# Cinemark Holdings, Inc.: Form 10-Q for the period ended Sep 30, 2024

- Company: [Cinemark Holdings, Inc.](/companies/cnk.md) (CIK 1385280)
- Form: 10-Q
- Filed: 2024-10-31
- Accepted by EDGAR: Oct 31, 2024, 06:45 ET
- Period: 2024-09-30
- Accession: 0000950170-24-119234
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1385280/000095017024119234/cnk-20240930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1385280/000095017024119234/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $921.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $2.24bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Interest expense | 3 months, 2024-07-01 to 2024-09-30 | $36.7m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $109.0m | us-gaap:InterestExpenseNonoperating |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | $187.8m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | $258.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | $1.19 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | $1.73 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | $1.54 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | $2.11 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 158,200,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 153,700,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |

## Management's discussion and analysis

As filed, 71,087 characters.

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes and schedules included elsewhere in this report. Amounts included in the following discussion, except for theatres, screens, average screens, average ticket price and concessions revenue per patron, are rounded in millions.

We are a leader in the motion picture exhibition industry, with theatres in the U.S., Brazil, Argentina, Chile, Colombia, Peru, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, and Paraguay. As of September 30, 2024, we managed our business under two reportable operating segments – U.S. markets and international markets. See Note 16 to the condensed consolidated financial statements.

The success of the theatrical exhibition industry is contingent upon several key factors, including the volume of new film content available, which has been impacted by the effects of the COVID-19 pandemic and last year’s writers’ and actors’ guilds strikes (the “Hollywood strikes”), the box office performance of new film content released, the duration of the exclusive theatrical release window, and evolving consumer behavior with competition from other forms of in-and-out-of-home entertainment.

#### Revenue and Expense

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. Filmed entertainment box office receipts include traditional content from studios as well as alternative entertainment, such as the Metropolitan Opera, concert events, 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 for other international exhibitors.

Films leading the box office during the nine months ended September 30, 2024 included *Inside Out 2, Deadpool & Wolverine, Despicable Me 4, Dune: Part Two, Twisters,* and *Beetlejuice Beetlejuice.*

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. 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. Inflationary pressures have impacted, and may continue to impact, product costs 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 anticipated 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. Inflationary pressures have driven increases in wage rates across our labor base and 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, gift card 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. 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. General and administrative expenses also include some variable expenses such as incentive compensation, consulting and legal fees, supplies, and other costs that are not specifically associated with the operations of our theatres.

### Results of Operations

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

| Operating data (in millions): Revenue | Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Admissions | $460.4 | $443.8 | $1,116.0 | $1,233.2 |
| Concession | 367.3 | 339.8 | 884.4 | 949.0 |
| Other | 94.1 | 91.2 | 234.8 | 245.6 |
| Total revenue | $921.8 | $874.8 | $2,235.2 | $2,427.8 |
| Cost of operations |  |  |  |  |
| Film rentals and advertising | 265.6 | 248.2 | 623.9 | 692.9 |
| Concession supplies | 64.5 | 63.0 | 165.1 | 174.0 |
| Salaries and wages | 109.9 | 107.9 | 294.1 | 306.2 |
| Facility lease expense | 85.9 | 84.4 | 244.7 | 250.9 |
| Utilities and other | 127.0 | 129.5 | 332.1 | 353.5 |
| General and administrative expenses (1) | 56.4 | 48.2 | 161.0 | 144.7 |
| Depreciation and amortization | 49.1 | 51.9 | 148.3 | 159.6 |
| Impairment of long-lived and other assets | — | 2.0 | — | 12.1 |
| (Gain) loss on disposal of assets and other | (0.1) | (6.1) | 2.0 | (8.8) |
| Total cost of operations (1) | 758.3 | 729.0 | 1,971.2 | 2,085.1 |
| Operating income (1) | $163.5 | $145.8 | $264.0 | $342.7 |
| **Operating data as a percentage of total revenue:** |  |  |  |  |
| Revenue |  |  |  |  |
| Admissions | 50.0% | 50.7% | 49.9% | 50.8% |
| Concession | 39.8% | 38.8% | 39.6% | 39.1% |
| Other | 10.2% | 10.5% | 10.5% | 10.1% |
| Total revenue | 100.0% | 100.0% | 100.0% | 100.0% |
| Cost of operations (2) |  |  |  |  |
| Film rentals and advertising | 57.7% | 55.9% | 55.9% | 56.2% |
| Concession supplies | 17.6% | 18.5% | 18.7% | 18.3% |
| Salaries and wages | 11.9% | 12.3% | 13.2% | 12.6% |
| Facility lease expense | 9.3% | 9.6% | 10.9% | 10.3% |
| Utilities and other | 13.8% | 14.8% | 14.9% | 14.6% |
| General and administrative expenses | 6.1% | 5.5% | 7.2% | 6.0% |
| Depreciation and amortization | 5.3% | 5.9% | 6.6% | 6.6% |
| Impairment of long-lived and other assets | —% | 0.2% | —% | 0.5% |
| (Gain) loss on disposal of assets and other | —% | (0.7)% | 0.1% | (0.4)% |
| Total cost of operations | 82.3% | 83.3% | 88.2% | 85.9% |
| Operating income | 17.7% | 16.7% | 11.8% | 14.1% |
| Average screen count (3) | 5,698 | 5,802 | 5,706 | 5,822 |

