative ~~assessment. For~~impairment evaluation for all definite and indefinite-lived tradename assets during the ~~year~~three months ended ~~December~~March 31, ~~2016,~~2020. Under the quantitative analysis, the Company also performed a quantitative test on its definite-lived tradename associated with certain of its Rave-branded theatres acquired in 2013. No events or changes in circumstances occurred during the nine months ended September 30, 2017 that indicatedcompared the carrying ~~value~~values of ~~its~~ tradename assets ~~might exceed~~to their estimated fair values. Fair values were estimated by applying an estimated market royalty rate that could be charged for the use of the tradenames to forecasted future revenues, with an adjustment for the present value of such royalties. Significant judgment, including management’s estimate of the impact of temporary theatre closures and other considerations as a result of COVID-19, was involved in estimating market royalty rates and long-term revenue forecasts. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, were based on projected revenue performance and expected industry trends. The carrying values of the Company’s tradename assets did not exceed estimated fair values at March 31, 2020.

Estimated aggregate future amortization expense for intangible assets is as follows:

For the three months ended December 31, 2017

$
1,668

For the twelve months ended December 31, 2018

5,964

For the twelve months ended December 31, 2019

5,101

For the twelve months ended December 31, 2020

4,995

For the twelve months ended December 31, 2021

2,444

Thereafter

15,695

Total

$
35,867

For the nine months ended December 31, 2020	$	3,655
For the twelve months ended December 31, 2021		2,801
For the twelve months ended December 31, 2022		2,648
For the twelve months ended December 31, 2023		2,550
For the twelve months ended December 31, 2024		2,550
Thereafter		3,840
Total	$	18,044

~~10.~~13.

Impairment of Long-Lived Assets

~~The Company reviews long-lived assets for impairment indicators on a quarterly basis or whenever events or changes in circumstances indicate~~Due to the ~~carrying amount~~temporary closure of the ~~assets may not be fully recoverable. See discussion~~Company’s theatres effective March 18, 2020 as a result of the ~~Company’s~~COVID-19 pandemic (see Note 2), the Company performed a long-lived asset impairment evaluation ~~process~~for all theatres during the three months ended March 31, 2020. The impairment evaluation was based on the estimated undiscounted cash flows from continuing use through the remainder of the theatre’s useful life. Significant judgment, including management’s estimate of the impact of temporary theatre closures and other considerations as a result of COVID-19, was involved in ~~“Critical Accounting Policies” in its Annual Report on Form 10-K for the year ended December 31, 2016, filed February 23, 2017. As noted in the discussion,~~estimating cash flows and fair value. Fair value is determined based on a multiple of cash flows, which was ~~six and a half~~6 times for the evaluations performed during the ~~nine~~three months ended ~~September 30, 2017 and 2016. As~~March 31, 2020. Management’s estimates, which fall under Level 3 of ~~September 30, 2017,~~ the ~~estimated aggregate~~U.S. GAAP fair value hierarchy, as defined by FASB ASC Topic 820-10-35, are based on projected operating performance, market transactions and industry trading multiples.

Below is a summary of impairment charges for the ~~long-lived assets impaired during the nine months ended September 30, 2017 was approximately $5,367.~~periods presented:

	Three Months Ended
	March 31,
	2020		2019
U.S. Segment
Theatre properties	$	3,643	$	1,208
Theatre operating lease right-of-use assets		5,952		—
U.S. total		9,595		1,208

International segment
Theatre properties		4,484		4,376
Theatre operating lease right-of-use assets		2,540		—
International total		7,024		4,376

Total Impairment	$	16,619	$	5,584

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

The long-lived asset impairment charges recorded during each of the periods presented are 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.

~~Below is a summary of impairment charges for the periods presented:~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

U.S. theatre properties

$
1,054

$
406

$
1,411

$
1,500

International theatre properties

3,972

—

8,189

823

Impairment of long-lived assets

$
5,026

$
406

$
9,600

$
2,323

~~11.~~14.

Fair Value Measurements

The Company determines fair value measurements in accordance with ~~FASB~~ ASC Topic ~~820:~~ ~~Fair Value Measurements~~ ~~(“ASC Topic 820”),~~820, which establishes a fair value hierarchy under which an asset or liability is categorized based on the lowest level of input significant to its fair value measurement. The levels of input defined by ASC Topic 820 are as follows:

Level 1 – quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date;

Level 2 – other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3 – unobservable and should be used to measure fair value to the extent that observable inputs are not available.

~~The Company did not have any assets or~~Below is a summary of liabilities measured at fair value on a recurring basis by the Company under FASB ASC Topic 820 as of ~~December~~March 31, ~~2016 or September 30, 2017.~~ 2020:

	Carrying		Fair Value
Description	Value		Level 1		Level 2		Level 3
Interest rate swap liabilities⁽¹⁾	$	38,460	$	—	$	38,460	$	—

(1)

See further discussion of interest rate swaps at Note 7.

Below is a ~~reconciliation~~summary of ~~the beginning and ending balance for~~ liabilities measured at fair value on a recurring basis ~~using significant unobservable inputs (Level 3) for~~by the ~~nine months ended September 30, 2016:~~

Company under FASB ASC Topic 820 as of December 31, 2019:

Liabilities ⁽¹⁾

2016

Beginning balance - January 1

$
373

Total loss included in accumulated other comprehensive loss

71

Settlements included in interest expense

(444
)
Ending balance - September 30

$
—

	Carrying		Fair Value
Description	Value		Level 1		Level 2		Level 3
Interest rate swap liabilities⁽¹⁾	$	15,995	$	—	$	15,995	$	—

(1)

~~The Company was previously party to an~~See further discussion of interest rate ~~swap agreement, which expired in April 2016.~~ swaps at Note 7.

The Company uses the market approach for fair value measurements on a nonrecurring basis in the impairment evaluations of its goodwill, intangible assets and long-lived assets (see Note 912 and Note ~~10)~~13). See additional explanation of fair value measurement techniques used for long-lived assets, goodwill and intangible assets in “Critical Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2019, filed February ~~23, 2017.~~21, 2020. There were no changes in valuation ~~techniques~~techniques. The Company elected to perform its goodwill impairment evaluation using both the market approach and ~~there~~the income approach for the three months ended March 31, 2020. There were no0 transfers in to or out of Level 1, Level 2 or Level 3 during the ~~nine~~three months ended ~~September 30, 2017.~~ March 31, 2020.

~~12.~~15.

Foreign Currency Translation

The accumulated other comprehensive loss account in stockholders’ equity of ~~$242,894~~$421,908 and ~~$247,013~~$340,112 as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively, primarily includes cumulative foreign currency ~~adjustments~~net losses of ~~$243,020~~$385,678 and ~~$247,047,~~$328,053, respectively, from translating the financial statements of the Company’s international ~~subsidiaries.~~subsidiaries and the cumulative changes in fair value of the Company’s interest rate swap agreements that are designated as hedges.

~~All~~As of March 31, 2020, all foreign countries where the Company has operations, other than Argentina, are non-highly inflationary, and the local currency is the same as the functional currency in all of the locations. Thus, any fluctuation in the currency results in a cumulative foreign currency translation adjustment recorded to accumulated other comprehensive loss.

~~CINEMARK HOLDINGS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~In thousands, except share and per share data~~

The Company deemed Argentina to be highly inflationary beginning July 1, 2018. A highly inflationary economy is defined as an economy with a cumulative inflation rate of approximately 100 percent or more over a three-year period. If a country’s economy is classified as highly inflationary, the financial statements of the foreign entity operating in that country must be remeasured to the functional currency of the reporting entity. ~~There~~The financial information of the Company’s Argentina subsidiaries has been ~~a steady devaluation of the Argentine peso relative to the~~remeasured in U.S. ~~dollar~~dollars in ~~recent years. The official cumulative inflation rate for Argentina over the last three years has not definitively reached 100 percent~~accordance with ASC Topic 830, Foreign Currency Matters, effective beginning July 1, 2018.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and ~~remeasurement is not required. The Company will continue to monitor the inflation on a quarterly basis to determine whether remeasurement is necessary.~~ per share data

Below is a summary of the impact of translating the ~~September 30, 2017~~March 31, 2020 and 2019 financial statements of the Company’s international subsidiaries:


					Other
					Comprehensive							Other Comprehensive Income (Loss) for
	Exchange Rate as of				Income (Loss) for The			Exchange Rate as of				Three Months Ended
Country	September 30, 2017		December 31, 2016		Nine Months Ended September 30, 2017			March 31, 2020		December 31, 2019		March 31, 2020			March 31, 2019
Brazil		3.17		3.26	$	6,700			5.20		4.02	$	(42,873	)	$	(2,334	)
Argentina		17.70		16.04		(5,918	)
Chile									857.94		736.86		(11,126	)		1,473
Colombia									4,064.81		3,277.14		(3,274	)		982
Peru		3.35		3.45		1,133			3.47		3.37		(1,450	)		431
Chile		640.60		679.09		3,136
All other						527							1,098			203
					$	5,578						$	(57,625	)	$	755

During the nine months ended September 30, 2017, the Company reclassified $1,551 of cumulative foreign currency translation adjustments, related to a Canadian subsidiary that was liquidated, from accumulated other comprehensive loss to foreign currency exchange gain on the condensed consolidated statement of income.

~~13.~~

(1)

Beginning July 1, 2018, Argentina was deemed highly inflationary. A loss of $294 and $394 for the three months ended March 31, 2020 and 2019, respectively, is reflected as foreign currency exchange gain (loss) on the Company’s condensed consolidated statement of income as a result of translating Argentina financial results to U.S. dollars.

16.	Supplemental Cash Flow Information

The following is provided as supplemental information to the condensed consolidated statements of cash flows:

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2017			2016			2020			2019
Cash paid for interest	$	58,334		$	68,552		$	8,774		$	9,104
Cash paid for income taxes, net of refunds received	$	81,271		$	66,757		$	2,110		$	3,414
Noncash investing and financing activities:
Change in accounts payable and accrued expenses for the acquisition of theatre properties and equipment ⁽¹⁾	$	(5,947	)	$	132		$	2,269		$	(14,660	)
Theatre properties acquired under capital lease	$	30,517		$	11,292
Investment in NCM – receipt of common units (see Note 6)	$	18,363		$	11,111
Interest expense - NCM (see Note 9)							$	(5,891	)	$	(4,782	)
Investment in NCM – receipt of common units (see Note 9)							$	3,620		$	1,552
Dividends accrued on unvested restricted stock unit awards	$	(423	)	$	(360	)	$	(256	)	$	(108	)

(1)	Additions to theatre properties and equipment included in accounts payable as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 were ~~$34,678~~$17,260 and ~~$40,625,~~$14,991, respectively.

~~14.~~17.

Segments

The Company manages its international market and its U.S. market as separate reportable operating segments, with the international segment consisting of operations in Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao and Paraguay. Each segment’s revenue is derived from admissions and concession sales and other ancillary revenues. The Company uses Adjusted EBITDA, as shown in the reconciliation table below, as the primary measure of segment profit and loss to evaluate performance and allocate its resources. The Company does not report total assets by segment because that information is not used to evaluate the performance of or allocate resources between segments.

