# Cinemark Holdings, Inc.: Form 10-K for the period ended Dec 31, 2022

- Company: [Cinemark Holdings, Inc.](/companies/cnk.md) (CIK 1385280)
- Form: 10-K
- Filed: 2023-02-24
- Accepted by EDGAR: Feb 24, 2023, 06:46 ET
- Period: 2022-12-31
- Accession: 0000950170-23-004235
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1385280/000095017023004235/cnk-20221231.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1385280/000095017023004235/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 12 months, 2022-01-01 to 2022-12-31 | $2.45bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Interest expense | 12 months, 2022-01-01 to 2022-12-31 | $155.3m | us-gaap:InterestExpense |
| Income tax | 12 months, 2022-01-01 to 2022-12-31 | $3.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 12 months, 2022-01-01 to 2022-12-31 | −$271.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 12 months, 2022-01-01 to 2022-12-31 | −$2.26 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 12 months, 2022-01-01 to 2022-12-31 | −$2.26 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 12 months, 2022-01-01 to 2022-12-31 | 118,200,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Capital expenditure | 12 months, 2022-01-01 to 2022-12-31 | $110.7m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |

## Business

As filed, 41,973 characters.

We are a leader and one of the most geographically diverse operators in the motion picture exhibition industry. As of December 31, 2022, we operated 518 theatres and 5,847 screens in the United States, or “U.S.”, and Latin America. Our U.S. circuit operated 318 theatres and 4,399 screens and our Latin America circuit operated 200 theatres and 1,448 screens across 15 countries. Our significant and diverse presence in the U.S. and Latin America has made us an important distribution channel for movie studios and other content providers. We believe our portfolio of modern, high-quality theatres with multiple platforms provides a preferred destination for moviegoers and has contributed to our consistent industry-leading results.

As of December 31, 2022, we managed our business under two reportable operating segments: U.S. markets and international markets. See Note 22 to the consolidated financial statements.

### Impact of COVID-19 Pandemic

The COVID-19 pandemic had a significant impact on the global economy and created a strain on the movie exhibition industry along with widespread social and economic effects. We temporarily closed our theatres in the U.S. and Latin America during March of 2020 at the onset of the COVID-19 outbreak. Additionally, we implemented various cash preservation strategies, including, but not limited to, temporary personnel and salary reductions, halting non-essential operating and capital expenditures, negotiating modified timing and/or abatement of contractual payments with landlords and other major suppliers, and the suspension of our quarterly dividend.

Throughout 2020 and 2021 we reopened theatres as soon as local restrictions and the status of the COVID-19 pandemic would allow. All of our domestic and international theatres were reopened by the end of the fourth quarter of 2021. While we reopened our theatres and were able to operate, we faced ongoing challenges with the significant reduction in new film releases as our distributors considered the impact of COVID-19 on future box office potential, with many studio partners simultaneously launching streaming platforms.

The industry’s recovery from the COVID-19 pandemic is still underway and is contingent upon the volume of new film content available, as well as the box office performance of new film content released. The industry continues to adapt to the evolution of the exclusive theatrical release window, competition from streaming platforms, supply chain constraints, inflationary impacts, and other economic factors. See further discussion in Item 1a. *Risk Factors.*

### Motion Picture Exhibition Industry Overview

### Domestic

Preliminary estimates indicate that North American box office revenues were approximately $7.5 billion for 2022, up more than 64% compared with 2021. Industry statistics continued to improve through 2022 as theatres were fully reopened and there was a steadier flow of new films released.

The following table represents the results of a survey by Motion Picture Association, or MPA, published in March 2021, outlining the historical trends in North American box office performance for the five-year period from 2017 through 2021. Box office performance has historically been primarily dependent on the quality, quantity and timing of film product.

*($ in billions)*

*(in billions)*

| Year | North America Box Office Revenue | Attendance | Average Ticket Price |
| --- | ---: | ---: | ---: |
| 2017 | $11.1 | 1.24 | $8.97 |
| 2018 | $11.9 | 1.30 | $9.11 |
| 2019 | $11.4 | 1.24 | $9.16 |
| 2020 | $2.2 | 0.24 | $9.37 |
| 2021 | $4.5 | 0.47 | $9.57 |

Films released during the year ended December 31, 2022 included *Top Gun: Maverick, Black Panther: Wakanda Forever, Doctor Strange in the Multiverse of Madness, Jurassic World: Dominion, Minions: The Rise of Gru, The Batman, Thor: Love and Thunder, Sonic the Hedgehog 2, Black Adam, Elvis, Uncharted, Nope, Lightyear, Smile, The Lost City, Bullet Train,* and the highly anticipated sequel *Avatar: The Way of Water*, among other films.

Currently, films scheduled for release in 2023 include *Ant-Man and the Wasp: Quantumania, Shazam: Fury of the Gods, John Wick 4, The Super Mario Bros. Movie, Guardians of the Galaxy Vol. 3, Fast X, The Little Mermaid, Spider-man: Across the Spider-verse, Elemental, The Flash, Indiana Jones and the Dial of Destiny, Mission Impossible: Dead Reckoning Part One, The Marvels, Barbie, Oppenheimer, Dune Part Two, Hunger Games: The Ballad of Songbirds and Snakes,* and *Aquaman and the Lost Kingdom*, among other films.

### International

Preliminary estimates for Latin American box office revenues were approximately $1.8 billion for 2022, up 87% compared with 2021.

In addition to the quantity, quality and timing of Hollywood film product, performance in Latin American markets is also impacted by political and social conditions, growing populations, and continued retail development. In many Latin American countries, including Brazil, Argentina, Colombia, Peru and Chile, the quantity and quality of local film product can also impact box office revenues.

### Drivers of Continued Industry Success

Industry dynamics continue to evolve as we recover from the lingering effects of the COVID-19 pandemic, but we believe the following factors will continue to drive the strength of our industry:

***Importance of Theatrical Success in Establishing Movie Brands.*** Theatrical exhibition has long been the primary distribution channel for new major motion picture releases. In addition to representing a significant share of a film’s overall revenue, we believe a successful theatrical release “brands” a film and is one of the major contributors to a film’s success in “downstream” markets, such as digital downloads, video on-demand, network television and streaming, as well as theme parks and branded retail merchandise. For theatrical releases, we expect most of the studios to observe an exclusive theatrical window, albeit shorter than pre-COVID-19 pandemic levels.

***Convenient and Affordable Form of Premium Out-Of-Home Entertainment.*** Movie-going remains one of the most convenient and affordable forms of out-of-home entertainment, and its appeal has proven resilient to competition for consumers’ leisure spending as well as recessionary periods. The average movie ticket price in the U.S. according to MPA was $9.57 for 2021, which is well below the average prices per ticket for other forms of out-of-home entertainment in the U.S., including sporting events and theme parks. Industry data for 2022 is not yet available.

***Expansion of Concepts and Product Offerings that Enhance the Movie Viewing Experience.*** Over the last several years, the motion picture exhibition industry has invested in the development of new movie theatre amenities and concepts to respond to varying and changing consumer preferences as well as to differentiate the movie-going experience from other in-home and out-of-home entertainment options. Some examples include changing the overall style and amenities of theatres, such as expansion of concession product offerings that provide more variety to traditional popcorn, fountain drinks and candy. Enhanced digital projectors and sound equipment, luxury loungers and motion seats are offered in some locations to create an immersive movie-going experience. New alternative content is expanding the industry’s entertainment offerings to attract a broader customer base. We have also developed advanced mobile concessions ordering and delivery-to-seat options.

### Our Strategy

Our primary objective is to efficiently attract and grow attendance and box office revenue and pursue other opportunities to capture ancillary revenue, in order to maximize revenue and profitability. To achieve this, we maintain a long-term focus on (i) creating an extraordinary entertainment experience for our guests, (ii) building audiences, (iii) expanding sources of revenue, (iv) streamlining processes, and (v) optimizing our theatre footprint. Furthermore, as we continue to emerge from the impact of the COVID-19 pandemic, our near-term priorities include effectively navigating our industry’s continued recovery, expanding our content pipeline and audience base, and further strengthening the Company for long-term stability and growth.

Our long-term strategies include:

***Create an Extraordinary Guest Experience.*** We aim to differentiate our theatres and provide a high perception of value by pursuing initiatives that deliver audiences a larger-than-life, cinematic entertainment experience that is frictionless and memorable. Doing so includes world-class guest service, state-of-the-art sight and sound technology, expansive food and beverage offerings, and premium amenities, such as enhanced large format screens, luxury loungers and motion seats. We believe our ongoing focus on providing an extraordinary guest experience is a primary factor of our consistent industry-leading results.

***Build Audiences.*** We are actively focused on attracting a wider range of consumers to our theatres by expanding the variety of content and experiences we offer, while utilizing our sophisticated marketing capabilities to increase consumer interest and conversion. We continue to invest in strengthening and leveraging our omni-channel marketing platforms, showcasing a broader array of non-traditional content, and optimizing our showtime scheduling.

***Expand Sources of Revenue.*** In addition to growing audiences, we seek to expand revenue generation by creating new and incremental revenue opportunities. Examples include the introduction of additional new food and beverage offerings, honing our recently implemented e-commerce initiatives, optimizing pricing, implementing new experiential entertainment concepts, enhancing Cinemark partnership and brand tie-ins, and expanding sales channels.

***Streamline Processes.*** Through an ongoing pursuit of continuous improvement, we are actively focused on increasing productivity through process simplification, streamlining operations, and removing inefficiencies. Areas of emphasis include further progressing workforce management initiatives, automation opportunities, and utilizing advanced tools, practices, and platforms to remove time spent on administrative tasks and increasing time dedicated to our guests and employees.

***Optimize our Footprint.*** To best deliver long-term returns, we continuously assess our global theatre circuit, including varied market trends domestically and internationally, to ascertain the most advantageous strategies for growth, recalibration, and strengthening of our circuit. We perform these assessments on a market-by-market and theatre-by-theatre basis, and based on the results we determine where we are best suited to invest, the types of investment to make and the appropriate degree of investment.

### Competitive Strengths

We believe the following strengths have allowed us to compete effectively in the past, helped us navigate the impacts of the COVID-19 pandemic over the last few years and will be guiding principles as we continue to evolve post-pandemic:

***Disciplined Operating Philosophy.*** Our operating philosophy focuses on creating an extraordinary guest experience, maintaining favorable theatre-level economics, controlling operating costs and effectively reacting to economic and market changes.

***Balanced Approach to Investment and Capital Allocation.*** Our balanced and disciplined investment approach centers on thoughtfully reinvesting in our existing theatres, building new theatres and acquiring theatres that will complement our circuit. We have long believed in the combination of a strong balance sheet and ensuring our capital investments earn a solid return. This philosophy has proven to be successful and helped us enter the COVID-19 pandemic in a healthy financial position as we navigated through the temporary closure of our theatres and their subsequent phased reopening. As we continue to recover from the COVID-19 pandemic, we remain disciplined with our cash management and capital resource allocation strategies and are focused on strengthening our balance sheet, while still investing in long-term growth opportunities.

***Leading Position in Our U.S. and Latin American Markets.*** We have a leading market share in most of the U.S. markets we serve, which includes a presence in 42 states. For the year ended December 31, 2022, we ranked either first or second, based on box office revenues, in 20 of our top 25 U.S. markets, including Dallas, the San Francisco Bay Area, Houston, Salt Lake City, Sacramento, Cleveland, Austin and Las Vegas. We were one of the first circuits to begin reopening theatres in the U.S. during 2021, gaining market share of the overall North American box office as a result. We retained a meaningful portion of that market share growth throughout 2022.

We have successfully established a significant presence in major cities in Latin America, with theatres in 15 of the 20 largest metropolitan areas in Latin America as of December 31, 2022. We are the largest exhibitor in Brazil and Argentina and have significant market presence in Colombia, Peru and Chile. Our geographic diversity makes us an important global distribution channel for the movie studios. While our performance during 2020 and 2021 was impacted by the temporary closure of our theatres, we gained overall market share in Latin America as we reopened all of our theatres during 2021. We have retained a meaningful portion of that market share growth throughout 2022.

***State-of-the-Art Theatre Circuit.*** We build new theatres and consistently invest in our existing theatres to maintain a state-of-the-art movie-going experience, which we believe makes our theatres preferred destinations for moviegoers in our markets. We will continue to be opportunistic and make quality investments in our circuit, taking into consideration the extended box office recovery from the COVID-19 pandemic and our liquidity.

We offer our guests a premium large format experience through our 292 XD auditoriums, which represent the largest exhibitor-branded premium large format footprint in the industry, and 16 IMAX auditoriums across our worldwide circuit. Our XD auditoriums offer a premium experience utilizing the latest in digital projection and enhanced custom sound, including Barco Auro-Max 11.1 sound systems in select locations. The XD experience includes wall-to-wall screens, wrap-around sound, plush seating, reclining seats in 75% of our XD auditoriums and a maximum comfort entertainment environment for an immersive experience. The benefits of our XD auditoriums include program flexibility, as we can show the content of our choice with no additional revenue share component outside of routine film rental.

We have started a multi-year project to strategically convert our auditoriums to more energy efficient Cinionic RGB laser projectors, which provide greater light output than the current technology, further enhancing the movie-going experience.

We have also incorporated Luxury Lounger recliner seats into all of our recent domestic new builds and have repositioned many of our existing domestic theatres to offer this premium seating feature. We currently feature luxury loungers in 67% of our total domestic circuit.

We also have auditoriums that offer seats with immersive cinematic motion, which we refer to as motion seats, in 279 auditoriums throughout our circuit. These motion seats are programmed in harmony with the audio and video content of the film and further immerse guests into the on-screen action.

We offer enhanced food and beverages such as gourmet pizzas, burgers, and sandwiches, and a selection of beers, wine and cocktails, all of which can be enjoyed in the comfort of the auditoriums, at a majority of our theatres.

We also offer full bars or dine-in areas in many of our locations and we plan to continue to expand these amenities to additional locations. In the U.S., we offer advanced mobile concession ordering called Snacks In A Tap at virtually all of our U.S. theatres allowing guests to pre-order for select concession products and pick them up at the concession stand upon arrival or have them delivered to their seat. We also offer mobile concession ordering in most of our Latin American theatres and plan to expand delivery to seat in our Latin American theatres in 2023.

***Experienced Management.*** Led by President and Chief Executive Officer Sean Gamble, Chief Financial Officer Melissa Thomas, President International Valmir Fernandes, and Executive Vice President and General Counsel Michael Cavalier, our global operational management team has extensive industry experience. Additionally, our country general managers are local citizens familiar with political, social, cultural and economic factors impacting their country, which enables them to more effectively manage the local business. Our global management team has successfully navigated us through many industry and economic cycles over the years, and their leadership in steering the Company through the extended recovery from the COVID-19 pandemic is a testament to their abilities and effectiveness as stewards of the Company.

### Theatre Operations

As of December 31, 2022, we operated 518 theatres and 5,847 screens in 42 U.S. states and 15 Latin American countries. We opened our first theatre in the U.S. in 1984. Our domestic circuit has expanded through acquisitions and more recently through organic growth. We currently have theatres in 105 designated market areas. We first entered Latin America when we opened a theatre in Santiago, Chile in 1993. Since then, through a focused international growth strategy, we have developed one of the most geographically diverse theatre circuits in the region. We have balanced our risk through a diversified international portfolio, which included theatres in 15 of the 20 largest metropolitan areas in Latin America as of December 31, 2022. We have established significant presence in Brazil and Argentina, where we are the largest exhibitor. We also have significant market presence in Colombia, Peru and Chile.

The following table summarizes the geographic locations of our theatre circuit as of December 31, 2022.

| Country | Total Theatres | Total Screens |
| --- | ---: | ---: |
| United States | 318 | 4,399 |
| Brazil | 84 | 618 |
| Argentina | 23 | 199 |
| Colombia | 30 | 177 |
| Chile | 20 | 142 |
| Central America (1) | 17 | 114 |
| Peru | 14 | 113 |
| Ecuador | 8 | 51 |
| Bolivia | 1 | 13 |
| Paraguay | 2 | 15 |
| Curacao (2) | 1 | 6 |
| **Total** | **518** | **5,847** |

(1) Includes Honduras, El Salvador, Nicaragua, Costa Rica, Panama and Guatemala.

(2) In January 2023, we closed our theatre in Curacao.

### Content

We offer a variety of content at our theatres. We monitor upcoming films and other content and work diligently with film distributors to license content that we believe will be most successful in our theatres. We play mainstream films from many different genres, such as animated films, family films, dramas, comedies, horror and action films. We offer content in both 2-D and 3-D formats in all of our theatres, and in many locations, we offer either our own premium large format, XD or IMAX. We also offer a format that features motion seats and added sensory features.

