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| CNK > SEC Filings for CNK > Form 10-Q on 9-Nov-2009 | All Recent SEC Filings |
9-Nov-2009
Quarterly Report
Results of Operations
The following table sets forth, for the periods indicated, the percentage of
revenues represented by certain items reflected in our condensed consolidated
statements of income:
Three Months Ended Nine Months Ended
September 30, September 30,
Operating data (in millions): 2009 2008 2009 2008
Revenues
Admissions $ 322.9 $ 308.5 $ 941.9 $ 865.3
Concession 153.0 146.1 441.9 409.7
Other 20.9 21.6 56.3 59.5
Total revenues $ 496.8 $ 476.2 $ 1,440.1 $ 1,334.5
Cost of operations
Film rentals and advertising $ 175.9 $ 169.3 $ 513.9 $ 471.2
Concession supplies 23.5 24.5 67.2 66.4
Salaries and wages 52.7 47.4 149.1 135.3
Facility lease expense 61.6 58.9 176.5 171.4
Utilities and other 61.4 57.3 164.3 155.9
General and administrative expenses 23.5 22.7 69.0 67.8
Depreciation and amortization 38.5 38.8 112.8 115.5
Impairment of long-lived assets 3.1 2.3 8.1 8.1
Loss on sale of assets and other 0.9 2.3 2.4 3.2
Total cost of operations $ 441.1 $ 423.5 $ 1,263.3 $ 1,194.8
Operating income $ 55.7 $ 52.7 $ 176.8 $ 139.7
Operating data as a percentage of revenues:
Revenues
Admissions 65.0 % 64.8 % 65.4 % 64.8 %
Concession 30.8 % 30.7 % 30.7 % 30.7 %
Other 4.2 % 4.5 % 3.9 % 4.5 %
Total revenues 100.0 % 100.0 % 100.0 % 100.0 %
Cost of operations (1)
Film rentals and advertising 54.5 % 54.9 % 54.6 % 54.5 %
Concession supplies 15.4 % 16.8 % 15.2 % 16.2 %
Salaries and wages 10.6 % 10.0 % 10.4 % 10.1 %
Facility lease expense 12.4 % 12.4 % 12.3 % 12.8 %
Utilities and other 12.3 % 12.0 % 11.4 % 11.7 %
General and administrative expenses 4.8 % 4.8 % 4.8 % 5.1 %
Depreciation and amortization 7.8 % 8.2 % 7.9 % 8.7 %
Impairment of long-lived assets 0.7 % 0.5 % 0.6 % 0.6 %
Loss on sale of assets and other 0.2 % 0.5 % 0.2 % 0.3 %
Total cost of operations 88.8 % 88.9 % 87.7 % 89.5 %
Operating income 11.2 % 11.1 % 12.3 % 10.5 %
Average screen count (month end average) 4,901 4,709 4,849 4,683
Revenues per average screen (in dollars) $ 101,367 $ 101,136 $ 296,978 $ 284,943
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(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, 2009 and 2008 Revenues. Total revenues increased $20.6 million to $496.8 million for the three months ended September 30, 2009 ("third quarter of 2009") from $476.2 million for the three months ended September 30, 2008 ("third quarter of 2008"), representing a 4.3% increase. The table below, presented by reportable operating segment, summarizes our year-over-year revenue performance and certain key performance indicators that impact our revenues.
International Operating
U.S. Operating Segment Segment Consolidated
Three Months Ended Three Months Ended Three Months Ended
September 30, September 30, September 30,
% % %
2009 2008 Change 2009 2008 Change 2009 2008 Change
Admissions revenues (in millions) $ 246.9 $ 235.4 4.9 % $ 76.0 $ 73.1 4.0 % $ 322.9 $ 308.5 4.7 %
Concession revenues (in millions) $ 119.8 $ 112.5 6.5 % $ 33.2 $ 33.6 (1.2 )% $ 153.0 $ 146.1 4.7 %
Other revenues (in millions) (1) $ 10.3 $ 9.9 4.0 % $ 10.6 $ 11.7 (9.4 )% $ 20.9 $ 21.6 (3.2 )%
Total revenues (in millions) (1) $ 377.0 $ 357.8 5.4 % $ 119.8 $ 118.4 1.2 % $ 496.8 $ 476.2 4.3 %
Attendance (in millions) 41.0 39.4 4.1 % 19.4 18.4 5.4 % 60.4 57.8 4.5 %
Revenues per screen (in dollars) (1) $ 98,115 $ 97,011 1.1 % $ 113,161 $ 116,040 (2.5 )% $ 101,367 $ 101,136 0.2 %
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(1) U.S. operating segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 16 of our condensed consolidated financial statements.