2025

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

Below is a breakdown of selected financial information by reportable operating segment:

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2017			2016			2017			2016			2020			2019
Revenues
U.S.	$	514,376		$	572,916		$	1,650,514		$	1,677,365		$	429,302		$	557,798
International		200,122			199,476			602,116			551,212			116,173			159,907
Eliminations		(3,750	)		(3,818	)		(11,077	)		(10,730	)		(1,859	)		(2,982	)
Total revenues	$	710,748		$	768,574		$	2,241,553		$	2,217,847		$	543,616		$	714,723

Adjusted EBITDA
U.S.	$	108,854		$	137,540		$	402,902		$	409,018		$	56,072		$	125,759
International		44,818			47,351			133,329			128,915			10,139			26,495
Total Adjusted EBITDA	$	153,672		$	184,891		$	536,231		$	537,933		$	66,211		$	152,254

Capital expenditures
U.S.	$	65,612		$	75,839		$	221,604		$	175,218		$	25,673		$	52,339
International		14,318			22,984			41,126			55,128			8,470			5,230
Total capital expenditures	$	79,930		$	98,823		$	262,730		$	230,346		$	34,143		$	57,569

The following table sets forth a reconciliation of net income (loss) to Adjusted EBITDA:

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2017			2016			2017			2016			2020			2019
Net income	$	38,540		$	66,126		$	170,544		$	179,540
Net income (loss)													$	(59,422	)	$	33,193
Add (deduct):
Income taxes		24,630			40,926			98,475			106,002			(3,108	)		11,917
Interest expense ⁽¹⁾		26,317			26,659			79,208			81,980			24,666			25,141
Other income ⁽²⁾		(13,168	)		(14,540	)		(33,180	)		(32,510	)
Loss on debt amendments and refinancing		―			―			246			13,284
Other cash distributions from equity investees ⁽³⁾		2,402			1,391			17,321			9,660
Other (income) expense, net ⁽²⁾														169			(8,335	)
Cash distributions from DCIP ⁽³⁾														5,161			5,218
Cash distributions from other equity investees ⁽⁴⁾														11,445			9,124
Depreciation and amortization		58,052			54,187			174,545			155,874			65,256			64,462
Impairment of long-lived assets		5,026			406			9,600			2,323			16,619			5,584
Loss on sale of assets and other		8,576			6,940			9,464			10,985
Deferred lease expenses		(297	)		(162	)		(1,019	)		(809	)
Amortization of long-term prepaid rents		551			371			1,540			1,357
Loss on disposal of assets and other														1,905			3,799
Non-cash rent expense														(591	)		(819	)
Share based awards compensation expense		3,043			2,587			9,487			10,247			4,111			2,970
Adjusted EBITDA	$	153,672		$	184,891		$	536,231		$	537,933		$	66,211		$	152,254

(1)

Includes amortization of debt issue costs.

(2)

Includes interest income, foreign currency exchange gain ~~and~~(loss), equity in income of affiliates and interest expense - NCM and excludes distributions from NCM.

(3)

See discussion of cash distributions from DCIP, which were recorded as a reduction of the Company’s investment in DCIP, at Note 10. These distributions are reported entirely within the U.S. operating segment.

(4)

Includes cash distributions received from equity investees, other than those from DCIP noted above, that were recorded as a reduction of the respective investment balances (see Notes 69 and 7)10). These distributions are reported entirely within the U.S. operating segment.

2126

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

Financial Information About Geographic Areas

Below is a breakdown of selected financial information by geographic area:

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
Revenues	2017			2016			2017			2016			2020			2019
U.S.	$	514,376		$	572,916		$	1,650,514		$	1,677,365		$	429,302		$	557,798
Brazil		81,545			85,051			264,085			231,556			52,968			70,861
Other international countries		118,577			114,425			338,031			319,656			63,205			89,046
Eliminations		(3,750	)		(3,818	)		(11,077	)		(10,730	)		(1,859	)		(2,982	)
Total	$	710,748		$	768,574		$	2,241,553		$	2,217,847		$	543,616		$	714,723

					As of		As of
Theatre Properties and Equipment-net	September 30, 2017		December 31, 2016		March 31, 2020		December 31, 2019
U.S.	$	1,392,429	$	1,306,643	$	1,408,772	$	1,436,275
Brazil		194,171		197,896		86,474		118,367
Other international countries		205,006		199,997		163,079		180,605
Total	$	1,791,606	$	1,704,536	$	1,658,325	$	1,735,247

1518.

Related Party Transactions

The Company manages theatres for Laredo Theatre, Ltd. (“Laredo”). The Company is the sole general partner and owns 75% of the limited partnership interests of Laredo. Lone Star Theatres, Inc. owns the remaining 25% of the limited partnership interests in Laredo and is 100% owned by Mr. David Roberts, Lee Roy Mitchell’s son-in-law. Lee Roy Mitchell is the Company’s Chairman of the Board of Directors and directly and indirectly owns approximately 9%8% of the Company’s common stock. Under the agreement, management fees are paid by Laredo to the Company at a rate of 5% of annual theatre revenues up to $50,000 and 3% of annual theatre revenues in excess of $50,000. The Company recorded ~~$451~~$62 and ~~$410~~$146 of management fee revenues during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively. All such amounts are included in the Company’s condensed consolidated financial statements with the intercompany amounts eliminated in consolidation.

The Company has an Aircraft Time Sharing Agreement with Copper Beech Capital, LLC (“Copper Beech”) to use, on occasion, a private aircraft owned by Copper ~~Beech Capital, LLC.~~Beech. Copper Beech ~~Capital, LLC~~ is owned by Mr. Mitchell and his wife, Tandy Mitchell. The private aircraft is used by Mr. Mitchell and other executives who accompany Mr. Mitchell to business meetings for the Company. The Company reimburses Copper Beech ~~Capital, LLC~~ for the actual costs of fuel usage and the expenses of the pilots, landing fees, storage fees and similar expenses incurred during the trip. For the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, the aggregate amounts paid to Copper Beech ~~Capital, LLC~~ for the use of the aircraft was ~~$89~~$12 and ~~$94,~~$7, respectively.

The Company leases 14 theatres and ~~one~~1 parking facility from Syufy Enterprises, LP (“Syufy”) or affiliates of Syufy. Raymond Syufy is one of the Company’s directors and is an officer of the general partner of Syufy. Of these 15 leases, 14 have fixed minimum annual rent. The ~~one~~1 lease without minimum annual rent has rent based upon a specified percentage of gross sales as defined in the lease. For the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, the Company paid total rent of approximately ~~$18,844~~$4,065 and ~~$17,806,~~$6,590, respectively, to Syufy.

~~16.~~

~~Commitments and Contingencies~~

~~Joseph Amey, et al. v. Cinemark USA, Inc., Case No. 3:13cv05669, In~~The Company has a 50% voting interest in FE Concepts, a joint venture with AWSR, an entity owned by Lee Roy Mitchell and Tandy Mitchell. FE Concepts operates a family entertainment center that offers bowling, gaming, movies and other amenities that opened during December 2019. See Note 10 for further discussion. The Company has a theatre services agreement with FE Concepts under which the ~~United States District Court~~Company receives management fees for providing film booking and equipment monitoring services for the ~~Northern District of California, San Francisco Division.~~ The case presents putative class action claims for damages and attorney’s fees arising from employee wage and hour claims under California law for alleged meal period, rest break, reporting time pay, unpaid wages, pay upon termination, and wage statements violations. The claims are also asserted as a representative action under the California Private Attorney General Act (“PAGA”).facility. The Company ~~denies~~recorded $10 of management fees during the claims, denies that class certification is appropriate and denies that a PAGA representative action is appropriate, and is vigorously defending against the claims. The Company denies any violation of law and plans to vigorously defend against all claims. The Court recently determined that class certification is not appropriate and determined that a PAGA representative action is not appropriate. The plaintiff has appealed these rulings. The Company is unable to predict the outcome of this litigation or the range of potential loss.three months ended March 31, 2020.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

19.	Commitments and Contingencies

From time to time, the Company is involved in various legal proceedings arising from the ordinary course of its business operations, such as personal injury claims, employment matters, landlord-tenant disputes, patent claims and contractual disputes, some of which are covered by insurance. The Company believes its potential liability with respect to proceedings currently pending is not material, individually or in the aggregate, to the Company’s financial position, results of operations and cash flows.

Intertrust Technologies Corporation (“Intertrust”) v. Cinemark Holdings, Inc., Regal, AMC, et al. This case was filed against the Company on August 7, 2019 in the Eastern District of Texas – Marshall Division alleging patent infringement. The Company firmly maintains that the contentions of the Plaintiff are without merit and will vigorously defend itself against the lawsuit. Although the Company does not believe that it has infringed on any of Intertrust’s patents, it cannot predict the outcome of this litigation.

Flagship Theatres of Palm Desert, LLC d/b/a Cinemas Palme D’Or v. Century Theatres, Inc., and Cinemark USA, Inc.; Superior Court of the State of California, County of Los ~~Angeles.~~Angeles. Plaintiff in this case alleges that the Company violated California antitrust and unfair competition laws by engaging in “circuit dealing” with various motion picture distributors and ~~tortuously~~tortiously interfered with Plaintiff’s business relationships. Plaintiff seeks compensatory damages, trebling of those damages under California law, punitive damages, injunctive relief, attorneys’ fees, costs and interest. Plaintiff also alleges that the Company’s conduct ultimately resulted in closure of its theatre in June 2016. The Company denied the allegations. In 2008, the Company moved for summary judgment on Plaintiff’s claims, arguing primarily that clearances between the theatres at issue were lawful and that Plaintiff lacked proof sufficient to support certain technical elements of its antitrust claims. The trial court granted that motion and dismissed Plaintiff’s claims. Plaintiff appealed and, in 2011, the Court of Appeal reversed, holding, among other things, that Plaintiff’s claims were not about the illegality of clearances but were focused, instead, on “circuit dealing.” Having re-framed the claims in that manner, the Court of Appeal held that the trial court’s decision to limit discovery to the market where the theatres at issue operated was an error, as “circuit dealing” necessarily involves activities in different markets. Upon return to the trial court, the parties engaged in additional, broadened discovery related to Plaintiff’s “circuit dealing” claim. Thereafter, the Company moved again for summary judgment on all of Plaintiff’s claims. That new motion for summary judgment was pending when, on or about April 11, 2014, the trial court granted the Company’s motion for terminating sanctions and entered a judgment dismissing the case with prejudice. Plaintiff then appealed that second dismissal, seeking to have the judgment reversed and the case remanded to the trial court. The Court of Appeal issued a ruling on May 24, 2016, reversing the granting of terminating sanctions and instead imposed a lesser evidentiary and damages preclusion sanction. The case returned to the trial court on October 6, 2016. On May 10, 2018, after a five-week jury trial, the jury found no liability on one circuit dealing claim and awarded Plaintiff damages on the other claim, which are tripled for antitrust damage awards. Plaintiff would also be entitled to certain court costs and to seek at least some portion of its attorney’s fees. During 2018, the Company recorded a litigation reserve based on the jury award, court costs and attorney’s fees. The trial court denied a motion for a judgment notwithstanding the verdict and a motion for a new trial. The Company has ~~denied Plaintiff’s allegations and is vigorously defending these claims. The~~appealed the judgment. Although the Company ~~is unable to~~denies that it engaged in any form of circuit dealing, it cannot predict the outcome of ~~this litigation~~its pending motions or ~~the range of potential loss.~~future appeals.

Civil Investigative Demand. The Company received a Civil Investigative Demand (“CID”) from the Antitrust Division of the United States Department of Justice. The CID relates to an investigation under Sections 1 and 2 of the Sherman Act. The Company also received CIDs from the Antitrust Section of the Office of the Attorney General of the State of Ohio and later from other states regarding similar inquiries under state antitrust laws. The CIDs request the Company to answer interrogatories, and produce documents, or both, related to the investigation of matters including film clearances, potential coordination and/or communication with other major theatre circuits and related joint ventures. The Company intends to fully cooperate with all federal and state government agencies. Although the Company does not believe that it has violated any federal or state antitrust or competition laws, it cannot predict the ultimate scope, duration or outcome of these investigations.

20.	Subsequent Events

~~From time to time,~~On April 20, 2020, the Company ~~is involved~~issued $250,000 8.750% senior secured notes (the “8.750% Secured Notes”). The notes will mature on May 1, 2025; provided, however, that if (i) on September 13, 2022, the aggregate outstanding principal amount of the 5.125% Senior Notes that shall not have been purchased, repurchased, redeemed, defeased or otherwise acquired, retired, cancelled or discharged exceeds $50,000, the notes will mature on September 14, 2022 and (ii) on February 27, 2023, the aggregate outstanding principal amount of the 4.875% Senior Notes that shall not have been purchased, repurchased, redeemed, defeased or otherwise acquired, retired, cancelled or discharged exceeds $50,000, the notes will mature on February 28, 2023. Interest on the notes will be payable on May 1 and November 1 of each year, beginning on November 1, 2020.