We regularly play art, independent and Bollywood films at many of our U.S. theatres and offer local film product in our Latin American markets, providing a variety of film choices to our guests. We exhibit a variety of multi-cultural foreign language films, e-sports gaming events and private gaming parties in our theatres. Additionally, we can stream live events via satellites to every one of our theatres in the U.S. and Latin America.

Our joint venture, AC JV, LLC, with Regal Entertainment Group, or Regal, and AMC Entertainment, Inc., or AMC, provides marketing and distribution of live and pre-recorded entertainment programming through Fathom Events to movie theatres to augment theatres’ feature film schedules, which includes the Metropolitan Opera, sports programs, concert events, and other special presentations, that may be live or pre-recorded.

We continue to explore new ways to utilize our theatre platform to provide new content to our guests, including electronic gaming events, traditional sports and other live and pre-recorded events.

### Film Licensing

In the U.S., our corporate film department negotiates with film distributors to license films for each of our domestic theatres. Local film personnel in our international offices negotiate with local offices of major film distributors, local film distributors and independent content providers to license films for our international theatres. Film distributors determine film release dates and film marketing campaigns, while we are responsible for booking the films at each of our theatres at the optimal showtimes for our guests.

In both our domestic and international locations, film rental fees are based on a film’s box office receipts. The majority of film rental rates are negotiated on a sliding scale formula, under which the rate is based on a standard rate matrix that is established with each content provider prior to a film’s theatrical run. We negotiate other film rental rates on a firm terms formula, a percentage of box office receipts negotiated prior to a film’s theatrical run, or a rate that is negotiated after a film’s theatrical run.

### Food and Beverage

Concession sales are our second largest revenue source. We have expanded concession sales by enhancing our offerings and adapting to our customers’ changing preferences, as discussed below.

*Product Mix.* Core concession products offered at all of our theatres include various sizes and types of popcorn, soft drinks, coffees, non-carbonated drinks, candy and quickly-prepared or pre-prepared food, such as hot dogs, pizza, pretzel bites, nachos and ice cream. Our food and beverage offerings may vary based on consumer preferences in a particular market. We offer adult beverage options for our guests including beer, wine and cocktails, freshly-made signature Pizza Hut pizzas, burgers and sandwiches, as well as some healthier snack options and diverse ethnic foods based on market demographics.

Our point-of-sale and inventory systems allow our category managers to monitor product sales and make adjustments to product mix on a theatre-by-theatre or market-by-market basis. This program flexibility also allows us to efficiently activate and manage both national or regional product launches and promotional initiatives to further grow food and beverage sales.

New products and promotions are introduced on a regular basis to increase concession purchase incidence by existing consumers as well as to attract new consumers. In certain international countries and in all of our domestic theatres, we offer a free loyalty program that routinely offers food and beverage promotions. Our paid subscription programs allow our guests to receive exclusive concessions discounts.

*Staff Training.* Employees are continually trained in proper sales techniques, food preparation and handling and maintaining concession product quality. Many employees are also certified in food safety protocols and in serving alcoholic beverages.

*Theatre Design.* Our theatres are designed to optimize the guest purchase experience at the concession stands, which includes multiple concession counters throughout a theatre to facilitate serving guests in an expedited manner. We strategically place large concession stands within theatres to heighten visibility, reduce the length of concession lines, and improve traffic flow around the concession stands. We incorporate self-serve candy cases and bottled drink coolers at our traditional crew-serve theatres to help provide convenience for our guests, drive impulse purchases and increase product visibility for these two core categories. We also have self-service cafeteria-style concession areas in many of our domestic theatres, which allow customers to select their own food and refreshments and proceed to the cash register when they are ready. This design allows for more efficient service, and superior visibility of concession items. We also have lobby bars and VIP lounges in many domestic and international theatres.

Our proprietary Snacks in a Tap online concessions ordering capability allows moviegoers to purchase their cinema snacks in advance and have them waiting to be picked up upon arrival or delivered directly to their seat. This functionality streamlines the guest experience as it transitions from digital to in-theatre and results in added convenience and enhanced guest service for our customers. As of December 31, 2022, Snacks in a Tap is available at virtually all of our U.S. theatres. Additionally, guests in our Latin American locations can pre-pay for select concession products online or at kiosks within the theatre and pick them up at the concession stand.

*Cost Control.* We negotiate prices, volume-based rebates and promotional-based rebates for concession supplies directly with concession vendors. Concession supplies are generally managed through a distribution network, with theatres placing and receiving orders directly. We monitor inventory levels at every theatre to ensure proper stock levels are maintained to appropriately serve our guests.

Recent supply chain interruptions and inflationary pressures have impacted costs and limited product availability. Our food and beverage costs have been especially susceptible to inflationary pressures as several core commodities such as corn, soybean and canola oil experienced elevated inflationary pressures. In an effort to mitigate these higher commodity prices, we have focused on identifying alternative products as well as implementing strategic pricing actions to help offset the impact of these pressures. We source products from a variety of partners around the world to minimize supply chain interruptions and price increases, wherever possible.

### Screen Advertising

Our U.S. theatres are part of the in-theatre digital network operated by National CineMedia, LLC, or NCM. NCM provides advertising to our theatres through its branded “*Noovie”* pre-show entertainment program and also handles certain lobby promotions and displays for our theatres. We believe that the reach, scope and digital delivery capability of NCM’s network provides an effective platform for national, regional and local advertisers to reach our audience. We receive a monthly theatre access fee for participation in the NCM network and also earn screen rental revenue on a per patron basis or revenue share basis depending on the placement of the advertisement. As of December 31, 2022, we had an approximate 25.4% ownership interest in NCM. See Note 9 to the consolidated financial statements for further discussion of our investment in NCM.

Throughout our international markets, we have established our Flix Media brand that handles screen advertising functions in Brazil, Argentina, Chile, Central America, Colombia, Paraguay, Bolivia, Ecuador and Curacao. Our Flix Media marketing personnel work with local agencies and advertisers to coordinate screen advertising in our theatres as well as other theatres in our markets. In addition to screen advertising in our theatres, we continue to expand Flix Media’s services to include, among other things, alternative content, digital media and other synergistic advertising opportunities. In our other international markets, we outsource our screen advertising to local companies who have established relationships with local advertisers that provide similar programming benefits. The terms of our international screen advertising contracts vary by country; however, we generally earn screen advertising revenue on a revenue share basis.

### Marketing and Promotions

*Digital Marketing*. Our investment in digital marketing and customer experience over the past several years has enabled us to expand our reach to our guests, communicate with them on a consistent basis, and streamline their digital customer journey. We continue to adapt our platforms to engage movie-goers more effectively and make it as compelling and simple as possible for them to purchase their next movie ticket and accompanying concessions from us. Through organic and paid marketing efforts, we keep our millions of guests informed through email, social media, website and mobile app updates, and advertising to promote upcoming content and keep Cinemark elevated in the moviegoer consideration set.

Transforming the digital customer journey enables us to more effectively reach movie-goers through targeted and refined search engine optimization, and gives the customer a better experience once they are directed to our website or app. We regularly conduct comprehensive analysis of the search and ticket purchase processes on our channels, making updates that reduce clicks and decrease the friction from search to ticket purchase. Regular enhancements result in driving higher traffic volume to our digital channels and drive increased ticket purchases.

In an effort to more deeply engage with our guests, the visual identity and physical flow of our theatres are regularly assessed. This includes keeping all signage, merchandise, food and beverage vessels and employee attire updated and reflective of the modern experience. We are currently rolling out such updates across our entire circuit with new theatre designs and remodels.

*Campaigns and Promotions.* We market our theatres and special events, including new theatre grand openings, remodel openings and VIP events, using email, digital advertising, and radio and television advertising spots. We exhibit previews of coming attractions and current films as part of our on-screen pre-feature program. We offer guests access to movie times, the ability to buy their tickets and reserve their seats in advance and purchase gift cards at our website www.cinemark.com and via our mobile applications. Guests can subscribe to our emails and push notifications to receive information about current and upcoming films and events at their preferred Cinemark theatre(s), including details about upcoming XD movies, advanced ticket sales, screenings, special events, concerts, live broadcasts, contests, promotions, and our latest concessions and merchandise offerings. We partner with film distributors on a regular basis to promote upcoming films through local, regional and national programs that are exclusive to our theatres.

*Social Media.* In the evolution of our external communication, we are meeting movie-goers where they are and ensuring we are present as they scroll throughout the day. We interact with moviegoers every day on social media platforms, such as Instagram, Facebook, Snapchat, Twitter and TikTok to provide advanced ticketing, promotions, and event information and to monitor and respond to guests’ questions and feedback.

*Membership and Loyalty.* Our domestic subscription membership program, Movie Club, offers guests a standard monthly ticket credit, member-pricing for a companion ticket and concession and other transaction discounts for their choice of a monthly or annual fixed price. Movie Club is a unique option to reward our loyal guests and allows us to stay informed of frequent moviegoers’ preferences. Movie Club includes a premium tier, Movie Club Platinum, allowing members with a high visit frequency and/or high volume of ticket purchases during the year to earn additional movie ticket credits, receive an increased concessions discount and the ability to purchase additional tickets at a discounted price.

We offer a free domestic loyalty program, named Movie Fan, to our guests in the U.S. Movie Fan allows our moviegoers to earn one point for every dollar they spend. Points can then be redeemed for tickets, concession items and discounts, as well as unique and limited-edition rewards that relate to films currently playing in our theatres. Our loyalty programs are closely monitored, and updates are consistently tested to incentivize consumers to prioritize visiting our theatres.

We also have membership and loyalty programs in some of our international markets that either allow customers to pay a nominal fee for an annual membership card that provides them with certain admissions and concession discounts or that allows guests to earn loyalty points for each purchase. Similar to the Movie Fan program, our points-based international programs offer discounts on movie tickets and concessions. Our global loyalty programs put us in direct contact with our moviegoers and provide additional opportunities for us to partner with the studios and our vendors through targeted promotions.

### Competition

We are one of the leaders in the motion picture exhibition industry. We compete against local, regional, national and international exhibitors with respect to attracting guests, licensing films and developing new theatre sites. Our primary U.S. competitors include Regal and AMC and our primary international competitors, which vary by country, include Cinépolis, Cine Colombia, CinePlanet, Kinoplex (GSR), Village Cines, SuperCines and Araujo.

We are generally able to book films at many of our theatres without regard to the film bookings of other exhibitors. Our success in attracting guests can depend on customer service quality, location, theatre capacity, quality of projection and sound equipment, film showtime availability and ticket prices.

We compete for new theatre sites with other movie theatre exhibitors as well as other entertainment venues. Securing a potential site depends upon factors such as commercial terms, available investment resources, theatre design and capacity, revenue potential and financial stability of developers.

We face competition from other forms of out-of-home entertainment competing for the public’s leisure time and disposable income, including family entertainment centers, concerts, theme parks and sporting events. We also face competition for guests from a number of alternative film distribution channels, such as streaming services, digital downloads, video on-demand and network television.

### Seasonality

Our revenues have historically been seasonal, coinciding with the timing of releases of motion pictures by the major distributors. The most successful motion pictures have historically been released during summer months in the U.S., extending from May to July, and during the holiday season, extending from November through year-end. The timing of releases, however, has become less pronounced as distributors have begun releasing content more evenly throughout the year. In our Latin American markets, while Hollywood content has similar release dates as in the U.S., the local holidays and seasons can vary. The unexpected emergence of a hit film during other periods can alter this seasonality trend. The timing, quantity and quality 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.

### Corporate Operations

Our worldwide headquarters, referred to as the Cinemark Service Center, or CSC, is located in Plano, Texas. Personnel at the CSC provide oversight and support for our domestic and international theatres and includes our executive team and department heads in charge of film licensing, food and beverage, theatre operations, theatre construction and maintenance, real estate, human resources, marketing, legal, finance, accounting, tax and information technology. Our U.S. operations are comprised of regions headed by a regional vice president. We have nine regional offices in Latin America responsible for the local management of theatres in 15 countries as of December 31, 2022 (Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala and Curacao are managed out of one Central American regional office). Each regional office is headed by a general manager or a member of our international management team with additional personnel responsible for film licensing, marketing, human resources, information technology, operations and finance. We have divisional chief financial officers in Brazil and Argentina and a regional chief financial officer located in Chile that oversees Chile, Bolivia and Paraguay.

### Human Capital

Our business is seasonal and therefore, our headcount can vary throughout the year depending on the timing and success of movie releases. While we do not have unionized employees within our domestic employee base, some of our international locations are subject to union regulations.

We currently have approximately 18,100 employees in the U.S., approximately 20% of whom are full-time employees and 80% of whom are part-time employees. We have approximately 8,000 employees in our international markets, approximately 59% of whom are full-time employees and approximately 41% of whom are part-time employees.

In our Mission, Vision and Values Statement, our employees form the core of our Cinemark Values. We strive to (i) act with honesty and integrity, respect and care for each other, our guests, communities and partners, (ii) provide a safe environment for our employees and guests, (iii) be the best in what we do and (iv) empower our people to make decisions and take responsibility. Guided by our Cinemark Values, we are committed to creating a company where everyone is included and respected, and where we support each other in reaching our full potential. We take pride in the fact that many of our employees, including executive management, international general managers and field employees, have significant tenure with the Company.

To attract and retain the most qualified talent, we offer competitive benefits, including market-competitive compensation, healthcare, paid time off, parental leave, free movie passes and a 401(k) retirement savings and investment plan with generous Company matching. Additionally, many of our CSC employees are eligible to work on a hybrid schedule. We support the continuous development of professional, technical and leadership skills of our employees by offering tuition assistance, skills development courses and leadership development training in partnership with reputed institutions. Employees are encouraged to provide feedback about their experience through periodic employee engagement surveys.

To foster a corporate culture of transparency and collaboration, our senior management regularly conducts “town-hall” style meetings with employees to share, among other matters, the Company’s performance, business conditions and market challenges, and to respond to employee concerns through question-and-answer sessions. Employees are also encouraged to provide feedback about their experience through periodic employee engagement surveys. These voluntary surveys provide overall and department-specific reports and enable us to improve employee experience and culture. We aspire to provide a safe, open and accountable work environment for our employees. We provide a hotline for all employees to report workplace concerns and violations with the option to report on an anonymous basis. We address such concerns and take appropriate actions that uphold our Cinemark Values.

In recognition and gratitude for our moviegoing communities, we strongly encourage team members to give back to the community. For the past several years, we have held annual service days for team members. Through

Cinemark Cares, we support local and national charitable organizations through monetary and product donations, or donations of employees’ time or expertise. We are a proud long-term corporate partner with several charities and host an annual golf tournament to raise funds for these and other selected charities.

### Regulations

The distribution of motion pictures is largely regulated by antitrust laws and was the subject of numerous antitrust cases in the past. The manner in which we can license films from certain major film distributors has been influenced by consent decrees and other court orders resulting from these cases. Consent decrees that bound certain major film distributors expired during 2022. These consent decrees required distributors to offer and license films to exhibitors, including Cinemark, on a theatre-by-theatre and film-by-film basis. Consequently, exhibitors have not entered into long-term arrangements with major distributors but must negotiate for licenses on a theatre-by-theatre and film-by-film basis. While the consent decrees may no longer be in effect, we are still subject to the antitrust laws, and we do not anticipate a material shift in the way films are licensed.

We are subject to various general regulations applicable to our operations including the Americans with Disabilities Act of 1990, or the ADA, and regulations promulgated by the U.S. Food and Drug Administration and certain state laws that require nutrition labels for certain menu items. Our domestic and international theatre operations are also subject to federal, state and local laws governing such matters as data privacy, wages, working conditions, citizenship, health and sanitation requirements and various business licensing and permitting.

### Financial Information About Geographic Areas

We currently have operations in the U.S., Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao, and Paraguay, which are reflected in the consolidated financial statements. See Note 22 to the consolidated financial statements for segment information and financial information by geographic area.

## Risk factors

As filed, 45,584 characters.

An investment in Holdings’ common stock or Holdings’ or CUSA’s debt securities involves risks and uncertainties, and our actual results and future trends may differ materially from our past or projected future performance. We urge investors to consider carefully the risk factors described below in addition to the other information contained in this report, in evaluating our Company and our business.