• Consolidated. The increase in admissions revenues of $14.4 million was
primarily attributable to a 4.5% increase in attendance and a 0.2% increase in
average ticket price from $5.34 for the third quarter of 2008 to $5.35 for the
third quarter of 2009. The increase in concession revenues of $6.9 million was
primarily attributable to the 4.5% increase in attendance, while concession
revenues per patron remained constant at $2.53 for the third quarter of 2009.
The 3.2% decrease in other revenues was primarily due to decreases in ancillary
revenue and the unfavorable impact of exchange rates in certain countries in
which we operate.
• U.S. The increase in admissions revenues of $11.5 million was primarily
attributable to a 4.1% increase in attendance and a 0.8% increase in average
ticket price from $5.97 for the third quarter of 2008 to $6.02 for the third
quarter of 2009. The increase in concession revenues of $7.3 million was
primarily attributable to the 4.1% increase in attendance and a 2.1% increase in
concession revenues per patron from $2.86 for the third quarter of 2008 to $2.92
for the third quarter of 2009. The increase in average ticket price was
primarily due to incremental 3-D pricing. The increase in concession revenues
per patron was due to a kid-friendly film mix and price increases.
• International. The increase in admissions revenues of $2.9 million was
primarily attributable to a 5.4% increase in attendance, partially offset by a
1.3% decrease in average ticket price from $3.97 for the third quarter of 2008
to $3.92 for the third quarter of 2009. The decrease in concession revenues of
$0.4 million was primarily attributable to a 6.6% decrease in concession
revenues per patron from $1.83 for the third quarter of 2008 to $1.71 for the
third quarter of 2009, partially offset by the 5.4% increase in attendance. The
decreases in average ticket price and concession revenues per patron were
primarily due to the unfavorable impact of exchange rates in certain countries
in which we operate. The 9.4% decrease in other revenues was primarily due to
decreases in ancillary revenue and the unfavorable impact of exchange rates in
certain countries in which we operate.
Cost of Operations. The table below summarizes certain of our theatre operating costs by reportable operating segment.
International Operating
U.S. Operating Segment Segment Consolidated
Three Months Ended Three Months Ended Three Months Ended
September 30, September 30, September 30,
2009 2008 2009 2008 2009 2008
Film rentals and
advertising $ 137.4 $ 132.5 $ 38.5 $ 36.8 $ 175.9 $ 169.3
Concession supplies 14.8 15.6 8.7 8.9 23.5 24.5
Salaries and wages 43.3 38.2 9.4 9.2 52.7 47.4
Facility lease expense 45.2 42.1 16.4 16.8 61.6 58.9
Utilities and other 45.1 41.8 16.3 15.5 61.4 57.3
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• Consolidated. Film rentals and advertising costs were $175.9 million, or 54.5%
of admissions revenues, for the third quarter of 2009 compared to
$169.3 million, or 54.9% of admissions revenues, for the third quarter of 2008.
The increase in film rentals and advertising costs of $6.6 million is primarily
due to a $14.4 million increase in admissions revenues, which contributed
$7.9 million, and a decrease in our film rental and advertising rate, which
contributed $(1.3) million. Concession supplies expense was $23.5 million, or
15.4% of concession revenues, for the third quarter of 2009 compared to
$24.5 million, or 16.8% of concession revenues, for the third quarter of 2008.
The decrease in the concession supplies rate is primarily related to the
incremental benefit of our new U.S. beverage agreement that was effective at the
beginning of 2009.
Salaries and wages increased to $52.7 million for the third quarter of 2009 from
$47.4 million for the third quarter of 2008 primarily due to increased staffing
levels to support the 4.5% increase in attendance, increased minimum wage rates
and new theatre openings. Facility lease expense increased to $61.6 million for
the third quarter of 2009 from $58.9 million for the third quarter of 2008
primarily due to new theatres. Utilities and other costs increased to
$61.4 million for the third quarter of 2009 from $57.3 million for the third
quarter of 2008 primarily due to new theatres, increased repairs and maintenance
expense and increased 3-D equipment rental fees.