The 8.750% Secured Notes will be fully and unconditionally guaranteed on a joint and several senior basis by certain of the Company’s subsidiaries that guarantee, assume or in ~~various~~any other legal proceedings arising from the ordinary course of its business operations, such as personal injury claims, employment matters, landlord-tenant disputes, patent claims and contractual disputes, some of which are covered by insurance. The Company believes its potential liabilitymanner become liable with respect to ~~proceedings currently pending is not material, individually~~any of the Company’s or its guarantors’ other debt. If the Company cannot make payments on the 8.750% Secured Notes when they are due, the Company’s

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In thousands, except share and per share data

guarantors must make them instead. Under certain circumstances, the guarantees may be released without action by, or the consent of, the holders of the 8.750% Secured Notes.

The 8.750% Secured Notes and the guarantees will be the Company’s and its guarantors’ senior obligations and they will:

•

rank effectively senior in right of payment to the Company’s and its guarantors’ existing and future debt that is not secured by the collateral as described within the indentures to the 8.750% Secured Notes (“Collateral”), including all obligations under the Credit Agreement, and unsecured obligations, including the existing senior notes, in each case to the extent of the value of the collateral;

•

rank effectively junior to the Company’s and its guarantors’ existing and future debt secured by assets that are not part of the Collateral to the extent of the value of the collateral securing such debt, including all obligations under the Credit Agreement;

•

otherwise rank equally in right of payment to the Company’s and its guarantors’ existing and future senior debt, including debt under the Credit Agreement and the existing senior notes;

•

rank senior in right of payment to the Company’s and its guarantors’ future subordinated debt; and

•

be structurally subordinated to all existing and future debt and other liabilities of the Company’s non-guarantor subsidiaries.

The indenture to the 8.750% Secured Notes contains covenants that limit, among other things, the ability of Cinemark USA, Inc. and certain of its subsidiaries to (1) make investments or other restricted payments, including paying dividends, making other distributions or repurchasing subordinated debt or equity, (2) incur additional indebtedness and issue preferred stock, (3) enter into transactions with affiliates, (4) enter new lines of business, (5) merge or consolidate with, or sell all or substantially all of its assets to, another person and (6) create liens. Upon a change of control, as defined in the indenture governing the 8.750% Secured Notes, Cinemark USA, Inc. would be required to make an offer to repurchase the 8.750% Secured Notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, through the date of repurchase. The indenture governing the 8.750% Secured Notes allows Cinemark USA, Inc. to incur additional indebtedness if it satisfies a coverage ratio specified in the indenture, after giving effect to the ~~Company’s financial position, results~~incurrence of ~~operations~~the additional indebtedness, and ~~cash flows.~~in certain other circumstances.

On April 20, 2020, in conjunction with the issuance of the 8.750% Secured Notes, the Company obtained a waiver of the maintenance covenant from the majority of revolving lenders under the Credit Agreement for the fiscal quarters ending September 30, 2020 and December 31, 2020.

Item 2. ~~Management’~~sManagement’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes and schedules included elsewhere in this report.

We are a leader in the motion picture exhibition industry, with theatres in the U.S., Brazil, Argentina, Chile, Colombia, Ecuador, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao and Paraguay. As of ~~September 30, 2017,~~March 31, 2020, we managed our business under two reportable operating segments – U.S. markets and international markets. See Note 1417 to our condensed consolidated financial statements.

We generate revenues primarily from filmed entertainment box office receipts and concession sales with additional revenues from screen advertising sales and other revenue streams, such as transactional fees, vendor marketing promotions, studio trailer placements, meeting rentals and electronic video games located in some of our theatres. ~~NCM provides our domestic theatres with various forms of in-theatre advertising.~~ We also offer alternative entertainment, such as live and pre-recorded sports programs, concert events, the Metropolitan Opera, in-theatre gaming and other special events in our theatres through ~~our joint venture,~~ AC JV, LLC. NCM provides our domestic theatres with various forms of in-theatre advertising. Our Flix Media ~~initiative has also allowed us to expand our~~subsidiaries provide screen advertising and alternative content ~~within~~for our international circuit and to other international exhibitors.

Films leading the box office during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 included Bad Boys for Life, 1917, Sonic the ~~carryover~~Hedgehog, Jumanji: The Next Level, Star Wars: Episode IX – The Rise of ~~Rogue One: A Star Wars Story~~ Skywalker, Birds of Prey, Dolittle, Little Women, The Invisible Man and~~Hidden Figures~~ ~~and new releases such as~~ ~~Beauty and the Beast, Wonder Woman, Guardians~~ The Call of the Galaxy Vol. 2, Spider Man: Homecoming, It, Despicable Me 3, Logan, The Fate of the Furious, Dunkirk, The LEGO Batman Movie, Get Out, The Boss Baby, Pirates of the Caribbean: Dead Men Tell No Tales, Kong: Skull Island ~~and other films.~~Wild. Films scheduled for release during the remainder of ~~2017~~2020 include ~~Jumanji: Welcome to the Jungle~~ Wonder Woman 1984, No Time To Die, Mulan, Black Widow, A Quiet Place: Part 2, Top Gun: Maverick, Tenet, and~~Coco~~ ~~and well-known franchise films such as~~ ~~Star Wars:~~ The ~~Last Jedi, Justice League, Pitch Perfect 3~~ ~~and~~ ~~Thor: Ragnarok~~ King’s Man, among other ~~films~~.films.

Film rental costs are variable in nature and fluctuate with our admissions revenues. Film rental costs as a percentage of revenues are generally higher for periods in which more blockbuster films are released. The Company also receives virtual print fees from studios for certain of its international locations, which are included as a contra-expense in film rentals and advertising costs. Advertising costs, which are expensed as incurred, are primarily related to campaigns for new and renovated theatres, loyalty and membership programs and brand advertising that vary depending on the timing of such campaigns.

Concession supplies expense is variable in nature and fluctuates with our concession ~~revenues.~~revenues and product mix. We negotiate prices for concession supplies directly with concession vendors and manufacturers to obtain volume rates.

Although salaries and wages include a fixed cost component (i.e. the minimum staffing costs to operate a theatre facility during non-peak periods), salaries and wages move in relation to revenues as theatre staffing is adjusted to respond to changes in attendance. In some international locations, staffing levels are also subject to local regulations.

Facility lease expense is primarily a fixed cost at the theatre level as most of our facility leases require a fixed monthly minimum rent payment. Certain leases are subject to percentage rent only, while others are subject to percentage rent in addition to their fixed monthly rent if a target annual performance level is achieved. Facility lease expense as a percentage of revenues is also affected by the number of theatres under operating leases, the number of theatres under capital and finance leases and the number of ~~fee-owned~~owned theatres.

Utilities and other costs include both fixed and variable costs and primarily consist of utilities, expenses for projection and sound equipment maintenance and monitoring, credit card fees, third party ticket sales commissions, property taxes, janitorial costs, repairs, maintenance and security services.

General and administrative expenses are primarily fixed in nature and consist of the costs to support the overall management of the Company, including salaries and wages, incentive compensation and benefit costs for our corporate office personnel, facility expenses for our corporate offices, consulting fees, legal fees, audit fees, supplies and other costs that are not specifically associated with the operations of our theatres.

Recent Developments

Impact of COVID-19

distancing, restrictions on freedom of movement, business closures, quarantines, and shelter-in-place and stay-at-home orders. As a result of these measures, we temporarily closed all of our theatres in the U.S. and Latin America effective March 18, 2020.

We believe we have sufficient cash to sustain our operations for the remainder of the year, even if our theatres remained closed for the remainder of the year. Nonetheless, the COVID-19 pandemic has had and may continue to have adverse effects on our business, results of operations, cash flows, financial condition, access to credit markets. In light of the COVID-19 pandemic, we have been working to preserve cash and ensure sufficient liquidity to endure the impacts of the global crisis, even if prolonged. Some of the actions taken by us include the following:

•

our directors and chief executive officer have elected to take no salary, and many of our executives have voluntarily reduced their salaries by 80% while our theatres remain closed;

•

halted all non-essential operating and capital expenditures, such as marketing promotions and initiatives, travel and entertainment, system enhancements and related consulting projects, recliner conversions, XD expansions and certain other theatre enhancements, which will significantly reduce utilities and other costs, general and administrative expenses and capital expenditures on a temporary basis;

•

suspended the quarterly dividend;

•

implemented a formal daily review and approval process by our chief financial officer for all outgoing procurement and payment requests;

•

laid off over 17,500 domestic hourly theatre employees, furloughed 50% of headquarter employees at 20% of salary (with full benefits) and reduced salaries of remaining employees by 50% and pursued similar actions in international markets to the extent permitted by local laws; which will significantly reduce salaries and wages expenses and general administrative expenses while theatres are closed; and

•

started working actively with landlords and major suppliers to modify the timing of certain contractual payments.

We continue to evaluate the impact of certain tax-related benefits available under the Cares Act, which, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer social security payments, NOL utilization and carryback periods, modifications to the net interest deduction limitations and a technical correction to the 2017 Tax Cuts and Jobs Act, which makes certain qualified improvement property eligible for bonus depreciation. Based upon a review of the Cares Act, we expect to:

•

receive an approximately $20 million cash tax refund in 2020 related to qualified improvement property expenditures from 2018 and 2019;

•

benefit from the ability to defer social security payroll tax matches that would otherwise be required in 2020;

•

apply any tax loss incurred in 2020 to prior year income for a refund when our 2020 tax return is filed.

We continue to review, and intend to seek, other available potential benefits under the Cares Act as well as any future legislation signed into law during 2020.

Issuance of 8.750% Senior Secured Notes

On April 20, 2020, we issued $250 million 8.750% senior secured notes (the “8.750% Secured Notes”). The notes will mature on May 1, 2025; provided, however, that if (i) on September 13, 2022, the aggregate outstanding principal amount of the 5.125% Senior Notes that shall not have been purchased, repurchased, redeemed, defeased or otherwise acquired, retired, cancelled or discharged exceeds $50 million, the notes will mature on September 14, 2022 and (ii) on February 27, 2023, the aggregate outstanding principal amount of the 4.875% Senior Notes that shall not have been purchased, repurchased, redeemed, defeased or otherwise acquired, retired, cancelled or discharged exceeds $50 million, the notes will mature on February 28, 2023. Interest on the notes will be payable on May 1 and November 1 of each year, beginning on November 1, 2020.

The 8.750% Secured Notes will be fully and unconditionally guaranteed on a joint and several senior basis by certain of our subsidiaries that guarantee, assume or in any other manner become liable with respect to any of our or our guarantors’ other debt. If we cannot make payments on the 8.750% Secured Notes when they are due, our guarantors must make them instead. Under certain circumstances, the guarantees may be released without action by, or the consent of, the holders of the 8.750% Secured Notes.

The 8.750% Secured Notes and the guarantees will be ours and our guarantors’ senior obligations and they will:

•

rank effectively senior in right of payment to our and our guarantors’ existing and future debt that is not secured by the collateral as described within the indentures to the 8.750% Secured Notes (“Collateral”), including all obligations under

the Credit Agreement, and unsecured obligations, including the existing senior notes, in each case to the extent of the value of the collateral;

•

rank effectively junior to our and our guarantors’ existing and future debt secured by assets that are not part of the Collateral to the extent of the value of the collateral securing such debt, including all obligations under the Credit Agreement;

•

otherwise rank equally in right of payment to our and our guarantors’ existing and future senior debt, including debt under the Credit Agreement and the existing senior notes;

•

rank senior in right of payment to our and our guarantors’ future subordinated debt; and

•

be structurally subordinated to all existing and future debt and other liabilities of our non-guarantor subsidiaries.

The indenture to the 8.750% Secured Notes contains covenants that limit, among other things, the ability of Cinemark USA, Inc. and certain of its subsidiaries to (1) make investments or other restricted payments, including paying dividends, making other distributions or repurchasing subordinated debt or equity, (2) incur additional indebtedness and issue preferred stock, (3) enter into transactions with affiliates, (4) enter new lines of business, (5) merge or consolidate with, or sell all or substantially all of its assets to, another person and (6) create liens. Upon a change of control, as defined in the indenture governing the 8.750% Secured Notes, Cinemark USA, Inc. would be required to make an offer to repurchase the 8.750% Secured Notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, through the date of repurchase. The indenture governing the 8.750% Secured Notes allows Cinemark USA, Inc. to incur additional indebtedness if it satisfies a coverage ratio specified in the indenture, after giving effect to the incurrence of the additional indebtedness, and in certain other circumstances.