### Risks Related to the COVID-19 Pandemic

***The COVID-19 pandemic has disrupted our industry and our business and could continue to affect our financial condition, liquidity, cash flows, results of operations and ability to service our existing and future indebtedness.***

The outbreak of the COVID-19 pandemic has disrupted our industry and our business for an extended period of time. While all of our theatres have been reopened since December 31, 2021, our business, results of operations, liquidity, cash flows and financial condition continue to be impacted by the COVID-19 pandemic. One of the key factors that has affected our business is the consistent availability of new films for exhibition at our theatres. Due to the COVID-19 pandemic, production of films was temporarily halted or delayed and new film releases were postponed, resulting in a reduction in the volume of new films available for theatrical exhibition. Certain studios have reduced the window for video and digital releases or released films directly to alternative distribution channels such as streaming services simultaneous with a theatrical release. In addition, studios may determine that certain types of film content will not be released for theatrical exhibition in the future and will go straight to streaming platforms.

In response to the COVID-19 pandemic federal, state and local governments implemented restrictions that limited in-person gathering and/or movement of guests. Even as restrictions have been lifted, consumers may not yet be comfortable gathering in a large group or within a closed space for a few hours at a time, which could have an adverse effect on our business by resulting in fewer guests and reduced revenue.

The outbreak of COVID-19 has also significantly increased economic and demand uncertainty, and it is possible that it could cause a global recession. For additional information on risks related to a slowdown or recession, and inflationary, supply chain and wage rate pressures, see “—Other General Risks—General political, social, health and economic conditions can adversely affect our business.”

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, including but not limited to those relating to our high level of indebtedness, our need to generate sufficient cash flows to service our indebtedness and our ability to comply with the covenants contained in the agreements that govern our indebtedness.

### Risks Related to Our Business and Operations

### Our business depends on film production and performance.

Our business depends on both the availability of films for exhibition in our theatres and the success of those films in our markets. Reduced volume of film releases, poor performance of films, the disruption in the production of films due to events such as a strike by directors, writers or actors, a reduction in financing options for the film distributors, or a reduction in the production and marketing efforts of the film distributors to make and promote their films could have an adverse effect on our business by resulting in fewer patrons and reduced revenue. During 2022, the quantity of new film releases available for theatrical exhibition improved as the industry began to recover from the impacts of the COVID-19 pandemic, however studios may continue to determine that certain types of films will not be released for theatrical exhibition and will go straight to streaming platforms, impacting the quantity of films available.

### Our results of operations fluctuate on a seasonal basis.

Our results of operations vary from period to period based upon the quantity and quality of the motion pictures that we show in our theatres. The major film distributors generally release the films they anticipate will be most successful during the summer and holiday seasons. Consequently, we typically generate higher revenue during these periods. The timing of releases, however, has become less pronounced as distributors have begun releasing content at other times throughout the year. In our Latin American markets, while Hollywood content has similar release dates as in the U.S., the local holidays and seasons vary. The unexpected emergence of a successful film during other periods or the failure of an expected success at a key time could alter this seasonality trend. Due to the dependency on the success of films released from one period to the next, results of operations for one period may not be indicative of the results for future periods.

***A deterioration in relationships with film distributors could adversely affect our ability to obtain commercially successful films.***

We rely on the film distributors to supply the films shown in our theatres. The film distribution business is highly concentrated, with five major film distributors accounting for approximately 91.6% of U.S. box office revenues and 46 of the top 50 grossing films during 2022. Film distributors license films to exhibitors on a theatre-by-theatre and film-by-film basis. Consequently, we cannot guarantee a supply of films by entering into long-term arrangements with major distributors. A deterioration in our relationship with any of the major film distributors could adversely affect our ability to obtain commercially successful films and to negotiate favorable licensing terms for such films, both of which could adversely affect our business and operating results.

***We face intense competition for patrons and films which may adversely affect our business.***

The motion picture exhibition industry is highly competitive. We compete against local, regional, national and international exhibitors in many of our markets. We compete for both patrons and licensing of films. In markets where we do not face nearby competitive theatres, there is a risk of new theatres being built. The degree of competition for patrons is dependent upon such factors as location, theatre capacity, presentation quality, film showtime availability, customer service quality, products and amenities offered, and ticket prices. The principal competitive factors with respect to film licensing include the theatre’s location and its demographics, the condition, capacity and grossing potential of each theatre, and licensing terms. We also face competition from new concept theatres such as dine-in theatres, tavern style theatres and family entertainment centers, that open in close proximity to our conventional theatres. If we are unable to attract patrons or to license successful films, our business may be adversely affected.

***An increase in competing forms of entertainment or the use of alternative film distribution channels may reduce movie theatre attendance and limit revenue growth.***

We compete with other forms of out-of-home entertainment, such as family entertainment centers, concerts, theme parks, gaming and sporting events, for our patrons’ leisure time and disposable income. We also face competition for patrons from a number of alternative film distribution channels, such as streaming, digital downloads, video on-demand and network television. We have seen an expansion in these distribution channels in recent years. A significant increase in popularity of these alternative film distribution channels, competing forms of entertainment or improvements in technologies available at home could have an adverse effect on our business and results of operations.

***Our results of operations may be impacted by the shrinking, or elimination of, video and digital release windows.***

The average video and digital release window, which represents the time that elapses from the date of a film’s theatrical release to the date a film is available for DVD, was approximately 90 days and digital purchase for ownership (also known as electronic sell-through) was approximately 74 days for several years prior to the COVID-19 pandemic. During the COVID-19 pandemic, certain studios adopted strategies that reduced, or in some cases eliminated, the release windows. Select studios released certain movie titles to their own streaming platforms either simultaneously with theatrical releases or bypassed theatrical releases altogether. If studios continue to reduce or eliminate the windows for certain films even after the industry recovers or, if our guests choose to wait for an in-home release rather than attend a theatre to view the film, it may continue to adversely impact our business and results of operations, financial condition and cash flows.

***Our foreign operations are subject to adverse regulations, economic instability and currency exchange risk.***

We have 200 theatres with 1,448 screens in fifteen countries in Latin America as of December 31, 2022. Brazil represented approximately 7% of our consolidated 2022 revenues. Governmental regulation of the motion picture industry in foreign markets differs from that in the U.S. Changes in regulations affecting prices and quota systems requiring the exhibition of locally-produced films may adversely affect our international operations. Our international operations are subject to certain political, economic and other uncertainties not encountered by our domestic operations, including risks of severe economic downturns and high inflation. We also face risks of currency fluctuations, hard currency shortages and controls of foreign currency exchange and cash payments to the U.S., all of which could have an adverse effect on the results of our operations.

### Tight labor market and loss of key personnel may negatively impact our operations and operating results

Labor shortages may affect our ability to hire and retain employees. The success of our business depends on our ability to recruit and retain our theatre staff. Without proper staffing, wait times to buy tickets and concessions may be extended and operating hours may be reduced. These conditions could result in a poor guest experience, which could adversely affect future attendance. We could face similar challenges with respect to retaining corporate employees. Losing the services of one or more senior executives, or other key personnel, could adversely affect our ability to execute our business strategies and could have an adverse effect on our business, financial condition, and results of operations, especially if we were unable to timely employ a qualified replacement. Labor shortages could also result in rising wages, affecting our profits.

***We are subject to impairment losses due to potential declines in the fair value of our assets.***

We have a significant amount of long-lived assets. We evaluate long-lived assets for impairment at the theatre level. Therefore, if a theatre is directly and individually impacted by increased competition, adverse changes in market demographics, or adverse changes in the development or condition of the areas surrounding the theatre, we may record impairment charges to reflect the decline in estimated fair value of that theatre.

We also have a significant amount of goodwill and tradename intangible assets. Declines in our stock price or market capitalization, declines in our attendance due to increased competition, or economic factors that lead to a decline in attendance could result in impairments of goodwill and our intangible assets.

***We are subject to uncertainties relating to future expansion plans, including our ability to identify suitable acquisition candidates or new theatre site locations, and to obtain financing for such activities on favorable terms or at all.***

We have expanded our operations through targeted worldwide theatre development and acquisitions. We continue to pursue a strategy of expansion that involves the development of new theatres and may involve acquisitions of existing theatres and theatre circuits both in the U.S. and internationally. There is significant competition for new site locations and for existing theatre and theatre circuit acquisition opportunities. As a result of such competition, we may not be able to acquire attractive new site locations, existing theatres or theatre circuits on terms we consider acceptable. The pace of our growth may also be impacted by delays in site development caused by other parties. Acquisitions and expansion opportunities may divert a significant amount of management’s time away from the operation of our business. Growth by acquisition also involves risks relating to difficulties in integrating the operations and personnel of acquired companies and the potential loss of key employees of acquired companies. Our potential expansion strategy may not result in improvements to our business, financial condition, profitability or cash flows. Further, our expansion programs may require financing above our existing borrowing capacity and operating cash flows. We may not be able to obtain such financing or ensure that such financing will be available to us on acceptable terms, or at all.

### Risks Related to Financing and Liquidity

***We have substantial long-term lease and debt obligations, which may restrict our ability to fund current and future operations and that restrict our ability to enter into certain transactions.***

We have significant long-term debt service obligations and long-term lease obligations. As of December 31, 2022, Holdings had $2,516.6 million in long-term debt obligations, which included $2,056.6 million of CUSA debt and excludes unamortized debt issuance costs. As of December 31, 2022, Holdings and CUSA had $102.4 million in finance lease obligations and $1,189.9 million in long-term operating lease obligations. The substantial lease and debt obligations pose risk by:

- requiring us to dedicate a substantial portion of our cash flows to payments on our lease and debt obligations, thereby reducing the availability of our cash flows from operations to fund working capital, capital expenditures, acquisitions and other corporate requirements and to pay dividends on Holdings’ common stock;
- impeding our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions and other purposes;
- subjecting us to the risk of increased sensitivity to interest rate increases on our variable rate debt;
- limiting our ability to invest in innovations in technology and implement new platforms or concepts in our theatres; and
- making us more vulnerable to adverse economic, market and industry conditions, limit our flexibility in planning for, or reacting to, changes in our business operations or to our industry overall, and place us at a disadvantage in relation to our competitors that may have lower debt levels.

Holdings’ and CUSA’s ability to make scheduled payments of principal and interest on their respective indebtedness will depend on our ability to generate positive cash flows and on our future financial results. Our ability to generate positive cash flows is subject to general economic, financial, competitive, regulatory and other factors that are beyond our control. As we continue to recover from the COVID-19 pandemic, we may not be able to generate cash flows at historical levels, or guarantee that future borrowings will be available under our senior secured credit facility, in an amount sufficient to enable us to pay our indebtedness. If our cash flows and capital resources are insufficient to fund our lease and debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness. We may not be able to take any of these actions, and these actions may not be successful or permit us to meet our scheduled debt service obligations and these actions may be restricted under the terms of our existing or future debt agreements, including our senior secured credit facility.

If we fail to make any required payment under the agreements governing our leases and indebtedness or fail to comply with the financial and operating covenants contained in them, we would be in default, and as a result, our debt holders would have the ability to require that we immediately repay our outstanding indebtedness and the lenders under our senior secured credit facility could terminate their commitments to lend us money and foreclose against the assets securing their borrowings. We could be forced into bankruptcy or liquidation. The acceleration of our indebtedness under one agreement may permit acceleration of indebtedness under other agreements that contain cross-default and cross-acceleration provisions. If our indebtedness is accelerated, we may not be able to repay our indebtedness or borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms or on terms that are acceptable to us. If our debt holders require immediate payment, we may not have sufficient assets to satisfy our obligations under our indebtedness.

***A lowering or withdrawal of the ratings assigned or a change in outlook to our outstanding debt securities by rating agencies may increase our future borrowing costs and reduce our access to capital.***

We are rated by nationally recognized rating agencies. The rating scales and methodologies used to derive individual ratings may vary from agency to agency. Credit ratings are issued by credit rating agencies based on evaluations of our ability to pay back our outstanding debt and the likelihood that we would default on that debt prior to its maturity. The credit ratings issued by the rating agencies represent the rating agency's evaluation of both qualitative and quantitative information for our company. The credit ratings that are issued are based on the rating agency’s judgment and experience in determining what information should be considered in giving a rating to a particular company. Ratings are always subject to change and there can be no assurance that our current ratings will remain the same for any given period of time.

Our debt currently has a non-investment grade rating, and any rating assigned could be lowered (or outlook thereof could be changed) or withdrawn entirely by a rating agency if, in that rating agency’s judgment, future circumstances relating to the basis of the rating, such as adverse changes in our business or industry, so warrant. Any future lowering of our ratings likely would make it more difficult or more expensive for us to obtain additional debt financing. In particular, our access to the capital markets may be impacted, our other funding sources may decrease, the cost of debt may increase as a result of increased interest rates or fees, and we may be required to provide additional credit assurances, including collateral, under certain contracts or arrangements.

***Holdings’ inability to raise funds necessary to settle conversions of, or to repurchase, the 4.50% Convertible Senior Notes (as defined below), upon a fundamental change as described in the indenture governing the 4.50% Convertible Senior Notes, may lead to defaults under such indenture and under agreements governing our existing or future indebtedness.***

If Holdings settles the 4.50% Convertible Senior Notes by cash, or by a combination of cash and shares of our common stock, upon a fundamental change as described in the indenture governing the 4.50% Convertible Senior Notes, Holdings will be required to make cash payments with respect to the 4.50% Convertible Senior Notes being converted. However, Holdings may not have enough available cash or be able to obtain financing at the time it is required to settle the 4.50% Convertible Senior Notes being surrendered or converted. In addition, Holdings’ ability to settle the 4.50% Convertible Senior Notes or to pay cash upon conversion of the 4.50% Convertible Senior Notes is limited by the agreements governing CUSA’s existing indebtedness and may also be limited by law, by regulatory authority or by agreements that will govern future indebtedness. Holdings’ failure to settle the 4.50% Convertible Senior Notes at a time when the repurchase is required by the indenture governing the 4.50% Convertible Senior Notes or to pay cash payable on future conversions of the 4.50% Convertible Senior Notes as required by such indenture would constitute a default under such indenture. A default under the indenture governing the 4.50% Convertible Senior Notes or the fundamental change itself could also lead to a default under agreements governing CUSA’s existing or future indebtedness.

***The conditional conversion feature of the 4.50% Convertible Senior Notes, if triggered, may adversely affect our financial condition and operating results.***

In the event the conditional conversion feature of the 4.50% Convertible Senior Notes is triggered, holders of the 4.50% Convertible Senior Notes will be entitled to convert the 4.50% Convertible Senior Notes at any time during specified periods at their option. If one or more holders elect to convert their 4.50% Convertible Senior Notes, Holdings may elect to satisfy its conversion obligations by payment and delivery of a combination of cash and shares of its common stock. Settlement of this conversion obligation through the payment of cash could adversely affect Holdings’ and CUSA’s liquidity. In addition, even if holders do not elect to convert their 4.50% Convertible Senior Notes, Holdings could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 4.50% Convertible Senior Notes as a current rather than long-term liability, which would result in a material reduction of its net working capital.

***Conversion of the 4.50% Convertible Senior Notes may dilute the ownership interest of existing stockholders, or may otherwise depress the price of Holdings’ common stock.***

The conversion of some or all of the 4.50% Convertible Senior Notes will dilute the ownership interests of existing stockholders to the extent Holdings delivers shares of its common stock upon conversion of any of the 4.50% Convertible Senior Notes. The 4.50% Convertible Senior Notes may from time to time in the future be convertible at the option of their holders prior to their scheduled terms under certain circumstances. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of its common stock. In addition, the existence of the 4.50% Convertible Senior Notes may encourage short selling by market participants because the conversion of the 4.50% Convertible Senior Notes could be used to satisfy short positions, or anticipated conversion of the 4.50% Convertible Senior Notes into shares of Holdings’ common stock could depress the price of Holdings’ common stock.

***The 4.50% Convertible Senior Notes Hedge Transactions and Warrant Transactions (each as defined below) may affect the value of Holdings’ common stock.***

In connection with the pricing of the 4.50% Convertible Senior Notes, Holdings entered into Hedge Transactions with, and sold Warrants (as defined below) to, Option Counterparties (as defined below). The Hedge Transactions are expected generally to reduce the potential dilution to Holdings’ common stock upon any conversion of the 4.50% Convertible Senior Notes and/or offset any cash payments Holdings is required to make in excess of the principal amount of converted 4.50% Convertible Senior Notes, as the case may be. The Warrants would separately have a dilutive effect to the extent that the market price per share of Holdings’ common stock exceeds the strike price of any Warrants on the applicable expiration dates unless, subject to the terms of the Warrants, Holdings elects to cash settle the Warrants. In addition, the Option Counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to Holdings’ common stock and/or purchasing or selling Holdings’ common stock or other securities of Holdings’ in secondary market transactions prior to the maturity of the 4.50% Convertible Senior Notes (and are likely to do so during any observation period related to a conversion of the 4.50% Convertible Senior Notes or following any repurchase of the 4.50% Convertible Senior Notes by us in connection with any fundamental change repurchase date or otherwise). This activity could also cause or avoid an increase or decrease in the market price of Holdings’ common stock.