• U.S. Film rentals and advertising costs were $137.4 million, or 55.7% of
admissions revenues, for the third quarter of 2009 compared to $132.5 million,
or 56.3% of admissions revenues, for the third quarter of 2008. The increase in
film rentals and advertising costs of $4.9 million is due to an $11.5 million
increase in admissions revenues, which contributed $6.5 million, and a decrease
in our film rentals and advertising rate, which contributed $(1.6) million.
Concession supplies expense was $14.8 million, or 12.4% of concession revenues,
for the third quarter of 2009 compared to $15.6 million, or 13.9% of concession
revenues, for the third quarter of 2008. The decrease in the concession supplies
rate is primarily related to the incremental benefit of our new U.S. beverage
agreement that was effective at the beginning of 2009.
Salaries and wages increased to $43.3 million for the third quarter of 2009 from
$38.2 million for the third quarter of 2008 primarily due to increased staffing
levels to support the 4.1% increase in attendance, increased minimum wage rates
and new theatre openings. Facility lease expense increased to $45.2 million for
the third quarter of 2009 from $42.1 million for the third quarter of 2008
primarily due to new theatres openings. Utilities and other costs increased to
$45.1 million for the third quarter of 2009 from $41.8 million for the third
quarter of 2008 primarily due to new theatres, increased repairs and maintenance
expense and increased 3-D equipment rental fees.
• International. Film rentals and advertising costs were $38.5 million, or 50.7%
of admissions revenues, for the third quarter of 2009 compared to $36.8 million,
or 50.3% of admissions revenues, for the third quarter of 2008. The increase in
our film rentals and advertising rate was primarily due to increased advertising
expenses. Concession supplies expense was $8.7 million, or 26.2% of concession
revenues, for the third quarter of 2009 compared to $8.9 million, or 26.5% of
concession revenues, for the third quarter of 2008.
Salaries and wages increased to $9.4 million for the third quarter of 2009 from
$9.2 million for the third quarter of 2008 primarily due to increased staffing
levels to support the 5.4% increase in attendance and new theatre openings,
partially offset by the impact of exchange rates in certain countries in which
we operate. Facility lease expense decreased to $16.4 million for the third
quarter of 2009 from $16.8 million for the third quarter of 2008 primarily due
to the impact of exchange rates in certain countries in which we operate.
Utilities and other costs increased to $16.3 million for the third quarter of
2009 from $15.5 million for the third quarter of 2008 primarily due to new
theatres, increased repairs and maintenance expense and increased 3-D equipment
rental fees.
General and Administrative Expenses. General and administrative expenses
increased to $23.5 million for the third quarter of 2009 from $22.7 million for
the third quarter of 2008. The increase was primarily due to increased incentive
compensation expense, increased professional fees and increased service charges
related to increased credit card activity.
Depreciation and Amortization. Depreciation and amortization expense,
including amortization of favorable/unfavorable leases, was $38.5 million for
the third quarter of 2009 compared to $38.8 million for the third quarter of
2008. The decrease was primarily due to the impact of exchange rates in certain
countries in which we operate.
Impairment of Long-Lived Assets. We recorded asset impairment charges on
assets held and used of $3.1 million for the third quarter of 2009 compared to
$2.3 million for the third quarter of 2008. Impairment charges for the third
quarter of 2009 were primarily for U.S. theatre properties, which were directly
and individually impacted by increased competition or changes in their
respective market.
Loss on Sale of Assets and Other. We recorded a loss on sale of assets and
other of $0.9 million during the third quarter of 2009 compared to $2.3 million
during the third quarter of 2008.
Interest Expense. Interest costs incurred, including amortization of debt
issue costs, were $25.9 million for the third quarter of 2009 compared to
$27.6 million for the third quarter of 2008. The decrease was primarily due to
decreases in interest rates on our variable rate debt.
Interest Income. We recorded interest income of $1.0 million during the third
quarter of 2009 compared to $3.8 million during the third quarter of 2008. The
decrease was primarily due to lower interest rates earned on our cash
investments.
Loss on Early Retirement of Debt. During the third quarter of 2009, we
recorded a loss on early retirement of debt of $1.1 million as a result of the
call premiums paid and other fees related to the repurchase of the remaining
$16.9 million aggregate principal amount at maturity of Cinemark, Inc.'s 9 3/4%
senior discount notes and the write-off of unamortized debt issue costs
associated with these notes.