On April 20, 2020, in conjunction with the issuance of the 8.750% Secured Notes, we obtained a waiver of the maintenance covenant from the majority of revolving lenders under the Credit Agreement for the fiscal quarters ending September 30, 2020 and December 31, 2020.

Results of Operations

The following table sets forth, for the periods indicated, certain operating data and the percentage of revenues represented by certain items reflected in our condensed consolidated statements of income.

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2017			2016			2017			2016			2020			2019
Operating data (in millions):
Revenues
Admissions	$	425.1		$	472.9		$	1,351.5		$	1,364.8		$	292.5		$	395.5
Concession		247.1			261.4			777.6			752.8			190.4			251.3
Other		38.6			34.3			112.5			100.3			60.7			67.9
Total revenues	$	710.8		$	768.6		$	2,241.6		$	2,217.9		$	543.6		$	714.7
Cost of operations
Film rentals and advertising		226.2			249.8			725.6			733.1			156.6			210.1
Concession supplies		40.2			41.9			124.1			117.0			34.8			43.1
Salaries and wages		87.3			84.4			261.3			243.8			87.6			96.1
Facility lease expense		82.0			82.8			248.6			241.9			82.2			85.6
Utilities and other		92.4			95.0			271.8			265.5			100.5			110.6
General and administrative expenses		36.9			35.3			113.0			109.2			41.0			38.0
Depreciation and amortization		58.1			54.2			174.5			155.9			65.3			64.5
Impairment of long-lived assets		5.0			0.4			9.6			2.3			16.6			5.6
Loss on sale of assets and other		8.6			7.0			9.5			11.0
Loss on disposal of assets and other														1.9			3.8
Total cost of operations		636.7			650.8			1,938.0			1,879.7			586.5			657.4
Operating income	$	74.1		$	117.8		$	303.6		$	338.2
Operating income (loss)													$	(42.9	)	$	57.3

Operating data as a percentage of total revenues:
Revenues
Admissions		59.8	%		61.5	%		60.3	%		61.5	%		53.8	%		55.3	%
Concession		34.8	%		34.0	%		34.7	%		33.9	%		35.0	%		35.2	%
Other		5.4	%		4.5	%		5.0	%		4.6	%		11.2	%		9.5	%
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of operations ⁽¹⁾
Film rentals and advertising		53.2	%		52.8	%		53.7	%		53.7	%		53.5	%		53.1	%
Concession supplies		16.3	%		16.0	%		16.0	%		15.5	%		18.3	%		17.2	%
Salaries and wages		12.3	%		11.0	%		11.7	%		11.0	%		16.1	%		13.4	%
Facility lease expense		11.5	%		10.8	%		11.1	%		10.9	%		15.1	%		12.0	%
Utilities and other		13.0	%		12.4	%		12.1	%		12.0	%		18.5	%		15.5	%
General and administrative expenses		5.2	%		4.6	%		5.0	%		4.9	%		7.5	%		5.3	%
Depreciation and amortization		8.2	%		7.1	%		7.8	%		7.0	%		12.0	%		9.0	%
Impairment of long-lived assets		0.7	%		0.1	%		0.4	%		0.1	%		3.1	%		0.8	%
Loss on sale of assets and other		1.2	%		0.9	%		0.4	%		0.5	%
Loss on disposal of assets and other														0.3	%		0.5	%
Total cost of operations		89.6	%		84.7	%		86.5	%		84.8	%		107.9	%		92.0	%
Operating income		10.4	%		15.3	%		13.5	%		15.2	%
Operating income (loss)														(7.9	)%		8.0	%
Average screen count (month end average)		5,939			5,880			5,914			5,846			6,139			6,044
Average operating screen count (month end average)		5,749			5,785			5,764			5,771
Revenues per average screen (dollars)	$	119,675		$	130,710		$	379,025		$	379,379
Total revenues per average screen (dollars)													$	88,551		$	118,253

(1)	All costs are expressed as a percentage of total revenues, except film rentals and advertising, which are expressed as a percentage of admissions revenues and concession supplies, which are expressed as a percentage of concession revenues.

Three months ended ~~September 30, 2017~~March 31, 2020 versus ~~September 30, 2016~~March 31, 2019

Revenues. All of our domestic theatres were temporarily closed effective March 17, 2020 and all of our international theatres were temporarily closed effective March 18, 2020 as a result of the COVID-19 pandemic. See further discussion at Recent Developments and Note 2 of our condensed consolidated financial statements. Total revenues decreased ~~$57.8~~$171.1 million to ~~$710.8~~$543.6 million for the three months ended ~~September 30, 2017~~March 31, 2020 (“~~third~~first quarter of ~~2017”~~2020”) from ~~$768.6~~$714.7 million for the three months ended ~~September 30, 2016~~March 31, 2019 (“~~third~~first quarter of ~~2016”~~2019”)~~, representing a 7.5% decrease.~~. The table below, presented by reportable operating segment, summarizes our revenue performance and certain key performance indicators for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016.~~2019.

	U.S. Operating Segment							International Operating Segment												Consolidated							U.S. Operating Segment							International Operating Segment												Consolidated
															Constant Currency ⁽³⁾																										Constant Currency ⁽³⁾
	2017		2016		% Change			2017		2016		% Change			2017		% Change			2017		2016		% Change			2020		2019		% Change			2020		2019		% Change			2020		% Change			2020		2019		% Change
Admissions revenues ⁽¹⁾	$	312.3	$	354.9		(12.0	)%	$	112.8	$	118.0		(4.4	)%	$	115.4		(2.2	)%	$	425.1	$	472.9		(10.1	)%	$	232.3	$	308.8		(24.8	)%	$	60.2	$	86.7		(30.6	)%	$	71.1		(18.0	)%	$	292.5	$	395.5		(26.0	)%
Concession revenues ⁽¹⁾	$	181.5	$	197.5		(8.1	)%	$	65.6	$	63.9		2.7	%	$	67.0		4.9	%	$	247.1	$	261.4		(5.5	)%	$	152.8	$	199.4		(23.4	)%	$	37.6	$	51.9		(27.6	)%	$	43.7		(15.8	)%	$	190.4	$	251.3		(24.2	)%
Other revenues ⁽¹⁾⁽²⁾	$	16.9	$	16.7		1.2	%	$	21.7	$	17.6		23.3	%	$	22.2		26.1	%	$	38.6	$	34.3		12.5	%	$	42.3	$	46.6		(9.2	)%	$	18.4	$	21.3		(13.6	)%	$	22.6		6.1	%	$	60.7	$	67.9		(10.6	)%
Total revenues ⁽¹⁾⁽²⁾	$	510.7	$	569.1		(10.3	)%	$	200.1	$	199.5		0.3	%	$	204.6		2.6	%	$	710.8	$	768.6		(7.5	)%	$	427.4	$	554.8		(23.0	)%	$	116.2	$	159.9		(27.3	)%	$	137.4		(14.1	)%	$	543.6	$	714.7		(23.9	)%
Attendance ⁽¹⁾		40.6		48.0		(15.4	)%		26.7		28.2		(5.3	)%							67.3		76.2		(11.7	)%		27.9		38.7		(27.9	)%		17.9		23.6		(24.2	)%							45.8		62.3		(26.5	)%
Average ticket price ⁽¹⁾	$	7.69	$	7.39		4.1	%	$	4.22	$	4.18		1.0	%	$	4.32		3.3	%	$	6.32	$	6.21		1.8	%	$	8.33	$	7.98		4.4	%	$	3.36	$	3.67		(8.4	)%	$	3.97		8.2	%	$	6.39	$	6.35		0.6	%
Concession revenues per patron ⁽¹⁾	$	4.47	$	4.11		8.8	%	$	2.46	$	2.27		8.4	%	$	2.51		10.6	%	$	3.67	$	3.43		7.0	%	$	5.48	$	5.15		6.4	%	$	2.10	$	2.20		(4.5	)%	$	2.44		10.9	%	$	4.16	$	4.03		3.2	%

(1)	Revenues and attendance amounts in millions. Average ticket price is calculated as admissions revenues divided by attendance. Concession revenues per patron is calculated as concession revenues divided by attendance.

(2)	U.S. operating segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 1417 to our condensed consolidated financial statements.

(3)

Constant currency revenue amounts, which are non-GAAP measurements, were calculated using the average exchange rate for the corresponding month for ~~2016.~~2019. 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 in accordance with U.S. GAAP. Significant changes in foreign currency 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 that excludes the impact of foreign currency fluctuations.

~~U.S.~~Admissions revenues decreased $42.6 million primarily due to a 15.4% decrease in attendance, partially offset by a 4.1% increase in average ticket price. The decrease in concession revenues of $16.0 million was primarily due to the 15.4% decrease in attendance, partially offset by an 8.8% increase in concession revenues per patron. The decrease in attendance was due to a weaker slate of films in the third quarter of 2017 compared to the third quarter of 2016, partially offset by the favorable impact of luxury lounger conversions and new theatres. The increase in average ticket price was primarily due to price increases. The increase in concession revenues per patron was primarily due to incremental sales, price increases and new theatres.

•

U.S.Admissions revenues decreased $76.5million primarily due to a 27.9% decrease in attendance, partially offset by a 4.4% increase in average ticket price. The increase in average ticket price was primarily due to price increases, partially offset by the impact of the deferral of admissions revenues for loyalty points issued. Concession revenues decreased $46.6 million primarily due to the 27.9% decrease in attendance, partially offset by a 6.4% increase in concession revenues per patron. Concession revenues per patron grew primarily due to incremental sales of traditional concession products, continued expansion of concession offerings and price increases. Attendance declined primarily due to the temporary closure of all of our U.S. theatres on March 17, 2020. Other revenues decreased $4.3 million as a result of the temporary closure of theatres.

~~International.~~Admissions revenues decreased $5.2 million as reported primarily due to a 5.3% decrease in attendance, partially offset by a 1.0% increase in average ticket price. Admissions revenues decreased $2.6 million in constant currency, primarily due to the 5.3% decrease in attendance, partially offset by a 3.3% increase in constant currency average ticket price. Concession revenues increased $1.7 million as reported primarily due to an 8.4% increase in concession revenues per patron, partially offset by the 5.3% decrease in attendance. Concession revenues increased $3.1 million in constant currency, primarily due to a 10.6% increase in constant currency concession revenues per patron, partially offset by the 5.3% decrease in attendance. The decrease in attendance was driven by a weaker slate of films during the third quarter of 2017 compared to the third quarter of 2016, partially offset by the impact of new theatres. Average ticket price and concession revenues per patron increased primarily due to price increases, which were predominantly driven by local inflation. Other revenues increased primarily due to incremental screen advertising revenues generated by an expansion of our Flix Media services to affiliates in various countries and increased promotional income.

•

International.Admissions revenues decreased $26.5 million as reported ($15.6 million in constant currency). Average ticket price decreased 8.4% as reported (increased 8.2% in constant currency). Concession revenues decreased $14.3 million as reported ($8.2 million in constant currency). Concession revenues per patron decreased by 4.5% as reported (increased 10.9% in constant currency). Average ticket price and concession revenues per patron decreased, as reported, primarily due to the impact of changes in foreign currency exchange rates in certain countries in which we operate, partially offset by price increases. Attendance declined primarily due to the temporary closure of all of our international theatres on March 18, 2020.

Cost of Operations. The table below summarizes our theatre operating costs (in millions) by reportable operating segment for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016.~~2019.