In addition, if any such Hedge Transactions and Warrants fail to become effective, the Option Counterparties or their respective affiliates may unwind their hedge positions with respect to Holdings’ common stock, which could adversely affect the market price of its common stock. The potential effect, if any, of these transactions and activities on the market price of Holdings’ common stock will depend in part on market conditions and cannot be ascertained at this time. Any of these activities could adversely affect the value of Holdings’ common stock.

***Holdings is subject to counterparty risk with respect to the 4.50% Convertible Senior Notes Hedge Transactions.***

The Option Counterparties are financial institutions or affiliates of financial institutions, and Holdings will be subject to the risk that one or more of such Option Counterparties may default under the Hedge Transactions. Holdings’ exposure to the credit risk of the Option Counterparties will not be secured by any collateral. If any Option Counterparty becomes subject to insolvency proceedings, Holdings will become an unsecured creditor in those proceedings with a claim equal to its exposure at that time under its transactions with that counterparty. Holdings’ exposure will depend on many factors but, generally, the increase in Holdings’ exposure will be correlated to the increase in Holdings’ common stock market price and in the volatility of the market price of Holdings’ common stock. In addition, upon a default by the Option Counterparty, Holdings may suffer adverse tax consequences and more dilution than it currently anticipates with respect to its common stock. Holdings can provide no assurance as to the financial stability or viability of any Option Counterparty.

***A credit market crisis may adversely affect our ability to raise capital and may materially impact our operations.***

Severe dislocations and liquidity disruptions in the credit markets could materially impact our ability to obtain debt financing on reasonable terms or at all. The inability to access debt financing on reasonable terms could materially impact our ability to make acquisitions, invest in technology innovations or significantly expand our business in the future.

### Holdings’ ability to pay dividends may be limited or otherwise restricted.

Holdings’ ability to pay dividends is limited by its status as a holding company and the terms of CUSA’s senior notes indentures and CUSA’s senior secured credit facility, which restrict Holdings’ ability to pay dividends and the ability of certain of its subsidiaries to pay dividends, directly or indirectly, to Holdings. Under CUSA’s debt instruments, we may pay a cash dividend up to a specified amount, provided we have satisfied certain financial covenants in, and are not in default under, CUSA’s debt instruments. The declaration of future dividends on Holdings’ common stock, par value $0.001 per share, or Common Stock, will be at the discretion of Holdings’ board of directors and will depend upon many factors, including our results of operations, cash flows, financial condition, earnings, capital requirements, limitations in CUSA’s debt agreements and legal requirements. Holdings suspended its dividend in March 2020 due to the impacts of the COVID-19 pandemic and it is uncertain when Holdings will resume paying dividends.

***Future sales of Holdings’ common stock may adversely affect the prevailing market price.***

Future sales of substantial amounts of Holdings’ common stock in the open market and the issuance of the shares reserved for future issuance under Holdings’ incentive plan, in exchange for outstanding warrants, conversion of outstanding 4.50% Convertible Senior Notes, or in connection with acquisitions or other corporate events, will be dilutive to Holdings’ existing stockholders and could result in a decrease in Holdings’ stock price. Holdings cannot predict whether substantial amounts of its common stock will be sold in the open market in anticipation of, or following, any divestiture by any of its large stockholders, its directors or executive officers of their shares of common stock. Holdings can also issue shares of its common stock which are authorized but unissued and not reserved for any specific purpose without any action or approval by its stockholders.

***We may not be able to generate additional revenue or continue to realize value from our investment in NCM.***

As of December 31, 2022, we owned 43.7 common units of NCM, which represented an ownership interest in NCM of approximately 25.4%. CUSA receives monthly theatre access and advertising fees under an Exhibitor Services Agreement with NCM, and CUSA has received quarterly distributions of excess cash from NCM pursuant to NCM’s operating agreement. During the years ended December 31, 2020, 2021 and 2022, Holdings and CUSA each recorded approximately $36.0 million, $44.1 million and $52.2 million in other revenue related to NCM, respectively, $14.1 million, $0.2 million and $0 million in cash distributions recorded as a reduction of the investment in NCM, respectively, and $7.0 million, $0.1 million and $0 in cash distributions in excess of the investment in NCM, respectively. On February 23, 2022, we redeemed substantially all of our common units of NCM for an equal number of common shares in National Cinemedia, Inc. (“NCMI”). Distributions of excess cash from NCM to its members, including NCMI, are currently restricted through December 2023 in accordance with the credit agreement amendment NCM entered into with its lenders, and NCMI has suspended its dividend. Cinema advertising is a small component of the U.S. advertising market and therefore, NCM competes with larger, more established and well-known media platforms such as broadcast radio and television, cable and satellite television, outdoor advertising and Internet portals. In-theatre advertising may not continue to attract advertisers or NCM’s in-theatre advertising format may not continue to be received favorably by theatre patrons. If NCM is unable to continue to generate consistent advertising revenue, its results of operations may be adversely affected and our investment in NCM may be adversely impacted. NCM has a substantial amount of indebtedness and has been significantly impacted by the COVID-19 pandemic. If a bankruptcy case were commenced by or against NCM, it is possible that our Exhibitor Services Agreement would be rejected or renegotiated and it is possible that we may lose all of our equity in NCM. Additionally, Cineworld Group plc (“Cineworld”) (the parent company of Regal Entertainment, Inc. (“Regal”)), filed for bankruptcy under Chapter 11 in September 2022. As part of the bankruptcy proceedings, Cineworld has filed motions to reject Regal’s Exhibitor Services Agreement. If the rejection of the Exhibitor Services Agreement is approved or if Regal closes or disposes of a significant number of theatres, NCM’s advertising revenue will be adversely impacted.

NCMI’s stock price was $0.22 per share at December 31, 2022, which was significantly below the Company’s carrying value of NCM per common unit. As a result of the decrease in stock price and the prolonged recovery of NCM’s business, during the year ended December 31, 2022 we wrote-down CUSA’s investment in NCM by $113.2 million to its estimated fair value. Since NCM's revenues are primarily dependent on theatre attendance, future NCM revenues and future dividends from NCMI will depend on the continued recovery of the motion picture exhibition industry.

### Regulatory Risks

***We are subject to various government regulations which could result in substantial costs.***

We are subject to various federal, state and local laws, regulations and administrative practices in the U.S. and internationally. We must comply with laws regulating, among other things, antitrust activities, employment environment, sale of concession goods, alcoholic beverages, data protection and privacy and Title III of the Americans with Disabilities Act of 1990 ("ADA") and similar state disability rights laws. Compliance with the ADA and similar disability rights laws requires us as a public accommodation to reasonably accommodate individuals with disabilities. This applies to the construction of new theatres, certain renovations, existing theatres, websites and mobile applications and presentations for the blind, deaf and hard of hearing. Changes in existing laws, regulations or administrative practices or new laws, regulations or administrative practices could have a significant impact on our business.

***We may face data protection, data security, and privacy risks in connection with privacy regulation.***

Strict data privacy laws regulating the collection, transmission, storage and use of employee data and consumers’ personally identifying information are evolving in the U.S. and other jurisdictions in which we operate. These laws impose compliance obligations for the collection, use, retention, security, processing, transfer and deletion of personally identifiable information of individuals and creates enhanced rights for individuals. These changes in the legal and regulatory environments in the areas of customer and employee privacy, data security, and cross-border data flows could have a material adverse effect on our business, primarily through the impairment of our marketing and transaction processing activities, the limitation on the types of information that we may collect, process and retain, the resulting costs of complying with such legal and regulatory requirements and potential monetary forfeitures and penalties for noncompliance.

### We may be subject to increased labor and benefits costs.

In the U.S., we are subject to United States federal and state laws governing such matters as minimum wages, working conditions and overtime. We are also subject to union regulations in certain of our international markets, which can specify wage rates as well as minimum hours to be paid to certain employees. As federal and state minimum wage rates increase, we may need to increase not only the wages of our minimum wage employees, but also the wages paid to employees at wage rates that are above minimum wage. Labor market conditions have also recently driven increases in wages across our labor base and similar increases may continue in the future. Labor shortages, increased employee turnover and health care mandates could also increase our labor costs. This in turn could lead us to increase prices, which could impact our sales. Conversely, if competitive pressures or other factors prevent us from offsetting increased labor costs by increases in prices, our results of operations may be adversely impacted.

***Provisions in Holdings’ corporate documents and certain of CUSA’s agreements, as well as Delaware law, may hinder a change of control.***

Provisions in the Holdings amended and restated certificate of incorporation and bylaws, as well as provisions of the Delaware General Corporation Law, could discourage unsolicited proposals to acquire us. These provisions include:

- authorization of Holdings’ board of directors to issue shares of preferred stock without stockholder approval;
- a board of directors classified into three classes of directors with the directors of each class having staggered, three-year terms;
- provisions regulating the ability of Holdings’ stockholders to nominate directors for election or to bring matters for action at annual meetings of its stockholders; and
- provisions of Delaware law that restrict many business combinations and provide that directors serving on classified boards of directors, may be removed only for cause.

Certain provisions of CUSA’s 8.75% secured notes indenture, 5.25% senior notes indenture, CUSA’s 5.875% senior notes indenture and CUSA’s senior secured credit facility may have the effect of delaying or preventing future transactions involving a “change of control.” A “change of control” would require us to make an offer to the holders of each of its 8.75% Secured Notes, 5.25% Senior Notes and 5.875% Senior Notes to repurchase all of the outstanding notes at a purchase price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest to the date of purchase. A “change of control” would also be an event of default under CUSA’s senior secured credit facility.

### Risks Related to Information Security and Business Disruptions

***An information security incident, including a cyber security breach, and our failure to protect our electronically stored data could adversely affect our business or reputation.***

We collect, use, store and maintain electronic information and data necessary to conduct our business, including confidential and proprietary information of the company, our customers, and our employees. We also rely on the availability of information technology systems to operate our business, including for communications, receiving and displaying movies, ticketing, guest services, payments, and other general operations. We rely on some of our vendors to store and process certain data and to manage, host, and/or provide some of our information technology systems. Because of the scope and complexity of our information technology systems, our reliance on vendors to provide, support and protect our systems and data, and the constantly evolving cyber-threat landscape, our information technology systems are subject to the risk of disruption, failure, unauthorized access, cyber-terrorism, human error, misuse, tampering, theft, and other cyber-attacks. These or similar events, whether accidental or intentional, could result in theft, unauthorized access or disclosure, loss, fraudulent or unlawful use of customer, employee or company data, which could harm our reputation or result in a loss of business, as well as remedial and other costs, fines, investigations, enforcement actions or lawsuits. These or similar events could also lead to an interruption in the operation of our systems resulting in business impact, including loss of business. Those same scope, complexity, reliance, and changing cyber-threat landscape factors could also affect our ability to adapt to and comply with changing regulations and contractual obligations applicable to data security and privacy, which are increasingly demanding, both in the United States and in other jurisdictions where we operate. In order to address these risks, we have adopted security measures and technology, operate a security program, and work continuously to evaluate and improve our security posture. However, the development and maintenance of these systems and programs are costly and require ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. As such, there can be no assurance that these or similar events will not occur in the future or will not have an adverse effect on our business and results of operation.

In addition to Company-specific cyber threats or events, our business and results of operations could also be impacted by cyber-related events affecting our peers and partners within the entertainment industry, as well as other retail companies. We maintain insurance designed to provide coverage for cyber risks related to what we believe to be adequate and collectible insurance in the event of the theft, loss, fraudulent or unlawful use of customer, employee or company data, but the foregoing events or future events could result in costs and business impacts which may not be covered or may be in excess of any available insurance that we may have procured. As a result, future events could have a material impact on our business and adversely affect our financial condition and results of operations.

### Other General Risks

***General political, social, health and economic conditions can adversely affect our business.***

Our results of operations are dependent on general political, social, health and economic conditions, and the impact of such conditions on our theatre operating costs and on the willingness of consumers to spend money at movie theatres. If consumers’ discretionary income declines during a period of an economic downturn or political uncertainty, our operations could be adversely affected. If theatre operating costs, such as utility costs, increase due to political or economic changes, our results of operations could be adversely affected. Supply chain interruptions may increase costs and limit product availability, as reduced supply of certain commodities and labor shortages in the transportation industry have led to limitations in product availability and continued increases in product pricing. Political events, such as terrorist attacks, and health-related pandemics or epidemics, such as flu or other virus outbreaks, could cause people to avoid our theatres or other public places where large crowds are in attendance, which could adversely affect our results of operations. In addition, a natural disaster, such as a hurricane or an earthquake, could impact our ability to operate certain of our theatres, which could adversely affect our results of operations.

***A failure to adapt to future technological innovations could impact our ability to compete effectively and could adversely affect our results of operations.***

While we continue to invest in technological innovations, such as laser projectors and motion seats, new technological innovations continue to impact our industry. If we are unable to respond to or invest in changes in technology and the technological preferences of our customers, we may not be able to compete with other exhibitors or other entertainment venues, which could adversely affect our results of operations.

***Legislative or regulatory initiatives related to global warming/climate change concerns may negatively impact our business.***

Recently, there has been an increasing focus and continuous debate on global climate change including increased attention from regulatory agencies and legislative bodies. This increased focus may lead to new initiatives directed at regulating an as-yet unspecified array of environmental matters. Legislative, regulatory or other efforts in the U.S. to combat climate change could result in future increases in the cost of raw materials, taxes, transportation and utilities for our vendors and for us which would result in higher operating costs for the Company. Also, compliance of our theatres and accompanying real estate with new and revised environmental, zoning, land-use or building codes, laws, rules or regulations, could have a material and adverse effect on our business. However, we are unable to predict at this time, the potential effects, if any, that any future environmental initiatives may have on our business.

### We may be subject to liability under environmental laws and regulations.

We own and operate a large number of theatres and other properties within the U.S. and internationally, which may be subject to various foreign, federal, state and local laws and regulations relating to the protection of the environment or human health. Such environmental laws and regulations include those that impose liability for the investigation and remediation of spills or releases of hazardous materials. We may incur such liability, including for any currently or formerly owned, leased or operated property, or for any site, to which we may have disposed, or arranged for the disposal of, hazardous materials or wastes. Certain of these laws and regulations may impose liability, including joint and several liability, which can result in a liable party being obliged to pay for greater than its share, regardless of fault or the legality of the original disposal. Environmental conditions relating to our properties or operations could have an adverse effect on our business and results of operations and cash flows.

***Product recalls and associated costs could adversely affect our reputation and financial condition.***

We may be found liable if the consumption of any of the products we sell causes illness or injury. We are also subject to recall by product manufacturers or if the food products become contaminated. Recalls could result in losses due to the cost of the recall, the destruction of the product and lost sales due to the unavailability of the product for a period of time.

## Properties

As filed, 1,613 characters.

The following table sets forth a summary of our theatres in U.S. and international markets as of December 31, 2022:

| Segment | Leased Theatres | Owned Theatres |
| --- | ---: | ---: |
| U.S. | 277 | 41 |
| International | 200 | — |
| **Total** | **477** | **41** |

See also Item 1, *Business – Theatre Operations*, for a summary of the geographic locations for our U.S. and international theatre circuit as of December 31, 2022.

The Company conducts a significant part of its theatre operations in leased properties under noncancelable operating and finance leases with base terms generally ranging from 10 to 25 years. In addition to fixed lease payments, some of the leases provide for variable lease payments and some require the payment of taxes, insurance, common area maintenance and other costs applicable to the property. Variable lease payments include payments based on a percentage of sales over defined thresholds or payments adjusted periodically for inflation or changes in pricing or attendance. The Company can renew, at its option, a substantial portion of the leases at defined or then market rental rates for various periods. Some leases also provide for escalating rent payments throughout the lease term. See Note 4 to the consolidated financial statements for further discussion of our leases.

In addition to our theatre properties, we currently own an office building in Plano, Texas, which is our worldwide headquarters. We lease office space in Frisco, Texas and a warehouse in McKinney, Texas. We also lease office space in seven regions in Latin America for our local office teams.

## Legal proceedings

As filed, 160 characters.

For a discussion of contingencies related to legal proceedings, see Note 21 to the consolidated financial statements, which is hereby incorporated by reference.

## Management's discussion and analysis

As filed, 82,412 characters.