(1) The only difference between components of operating income 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 income of CUSA:

| Operating data (in millions): Cost of operations | Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| General and administrative expenses | $55.5 | $47.5 | $158.2 | $142.2 |
| Total cost of operations | $757.4 | $728.3 | $1,968.4 | $2,082.6 |
| Operating income | $164.4 | $146.5 | $266.8 | $345.2 |

(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.

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

### Three months ended September 30, 2024 (the “third quarter of 2024”) versus the three months ended September 30, 2023 (the “third quarter of 2023”)

*Third quarter of 2024 -* The North American Industry box office generated approximately $2.7 billion during the third quarter of 2024, which included *Deadpool & Wolverine, Despicable Me 4, Twisters, Beetlejuice Beetlejuice,* and the carryover of *Inside Out 2.*

*Third quarter of 2023 -* The North American Industry box office was approximately $2.7 billion during the third quarter of 2023, which included *Barbie, Oppenheimer, Sound of Freedom, Mission: Impossible - Dead Reckoning Part One,* and *Indiana Jones and the Dial of Destiny.*

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

|  | U.S. Operating Segment Three Months Ended September 30, 2024 | 2023 | International Operating Segment Three Months Ended September 30, 2024 | 2023 | Constant Currency (3) 2024 | Consolidated Three Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Admissions revenue | $375.2 | $350.4 | $85.2 | $93.4 | $131.8 | $460.4 | $443.8 |
| Concession revenue | 299.6 | 268.0 | 67.7 | 71.8 | 103.0 | 367.3 | 339.8 |
| Other revenue (1) | 66.6 | 64.1 | 27.5 | 27.1 | 42.3 | 94.1 | 91.2 |
| Total revenue (1) | $741.4 | $682.5 | $180.4 | $192.3 | $277.1 | $921.8 | $874.8 |
| Attendance | 37.6 | 37.5 | 22.8 | 24.4 |  | 60.4 | 61.9 |
| Average ticket price (2) | $9.98 | $9.34 | $3.74 | $3.83 | $5.78 | $7.62 | $7.17 |
| Concession revenue per patron (2) | $7.97 | $7.15 | $2.97 | $2.94 | $4.52 | $6.08 | $5.49 |

(1) U.S. operating segment revenue includes eliminations of intercompany transactions with the international operating segment. See Note 16 to our condensed 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 2023. 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.* Attendance increased to 37.6 million patrons during the third quarter of 2024 compared with 37.5 million patrons during the third quarter of 2023. Average ticket price increased 6.9% to $9.98 during the third quarter of 2024 compared with $9.34 during the third quarter of 2023 primarily driven by strategic pricing actions, a higher mix of premium format tickets, and the absence of National Cinema Day in the third quarter of 2024. Concession revenue per patron increased 11.5% to $7.97 during the third quarter of 2024 compared with $7.15 during the third quarter of 2023 driven by higher incidence rates associated with the film content mix, strategic pricing actions and, to a lesser extent, product mix. Other revenue for the third quarter of 2024 increased 3.9% to $66.6 million compared with $64.1 million during the third quarter of 2023 primarily due to an increase in promotional and events revenue.
- *International.* Attendance decreased 6.6% to 22.8 million patrons during the third quarter of 2024 compared with 24.4 million patrons during the third quarter of 2023 driven by the mix of film releases during the third quarter of 2024. Revenues, average ticket price and concession revenue per patron for our international segment, as reported, were unfavorably impacted by exchange rate fluctuations for the third quarter of 2024. In constant currency, the average ticket price increased 50.9% to $5.78 for the third quarter of 2024 primarily due to inflationary pricing actions, partially offset by promotional activity. Similarly, in constant currency, concession revenue per patron increased 53.7% to $4.52 for the third quarter of 2024 primarily due to inflationary pricing actions. Other revenue increased 56.1% in constant currency to $42.3 million for the third quarter of 2024 primarily due to inflationary impacts.