	U.S. Operating Segment				International Operating Segment						Consolidated				U.S. Operating Segment				International Operating Segment						Consolidated
	2017		2016		2017		2016		Constant Currency 2017 ⁽¹⁾		2017		2016		2020		2019		2020		2019		Constant Currency ⁽¹⁾ 2020		2020		2019
Film rentals and advertising	$	171.5	$	193.6	$	54.7	$	56.2	$	56.2	$	226.2	$	249.8	$	128.0	$	169.2	$	28.6	$	40.9	$	33.9	$	156.6	$	210.1
Concession supplies		26.2		28.2		14.0		13.7		14.2		40.2		41.9	$	25.6	$	32.0	$	9.2	$	11.1	$	10.9	$	34.8	$	43.1
Salaries and wages		64.6		63.2		22.7		21.2		23.5		87.3		84.4	$	71.2	$	76.8	$	16.4	$	19.3	$	19.6	$	87.6	$	96.1
Facility lease expense		59.8		60.5		22.2		22.3		22.4		82.0		82.8	$	65.4	$	64.9	$	16.8	$	20.7	$	19.3	$	82.2	$	85.6
Utilities and other		64.0		66.9		28.4		28.1		29.0		92.4		95.0	$	75.0	$	79.8	$	25.5	$	30.8	$	30.2	$	100.5	$	110.6

(1)

Constant currency expense amounts, which are non-GAAP measurements were calculated using the average exchange rate for the corresponding month for ~~2016.~~2019. 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 in accordance with U.S. GAAP. Significant changes in foreign currency 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 that excludes the impact of foreign currency fluctuations.

•

U.S. Film rentals and advertising costs were ~~$171.5~~$128.0 million, or ~~54.9%~~55.1% of admissions revenues, for the ~~third~~first quarter of ~~2017~~2020 compared to ~~$193.6~~$169.2 million, or ~~54.6%~~54.8% of admissions revenues, for the ~~third~~first quarter of ~~2016.~~2019. Concession supplies expense was $25.6 million, or 16.8% of concession revenues, for the first quarter of 2020 compared to $32.0 million, or 16.0% of concession revenues, for the first quarter of 2019. The increase in the ~~film rentals and advertising~~concession supplies rate was primarily due to expanded food and beverage offerings and the impact of disposing perishable food as a ~~higher box office concentration~~result of top performing films during the third quarter of 2017. Concession supplies expense was $26.2 million, or 14.4% of concession revenues, for the third quarter of 2017 compared to $28.2 million, or 14.3% of concession revenues, for the third quarter of 2016.temporarily closing our theatres.

Salaries and wages ~~increased~~decreased to ~~$64.6~~$71.2 million for the ~~third~~first quarter of ~~2017~~2020 from ~~$63.2~~$76.8 million for the ~~third~~first quarter of ~~2016~~2019 primarily due to ~~staffing at new and recently remodeled~~the temporary closure of all of our U.S. theatres ~~increases in minimum wages and staffing for food and beverage initiatives.~~on March 17, 2020. Facility lease expense ~~decreased~~increased to ~~$59.8~~$65.4 million for the ~~third~~first quarter of ~~2017~~2020 from ~~$60.5~~$64.9 million for the ~~third~~first quarter of ~~2016~~2019 primarily due to ~~decreased percentage rent due to the decline in revenues.~~new theatres. Utilities and other costs decreased to ~~$64.0~~$75.0 million for the ~~third~~first quarter of ~~2017~~2020 from ~~$66.9~~$79.8 million for the ~~third~~first quarter of ~~2016 primarily due to decreased equipment lease expenses for 3-D presentations.~~

~~International.~~ Film rentals and advertising costs were $54.7 million ($56.2 million in constant currency), or 48.5% of admissions revenues, for the third quarter of 2017 compared to $56.2 million, or 47.6% of admissions revenues, for the third quarter of 2016. The increase in the film rental and advertising rate was primarily2019 due to the ~~mix~~temporary closure of ~~film product during the~~all of our U.S. theatres on March 17, 2020 which resulted in lower revenues and lower credit card fees and third quarter of 2017 compared to the third quarter of 2016 and increased advertising costs during the third quarter of 2017. Concession supplies expense was $14.0 million ($14.2 million in constant currency), or 21.3% of concession revenues, for the third quarter of 2017 compared to $13.7 million, or 21.4% of concession revenues, for the third quarter of 2016.party ticket sales commissions.

•

International. Film rentals and advertising costs were $28.6 million ($33.9 million in constant currency), or 47.5% of admissions revenues, for the first quarter of 2020 compared to $40.9 million, or 47.2% of admissions revenues, for the first quarter of 2019. Concession supplies expense was $9.2 million ($10.9 million in constant currency), or 24.5% of concession revenues, for the first quarter of 2020 compared to $11.1 million, or 21.4% of concession revenues, for the first quarter of 2019. The increase in the concession supplies rate was primarily due to expanded food and beverage offerings and the impact of disposing perishable food as a result of temporarily closing our theatres.

Salaries and wages ~~increased~~decreased to ~~$22.7~~$16.4 million ~~($23.5~~(increased to $19.6 million in constant currency) for the ~~third~~first quarter of ~~2017~~2020 compared to ~~$21.2~~$19.3 million for the ~~third~~first quarter of ~~2016.~~2019. The ~~as reported~~ increase in constant currency was due to new theatres, ~~and growth in wages as a result~~partially offset by decreased attendance due to the temporary closure of ~~inflation.~~all of our international theatres on March 18, 2020. Facility lease expense decreased to ~~$22.2~~$16.8 million ~~(increased to $22.4~~($19.3 million in constant currency) for the ~~third~~first quarter of ~~2017~~2020 compared to ~~$22.3~~$20.7 million for the ~~third~~first quarter of ~~2016.~~2019. The ~~as reported~~ decrease was due to ~~decreased~~lower percentage rent due to the ~~decline in revenues.~~temporary closure of all of our international theatres on March 18, 2020. Utilities and other costs ~~increased~~decreased to ~~$28.4~~$25.5 million ($~~29.0~~30.2 million in constant currency) for the ~~third~~first quarter of ~~2017~~2020 compared to ~~$28.1~~$30.8 million for the ~~third~~first quarter of ~~2016. The as reported increase was~~2019 due to ~~increases~~the temporary closure of all of our international theatres on March 18, 2020 which resulted in ~~utility~~lower revenues and lower credit card fees and third party ticket sales commissions, as well as lower 3D glasses expenses, ~~and the impact of new theatres.~~ partially offset by an increase in utilities expense.

General and Administrative Expenses. General and administrative expenses increased to ~~$36.9~~$41.0 million for the ~~third~~first quarter of ~~2017~~2020 from ~~$35.3~~$38.0 million for the ~~third~~first quarter of ~~2016.~~2019. The increase was primarily due to inflation, increases in salaries and incentive compensation and increased ~~salaries, professional fees and share based award compensation expense.~~cloud-based software costs, which were 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 increased to ~~$58.1~~$65.3 million during the ~~third~~first quarter of ~~2017~~2020 compared to ~~$54.2~~$64.5 million during the ~~third~~first quarter of ~~2016.~~2019. The increase was primarily due to ~~theatre remodels and~~ new theatres.

Impairment of Long-Lived Assets. We recorded asset impairment charges on assets held and used of ~~$5.0~~ $16.6million during the ~~third~~first quarter of ~~2017~~2020 compared to ~~$0.4~~$5.6 million during the ~~third~~first quarter of ~~2016.~~2019. 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. The long-lived asset impairment charges recorded during the first quarter of 2020 were also impacted by the temporary closure of our theatres and the associated assumptions related to estimated future cash flows. Impairment charges for the ~~third~~first quarter of ~~2017~~2020 impacted ~~nine~~eight countries and impairment charges for the first quarter of ~~our twenty-six reporting units.~~2019 impacted two countries. See Note 1013 to our condensed consolidated financial statements.

Loss on ~~Sale~~Disposal of Assets and Other. We recorded a loss on ~~sale~~disposal of assets and other of ~~$8.6~~$1.9 million during the ~~third~~first quarter of ~~2017~~2020 compared to ~~$7.0~~$3.8 million during the ~~third~~first quarter of ~~2016.~~2019. Activity for the ~~third~~first quarter of ~~2017~~2020 and ~~the third quarter of 2016~~2019 was primarily due to the retirement of assets related to theatre remodels.

Interest Expense. Interest costs incurred, including amortization of debt issue costs, were ~~$26.3~~$25.0 million during the ~~third~~first quarter of ~~2017~~2020 compared to ~~$26.7~~$25.1 million during the ~~third~~first quarter of 2016. The decrease was due to amendments to our senior secured credit facility completed during June and December of 2016 and June of 2017 which, in the aggregate, reduced the rate at which our term loan accrues interest by 100 basis points. 2019.

Distributions from NCM. We recorded ~~a distribution~~distributions from NCM of ~~$2.1~~$5.2 million during the ~~third~~first quarter of ~~2017~~2020 compared to ~~$1.4~~$4.5 million recorded during the ~~third~~first quarter of ~~2016,~~2019, which were in excess of the carrying value of our Tranche 1 investment. See Note 69 to our condensed consolidated financial statements.

Interest expense – NCM. We recorded non-cash interest expense of $5.9 million for the first quarter of 2020 compared to $4.8 million recorded during the first quarter of 2019, related to the significant financing component associated with certain of our agreements with NCM. See Note 9 to our condensed consolidated financial statements for further discussion.

Equity in Income of Affiliates. We recorded equity in income of affiliates of ~~$10.9~~$8.5 million during the ~~third~~first quarter of ~~2017~~2020 compared to ~~$12.4~~$10.4 million during the ~~third~~first quarter of ~~2016.~~2019. See Notes 69 and 710 to our condensed consolidated financial statements for information about our equity investments.

Income Taxes. ~~Income~~An income tax ~~expense~~benefit of ~~$24.6~~$3.1 million was recorded for the ~~third~~first quarter of ~~2017~~2020 compared to ~~$40.9~~income tax expense of $11.9 million ~~recorded~~ for the ~~third~~first quarter of ~~2016.~~2019. The effective tax rate was approximately ~~39.0%~~4.97% for the ~~third~~first quarter of ~~2017~~2020 compared to

~~38.2%~~ 26.42% for the ~~third~~first quarter of ~~2016.~~2019. The income tax provision for the three months ended March 31, 2020 was unfavorably impacted by $16.1 million of net discrete tax charges, including a $5.2 million charge related to a valuation allowance recorded against certain foreign net deferred tax assets in Colombia and Central America and $10.7 million related to the remeasurement of deferred tax balances due to a projected net operating loss carryback. 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.

~~Nine months ended September 30, 2017 versus September 30, 2016~~

~~Revenues.~~ Total revenues increased $23.7 million to $2,241.6 million for the nine months ended September 30, 2017 (“the 2017 period”) from $2,217.9 million for the nine months ended September 30, 2016 (“the 2016 period”), representing a 1.1% increase. The table below, presented by reportable operating segment, summarizes our revenue performance and certain key performance indicators or the nine months ended September 30, 2017 and 2016.

U.S. Operating Segment

International Operating Segment

Consolidated

Constant
Currency ⁽³⁾

2017

2016

%
Change

2017

2016

%
Change

2017

%
Change

2017

2016

%
Change

Admissions revenues ⁽¹⁾

$
1,003.5

$
1,037.7

(3.3
)%

$
348.0

$
327.1

6.4
%

$
336.4

2.8
%

$
1,351.5

$
1,364.8

(1.0
)%
Concession revenues ⁽¹⁾

$
582.2

$
575.3

1.2
%

$
195.4

$
177.5

10.1
%

$
190.0

7.0
%

$
777.6

$
752.8

3.3
%
Other revenues ⁽¹⁾⁽²⁾

$
53.8

$
53.6

0.4
%

$
58.7

$
46.7

25.7
%

$
57.2

22.5
%

$
112.5

$
100.3

12.2
%
Total revenues ⁽¹⁾⁽²⁾

$
1,639.5

$
1,666.6

(1.6
)%

$
602.1

$
551.3

9.2
%

$
583.6

5.9
%

$
2,241.6

$
2,217.9

1.1
%
Attendance ⁽¹⁾

130.1

138.0

(5.7
)%

80.9

83.7

(3.3
)%

211.0

221.7

(4.8
)%
Average ticket price ⁽¹⁾

$
7.71

$
7.52

2.5
%

$
4.30

$
3.91

10.0
%

$
4.16

6.4
%

$
6.41

$
6.16

4.1
%
Concession revenues per patron ⁽¹⁾

$
4.48

$
4.17

7.4
%

$
2.42

$
2.12

14.2
%

$
2.35

10.8
%

$
3.69

$
3.40

8.5
%

~~(1)~~

Revenues and attendance amounts in millions. Average ticket price is calculated as admissions revenues divided by attendance. Concession revenues per patron is calculated as concession revenues divided by attendance.