*Cinemark Holdings, Inc. is a holding company and its wholly-owned subsidiary is Cinemark USA, Inc. Holdings consolidates CUSA and its subsidiaries for financial statement purposes, and CUSA comprises approximately the entire balance of Holdings’ assets, liabilities and operating cash flows. In addition, CUSA’s operating revenue and operating expenses comprise nearly 100% of Holdings’ revenue and operating expenses. As such, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) that follows is for Holdings and CUSA in all material respects, unless otherwise noted. Differences between the operations and results of Holdings and CUSA are separately disclosed and explained. Where it is important to distinguish between the entities, we either refer specifically to Holdings or CUSA. Otherwise, all references to “we,” “our,” “us,” “the Company” or “Cinemark” relate to Cinemark Holdings, Inc. and its consolidated subsidiaries and all references to CUSA relate to CUSA and its consolidated subsidiaries.*

*The following discussion and analysis should be read in conjunction with the financial statements and accompanying notes included in this report. This discussion may contain forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of the uncertainties and risks associated with these statements. Discussion regarding our financial condition and results of operations for 2021 compared with 2020 is included in Item 7 of Holdings’ 2021 Annual Report on Form 10-K filed on February 25, 2022 and CUSA’s 2021 Annual Report on Form 10-K filed on March 9, 2022.*

### Overview

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 December 31, 2022, we managed our business under two reportable operating segments – U.S. markets and international markets. See Note 22 to the consolidated financial statements.

### Impact of COVID-19 Pandemic

The COVID-19 pandemic had a significant impact on the global economy and created a strain on the movie exhibition industry along with widespread social and economic effects. We temporarily closed our theatres in the U.S. and Latin America during March of 2020 at the onset of the COVID-19 outbreak. Additionally, we implemented various cash preservation strategies, including, but not limited to, temporary personnel and salary reductions, halting non-essential operating and capital expenditures, negotiating modified timing and/or abatement of contractual payments with landlords and other major suppliers, and the suspension of our quarterly dividend.

Throughout 2020 and 2021 we reopened theatres as soon as local restrictions and the status of the COVID-19 pandemic would allow. All of our domestic and international theatres were reopened by the end of the fourth quarter of 2021. While we reopened our theatres and were able to operate, we faced ongoing challenges with the significant reduction in new film releases as our distributors considered the impact of COVID-19 on future box office potential, with many studio partners simultaneously launching streaming platforms.

The industry’s recovery from the COVID-19 pandemic is still underway and is contingent upon the volume of new film content available, as well as the box office performance of new film content released. The industry continues to adapt to the evolution of the exclusive theatrical release window, competition from streaming platforms, supply chain constraints, inflationary impacts, and other economic factors.

### Revenue and Expenses

We generate revenue primarily from filmed entertainment box office receipts and concession sales, with additional revenue from screen advertising, screen rental 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. We also offer alternative entertainment, such as the Metropolitan Opera, concert events, in-theatre gaming, live and pre-recorded sports programs and other special events in our theatres. NCM provides our domestic theatres with various forms of in-theatre advertising. Our Flix Media subsidiaries provide screen advertising and alternative content for our international circuit and to other international exhibitors.

Films released during the year ended December 31, 2022 included *Top Gun: Maverick, Black Panther: Wakanda Forever, Doctor Strange in the Multiverse of Madness, Jurassic World: Dominion, Minions: The Rise of*

*Gru, The Batman, Thor: Love and Thunder, Sonic the Hedgehog 2, Black Adam, Elvis, Uncharted, Nope, Lightyear, Smile, The Lost City, Bullet Train,* and the highly anticipated sequel *Avatar: The Way of Water*, among other films.

Currently, films scheduled for release in 2023 include *Ant-Man and the Wasp: Quantumania, Shazam: Fury of the Gods, John Wick 4, The Super Mario Bros. Movie, Guardians of the Galaxy Vol. 3, Fast X, The Little Mermaid, Spider-man: Across the Spider-verse; Elemental; The Flash; Indiana Jones and the Dial of Destiny; Mission Impossible: Dead Reckoning Part One, The Marvels, Barbie, Oppenheimer, Dune Part Two, Hunger Games: The Ballad of Songbirds and Snakes,* and *Aquaman and the Lost Kingdom, among other films.*

There are several key factors impacting the industry box office's continued recovery from the COVID-19 pandemic, including the availability and quality of new films released, the duration of the exclusive theatrical release windows and evolving consumer behavior with competition from streaming platforms and other forms of entertainment.

Film rental costs are variable in nature and fluctuate with our admissions revenue. Film rental costs as a percentage of revenue are generally higher for periods in which more blockbuster films are released. The Company previously received virtual print fees (VPFs) from studios for certain of its international locations, which were included as a contra-expense in film rental and advertising costs on the consolidated statements of income. However, these costs were fully recovered during 2021, and as a result, were not received during 2022 and will not be received in future periods. Advertising costs, which are expensed as incurred, are primarily related to expanding our customer base, increasing the frequency of visits and growing loyalty. These expenses vary depending on the timing and length of such campaigns.

Concession supplies expense is variable in nature and fluctuates with our concession revenue and also product mix. Supply chain interruptions and inflationary pressures have impacted, and may continue to impact, product costs and product availability in the near term. We source products from a variety of partners around the world to minimize supply chain interruptions and price increases, wherever possible.

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 tend to move in relation to revenue as theatre staffing is adjusted to respond to changes in attendance. Staffing levels may vary based on the amenities offered at each location, such as full-service restaurants, bars or expanded food and beverage options. In certain international locations, staffing levels are also subject to local regulations, including minimum hour requirements. Labor market conditions and inflationary pressures have driven increases in wages across our labor base and similar increases may continue in the future.

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 revenue is also affected by the number of theatres under operating leases, the number of theatres under finance leases and the number of owned theatres.

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

General and administrative expenses to support the overall management of the Company are primarily fixed in nature with certain variable components. Fixed expenses include salaries, wages and benefits costs for our corporate office personnel, facility expenses for our corporate and other offices, software license and maintenance costs and audit fees. Some variable expenses may include incentive compensation, consulting and legal fees, supplies and other costs that are not specifically associated with the operations of our theatres.

### Critical Accounting Policies and Estimates

Holdings and CUSA each prepare their consolidated financial statements in conformity with generally accepted accounting principles in the U.S., or U.S. GAAP. As such, Holdings and CUSA are each required to make certain estimates and assumptions that it believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The significant accounting policies and estimates, which we believe are the most critical to aid in fully understanding and evaluating Holdings’ and CUSA’s reported consolidated financial results, include the following:

#### Revenue and Expense Recognition

Our 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. We recognize such admissions revenue when the showtime for a purchased movie ticket has passed. Concession revenue is recognized when products are sold to the consumer, or if purchased in advance, based on the showtime associated with the customer’s movie ticket. Other revenue primarily consists of screen advertising, screen rental revenue, promotional income, studio trailer placements and transactional fees. Except for NCM screen advertising advances (see Note 9 to the consolidated financial statements), these revenues are generally recognized when we have performed the related services. We sell gift cards and discount ticket vouchers, the proceeds from which are recorded as deferred revenue. Deferred revenue for gift cards and discount ticket vouchers is recognized when they are redeemed for concession items or, if redeemed for movie tickets, when the showtime has passed. We generally record breakage revenue on gift cards and discount ticket vouchers based on redemption activity and historical experience with unused balances. We offer a subscription program in the U.S. whereby patrons can pay a monthly or annual fee to receive a monthly credit for use towards a future movie ticket purchase. We record the subscription program fees as deferred revenue and record admissions revenue when the showtime for a movie ticket purchased with a credit has passed. We have loyalty programs in the U.S. and many of our international locations that either have a prepaid annual fee or award points to customers as purchases are made. For those loyalty programs that have a prepaid annual fee, we recognize the fee collected as other revenue on a straight-line basis over the term of the program. For those loyalty programs that award points to customers based on their purchases, we record a portion of the original transaction proceeds as deferred revenue based on the number of reward points issued to customers and recognize the deferred revenue when the customer redeems such points. The value of loyalty points issued is based on the estimated fair value of the rewards offered. We record breakage revenue on deferred loyalty and subscription revenue generally upon the expiration of points and subscription credits, respectively. 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.

Film rental costs are based on the film licensing arrangements and accrued based on the applicable box office receipts and either; 1) a sliding scale formula, which is generally established prior to the opening of the film, 2) a firm terms formula as negotiated prior to a film’s theatrical run or 3) estimates of the final settlement rate, which occurs at the conclusion of the film’s run. Under a sliding scale formula, we pay a percentage of box office revenues using a pre-determined scale that is based upon box office performance of the film for its full theatrical run. Under a firm terms formula, we pay the distributor a percentage of box office receipts, that can either be an aggregate rate for the full theatrical run or rates that decline over the term of the theatrical run. The settlement process allows for negotiation of film rental fees upon the conclusion of the film's theatrical run based upon how the film performs. Estimates are based on the expected success of a film. The success of a film can generally be determined a few weeks after a film is released when the initial box office performance of the film is known. If actual settlements are different than those estimates, film rental costs are adjusted at that time.

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 of our leases are subject to monthly percentage rent only, which is accrued each month based on actual revenues. Certain of our other theatres require payment of percentage rent in addition to fixed monthly rent if an annual target revenue level is achieved. Percentage rent expense is estimated and recorded for these theatres on a monthly basis if the theatre’s historical performance or forecasted performance indicates that the annual target revenue level will be reached. Once annual revenues are known, the timing of which is based on the respective lease agreement, percentage rent expense is adjusted at that time.

Theatre properties and equipment are depreciated using the straight-line method over their estimated useful lives. In estimating the useful lives of our theatre properties and equipment, we have relied upon our experience with such assets and our historical replacement period. We periodically evaluate these estimates and assumptions and adjust them as necessary. Leasehold improvements for which we pay, and to which we have title, are amortized over the lesser of their useful life or the remaining initial lease term.

#### Long-Lived Assets Impairment Evaluaitons

We review long-lived assets for impairment indicators on a quarterly basis or whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable. We also perform a full quantitative impairment evaluation on an annual basis. We assess many factors including the following to determine whether to impair individual theatre assets:

- actual theatre level cash flows;
- budgeted or forecast theatre level cash flows;
- theatre property and equipment carrying values;
- operating lease right-of-use asset carrying values;
- the age of a recently built theatre;
- competitive theatres in the marketplace;
- the impact of recent theatre remodels or other substantial improvements;
- available lease renewal options; and
- other factors considered relevant in our assessment of impairment of individual theatre assets.

Long-lived assets are evaluated for impairment on a theatre level, which we believe is the lowest applicable level for which there are identifiable cash flows. The impairment evaluation is based on the estimated undiscounted cash flows from continuing use through the remainder of the theatre’s useful life. The remainder of the theatre’s useful life correlates with the remaining lease period, which includes the probability of the exercise of available renewal periods for leased properties, and the lesser of twenty years or the building’s remaining useful life for owned properties. If the estimated undiscounted cash flows are not sufficient to recover a long-lived asset’s carrying value, we then compare the carrying value of the asset group (theatre) with its estimated fair value. When estimated fair value is determined to be lower than the carrying value of the asset group (theatre), the asset group (theatre) is written down to its estimated fair value. Significant judgment is involved in estimating cash flows and fair value. Fair value is determined based on a multiple of cash flows. 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, are based on historical and projected operating performance, recent market transactions and current industry trading multiples.

See further discussion of our impairment evaluation policy in Note 1 of the consolidated financial statements. See a summary of the impairment evaluations performed and impairments recorded during the years ended December 31, 2020, 2021 and 2022 in Note 12 to the consolidated financial statements.

#### Goodwill and Intangible Assets Impairment Evaluations

We evaluate 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. We evaluate goodwill for impairment at the reporting unit level and we have allocated goodwill to the reporting unit based on an estimate of its relative fair value. Management considers its reporting units to be the U.S. and each of its international countries that has been allocated goodwill (the Company does not have goodwill recorded for all of its international locations). Management evaluates goodwill at the U.S. market level as its U.S. regions have similar economic characteristics. Under a quantitative goodwill impairment analysis, the Company estimates the fair value of each reporting unit and compares it with its carrying value. Fair value is estimated using the market and income approaches, which consider a multiple of cash flows for each reporting unit as the basis for fair value. Significant judgment including management’s estimate of future theatre level cash flows for each theatre is involved in estimating fair value of a reporting unit. The Company’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, are based on projected operating performance of each reporting unit, relevant market transactions and industry trading multiples. Under ASC Topic 350, *Goodwill, Intangibles and Other*, we may perform a qualitative impairment assessment or a quantitative impairment assessment of our goodwill.

Tradename intangible assets are tested for impairment at least annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value may not be fully recoverable. Under ASC Topic 350, we can elect to perform a qualitative or quantitative impairment assessment for our tradename intangible assets. A quantitative tradename impairment assessment includes comparing the carrying values of tradename assets to their estimated fair value. Fair values are estimated by applying an estimated market royalty rate that could be charged for the use of our tradenames to forecasted future revenues, with an adjustment for the present value of such royalties. If the estimated fair value is less than the carrying value, the tradename intangible asset is written down to its estimated fair value. Significant judgment is 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, are based on historical and projected revenue performance and industry trends. The Company’s qualitative assessment considers industry and market conditions and recent developments that may impact the revenue forecasts and other estimates as compared to its most recent quantitative assessment.

See further discussion of our impairment evaluation policy in Note 1 of the consolidated financial statements. See a summary of the impairment evaluations performed and impairments recorded during the years ended December 31, 2020, 2021 and 2022 in Note 12 to the consolidated financial statements.

#### Income Taxes

CUSA participates in the consolidated return of Holdings; however, CUSA’s provisions for income taxes are computed on a stand-alone basis. We use an asset and liability approach to financial accounting and reporting for income taxes. Deferred income taxes are provided when tax laws and financial accounting standards differ with respect to the amount of income for a year and the basis of assets and liabilities. A valuation allowance is recorded to reduce the carrying amount of deferred tax assets unless it is more likely than not that such assets will be realized. Income taxes are provided on unremitted earnings from foreign subsidiaries unless such earnings are expected to be indefinitely reinvested. Income taxes have also been provided for potential tax assessments. The evaluation of an uncertain tax position is a two-step process. The first step is recognition: We determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, we presume that the position would be examined by the appropriate taxing authority that would have full knowledge of all relevant information. The second step is measurement: A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements result in (1) a change in a liability for income taxes payable or (2) a change in an income tax refund receivable, a deferred tax asset or a deferred tax liability or both (1) and (2). We accrue interest and penalties on uncertain tax positions. See Note 20 to the consolidated financial statements for further discussion of income taxes.

#### Accounting for Investment in National CineMedia, LLC and Related Agreements

We have an investment in NCM. NCM operates a digital in-theatre network in the U.S. providing cinema advertising. The Company entered into an Exhibitor Services Agreement, or ESA, with NCM pursuant to which NCM primarily provides advertising to its domestic theatres. On February 13, 2007, National CineMedia, Inc., or 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 NCMI initial public offering, the Company amended its operating agreement and the ESA. At the time of the NCM IPO and as a result of amending the ESA, the Company received approximately $174 million in cash consideration from NCM. The proceeds were recorded as deferred revenue, or NCM screen advertising advances, and are being amortized over the term of the amended and restated ESA, which expires in February 2041. Following the NCMI IPO, the Company will 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 the cash distributions it receives from NCM on its Tranche 1 Investment as a component of earnings reflected as Distributions from NCM. The Company believes that the accounting model provided by ASC 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.

In addition to the consideration received upon the NCMI IPO and ESA modification in 2007, the Company also periodically receives consideration in the form of common unit adjustments from NCM. Pursuant to a Common Unit Adjustment Agreement dated as of February 13, 2007 between NCMI and the Company, AMC and Regal, collectively referred to as the 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. The common units received (collectively referred to as the Company’s “Tranche 2 Investment”) are recorded at fair value as an increase in the Company’s investment in NCM with an offset to deferred revenue or NCM screen advertising advances. The Company’s Tranche 2 Investment is accounted for following the equity method, with undistributed equity earnings related to its Tranche 2 Investment included as a component of equity in income of affiliates and distributions received related to its Tranche 2 Investment recorded as a reduction of its investment basis. The fair value of the common units received is estimated based on the market price of NCMI common stock (Level 1 input as defined in FASB ASC Topic 820, *Fair Value Measurement*) at the time the common units are determined, adjusted for volatility associated with the estimated time period it would take to convert the common units and register the respective shares.

The Company evaluates its investment in NCM for impairment that is other than temporary on a quarterly basis or whenever events or changes in circumstances indicate the current value of the investment may be less than its carrying value. Under ASC Topic 323, *Investments - Equity Method and Joint Ventures*, a loss in value of an investment that is other than a temporary decline should be recognized. Factors that are considered in evaluating whether a decline in the value of an investment is other than temporary include a severe and sustained decline in the quoted market price of an investment below the carrying value of the investment, or specific events that may adversely influence the operations of the investee in a permanent or irreversible manner.