Distributions from NCM. We recorded distributions from NCM of $4.2 million
during the third quarter of 2009 and $3.6 million during the third quarter of
2008, which were in excess of the carrying value of our investment. See Note 6
to our condensed consolidated financial statements.
Income Taxes. Income tax expense of $12.2 million was recorded for the third
quarter of 2009 compared to $10.4 million for the third quarter of 2008. The
effective tax rate was 35.6% for the third quarter of 2009 compared to 32.1% for
the third quarter of 2008.
Nine months ended September 30, 2009 and 2008 Revenues. Total revenues increased $105.6 million to $1,440.1 million for the nine months ended September 30, 2009 ("the 2009 period") from $1,334.5 million for the nine months ended September 30, 2008 ("the 2008 period"), representing a 7.9% increase. The table below, presented by reportable operating segment, summarizes our year-over-year revenue performance and certain key performance indicators that impact our revenues.
International Operating
U.S. Operating Segment Segment Consolidated
Nine Months Ended Nine Months Ended Nine Months Ended
September 30, September 30, September 30,
% % %
2009 2008 Change 2009 2008 Change 2009 2008 Change
Admissions revenues (in millions) $ 748.6 $ 672.5 11.3 % $ 193.3 $ 192.8 0.3 % $ 941.9 $ 865.3 8.9 %
Concession revenues (in millions) $ 357.0 $ 323.5 10.4 % $ 84.9 $ 86.2 (1.5 )% $ 441.9 $ 409.7 7.9 %
Other revenues (in millions) (1) $ 30.5 $ 29.0 5.2 % $ 25.8 $ 30.5 (15.4 )% $ 56.3 $ 59.5 (5.4 )%
Total revenues (in millions) (1) $ 1,136.1 $ 1,025.0 10.8 % $ 304.0 $ 309.5 (1.8 )% $ 1,440.1 $ 1,334.5 7.9 %
Attendance (in millions) 122.2 112.2 8.9 % 53.4 48.7 9.7 % 175.6 160.9 9.1 %
Revenues per screen (in dollars) (1) $ 298,615 $ 279,372 6.9 % $ 291,016 $ 305,094 (4.6 )% $ 296,978 $ 284,943 4.2 %
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(1) U.S. operating segment revenues include eliminations of intercompany transactions with the international operating segment. See Note 16 of our condensed consolidated financial statements.
• Consolidated. The increase in admissions revenues of $76.6 million was
primarily attributable to a 9.1% increase in attendance, partially offset by a
0.4% decrease in average ticket price from $5.38 for the 2008 period to $5.36
for the 2009 period. The increase in concession revenues of $32.2 million was
primarily attributable to the 9.1% increase in attendance, partially offset by a
1.2% decrease in concession revenues per patron from $2.55 for the 2008 period
to $2.52 for the 2009 period. The decreases in average ticket price and
concession revenues per patron were primarily due to the unfavorable impact of
exchange rates in certain countries in which we operate. The 5.4% decrease in
other revenues was primarily due to decreases in ancillary revenue and the
unfavorable impact of exchange rates in certain countries in which we operate.
• U.S. The increase in admissions revenues of $76.1 million was primarily
attributable to an 8.9% increase in attendance and a 2.3% increase in average
ticket price from $5.99 for the 2008 period to $6.13 for the 2009 period. The
increase in concession revenues of $33.5 million was primarily attributable to
the 8.9% increase in attendance and a 1.4% increase in concession revenues per
patron from $2.88 for the 2008 period to $2.92 for the 2009 period. The increase
in average ticket price was primarily due to incremental 3-D pricing and other
price increases and the increase in concession revenues per patron was primarily
due to price increases.
• International. The increase in admissions revenues of $0.5 million was
primarily attributable to a 9.7% increase in attendance, partially offset by an
8.6% decrease in average ticket price from $3.96 for the 2008 period to $3.62
for the 2009 period. The decrease in concession revenues of $1.3 million was
primarily attributable to a 10.2% decrease in concession revenues per patron
from $1.77 for the 2008 period to $1.59 for the 2009 period, partially offset by
the 9.7% increase in attendance. The decreases in average ticket price and
concession revenues per patron were primarily due to the unfavorable impact of
exchange rates in certain countries in which we operate. The 15.4% decrease in
other revenues was primarily due to decreases in ancillary revenue and the
unfavorable impact of exchange rates in certain countries in which we operate.
Cost of Operations. The table below summarizes certain of our theatre operating costs by reportable operating segment.
International Operating
. . .
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