~~(2)~~

~~U.S. operating segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 14 to our condensed consolidated financial statements.~~

~~(3)~~

Constant currency revenue amounts, which are non-GAAP measurements, were calculated using the average exchange rate for the corresponding month for 2016. 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 in accordance with U.S. GAAP. 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 that excludes the impact of foreign currency fluctuations.

~~U.S.~~Admissions revenues decreased $34.2 million primarily due to a 5.7% decrease in attendance, partially offset by a 2.5% increase in average ticket price. Concession revenues increased $6.9 million primarily due to a 7.4% increase in concession revenues per patron, partially offset by the 5.7% decrease in attendance. The decrease in attendance was due to a weaker slate of films in the 2017 period compared to the 2016 period, partially offset by the favorable impact of luxury lounger conversions and new theatres. The increase in average ticket price was primarily due to price increases. The increase in concession revenues per patron was primarily due to incremental sales, price increases and new theatres.

~~International.~~Admissions revenues increased $20.9 million as reported primarily due to a 10.0% increase in average ticket price, partially offset by a 3.3% decrease in attendance. Admissions revenues increased $9.3 million in constant currency, primarily due to a 6.4% increase in constant currency average ticket price, partially offset by the 3.3% decrease in attendance. Concession revenues increased $17.9 million as reported primarily due to a 14.2% increase in concession revenues per patron, partially offset by the 3.3% decrease in attendance. Concession revenues increased $12.5 million in constant currency, primarily due to a 10.8% increase in constant currency concession revenues per patron, partially offset by the 3.3% decrease in attendance. The decrease in attendance was driven by a weaker slate of films during the 2017 period compared to the 2016 period, partially offset by the impact of new theatres. Average ticket price and concession revenues per patron increased primarily due to price increases, which were predominantly driven by local inflation. Other revenues increased primarily due to incremental screen advertising revenues generated by an expansion of our Flix Media services to affiliates in various countries and increased promotional income.

~~Cost of Operations.~~ ~~The table below summarizes our theatre operating costs (in millions) by reportable operating segment for the nine months ended September 30, 2017 and 2016.~~

U.S. Operating Segment

International Operating Segment

Consolidated

2017

2016

2017

2016

Constant
Currency
2017 ⁽¹⁾

2017

2016

Film rentals and advertising

$
558.3

$
578.2

$
167.3

$
154.9

$
162.2

$
725.6

$
733.1

Concession supplies

82.1

79.9

42.0

37.1

40.8

124.1

117.0

Salaries and wages

194.5

183.1

66.8

60.7

65.9

261.3

243.8

Facility lease expense

181.1

179.7

67.5

62.2

64.9

248.6

241.9

Utilities and other

185.1

188.0

86.7

77.5

84.4

271.8

265.5

~~(1)~~

Constant currency expense amounts, which are non-GAAP measurements were calculated using the average exchange rate for the corresponding month for 2016. 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 in accordance with U.S. GAAP. 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 that excludes the impact of foreign currency fluctuations.

~~U.S.~~ Film rentals and advertising costs were $558.3 million, or 55.6% of admissions revenues for the 2017 period compared to $578.2 million, or 55.7% of admissions revenues for the 2016 period. The decrease in the film rentals and advertising rate was primarily due to a higher concentration of blockbuster films during the 2016 period. Concession supplies expense was $82.1 million, or 14.1% of concession revenues, for the 2017 period compared to $79.9 million, or 13.9% of concession revenues, for the 2016 period. The increase in the concession supplies rate was primarily due to the impact of our expanded concession offerings.

Salaries and wages increased to $194.5 million for the 2017 period from $183.1 million for the 2016 period primarily due to staffing at new and recently remodeled theatres, increases in minimum wages and staffing for food and beverage initiatives. Facility lease expense increased to $181.1 million for the 2017 period from $179.7 million for the 2016 period due to the impact of new theatres. Utilities and other costs decreased to $185.1 million for the 2017 period from $188.0 million for the 2016 period primarily due to decreases in equipment lease expenses for 3-D presentations, partially offset by increased utilities, repairs and maintenance, and janitorial services expenses.

~~International.~~ Film rentals and advertising costs were $167.3 million ($162.2 million in constant currency), or 48.1% of admissions revenues, for the 2017 period compared to $154.9 million, or 47.4% of admissions revenues, for the 2016 period. The increase in the film rentals and advertising rate was primarily due to higher advertising costs during the 2017 period. Concession supplies expense was $42.0 million ($40.8 million in constant currency), or 21.5% of concession revenues, for the 2017 period compared to $37.1 million, or 20.9% of concession revenues, for the 2016 period. The increase in the concession supplies rate was primarily due to the mix of concession products sold.

Salaries and wages increased to $66.8 million ($65.9 million in constant currency) for the 2017 period compared to $60.7 million for the 2016 period. The as reported increase was due to new theatres, increased local currency wage rates, limited flexibility in scheduling staff caused by shifting government regulations and the impact of changes in foreign currency exchange rates in certain countries in which we operate. Facility lease expense increased to $67.5 million ($64.9 million in constant currency) for the 2017 period compared to $62.2 million for the 2016 period. The as reported increase was due to the impact of changes in foreign currency exchange rates in certain countries in which we operate and new theatres. Utilities and other costs increased to $86.7 million ($84.4 million in constant currency) for the 2017 period compared to $77.5 million for the 2016 period. The as reported increase was due to the impact of changes in foreign currency exchange rates in certain countries in which we operate, increases in repairs and maintenance expenses and utility expenses and the impact of new theatres.

~~General and Administrative Expenses.~~ General and administrative expenses increased to $113.0 million for the 2017 period from $109.2 million for the 2016 period. The increase was primarily due to increased salaries and wages, professional fees and the impact of changes in foreign currency exchange rates in certain countries in which we operate, partially offset by a decrease in share based award compensation expense.

~~Depreciation and Amortization.~~ ~~Depreciation and amortization expense was $174.5 million for the 2017 period compared to $155.9 million for the 2016 period. The increase was primarily due to theatre remodels and new theatres.~~

~~Impairment of Long-Lived Assets.~~ We recorded asset impairment charges on assets held and used of $9.6 million for the 2017 period compared to $2.3 million for the 2016 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 2017 period impacted thirteen of our twenty-six reporting units. See Note 10 to our condensed consolidated financial statements.

~~Loss on Sale of Assets and Other.~~ We recorded a loss on sale of assets and other of $9.5 million during the 2017 period compared to $11.0 million during the 2016 period. The loss recorded during the 2017 period included the retirement of assets due to theatre remodels and closures, partially offset by gains related to the sale of excess land parcels and a gain on a landlord buyout of a theatre lease. The loss recorded during the 2016 period was primarily related to the retirement of assets due to theatre remodels and closures, partially offset by a gain on the sale of our investment in RealD stock.

~~Interest Expense.~~ Interest costs incurred, including amortization of debt issue costs, were $79.2 million for the 2017 period compared to $82.0 million for the 2016 period. The decrease was due to the redemption of our previously outstanding $200.0 million 7.375% senior subordinated notes (the “7.375% Senior Subordinated Notes”) funded by a $225.0 million add-on to our 4.875% senior notes (the “4.875% Senior Notes), which occurred on March 21, 2016, as well as amendments to our senior secured credit facility completed during June and December of 2016 and June of 2017, which, in the aggregate, reduced the rate at which our term loan accrues interest by 100 basis points.

~~Loss On Debt Amendments and Refinancing~~. We recorded a loss of $0.2 million during the 2017 period related to an amendment to our senior secured credit facility that included a reduction in the interest rate at which our term loan accrues interest and revisions to certain definitions within the agreement. See Note 4 to our condensed consolidated financial statements. We recorded a loss of $13.3 million during the 2016 period primarily related to the early redemption of our $200.0 million 7.375% Senior Subordinated Notes.

~~Foreign Currency Exchange Gain~~. We recorded a foreign currency exchange gain of $2.0 million during the 2017 period compared to a foreign currency exchange gain of $2.9 million during the 2016 period. These amounts primarily represent the impact of changes in foreign currency exchange rates on intercompany transactions between our domestic subsidiaries and our international subsidiaries. See Note 12 to the condensed consolidated financial statements for further discussion.

~~Distributions from NCM.~~ We recorded distributions from NCM of $11.7 million during the 2017 period and $10.1 million during the 2016 period, which were in excess of the carrying value of our Tranche 1 investment. See Note 6 to our condensed consolidated financial statements.

~~Equity in Income of Affiliates.~~ We recorded equity in income of affiliates of $26.8 million during the 2017 period compared to $24.6 million during the 2016 period. See Notes 6 and 7 for information about the equity investments to our condensed consolidated financial statements.

~~Income Taxes.~~ Income tax expense of $98.5 million was recorded for the 2017 period compared to $106.0 million recorded for the 2016 period. The effective tax rate was 36.6% for the 2017 period compared to 37.1% for the 2016 period. 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~~Our revenues are received in cash prior to the payment of related expenses, therefore we have an operating “float” and historically have not required traditional working capital financing. However, we temporarily closed all of our theatres effective March 18, 2020 as discussed above in Recent Developments and will fund operating expenses while our theatres are closed with cash on hand and additional financing discussed below under Financing Activities. Cash used for operating activities was $15.6million for the three months ended March 31, 2020 compared to cash provided by operating activities of $104.3million for the three months ended March 31, 2019. The decrease in cash provided by operating activities was ~~$311.4 million for~~primarily due to the ~~nine months ended September 30, 2017 compared~~Company’s net loss as a result of the temporary closure of all of our theatres effective March 18, 2020 and the level and timing of payments to ~~$278.3 million for the nine months ended September 30, 2016.~~suppliers during each respective period.

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 $~~290.1~~ 34.1 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared to $~~230.5~~ 57.5 million for the ~~nine~~three months ended September 30, 2016. The increase was primarily due to an increase in capital expenditures for the remodel of certain of our existing domestic theatres and the acquisition of one theatre in the U.S. and two theatres in Brazil. March 31, 2019.

Capital expenditures for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 were as follows (in millions):

Period

New
Theatres

Existing
Theatres ⁽¹⁾

Total

Nine Months Ended September 30, 2017

$
42.5

$
220.2

$
262.7

Nine Months Ended September 30, 2016

$
65.6

$
164.7

$
230.3

Period	New Theatres		Existing Theatres		Total
Three Months Ended March 31, 2020	$	8.1	$	26.0	$	34.1
Three Months Ended March 31, 2019	$	15.0	$	42.6	$	57.6

We operated 555 theatres with 6,145 screens worldwide as of March 31, 2020. Theatres and screens acquired, built and closed during the three months ended March 31, 2020 were as follows:

	January 1, 2020		Built		Closed		March 31, 2020
U.S
Theatres		345		1		1		345
Screens		4,645		12		8		4,649

International
Theatres		209		1		—		210
Screens		1,487		9		—		1,496

Worldwide
Theatres		554		2		1		555
Screens		6,132		21		8		6,145

~~(1)~~

~~The amounts for the nine months ended September 30, 2017 and 2016 include $5.7 million and $3.6 million, respectively, related to the remodel of our corporate headquarters building in Plano, TX.~~

~~Capital expenditures for existing properties in the table above includes the costs~~As of ~~remodeling certain of our existing theatres to include Luxury Loungers and expanded concession offerings. During the nine months ended September 30, 2017 and 2016,~~March 31, 2020, we had ~~an average of 151 and 75 of our domestic screens, respectively, temporarily closed for such remodels.~~

~~Our U.S. theatre circuit consisted of 339 theatres with 4,562 screens at September 30, 2017. During~~ the ~~nine months ended September 30, 2017, we built two new theatres with 18 screens,~~ ~~acquired~~ ~~one~~ ~~new theatre with~~ 12 ~~screens and closed~~ ~~three~~ ~~theatres and~~ 27 ~~screens. At September 30, 2017, we had~~following signed commitments ~~to open~~ ~~one~~ ~~new theatre and 10 screens~~(costs in ~~domestic markets during the remainder of 2017 and open~~ ~~ten~~ ~~new theatres with~~ ~~106~~ ~~screens subsequent to 2017. We estimate the remaining capital expenditures for the development of these~~ ~~116~~ ~~domestic screens will be approximately $85.0~~ ~~million.~~millions):

Our international theatre circuit consisted of 194 theatres with 1,395 screens at September 30, 2017. During the nine months ended September 30, 2017, we built five new theatres with 37 screens and acquired two theatres with 14 screens. At September 30, 2017, we had signed commitments to open one new theatre and six screens in international markets during the remainder of 2017 and open seven new theatres and 34 screens subsequent to 2017. We estimate the remaining capital expenditures for the development of these 40 international screens will be approximately $20.0 million.