See Note 9 to the consolidated financial statements for further discussion of our investment in NCM and our assessment of its fair market value and other than temporary impairments.

### Results of Operations

The following table sets forth, for the periods indicated, the amounts for certain items reflected in operating loss of Holdings along with each of those items as a percentage of revenue.

| Operating data (in millions): Revenue | Year Ended December 31, 2020 | 2021 | 2022 |
| --- | ---: | ---: | ---: |
| Admissions | $356.5 | $780.0 | $1,246.9 |
| Concession | 231.1 | 561.7 | 938.3 |
| Other | 98.7 | 168.8 | 269.5 |
| Total revenue | $686.3 | $1,510.5 | $2,454.7 |
| Cost of operations (1) |  |  |  |
| Film rentals and advertising | 186.8 | 415.0 | 704.4 |
| Concession supplies | 48.6 | 97.9 | 169.3 |
| Salaries and wages | 145.0 | 232.9 | 372.7 |
| Facility lease expense | 279.8 | 280.0 | 308.3 |
| Utilities and other | 229.5 | 282.9 | 407.2 |
| General and administrative expenses | 127.6 | 161.1 | 177.6 |
| Depreciation and amortization | 259.8 | 265.4 | 238.2 |
| Impairment of long-lived assets | 152.7 | 20.8 | 174.1 |
| Restructuring costs | 20.4 | (1.0) | (0.5) |
| (Gain) loss on disposal of assets and other | (8.9) | 8.0 | (6.8) |
| Total cost of operations | 1,441.3 | 1,763.0 | 2,544.5 |
| Operating loss | $(755.0) | $(252.5) | $(89.8) |
| **Operating data as a percentage of total Revenue:** |  |  |  |
| Revenue |  |  |  |
| Admissions | 51.9% | 51.6% | 50.8% |
| Concession | 33.7% | 37.2% | 38.2% |
| Other | 14.4% | 11.2% | 11.0% |
| Total revenue | 100.0% | 100.0% | 100.0% |
| Cost of operations (2) |  |  |  |
| Film rentals and advertising | 52.4% | 53.2% | 56.5% |
| Concession supplies | 21.1% | 17.4% | 18.0% |
| Salaries and wages | N/A | 15.4% | 15.2% |
| Facility lease expense | N/A | 18.5% | 12.6% |
| Utilities and other | N/A | 18.7% | 16.6% |
| General and administrative expenses | N/A | 10.7% | 7.2% |
| Depreciation and amortization | N/A | 17.6% | 9.7% |
| Impairment of long-lived assets | N/A | 1.4% | 7.1% |
| Restructuring costs | N/A | (0.1)% | 0.0% |
| (Gain) loss on disposal of assets and other | N/A | 0.5% | (0.3)% |
| Total cost of operations | N/A | 116.7% | 103.7% |
| Operating loss | N/A | (16.7)% | (3.7)% |
| Average screen count (3) | N/A | 5,890 | 5,849 |
| Revenue per average screen (in dollars) | N/A | $256,445 | $419,675 |

(1) The only difference between components of operating loss for Holdings, as presented above, and those of CUSA is incremental general and administrative expense recognized by Holdings. The following table sets forth, for the periods indicated, the amounts for general and administrative expense, total cost of operations and operating loss of CUSA:

| Operating data (in millions): Cost of operations | Year Ended December 31, 2020 | 2021 | 2022 |
| --- | ---: | ---: | ---: |
| General and administrative expenses | $125.4 | $158.5 | $174.6 |
| Total cost of operations | $1,439.1 | $1,760.4 | $2,541.5 |
| Operating loss | $(752.8) | $(249.9) | $(86.8) |

(2) All costs are expressed as a percentage of total revenue, except film rentals and advertising, which are expressed as a percentage of admissions revenue and concession supplies, which are expressed as a percentage of concession revenue. Certain values are considered not applicable (“N/A”) during 2020 as they are not comparable due to theatre closures as a result of the COVID-19 pandemic.

(3) Average screen count is calculated based on the average of month end screen counts.

### Comparison of Years Ended December 31, 2022 and December 31, 2021

*Year ended December 31, 2021 -* We reopened our remaining theatres throughout the first half of the year as the status of the COVID-19 pandemic and local regulations would allow. As of December 31, 2021, all of our domestic and international theatres were open. The North American Industry box office totaled approximately $4.5 billion during 2021 with library content and a limited number of new releases, which included *Shang-Chi and the Legend of the Ten Rings, Black Widow, F9 The Fast Saga, A Quiet Place Part II, Jungle Cruise, Free Guy, Godzilla vs. Kong, Cruella, Space Jam: A New Legacy and The Conjuring: The Devil Made Me Do It.*

*Year ended December 31, 2022 -* The North American Industry box office generated approximately $7.5 billion during 2022, which included blockbuster films such as *Top Gun: Maverick, Black Panther: Wakanda Forever, Doctor Strange in the Multiverse of Madness, Jurassic World: Dominion, Minions: The Rise of Gru, The Batman, Thor: Love and Thunder, Sonic the Hedgehog 2, Black Adam, Elvis, Uncharted, Nope, Lightyear, Smile, The Lost City, Bullet Train,* and the highly anticipated sequel *Avatar: The Way of Water*, among other films.

*Revenue.* The table below, presented by reportable operating segment, summarizes our year-over-year revenue performance and certain key performance indicators that impact our revenues.

|  | U.S. Operating Segment 2022 | 2021 | % Change | International Operating Segment 2022 | 2021 | % Change | Constant Currency (3) 2022 | % Change | Consolidated 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Admissions revenue | $1,010.2 | $671.7 | 50.4% | $236.7 | $108.3 | 118.6% | $258.8 | 139.0% | $1,246.9 | $780.0 | 59.9% |
| Concession revenue | $763.0 | $482.8 | 58.0% | $175.3 | $78.9 | 122.2% | $193.7 | 145.5% | 938.3 | $561.7 | 67.0% |
| Other revenue (1) | $197.0 | $139.1 | 41.6% | $72.5 | $29.7 | 144.1% | $78.7 | 165.0% | 269.5 | $168.8 | 59.7% |
| Total revenue (1) | $1,970.2 | $1,293.6 | 52.3% | $484.5 | $216.9 | 123.4% | $531.2 | 144.9% | $2,454.7 | $1,510.5 | 62.5% |
| Attendance | 109.3 | 73.0 | 49.7% | 63.4 | 32.6 | 94.5% |  |  | 172.7 | 105.6 | 63.5% |
| Average ticket price (2) | $9.24 | $9.20 | 0.4% | $3.73 | $3.32 | 12.3% | $4.08 | 22.9% | $7.22 | $7.39 | (2.3)% |
| Concession revenue per patron (2) | $6.98 | $6.61 | 5.6% | $2.76 | $2.42 | 14.0% | $3.06 | 26.4% | $5.43 | $5.32 | 2.1% |

(1) U.S. operating segment revenue includes eliminations of intercompany transactions with the international operating segment. See Note 22 to the consolidated financial statements.

(2) Average ticket price is calculated as admissions revenue divided by attendance. Concession revenue per patron is calculated as concession revenue divided by attendance.

(3) Constant currency revenue amounts, which are non-GAAP measurements, were calculated using the average exchange rate for the corresponding month for 2021. 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.* Attendance increased 49.7% to 109.3 million patrons in 2022 compared with 73.0 million patrons in 2021 due to the improved state of the COVID-19 pandemic and a more consistent cadence of new film releases with broad consumer appeal. Average ticket price increased 0.4% to $9.24 during 2022 compared with $9.20 during 2021, driven by strategic pricing initiatives partially offset by a higher mix of matinee and weekday showtimes and fewer Private Watch Parties. Concession revenue per patron increased 5.6% to $6.98 during 2022 compared with $6.61 during 2021 driven by strategic pricing initiatives. Other revenue for 2022 increased 41.6% to $197.0 million compared with $139.1 million for 2021 primarily due to attendance growth, which drove an increase in screen advertising, transaction fees, and promotional revenue.
- *International.* Attendance increased 94.5% to 63.4 million patrons in 2022 compared with 32.6 million in 2021 due to the lifting of COVID-19 related restrictions as well as a more consistent cadence of new film releases with broad consumer appeal. Average ticket price was $3.73 as reported, $4.08 in constant currency, for 2022 compared with $3.32 for 2021. The increase in average ticket price in constant currency was primarily due to

inflationary and strategic pricing actions and higher premium ticket mix. Concession revenue per patron was $2.76 as reported, $3.06 in constant currency, for 2022 compared with $2.42 in 2021. The increase in concession revenue per patron in constant currency was due to inflationary and strategic pricing actions and higher purchase incidence. Other revenue for 2022 increased 144.1% to $72.5 million compared with $29.7 million in 2021 primarily due to higher attendance, which drove an increase in screen advertising, transaction fees and promotional revenue.

*Cost of Operations.* The table below, presented by reportable operating segment, summarizes certain of our theatre operating costs (in millions) for the years ended December 31, 2021 and 2022.

|  | U.S. Operating Segment 2022 | 2021 | International Operating Segment 2022 | 2021 | Constant Currency 2022 (1) | Consolidated 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Film rentals and advertising | $584.4 | $360.0 | $120.0 | $55.0 | $131.7 | $704.4 | $415.0 |
| Concession supplies | 130.5 | 79.5 | 38.8 | 18.4 | 42.9 | 169.3 | 97.9 |
| Salaries and wages | 314.7 | 198.2 | 58.0 | 34.7 | 64.0 | 372.7 | 232.9 |
| Facility lease expense | 250.1 | 242.2 | 58.2 | 37.8 | 62.8 | 308.3 | 280.0 |
| Utilities and other | 313.7 | 232.1 | 93.5 | 50.8 | 101.2 | 407.2 | 282.9 |

(1) Constant currency expense amounts, which are non-GAAP measurements, were calculated using the average exchange rates for the corresponding months for 2021. 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 for 2022 were 57.8% of admissions revenue compared with 53.6% for 2021. The rate for 2022 reflected the success of the new film releases discussed above under *Revenue and Expenses*, while the rate for 2021 reflected limited new film releases that skewed lower on our negotiated film rental scales. Concession supplies expense for 2022 was 17.1% of concession revenue compared with 16.5% of concession revenue for 2021. The increase in the concession supplies rate for 2022 was due to inflationary and supply chain pressures on certain concession categories, partially offset by the impact of strategic pricing initiatives on concession revenue.

Salaries and wages increased to $314.7 million compared with $198.2 million for 2021 as a result of significantly higher attendance, expanded operating hours and wage rate increases with average hourly rates up approximately 10.0% over 2021, partially offset by efficiencies and streamlined operations. Facility lease expense, which is primarily fixed in nature, increased to $250.1 million primarily due to higher percentage rent and an increase in common area maintenance costs. Utilities and other costs increased to $313.7 million, as many of these costs, such as janitorial costs, utilities costs, credit card fees, repairs and maintenance and security costs, are variable in nature and were impacted by the expansion of operating hours, a significant increase in attendance and inflationary pressures.

- *International.* Film rentals and advertising costs for 2022 were 50.7% of admissions revenue compared with 50.8% for 2021. Concession supplies expense was 22.1% of concessions revenue compared with 23.3% of concession revenue for 2021. The decrease in concessions supplies rate was primarily driven by the impact of strategic pricing initiatives on concession revenue.

Salaries and wages increased to $58.0 million as reported for 2022 due to significantly higher attendance, expanded operating hours and wage rate increases. Facility lease expense increased to $58.2 million as reported due to the higher percentage rent driven by higher revenue and the return of certain minimum rent thresholds compared with 2021. Utilities and other costs increased to $93.5 million as reported, as many of these costs are variable in nature, such as utilities, credit card fees, screen advertising commissions, janitorial costs and repairs and maintenance, and were impacted by the significant increase in attendance for 2022 and inflation. These expenses, as reported, were also impacted by exchange rates in each of the countries in which we operate.

*General and Administrative Expense.* General and administrative expense for Holdings increased to $177.6 million for 2022 compared with $161.1 million for 2021. General and administrative expense attributable to CUSA increased to $174.6 million for 2022 compared with $158.5 million for 2021. The increase for both Holdings and CUSA is primarily due to higher staffing levels, wages and benefits inflation, higher incentive compensation and professional fees and a shift to cloud-based software.

*Depreciation and Amortization.* Depreciation and amortization expense decreased to $238.2 million for 2022 from $265.4 million for 2021 primarily due to the impairment of theatre assets during 2021.

*Impairment of Long-Lived Assets.* We recorded asset impairment charges of $174.1 million during 2022 and $20.8 million during 2021. Long-lived asset impairment charges of approximately $60.9 million were recorded in 2022, impacting six countries, due primarily to the prolonged recovery of certain theatres from the COVID-19 pandemic. In addition, we recorded an impairment of $113.2 million for our investment in NCM as NCMI's stock price was significantly below the Company's carrying value of NCM per common unit and due to the prolonged recovery of NCM's business. The asset impairment charges recorded during 2021 impacted seven countries and were primarily related to certain theatres that were not showing sufficient recovery after reopening when compared with the rest of our theatre circuit. See Note 12 to the consolidated financial statements.

*Restructuring costs.* The credits of $(0.5) million and $(1.0) million to restructuring costs during 2022 and 2021, respectively, were primarily due to adjustments based on final facility lease payments for certain closed theatres as compared with recorded amounts. See Note 3 to the consolidated financial statements for further discussion.

*(Gain) Loss on Disposal of Assets and Other.* A gain on disposal of assets and other of $(6.8) million was recorded during 2022 compared with a loss of $8.0 million during 2021. Activity for 2022 was primarily related to the sale of excess land parcels. Activity for 2021 was primarily related to a litigation settlement reserve and the write-off of certain digital projectors that were replaced with laser projectors, partially offset by gains on the sales of excess land parcels.

*Interest Expense.* Interest expense for Holdings, which includes amortization of debt issuance costs and amortization of accumulated losses for swap amendments, increased to $155.3 million during 2022 compared with $149.7 million for 2021. The interest expense attributable to CUSA, which includes amortization of debt issue costs and amortization of accumulated losses for swap amendments, was $131.2 million during 2022 compared with $125.6 million for 2021. The increase for both Holdings and CUSA was primarily due to the issuance of the 5.875% Senior Notes and 5.25% Senior Notes to refinance the 5.125% Senior Notes and 4.875% Senior Notes, respectively, during 2021. See further discussion at *Liquidity and Capital Resources - Financing Activities* below.

*Loss on Extinguishment of Debt.* We recorded a loss on extinguishment of debt of $6.5 million during 2021 related to the refinancing of CUSA’s 5.125% Senior Notes and 4.875% Senior Notes, including the write-off of the related unamortized debt issuance costs and legal and other fees paid. See Note 14 to the consolidated financial statements.

*Foreign Currency Exchange Loss.* We recorded a foreign currency exchange loss of $11.5 million during 2022 and $1.3 million during 2021 primarily related to intercompany transactions and changes in exchange rates from original transaction dates until cash settlement. See Notes 1 and 16 to the consolidated financial statements for discussion of foreign currency translation.

*Cash and Non-Cash Distributions from DCIP.* We recorded cash distributions from DCIP of $3.7 million during 2022 compared with $13.1 million during 2021. These distributions were in excess of the carrying value of our investment in DCIP. See Note 10 to the consolidated financial statements for discussion of our investment in DCIP.

*Equity in Loss of Affiliates.* Equity in loss of affiliates of $9.3 million was recorded during 2022 compared with $25.0 million during 2021. The decrease in equity in loss of affiliates is due to the ongoing recovery of our equity investees' performance as the industry continues to recover. See Notes 9 and 10 to the consolidated financial statements for information about our equity investments.

*Income Taxes - Holdings.* An income tax expense of $3.0 million was recorded for 2022 compared with an income tax benefit of $(16.8) million for 2021. The effective tax rate was approximately (1.1)% for 2022 compared with 3.8% for 2021. As a result of continued pre-tax losses in 2022 and 2021, the 2022 and 2021 effective tax rates were impacted by valuation allowances related to certain deferred tax assets for which the ultimate realization is uncertain. We have recorded an income tax receivable of $45.1 million at December 31, 2022 and have paid cash taxes of $4.6 million during the year ended December 31, 2022. See Note 20 to the consolidated financial statements for further discussion of income taxes.