	Theatres		Screens		Estimated Cost
Remainder of 2020
U.S.		3		30	$	24
International		2		18	$	5
Total		5		48

Subsequent to 2020
U.S.		9		112	$	79
International		8		63	$	35
Total		17		175

Total commitments at March 31, 2020		22		223	$	143

Actual expenditures for continued theatre development, remodels and acquisitions are subject to change based upon the availability of attractive opportunities. We plan to fund capital expenditures for our continued development with cash flow from operations, borrowings under our senior secured credit facility, and proceeds from debt issuances, sale leaseback transactions and/or sales of excess real estate.

Financing Activities

Cash provided by financing activities was $48.0 million for the three months ended March 31, 2020 compared to cash used for financing activities ~~was $114.2~~of $47.9 million for the ~~nine~~three months ended ~~September 30, 2017 compared~~March 31, 2019. The increase in cash provided by financing activities was primarily due to ~~$111.3~~the $98.8 million for the nine months ended September 30, 2016. Financing activities for the nine months ended September 30, 2016 included the redemption of Cinemark USA, Inc.’s $200.0 million 7.375% Senior Subordinated Notes with proceeds from borrowings on the ~~issuance of a $225.0 million add-on to Cinemark USA, Inc.’s existing 4.875% Senior Notes.~~Company’s revolving credit line.

We, at the discretion of the board of directors and subject to applicable law, ~~anticipate paying regular quarterly~~may pay dividends on our common stock. The amount, if any, of the dividends to be paid in the future will depend upon our then available cash balance, anticipated cash needs, overall financial condition, loan agreement restrictions as discussed below, future prospects for earnings and cash flows, as well as other relevant factors. As discussed above in Recent Developments, we have suspended our quarterly dividend due to the impact of the COVID-19 pandemic.

We may from time to time, subject to compliance with our debt instruments, purchase our debt securities on the open market depending upon the availability and prices of such securities. Long-term debt consisted of the following as of ~~September 30, 2017~~March 31, 2020 (in millions):

Cinemark USA, Inc. term loan	$	660.9	$	644.7
Cinemark USA, Inc. revolving line of credit				98.8
Cinemark USA, Inc. 5.125% senior notes due 2022		400.0		400.0
Cinemark USA, Inc. 4.875% senior notes due 2023		755.0		755.0
Other	4.2
Total long-term debt	$	1,820.1	$	1,898.5
Less current portion		7.1		6.6
Subtotal long-term debt, less current portion	$	1,813.0	$	1,891.9
Less: Debt discounts and debt issuance costs, net of accumulated amortization		31.0		22.1
Long-term debt, less current portion, net of debt issuance costs	$	1,782.0	$	1,869.8

As of ~~September 30, 2017, Cinemark USA, Inc. had $100.0~~March 31, 2020, approximately $0.1 million inwas available for borrowing ~~capacity on its~~under the revolving line of credit ~~line.~~after giving effect to a $1.1 million letter of credit outstanding.

Contractual Obligations

There have been no material changes in our contractual obligations previously disclosed in “Liquidity and Capital Resources” in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 filed February ~~23, 2017.~~21, 2020.

Off-Balance Sheet Arrangements

~~Other than the operating leases and purchase commitments disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016 filed February 23, 2017, we~~We do not have any off-balance sheet arrangements.

Senior Secured Credit Facility

Cinemark USA, Inc. has a senior secured credit facility that includes a $700.0 million term loan ~~with a maturity date of May 2022,~~ and a $100.0 million revolving credit line ~~with a maturity date of December 2017 (collectively referred to as the~~(the “Credit Agreement”).

~~On May 16, 2016, Cinemark USA, Inc. made a principal pre-payment of $13,451 using~~ Under the ~~proceeds received from the sale of shares of RealD. In accordance with the terms of the~~amended Credit Agreement, ~~the pre-payment was applied first to the next four~~quarterly principal ~~installments, and second, to the remaining installments pro-rata based on the remaining outstanding principal amount of such installments. Therefore, quarterly~~ payments of ~~$1.4~~$1.6 million are due on the term loan through ~~March~~December 31, ~~2022,~~2024, with ~~the remaining~~a final principal payment of ~~$635.3~~$613.4 million due on ~~May 8, 2022. The Company did not incur any fees~~March 29, 2025. After giving effect to a letter of credit outstanding as ~~a result~~ of ~~the pre-payment.~~

~~On June 13, 2016 and December 15, 2016,~~March 31, 2020, Cinemark USA, Inc. ~~amended its Credit Agreement to reduce~~had no available borrowing capacity on the rate at which the term loan bears interest by 0.25% and then an additional 0.50%, respectively. On June 16, 2017, Cinemark USA, Inc. amended its Credit Agreement to further reduce the rate at which the term loan bears interest by 0.25% and also to modify certain definitions and other provisions within the Credit Agreement. revolving credit line.

Interest on the term loan accrues at Cinemark USA, Inc.’s option at: (A) the base rate equal to the greater of (1) the US “Prime Rate” as quoted in The Wall Street Journal or if no such rate is quoted therein, in a Federal Reserve Board statistical release, (2) the federal funds effective rate plus 0.50%, and (3) a one-month Eurodollar-based rate plus 1.0%, plus, in each case, a margin of ~~1.00%~~0.75% per annum, or (B) a Eurodollar-based rate for a period of 1, 2, 3, 6, 9 or 12 months plus a margin of ~~2.00%~~1.75% per annum. Interest on the revolving credit line accrues, at our option, at: (A) a base rate equal to the greater of (1) the US “Prime Rate” as quoted in The Wall Street Journal or if no such rate is quoted therein, in a Federal Reserve Board statistical release, (2) the federal funds effective rate plus 0.50%, and (3) a one-month Eurodollar-based rate plus 1.0%, plus, in each case, a margin that ranges from ~~1.00%~~0.50% to ~~1.75%~~1.25% per annum, or (B) a Eurodollar-based rate for a period of 1, 2, 3, 6, 9 or 12 months plus a margin that ranges from ~~2.00%~~1.50% to ~~2.75%~~2.25% per annum. The margin of the revolving credit line is determined by the consolidated net senior secured leverage ratio as defined in the Credit Agreement.

At September 30, 2017, there was $660.9 million outstanding under the term loan and no borrowings outstanding under the revolving credit line. Cinemark USA, Inc. had $100.0 million in available borrowing capacity on the revolving credit line. The average interest rate on outstanding term loan borrowings under the Credit Agreement at September 30, 2017 was approximately 3.3% per annum.

Cinemark USA, Inc.’s obligations under the Credit Agreement are guaranteed by Cinemark Holdings, Inc. and certain of Cinemark USA, Inc.’s domestic subsidiaries and are secured by mortgages on certain fee and leasehold properties and security interests in substantially all of Cinemark USA, Inc.’s and the guarantors’ personal property, including, without limitation, pledges of all of Cinemark USA, Inc.’s capital stock, all of the capital stock of certain of Cinemark USA, Inc.’s domestic subsidiaries and 65% of the voting stock of certain of its foreign subsidiaries.

The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on Cinemark USA, Inc.’s ability, and in certain instances, its subsidiaries’ and our ability, to consolidate or merge or liquidate, wind up or dissolve; substantially change the nature of its business; sell, transfer or dispose of assets; create or incur indebtedness; create liens; pay dividends or repurchase stock; and make capital expenditures and investments. If Cinemark USA, Inc. has borrowings outstanding on the revolving credit line, it is required to satisfy a consolidated net senior secured leverage ratio covenant as defined in the Credit ~~Agreement.~~Agreement, not to exceed 4.25 to 1. As of March 31, 2020, the actual ratio was approximately 0.72 to 1.

The dividend restriction contained in the Credit Agreement prevents the Company and any of its subsidiaries from paying a dividend or otherwise distributing cash to its stockholders unless (1) the Company is not in default, and the distribution would not cause Cinemark USA, Inc. to be in default, under the Credit Agreement; and (2) the aggregate amount of certain dividends, distributions, investments, redemptions and capital expenditures made since December 18, 2012, including dividends declared by the

board of directors, is less than the sum of (a) the aggregate amount of cash and cash equivalents received by Cinemark Holdings, Inc. or Cinemark USA, Inc. as common equity since December 18, 2012, (b) Cinemark USA, Inc.’s consolidated EBITDA minus 1.75 times its consolidated interest expense, each as defined in the Credit Agreement, and (c) certain other defined amounts. As of ~~September 30, 2017,~~March 31, 2020, Cinemark USA, Inc. could have distributed up to approximately ~~$2,551.2~~$3,227 million to its parent company and sole stockholder, Cinemark Holdings, Inc., under the terms of the Credit Agreement, subject to its available cash and other borrowing restrictions outlined in the agreement.

We have four interest rate swap agreements that are used to hedge a portion of the interest rate risk associated with the variable interest rates on the term loan outstanding under the Credit Agreement. See Note 7 of our condensed consolidated financial statements for discussion of the interest rate swaps.

At March 31, 2020, there was $644.7 million outstanding under the term loan, $98.8 million of borrowings were outstanding under the $100.0 million revolving line of credit and approximately $0.1 million was available for borrowing under the revolving credit line after giving effect to a $1.1 million letter of credit outstanding. On April 3, 2020, the letter of credit was cancelled and was no longer outstanding. The average interest rate on outstanding term loan borrowings under the Credit Agreement at March 31, 2020 was approximately 3.5% per annum, after giving effect to the interest rate swap agreements discussed above. The average interest rate on the outstanding revolver borrowings was 2.9% at March 31, 2020.

Cinemark USA, Inc. 5.125% Senior Notes

On December 18, 2012, Cinemark USA, Inc. issued $400.0 million aggregate principal amount of 5.125% ~~senior notes~~Senior Notes due 2022, at par value (the “5.125% Senior Notes”). Interest on the 5.125% Senior Notes is payable on June 15 and December 15 of each ~~year, beginning June 15, 2013.~~year. The 5.125% Senior Notes mature on December 15, 2022.

The indenture to the 5.125% Senior Notes contains covenants ~~including limitations on~~that limit, among other things, the ~~amount~~ability of ~~dividends that could be paid by~~ Cinemark USA, Inc. and certain of its subsidiaries to (1) make investments or other restricted payments, including paying dividends, making other distributions or repurchasing subordinated debt or equity, (2) incur additional indebtedness and issue preferred stock, (3) enter into transactions with affiliates, (4) enter new lines of business, (5) merge or consolidate with, or sell all or substantially all of its assets to, another person and (6) create liens. As of ~~September 30, 2017,~~March 31, 2020, Cinemark USA, Inc. could have distributed up to approximately ~~$2,529.3~~$3,373 million to its parent company and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the 5.125% Senior Notes, subject to its available cash and other borrowing restrictions outlined in the indenture. Upon a change of control, as defined in the indenture governing the 5.125% Senior Notes, Cinemark USA, Inc. would be required to make an offer to repurchase the 5.125% Senior Notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, through the date of repurchase. The indenture governing the 5.125% Senior Notes 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, 2017~~March 31, 2020 was approximately ~~5.9~~ 6.6 to 1.