*Income Taxes - CUSA.* An income tax benefit of $(13.1) million was recorded for 2022 compared with an income tax benefit of $(32.3) million for 2021. The effective tax rate was approximately 5.4% for 2022 compared with 7.8% for 2021. As a result of continued pre-tax losses in 2022 and 2021, the 2022 and 2021 effective tax rates were impacted by valuation allowances related to certain deferred tax assets for which the ultimate realization is uncertain. We have recorded an income tax receivable of $45.1 million at December 31, 2022 and have paid cash taxes of $4.6 million during the year ended December 31, 2022. See Note 20 to the consolidated financial statements for further discussion of income taxes.

### Liquidity and Capital Resources

### Operating Activities

We primarily collect our revenue in cash, mainly through box office receipts and the sale of concessions. Our revenue is generally 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. We temporarily closed all of our theatres during March 2020 and funded operating expenses with cash on hand and new financing discussed below under *Financing Activities* while theatres were closed and as we reopened our theatres. During the latter part of 2021, as we began to show a steady stream of new film content and our theatres were returning to more consistent operating hours, we began to generate positive cash flows from operations and transition back to our historical working capital “float” position. However, our working capital position will continue to fluctuate based on seasonality, the timing and volume of new film content, the timing of interest payments on our long-term debt as well as timing of payment of other operating expenses that are paid annually or semi-annually, such as property and other taxes and incentive bonuses. We believe our existing cash and expected cash flows from operations will be sufficient to meet our working capital, capital expenditures, and expected cash requirements from known contractual obligations for the next twelve months and beyond.

Cash provided by operating activities was $136.0 million for Holdings and $153.4 million for CUSA for the year ended December 31, 2022 compared with $166.2 million for Holdings and $176.4 million for CUSA for the year ended December 31, 2021. The decrease in cash provided by operating activities was primarily a result of the timing of payments to vendors for revenue generated in the latter part of 2021 and the receipt of income tax refunds in 2021 as a result of the carry back of net operating losses (see Note 20 to our financial statements), offset by increased attendance as theatres were fully reopened and film product was released on a more consistent basis during 2022.

### Investing Activities

Investing activities have been principally related to the development, remodel and acquisition of theatres. New theatre openings, remodels 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 $96.3 million and $89.3 million for the years ended December 31, 2022 and 2021, respectively. The increase in cash used for investing activities was primarily due to higher capital expenditures in 2022.

Below is a summary of capital expenditures, disaggregated by new and existing theatres, for the periods indicated (in millions):

|  | Year Ended December 31, 2021 | 2022 |
| --- | ---: | ---: |
| New theatres | $38.0 | $33.1 |
| Existing theatres | 57.5 | 77.6 |
| Total capital expenditures | $95.5 | $110.7 |

34

We operated 518 theatres with 5,847 screens worldwide as of December 31, 2022. Theatres and screens opened and closed during the year ended December 31, 2022 were as follows:

| U.S. | December 31, 2021 | Built | Closed | December 31, 2022 |
| --- | ---: | ---: | ---: | ---: |
| Theatres | 321 | 2 | (5) | 318 |
| Screens | 4,408 | 28 | (37) | 4,399 |
| International |  |  |  |  |
| Theatres | 201 | 2 | (3) | 200 |
| Screens | 1,460 | 24 | (36) | 1,448 |
| Worldwide |  |  |  |  |
| Theatres | 522 | 4 | (8) | 518 |
| Screens | 5,868 | 52 | (73) | 5,847 |

As of December 31, 2022, the following signed commitments were outstanding:

| Expected to open during 2023 | Theatres | Screens | Estimated Cost (1) |
| --- | ---: | ---: | ---: |
| U.S. | — | — | — |
| International | 1 | 4 | 1.7 |
| Total during 2023 | 1 | 4 | 1.7 |
| Expected to open subsequent to 2023 |  |  |  |
| U.S. | 3 | 34 | 22.2 |
| International | 3 | 17 | 8.7 |
| Total subsequent to 2023 | 6 | 51 | $30.9 |
| Total commitments at December 31, 2022 | 7 | 55 | $32.6 |

(1) We expect approximately $9.5 million, $20.1 million, and $3.0 million to be paid during 2023, 2024 and 2025, respectively. The timing of payments is subject to change as a result of construction timing or other delays.

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

### Financing Activities

Cash used for financing activities for Holdings was $52.2 million and $19.9 million for the years ended December 31, 2022 and 2021, respectively. Cash provided by (used for) financing activities for CUSA was $(52.2) million and $100.1 million for the years ended December 31, 2022 and 2021, respectively. During 2021, Holdings distributed $120.0 million to CUSA and CUSA issued 5.875% Senior Notes and 5.25% Senior Notes, the proceeds of which were used to redeem the 5.125% Senior Notes and the 4.875% Senior Notes as discussed further below.

Holdings, at the discretion of its board of directors and subject to applicable law, may pay dividends on its common stock. The amount, if any, of the dividends to be paid in the future will depend upon available cash balances, 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 a result of the impact of the COVID-19 pandemic, Holdings suspended its quarterly dividend to its shareholders.

We may, from time to time, seek to retire or repurchase our outstanding debt securities through cash purchases or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on the availability and prices of such debt securities, prevailing market conditions, or liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Long-term debt for Holdings and CUSA consisted of the following as of December 31, 2021 and 2022 (in millions):

|  | December 31, 2021 | 2022 |
| --- | ---: | ---: |
| Cinemark Holdings, Inc. 4.50% convertible senior notes due 2025 | $460.0 | $460.0 |
| Cinemark USA, Inc. term loan due 2025 | 633.1 | 626.5 |
| Cinemark USA, Inc. 8.75% senior secured notes due 2025 | 250.0 | 250.0 |
| Cinemark USA, Inc. 5.875% senior notes due 2026 | 405.0 | 405.0 |
| Cinemark USA, Inc. 5.25% senior notes due 2028 | 765.0 | 765.0 |
| Other | 30.2 | 10.1 |
| Total long-term debt carrying value (1) | $2,543.3 | $2,516.6 |
| Less: Current portion | 24.3 | 10.7 |
| Less: Debt issuance costs, net of accumulated amortization (1) | 42.7 | 31.9 |
| Long-term debt, less current portion, net of unamortized debt issuance costs (1) | $2,476.3 | $2,474.0 |

(1) The only differences between the long-term debt for Holdings, as presented above, and the long-term debt for CUSA are the $460.0 million 4.50% Convertible Senior Notes due 2025 and the related debt issuance costs. The following table sets forth, as of the periods indicated, the total long-term debt, current portion of long-term debt and debt issuance costs, net of amortization for CUSA:

|  | December 31, 2021 | 2022 |
| --- | ---: | ---: |
| Total long-term debt carrying value | $2,083.3 | $2,056.6 |
| Less: Current portion | 24.3 | 10.7 |
| Less: Debt issuance costs, net of accumulated amortization | 30.3 | 22.9 |
| Long-term debt, less current portion, net of unamortized debt issuance costs | $2,028.7 | $2,023.0 |

As of December 31, 2022, we had $100 million in available borrowing capacity on our revolving line of credit.

As of December 31, 2022, Holding's long-term debt obligations, scheduled interest payments on long-term debt, future minimum lease obligations under non-cancelable operating and finance leases, deferred rent payments due as a result of amended lease terms, scheduled interest payments under finance leases and other obligations for each period indicated are summarized as follows:

*(in millions)*

| Contractual Obligations (1) | Payments Due by Period Total | Less Than One Year | 1 - 3 Years | 3 - 5 Years | After 5 Years |
| --- | ---: | ---: | ---: | ---: | ---: |
| Long-term debt (2) | $2,516.6 | $10.7 | $1,332.2 | $407.2 | $766.5 |
| Scheduled interest payments on long-term debt (3) | 470.9 | 135.2 | 228.8 | 86.7 | 20.2 |
| Operating lease obligations (4) | 1,434.9 | 276.6 | 459.4 | 316.9 | 382.0 |
| Finance lease obligations (4) | 124.2 | 19.0 | 34.5 | 24.0 | 46.7 |
| Purchase and other commitments (5) | 46.3 | 21.3 | 24.1 | 0.9 | — |
| Liability for uncertain tax positions (6) | — | — | — | — | — |
| Total obligations | $4,592.9 | $462.8 | $2,079.0 | $835.7 | $1,215.4 |

(1) The only differences between the contractual obligations for Holdings, as presented above, and those for CUSA are incremental long-term debt obligations and scheduled interest payments on long-term debt for Holdings. The following table sets forth, for each period indicated, the long-term debt obligations, scheduled interest payments on long-term debt, liability for uncertain tax positions and total obligations of CUSA:

*(in millions)*

| Contractual Obligations | Payments Due by Period Total | Less Than One Year | 1 - 3 Years | 3 - 5 Years | After 5 Years |
| --- | ---: | ---: | ---: | ---: | ---: |
| Long-term debt (2) | $2,056.6 | $10.7 | $872.2 | $407.2 | $766.5 |
| Scheduled interest payments on long-term debt (3) | 415.7 | 114.5 | 194.3 | 86.7 | 20.2 |
| Liability for uncertain tax positions (6) | — | — | — | — | — |
| Total obligations | $2,472.3 | $125.2 | $1,066.5 | $493.9 | $786.7 |

(2) Amounts are presented before adjusting for unamortized debt issuance costs.

(3) Amounts include scheduled interest payments on fixed rate and variable rate debt agreements. Estimates for the variable rate interest payments were based on interest rates in effect on December 31, 2022.

(4) Amounts include both scheduled principal and interest payments on leases commenced prior to December 31, 2022. Amounts do not include approximately $54.1 million of payments under signed lease agreements which have not commenced and the timing of which cannot be reasonably estimated. See Note 4 to the consolidated financial statements for discussion of lease obligations.

(5) Includes estimated capital expenditures associated with the construction of new theatres to which we were committed as of December 31, 2022, obligations under employment agreements, which are our only contractual human capital costs, and contractual purchase commitments.

(6) The long-term portions of Holdings’ and CUSA’s liability for uncertain tax positions of $47.9 million is not included above because we cannot make a reliable estimate of the timing of the related cash payments. There were no amounts recorded for short-term uncertain tax positions on the consolidated balance sheets of either Holdings or CUSA as of December 31, 2022.

### Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

### 4.50% Convertible Senior Notes

On August 21, 2020, Holdings issued $460.0 million 4.50% convertible senior notes (the "4.50% Convertible Senior Notes"). The 4.50% Convertible Senior Notes will mature on August 15, 2025, unless earlier repurchased or converted. Interest on the notes is payable on February 15 and August 15 of each year, beginning on February 15, 2021.

Holders of the 4.50% Convertible Senior Notes may convert their 4.50% Convertible Senior Notes at their option at any time prior to the close of business on the business day immediately preceding May 15, 2025 only under the following circumstances: (1) during the five business day period after any five consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (2) if Holdings distributes to all or substantially all stockholders (i) rights options or warrants entitling them to purchase shares at a discount to the recent average trading price of its common stock (including due to a stockholder rights plan) or (ii) Holdings’ assets or securities or rights, options or warrants to purchase the same with a per share value exceeding 10% of the trading price of Holdings’ common stock, (3) upon the occurrence of specified corporate events as described further in the indenture. Beginning May 15, 2025, holders may convert their 4.50% Convertible Senior Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date, or (4) during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of Holdings’ common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to $18.66 per share (130% of the initial conversion price of $14.35 per share), on each applicable trading day. Upon conversion of the 4.50% Convertible Senior Notes, Holdings will pay or deliver cash, shares of its common stock or a combination of cash and shares of its common stock, at its election.

The initial conversion rate is 69.6767 shares of Holdings’ common stock per one thousand dollars principal amount of the 4.50% Convertible Senior Notes. The conversion rate will be subject to adjustment upon the occurrence of certain events. If a make-whole fundamental change as defined in the indenture occurs prior to the maturity date, Holdings will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 4.50% Convertible Senior Notes in connection with such make-whole fundamental change.

The 4.50% Convertible Notes are effectively subordinated to any of Holdings’, or its subsidiaries’, existing and future secured debt to the extent of the value of the assets securing such indebtedness, including obligations under the Credit Agreement. The 4.50% Convertible Notes are structurally subordinated to all existing and future debt and other liabilities, including trade payables, and including CUSA’s 8.75% Secured Notes due 2025, 5.25% Senior Notes due 2028 and 5.875% Senior Notes due 2026, or, collectively, CUSA’s senior notes (but excluding all obligations under the Credit Agreement which are guaranteed by Holdings). The 4.50% Convertible Notes rank equally in right of payment with all existing and future unsubordinated debt, including all obligations under the Credit Agreement, which such Credit Agreement is guaranteed by Holdings, and senior in right of payment to any future debt that is expressly subordinated in right of payment to the 4.50% Convertible Senior Notes. The 4.50% Convertible Notes are not guaranteed by any of Holdings’ subsidiaries.

Concurrently with the issuance of the 4.50% Convertible Senior Notes, Holdings entered into privately negotiated convertible note hedge transactions, or the Hedge Transactions, with one or more of the initial purchasers of the 4.50% Convertible Senior Notes or their respective affiliates, or the Option Counterparties. The Hedge

Transactions cover the number of shares of our common stock that will initially underlie the aggregate amount of the 4.50% Convertible Senior Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 4.50% Convertible Senior Notes. The Hedge Transactions are generally expected to reduce potential dilution to Holdings’ common stock upon any conversion of the 4.50% Convertible Senior Notes and/or offset any cash payments we may be required to make in excess of the principal amount of converted 4.50% Convertible Senior Notes, as the case may be. Concurrently with entering into the Hedge Transactions, Holdings also entered into separate privately negotiated warrant transactions with Option Counterparties, or the Warrant Transactions, whereby Holdings sold to Option Counterparties warrants to purchase (subject to the net share settlement provisions set forth therein) up to the same number of shares of Holdings common stock, subject to customary anti-dilution adjustments, or the Warrants. The Warrants could separately have a dilutive effect to the extent that the market value per share of Holdings common stock exceeds the strike price of the warrants on the applicable expiration dates unless, subject to the terms of the Warrants, Holdings elects to cash settle the Warrants. The exercise price of the Warrants is initially $22.08 and is subject to certain adjustments under the terms of the warrants. Holdings received $89.4 million in cash proceeds from the sale of Warrants, which were used along with proceeds from the 4.50% Convertible Senior Notes, to pay approximately $142.1 million to enter into the Hedge Transactions.

Together, the Hedge Transactions and the Warrants are intended to reduce the potential dilution from the conversion of the 4.50% Convertible Senior Notes. The Hedge Transactions and Warrants are recorded in equity and are not accounted for as derivatives, in accordance with applicable accounting guidance.

### Senior Secured Credit Facility

CUSA has a senior secured credit facility that includes a $700.0 million term loan and a $100.0 million revolving line of credit ("the Credit Agreement"). Under the amended Credit Agreement, quarterly principal payments of $1.6 million are due on the term loan through December 31, 2024, with a final principal payment of $613.4 million due on March 29, 2025. CUSA had $100.0 million available borrowing capacity on the revolving line of credit as of December 31, 2022.

Interest on the term loan accrues at CUSA’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 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 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 0.50% to 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 1.50% to 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.

CUSA’s obligations under the Credit Agreement are guaranteed by Holdings, as well as certain of CUSA’s domestic subsidiaries, and are secured by mortgages on certain fee and leasehold properties and security interests in substantially all of CUSA’s and the guarantors’ personal property, including, without limitation, pledges of all of CUSA's capital stock and all of the capital stock of certain of CUSA’s domestic subsidiaries.

The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on CUSA’s ability, and in certain instances, its subsidiaries’ and Holdings’ 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 CUSA 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, not to exceed 4.25 to 1. CUSA’s actual ratio as of December 31, 2022 was 2.5 to 1. See below for discussion of covenant waivers.

The dividend restriction contained in the Credit Agreement prevents Holdings and certain of its subsidiaries from paying a dividend or otherwise distributing cash to its stockholders unless (1) Holdings is not in default, and the distribution would not cause CUSA 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 Holdings board of directors, is less than the sum of (a) the aggregate amount of cash and cash equivalents received by Holdings or CUSA as common equity since December 18, 2012, (b) CUSA’s consolidated EBITDA minus 1.75 times its consolidated interest expense, each as defined in the Credit Agreement, and (c) certain other defined amounts, or collectively, the Applicable Amount. As of December 31, 2022, CUSA, Inc. could have distributed up to approximately $2.85 billion to its parent company and sole stockholder, Holdings.

On April 17, 2020, in conjunction with the issuance of the 8.75% Secured Notes discussed below, CUSA obtained a waiver of the leverage covenant, which applies when amounts are outstanding under the revolving line of credit, from the majority of revolving lenders under the Credit Agreement for the fiscal quarters ending September 30, 2020 and December 31, 2020. The waiver was subject to certain liquidity thresholds, restrictions on investments and the use of the Applicable Amount.