Cinemark USA, Inc. 4.875% Senior Notes

On May 24, 2013, Cinemark USA, Inc. issued $530.0 million aggregate principal amount of ~~the~~ 4.875% Senior Notes due 2023, at par value (the “4.875% Senior Notes”). On March 21, 2016, Cinemark USA, Inc. issued an additional $225.0 million aggregate principal amount of the 4.875% Senior Notes at 99.0% of the principal amount plus accrued and unpaid interest from December 1, 2015. ~~Proceeds, after payment of fees, were used to finance the redemption of Cinemark, USA, Inc.’s $200.0 million 7.375% Senior Subordinated Notes, as discussed below.~~ These additional notes have identical terms, other than the issue date, the issue price and the first interest payment date, and constitute part of the same series as the Company’s existing 4.875% Senior Notes. Interest on the 4.875% Senior Notes is payable on June 1 and December 1 of each year. The 4.875% Senior Notes mature on June 1, 2023.

The indenture to the 4.875% Senior Notes contains covenants that ~~include limitations on~~limit, among other things, the ~~amount~~ability of ~~dividends that~~ Cinemark USA, Inc. ~~can pay.~~ and certain of its subsidiaries to (1) make investments or other restricted payments, including paying dividends, making other distributions or repurchasing subordinated debt or equity, (2) incur additional indebtedness and issue preferred stock, (3) enter into transactions with affiliates, (4) enter new lines of business, (5) merge or consolidate with, or sell all or substantially all of its assets to, another person and (6) create liens. As of ~~September 30, 2017,~~March 31, 2020, Cinemark USA, Inc. could have distributed up to approximately $~~2,524.4~~ $3,367 million to its parent company and sole stockholder, Cinemark Holdings, Inc., under the terms of the indenture to the 4.875% Senior Notes, subject to its available cash and other borrowing restrictions outlined in the indenture. Upon a change of control, as defined in the indenture governing the 4.875% Senior Notes, Cinemark USA, Inc. would be required to make an offer to repurchase the 4.875% Senior Notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, through the date of repurchase. The indenture governing the 4.875% Senior Notes 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, 2017~~March 31, 2020 was approximately ~~5.9~~ 6.6 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. On March 21, 2016, Cinemark USA, Inc. redeemed the 7.375% Senior Subordinated Notes at a make-whole premium of approximately 104% plus accrued and unpaid interest, utilizing the proceeds from the issuance of the additional $225.0 million 4.875% Senior Notes discussed above. As a result of the redemption, the Company wrote-off approximately $2.4 million in unamortized debt issue costs, paid the make-whole premium of approximately $9.4 million and paid other fees of $1.2 million, all of which are reflected in loss on debt amendments and refinancing during the nine months ended September 30, 2016.

Covenant Compliance

As of ~~September 30, 2017,~~March 31, 2020, we believe we were in full compliance with all agreements, including all related covenants, governing our outstanding debt.

~~Seasonality~~

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.

Item 3. Quantitative and ~~Qualitati~~veQualitative 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 a variable rate debt facility. An increase or decrease in interest rates would affect our interest expense relating to our variable rate debt. At ~~September 30, 2017,~~March 31, 2020, we had an aggregate of approximately ~~$660.9~~$143.5 million of variable rate debt outstanding. Based on the interest rates in effect on the variable rate debt outstanding at ~~September 30, 2017,~~March 31, 2020, a 100 basis point increase in market interest rates would increase our annual interest expense by approximately ~~$6.6~~$1.4 million.

The table below provides information about our fixed rate and variable rate long-term debt agreements as of ~~September 30, 2017:~~March 31, 2020:

	Expected Maturity for the Twelve-Month Periods Ending September 30,																Average			Expected Maturity for the Twelve-Month Periods Ending March 31,																Average
	(in millions)																Interest			(in millions)																Interest
	2018		2019		2020		2021		2022		Thereafter		Total		Fair Value		Rate			2021		2022		2023		2024		2025		Thereafter		Total		Fair Value		Rate
Fixed rate	$	1.4	$	1.4	$	1.4	$	—	$	—	$	1,155.0	$	1,159.2	$	1,177.2		5.0	%	$	—	$	—	$	400.0	$	755.0	$	600.0	$	—	$	1,755.0	$	1,355.4		4.5	%
Variable rate(1)		5.7		5.7		5.7		5.7		638.1		—		660.9	663.4			3.3	%		6.6		6.6		105.4		6.6		18.3		—		143.5		135.5		3.0	%
Total debt	$	7.1	$	7.1	$	7.1	$	5.7	$	638.1	$	1,155.0	$	1,820.1	$	1,840.6				$	6.6	$	6.6	$	505.4	$	761.6	$	618.3	$	—	$	1,898.5	$	1,490.9

~~Foreign Currency Exchange~~Interest Rate ~~Risk~~Swap Agreements

~~Other than the devaluation~~All of our interest rate swap agreements qualify for cash flow hedge accounting. The fair values of the ~~Argentine peso, discussed in~~interest rate swaps are recorded on our consolidated balance sheet as an asset or liability with the related gains or losses reported as a component of accumulated other comprehensive loss. See Note 127 to the condensed consolidated financial statements ~~there~~for further discussion of the interest rate swap agreements.

Foreign Currency Exchange Rate Risk

There have been no material changes in foreign currency exchange rate risk previously disclosed in “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 filed February ~~23, 2017.~~21, 2020.

Item 4. Controls and Procedures

Evaluation of the Effectiveness of Disclosure Controls and Procedures

As of ~~September 30, 2017,~~March 31, 2020, we carried out an evaluation required by the Exchange Act, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of ~~September 30, 2017,~~March 31, 2020, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and were effective to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 that occurred during the quarter ended ~~September 30, 2017~~March 31, 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - ~~OTHE~~ROTHER INFORMATION

Item 1.Legal Proceedings

~~There~~Other than the discussion at Note 19, there have been no material changes from legal proceedings previously reported under “Business – Legal Proceedings” in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 filed February ~~23, 2017~~21, 2020.

Item 1A. Risk Factors

~~There have been no material changes from risk factors previously disclosed~~See discussion in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 filed February ~~23, 2017~~.21, 2020, as updated by the information related to COVID-19 that was included in a Form 8-K that was filed on April 13, 2020, including the documents incorporated by reference therein.

Item 6. Exhibits


*10.1		Sixth Amendment, dated as of March 31, 2020, to Indenture of Lease dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc. (succeeded by Century Theatres, Inc.), as tenant, for Century Cinema 16, Mountain View, CA.

*10.2		Sixth Amendment, dated as of March 31, 2020, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc. (succeeded by Century Theatres, Inc.), as tenant, for Century 14, Folsom, CA.

*10.3		Sixth Amendment, dated as of March 31, 2020, to Indenture of Lease, dated as of December 1, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc. (succeeded by Century Theatres, Inc.), as tenant, for Century Laguna 16, Elk Grove, CA.

*10.4		Seventh Amendment, dated as of March 31, 2020, to Indenture of Lease, dated as of September 30, 1995, by and between Syufy Enterprises, L.P., as landlord and Century Theatres of California, Inc. (succeeded by Century Theatres, Inc.), as tenant, for Century 16, Sacramento, CA.

*31.1		Certification of Mark Zoradi, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2		Certification of Sean Gamble, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32.1		Certification of Mark Zoradi, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2		Certification of Sean Gamble, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002.

* 101		~~Financial Statements~~The following material from ~~the quarterly report on Form 10-Q of~~ Cinemark Holdings, Inc.’s Form 10-Q for the quarter ended ~~September 30, 2017, filed November 3, 2017,~~March 31, 2020, formatted in ~~XBRL:~~iXBRL (Inline eXtensible Business Reporting Language), filed herewith: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income (Loss), (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial ~~Statements tagged~~Statements.

* 104		Cover Page Interactive Data File (formatted as ~~detailed text.~~inline XBRL and contained in Exhibit 101)

*	filed herewith.

~~SIGNATURES~~SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		CINEMARK HOLDINGS, INC.
		Registrant

DATE:	~~November~~June 3, ~~2017~~2020

		/s/Mark Zoradi
		Mark Zoradi
		Chief Executive Officer

		/s/Sean Gamble
		Sean Gamble
		Chief Financial Officer

3743

	Cinemark
	Holdings, Inc.
	Stockholders’			Noncontrolling			Total
	Equity			Interests			Equity
Balance at January 1, 2017	$	1,261,818		$	11,142		$	1,272,960
Share based awards compensation expense		9,487			—			9,487
Stock withholdings related to share based awards that vested during the nine months ended September 30, 2017		(2,943	)		—			(2,943	)
Tax expense related to share based awards vesting		(32	)	―				(32	)
Dividends paid to stockholders ⁽¹⁾		(101,304	)		—			(101,304	)
Dividends accrued on unvested restricted stock unit awards ⁽¹⁾		(423	)		—			(423	)
Dividends paid to noncontrolling interests		—			(588	)		(588	)
Net income		169,106			1,438			170,544
Other comprehensive income in equity method investees		92			—			92
Foreign currency translation adjustments (see Note 12)		4,027			—			4,027
Balance at September 30, 2017	$	1,339,828		$	11,992		$	1,351,820

							Distributions
	Investment			Deferred			from			Equity in			Other			Cash
	in NCM			Revenue			NCM			Income			Revenue			Received
Balance as of January 1, 2017	$	189,995		$	(343,928	)
Receipt of common units due to annual common unit adjustment		18,363			(18,363	)	$	—		$	—		$	—		$	—
Revenues earned under ESA ⁽¹⁾		—			—			—			—			(8,446	)		8,446
Receipt of excess cash distributions		(10,020	)		—			(9,630	)		—			—			19,650
Receipt under tax receivable agreement		(2,089	)		—			(2,074	)		—			—			4,163
Equity in earnings		8,098			—			—			(8,098	)		—			—
Amortization of deferred revenue		—			7,872			—			—			(7,872	)		—
Balance as of and for the nine months ended September 30, 2017	$	204,347		$	(354,419	)	$	(11,704	)	$	(8,098	)	$	(16,318	)	$	32,259

	Three Months		Six Months Ended		Three Months Ended		Nine Months Ended
	Ended June 29, 2017		June 29, 2017		September 29, 2016		September 29, 2016
Gross revenues	$	97,042	$	168,962	$	113,476	$	305,101
Operating income	$	28,430	$	33,500	$	48,481	$	100,911
Net income	$	15,377	$	7,465	$	23,909	$	49,619

	Nine Months Ended September 30,
	2017		2016
Compensation expense recognized during the period	$	6,298	$	6,551
Fair value of restricted shares that vested during the period	$	8,169	$	14,662
Income tax benefit recognized upon vesting of restricted stock awards	$	2,665	$	5,555

	Balance at											Balance at
	January 1,											September 30,
	2017			Additions ⁽¹⁾		Amortization			Other ⁽²⁾			2017
Intangible assets with finite lives:
Gross carrying amount	$	99,796		$	4,453	$	—		$	(1,332	)	$	102,917
Accumulated amortization		(64,606	)	―			(3,606	)		1,162			(67,050	)
Total net intangible assets with finite lives	$	35,190		$	4,453	$	(3,606	)	$	(170	)	$	35,867

Intangible assets with indefinite lives:
Tradename		299,709		―		―				81			299,790
Total intangible assets — net	$	334,899		$	4,453	$	(3,606	)	$	(89	)	$	335,657

For the three months ended December 31, 2017	$	1,668
For the twelve months ended December 31, 2018		5,964
For the twelve months ended December 31, 2019		5,101
For the twelve months ended December 31, 2020		4,995
For the twelve months ended December 31, 2021		2,444
Thereafter		15,695
Total	$	35,867

	Liabilities ⁽¹⁾
	2016
Beginning balance - January 1	$	373
Total loss included in accumulated other comprehensive loss		71
Settlements included in interest expense		(444	)
Ending balance - September 30	$	—

Large accelerated filer

Accelerated filer

Non-accelerated filer

☐ ~~(Do not check if a smaller reporting company)~~

Smaller reporting company

Emerging growth company