On August 21, 2020, in conjunction with the issuance by Holdings of the 4.50% Convertible Senior Notes, CUSA further amended the waiver of the leverage covenant through the fiscal quarter ending September 30, 2021. The amendment also (i) modified the leverage covenant calculation beginning with the calculation for the trailing twelve-month period ended December 31, 2021, (ii) for purposes of testing the consolidated net senior secured leverage ratio for the fiscal quarters ending on December 31, 2021, March 31, 2022 and June 30, 2022, permitted substitution of Consolidated EBITDA for the first three fiscal quarters of 2019 in lieu of Consolidated EBITDA for the corresponding fiscal quarters of 2021, (iii) modified the restrictions imposed by the covenant waiver, and (iv) makes such other changes to permit the issuance of the 4.50% Convertible Senior Notes discussed below. The ratio for the period ended December 31, 2022 was calculated using actual Consolidated EBITDA for the trailing twelve month period.

On June 15, 2021, in conjunction with the issuance of the 5.25% Senior Notes discussed below, the Credit Agreement was amended to, among other things, extend the maturity of the revolving credit line from November 28, 2022 to November 28, 2024.

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 14 to the consolidated financial statements for discussion of the interest rate swaps.

At December 31, 2022, there was $626.5 million outstanding under the term loan and no borrowings were outstanding under the $100.0 million revolving line of credit. The average interest rate on outstanding term loan borrowings under the Credit Agreement at December 31, 2022 was approximately 4.5% per annum, after giving effect to the interest rate swap agreements.

### 5.875% Senior Notes

On March 16, 2021, CUSA issued $405 million aggregate principal amount of 5.875% senior notes due 2026, at par value (the “5.875% Senior Notes”). Proceeds, after payment of fees, were used to fund a cash tender offer to purchase any and all of CUSA’s 5.125% Senior Notes (the “5.125% Senior Notes”) and to redeem any of the 5.125% Notes that remained outstanding after the tender offer. Interest on the 5.875% Senior Notes is payable on March 15 and September 15 of each year, beginning September 15, 2021. The 5.875% Senior Notes mature on March 15, 2026. CUSA incurred debt issuance costs of approximately $6.0 million in connection with the issuance, which are recorded as a reduction of long-term debt on the consolidated balance sheets.

The 5.875% Senior Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of CUSA’s subsidiaries that guarantee, assume or become liable with respect to any of CUSA’s or a guarantor’s debt. The 5.875% Senior Notes and the guarantees are senior unsecured obligations and rank equally in right of payment with all of CUSA’s and its guarantor’s existing and future senior debt and senior in right of payment to all of CUSA’s and its guarantors’ existing and future senior subordinated debt. The 5.875% Senior Notes and the guarantees are effectively subordinated to all of CUSA’s and its guarantor’s existing and future secured debt to the extent of the value of the collateral securing such debt, including all borrowings under CUSA’s Credit Agreement. The 5.875% Senior Notes and the guarantees are structurally subordinated to all existing and future debt and other liabilities of CUSA’s subsidiaries that do not guarantee the 5.875% Senior Notes.

Prior to March 15, 2023, CUSA may redeem all or any part of the 5.875% Senior Notes at its option at 100% of the principal amount plus a make-whole premium plus accrued and unpaid interest on the 5.875% Senior Notes to the date of redemption. After March 15, 2023, CUSA may redeem the 5.875% Senior Notes in whole or in part at redemption prices specified in the indenture. In addition, prior to March 15, 2023, CUSA may redeem up to 40% of the aggregate principal amount of the 5.875% Senior Notes from the net proceeds of certain equity offerings at the redemption price set forth in the indenture.

### 5.25% Senior Notes

On June 15, 2021, CUSA issued $765 million aggregate principal amount of 5.25% senior notes due 2028, at par value (the “5.25% Senior Notes”). Proceeds, after payment of fees, were used to redeem all of CUSA’s 4.875% $755 million aggregate principal amount of Senior Notes due 2023 (the “4.875% Senior Notes”). Interest on the 5.25% Senior Notes is payable on January 15 and July 15 of each year, beginning January 15, 2022. The 5.25% Senior Notes mature on July 15, 2028. CUSA incurred debt issuance costs of approximately $10.7 million in connection with the issuance, which are recorded as a reduction of long-term debt on the consolidated balance sheets.

The 5.25% Senior Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of CUSA’s subsidiaries that guarantee, assume or become liable with respect to any of CUSA’s or a guarantor’s debt. The 5.25% Senior Notes and the guarantees will be CUSA’s and the guarantors’ senior unsecured obligations and (i) rank equally in right of payment to CUSA’s and the guarantors’ existing and future senior debt, including borrowings under CUSA’s Credit Agreement (as defined below) and CUSA’s existing senior notes, (ii) rank senior in right of payment to CUSA’s and the guarantors’ future subordinated debt, (iii) are effectively subordinated to all of CUSA’s and the guarantors’ existing and future secured debt, including all obligations under the Credit Agreement and CUSA’s 8.75% senior secured notes due 2025, in each case to the extent of the value of the collateral securing such debt, (iv) are structurally subordinated to all existing and future debt and other liabilities of CUSA’s non-guarantor subsidiaries, and (v) are structurally senior to the 4.50% convertible senior notes due 2025 issued by Holdings.

Prior to July 15, 2024, CUSA, Inc. may redeem all or any part of the 5.25% Senior Notes at its option at 100% of the principal amount plus a make-whole premium plus accrued and unpaid interest on the 5.25% Senior Notes to the date of redemption. On or after July 15, 2024, CUSA may redeem the 5.25% Senior Notes in whole or in part at redemption prices specified in the indenture. In addition, prior to July 15, 2024, CUSA may redeem up to 40% of the aggregate principal amount of the 5.25% Senior Notes from the net proceeds of certain equity offerings at the redemption price set forth in the indenture, so long as at least 60% of the principal amount of the 5.25% Senior Notes remains outstanding immediately after each such redemption.

### 8.75% Secured Notes

On April 20, 2020, CUSA issued $250.0 million aggregate principal amount of 8.75% senior secured notes due 2025, or the 8.75% Secured Notes. The 8.75% Secured Notes will mature on May 1, 2025. Interest on the 8.75% Secured Notes is payable on May 1 and November 1 of each year.

The indenture governing the 8.75% Secured Notes contains covenants that limit, among other things, the ability of CUSA 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 8.75% Secured Notes, CUSA would be required to make an offer to repurchase the 8.75% 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 8.75% Secured Notes allows CUSA 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.

The 8.75% Secured Notes are fully and unconditionally guaranteed on a joint and several senior basis by certain of CUSA’s subsidiaries that guarantee, assume or in any other manner become liable with respect to any of CUSA’s or its guarantors’ other debt. If CUSA cannot make payments on the 8.75% Secured Notes when they are due, CUSA guarantors must make them instead. Under certain circumstances, the guarantees may be released without action by, or the consent of, the holders of the 8.75% Secured Notes.

CUSA may redeem the 8.75% Secured Notes in whole or in part at redemption prices specified in the indenture.

### Additional Borrowings of International Subsidiaries

During the years ended December 31, 2020 and 2021, certain of CUSA’s international subsidiaries borrowed an aggregate of $35.8 million under various local bank loans. The bank loans outstanding as of December 31, 2021 and 2022 totaled $30.2 million and $10.1 million, respectively. Current interest rates on the bank loans outstanding at

December 31, 2022 range between 1.0% and 8.1%. The Company repaid $21.5 million of these bank loans outstanding during the year ended December 31, 2022.

Additionally, the Company deposited cash into a collateral account to support the issuance of letters of credit to the lenders for certain of the international loans noted above. The total amount on deposit as of December 31, 2022 was $10.8 million and is considered restricted cash.

### Covenant Compliance

The indentures governing the 5.875% Senior Notes, the 5.25% Senior Notes and the 8.75% Secured Notes ("the indentures") contain covenants that limit, among other things, the ability of CUSA 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 December 31, 2022, CUSA could have distributed up to approximately $3.1 billion to its parent company and sole stockholder, Holdings, under the terms of the indentures, subject to its available cash and other borrowing restrictions outlined in the indentures. Upon a change of control, as defined in the indentures, CUSA would be required to make an offer to repurchase the 5.875% Senior Notes, the 5.25% Senior Notes and the 8.75% 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 indentures allow CUSA 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 December 31, 2022 was 2.9 to 1.

See discussion of dividend restrictions and the consolidated net senior secured leverage ratio under the Credit Agreement at *Senior Secured Credit Facility* above.

As of December 31, 2022, we believe we were in full compliance with all agreements, including related covenants, governing our outstanding debt.

### Ratings

We are rated by nationally recognized rating agencies. The rating scales and methodologies used to derive individual ratings may vary from agency to agency. Credit ratings are issued by credit rating agencies based on evaluations of our ability to pay back our outstanding debt and the likelihood that we would default on that debt prior to its maturity. The credit ratings issued by the credit rating agencies represent the credit rating agency's evaluation of both qualitative and quantitative information for the Company. The credit ratings that are issued are based on the credit rating agency’s judgment and experience in determining what information should be considered in giving a rating to a particular company. Ratings are always subject to change and there can be no assurance that our current ratings will continue for any given period of time. A downgrade of our debt ratings, depending on the extent, could increase the cost to borrow funds.

### New Accounting Pronouncements

See Note 2 to the consolidated financial statements for a discussion of recently issued accounting pronouncements and their impact on our financial statements.

### Seasonality

Our revenues have historically been seasonal, coinciding with the timing of releases of motion pictures by the major distributors. The most successful motion pictures have historically been released during summer months in the U.S., extending from May to July, and during the holiday season, extending from November through year-end. The timing of releases, however, has become less pronounced as distributors have begun releasing content more evenly throughout the year. In our Latin American markets, while Hollywood content has similar release dates as in the U.S., the local holidays and seasons can vary. The unexpected emergence of a hit film during other periods can alter this seasonality trend. The timing, quantity and quality 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.

## Market risk

As filed, 5,207 characters.

We have exposure to financial market risks, including changes in interest rates and foreign currency exchange rates.

### Interest Rate Risk

The Company currently has variable rate debt. An increase or decrease in interest rates would affect its interest expense relating to this variable rate debt. At December 31, 2022, we had an aggregate of $186.6 million of variable rate debt outstanding, after giving effect to the interest rate swap agreements discussed below. Based on the interest rates in effect on the variable rate debt outstanding at December 31, 2022, a 100 basis point increase in market interest rates would increase our annual interest expense by approximately $1.9 million.

The tables below provide information about Holdings’ fixed rate and variable rate long-term debt agreements as of December 31, 2022, which includes fixed rate and variable rate long-term debt of CUSA which is guaranteed by Holdings.

#### Holdings Debt

*(in millions)*

|  | Expected Maturity for the Years Ending December 31, 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | Total | Fair Value | Average Interest Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Fixed rate | $— | $— | $1,160.0 | $405.0 | $— | $765.0 | $2,330.0 | $2,030.7 | 5.3% |
| Variable rate | 10.7 | 7.7 | 164.5 | 1.1 | 1.1 | 1.5 | 186.6 | 179.8 | 6.1% |
| Total debt (1) | $10.7 | $7.7 | $1,324.5 | $406.1 | $1.1 | $766.5 | $2,516.6 | $2,210.5 |  |

(1) Amounts are presented before adjusting for debt issuance costs and debt discounts.

#### CUSA Debt

*(in millions)*

|  | Expected Maturity for the Years Ending December 31, 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | Total | Fair Value | Average Interest Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Fixed rate | $— | $— | $700.0 | $405.0 | $— | $765.0 | $1,870.0 | $1,591.5 | 5.5% |
| Variable rate | 10.7 | 7.7 | 164.5 | 1.1 | 1.1 | 1.5 | 186.6 | 179.8 | 6.1% |
| Total debt (1) | $10.7 | $7.7 | $864.5 | $406.1 | $1.1 | $766.5 | $2,056.6 | $1,771.3 |  |

(1) Amounts are presented before adjusting for debt issuance costs and debt discounts.

### Interest Rate Swap Agreements

All of the interest rate swap agreements qualify for cash flow hedge accounting. The fair values of the interest rate swaps are recorded on each of Holdings’ and CUSA’s consolidated balance sheets as an asset or liability with the related gains or losses reported as a component of accumulated other comprehensive loss. See Note 14 to the consolidated financial statements for further discussion of the interest rate swap agreements.

Below is a summary of our interest rate swap agreements as of December 31, 2022:

| Notional Amount | Effective Date | Pay Rate | Receive Rate | Expiration Date |
| --- | --- | ---: | --- | --- |
| $ 137.5 million | December 31, 2018 | 2.122% | 1-Month LIBOR | December 31, 2024 |
| $ 175.0 million | December 31, 2018 | 2.124% | 1-Month LIBOR | December 31, 2024 |
| $ 137.5 million | December 31, 2018 | 2.193% | 1-Month LIBOR | December 31, 2024 |
| $ 450.0 million |  |  |  |  |

### Foreign Currency Exchange Rate Risk

We are also exposed to market risk arising from changes in foreign currency exchange rates as a result of our international operations. Generally, we export from the U.S. certain of the equipment and interior finish items and other operating supplies used by our international subsidiaries. A majority of the revenues and operating expenses of our international subsidiaries are transacted in the country’s local currency. U.S. GAAP requires that our subsidiaries use the currency of the primary economic environment in which they operate as their functional currency. If our subsidiaries operate in a highly inflationary economy, U.S. GAAP requires that the U.S. dollar be used as the functional currency for the subsidiary, which could impact future results of operations as reported. Currency fluctuations in the countries in which we operate result in us reporting exchange gains (losses) or foreign currency translation adjustments. Based upon our equity ownership in our international subsidiaries as of December 31, 2022, holding everything else constant, a 10% immediate, simultaneous, unfavorable change in all of the foreign currency exchange rates to which we are exposed, would decrease the aggregate net book value of our investments in our international subsidiaries by approximately $59.1 million and would decrease the aggregate net income of our international subsidiaries for the year ended December 31, 2022 by $3.2 million, respectively.

We 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. The financial statements of the Company’s Argentina subsidiaries has been remeasured in U.S. dollars in accordance with ASC Topic 830, *Foreign Currency Matters*, effective beginning July 1, 2018.

## Controls and procedures

As filed, 4,423 characters.

#### Evaluation of the Effectiveness of Disclosure Controls and Procedures

As of December 31, 2022, under the supervision and with the participation of Holdings’ and CUSA’s principal executive officer and principal financial officer, Holdings and CUSA each carried out an evaluation required by the Exchange Act of the effectiveness of the design and operation of their respective disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act. Based on this evaluation, Holdings’ and CUSA’s principal executive officer and principal financial officer concluded that, as of December 31, 2022, each of Holdings’ and CUSA’s respective disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by each of Holdings and CUSA in the reports that are filed or submitted 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 Holdings’ and CUSA’s management, including Holdings’ and CUSA’s 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 Holdings’ and CUSA’s 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 December 31, 2022 that materially affected, or are reasonably likely to materially affect, Holdings’ and CUSA’s internal control over financial reporting.

#### Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act. Holdings’ and CUSA’s internal control framework and processes are designed to provide reasonable assurance to management and their respective board of directors regarding the reliability of financial reporting and the preparation of the Holdings’ and CUSA’s consolidated financial statements in accordance with the accounting principles generally accepted in the U.S. Management has assessed the effectiveness of Holdings’ and CUSA’s internal control over financial reporting as of December 31, 2022 based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in *Internal Control—Integrated Framework (2013)*. As a result of this assessment, management concluded that, as of December 31, 2022, Holdings’ and CUSA’s internal control over financial reporting was effective.

Certifications of the Chief Executive Officer and the Chief Financial Officer for Holdings and CUSA, which are required in accordance with Rule 13a-14 of the Exchange Act, are attached as exhibits to this Annual Report. This "Controls and Procedures" section includes the information concerning the controls evaluation referred to in the certifications, and it should be read in conjunction with the certifications for a more complete understanding of the topics presented.

The Company’s independent registered public accounting firm, Deloitte & Touche LLP, which has direct access to Holdings’ board of directors through its Audit Committee, have audited the consolidated financial statements prepared by Holdings and CUSA. Their reports on the respective consolidated financial statements of Holdings and CUSA are included in Part II, Item 8, Financial Statements and Supplementary Data. Deloitte & Touche LLP has issued an attestation report on the Company’s internal control over financial reporting.

#### Limitations on Controls

Management for Holdings and CUSA does not expect that its disclosure controls and procedures or its internal control over financial reporting will prevent or detect all errors or fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within Holdings and CUSA have been detected.

Filed Feb 24, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-004235. Last ingested by Listed: Nov 3, 2026, 08:34 ET. No prices; not investment advice.