*Cost of Operations.* The table below, presented by reportable operating segment, summarizes our year-over-year theatre operating costs.

|  | U.S. Operating Segment Three Months Ended September 30, 2024 | 2023 | International Operating Segment Three Months Ended September 30, 2024 | 2023 | Constant Currency (1) 2024 | Consolidated Three Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Film rentals and advertising | $222.3 | $201.1 | $43.3 | $47.1 | $67.7 | $265.6 | $248.2 |
| Concession supplies | $49.3 | $47.7 | $15.2 | $15.3 | $23.0 | $64.5 | $63.0 |
| Salaries and wages | $91.1 | $89.0 | $18.8 | $18.9 | $29.4 | $109.9 | $107.9 |
| Facility lease expense | $63.5 | $61.0 | $22.4 | $23.4 | $31.0 | $85.9 | $84.4 |
| Utilities and other | $97.3 | $98.9 | $29.7 | $30.6 | $46.3 | $127.0 | $129.5 |

(1) Constant currency expense amounts, which are non-GAAP measurements, were calculated using the average exchange rate for the corresponding month for 2023. 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 the third quarter of 2024 were 59.2% of admissions revenue compared with 57.4% for the third quarter of 2023 due to an increased concentration of high grossing titles and the overall mix of films. Concession supplies expense for the third quarter of 2024 was 16.5% of concession revenue compared with 17.8% for the third quarter of 2023. The decline in the concession supplies rate for the third quarter of 2024 was driven by the impact of strategic pricing actions and favorable concession rebates, partially offset by inflationary pressures on certain concession categories and product mix.

Salaries and wages increased 2.4% to $91.1 million for the third quarter of 2024 compared with $89.0 million for the third quarter of 2023 due to higher wage rates and expanded operating hours, partially offset by the impact of labor productivity initiatives. Facility lease expense, which is predominantly fixed in nature, increased 4.1% to $63.5 million primarily due to higher percentage rent. Utilities and other costs decreased 1.6% to $97.3 million, driven by lower repairs and maintenance and janitorial costs.

- *International.* Our international operating costs, as reported, were favorably impacted by exchange rate fluctuations for the third quarter of 2024.

Film rentals and advertising costs were 50.8% of admissions revenue as reported for the third quarter of 2024 compared with 50.4% for the third quarter of 2023 driven by the overall mix of films. Concession supplies expense was 22.5% of concessions revenue as reported for the third quarter of 2024 compared with 21.3% for the third quarter of 2023. The increase in the concession supplies rate was in part driven by product mix.

Salaries and wages, facility lease expense and utilities and other expenses, as reported, were lower for the third quarter of 2024 as a result of favorable exchange rate fluctuations. In constant currency, salaries and wages increased to $29.4 million for the third quarter of 2024 primarily due to wage rate inflation, partially offset by labor productivity initiatives and lower attendance. Facility lease expense increased to $31.0 million in constant currency for the third quarter of 2024 driven by inflationary increases and the return of certain minimum rent thresholds, partially offset by lower percentage rent. Utilities and other costs increased to $46.3 million in constant currency for the third quarter of 2024 primarily due to inflationary pressures and higher utility costs.

*General and Administrative Expense.* General and administrative expense for Holdings increased to $56.4 million for the third quarter of 2024 compared with $48.2 million for the third quarter of 2023. General and administrative expense for CUSA increased to $55.5 million for the third quarter of 2024 compared with $47.5 million for the third quarter of 2023. The increase for both Holdings and CUSA is primarily due to wages and benefits inflation, higher incentive and share-based compensation and higher professional fees, partially offset by the favorable impact of exchange rate fluctuations.

*Depreciation and Amortization.* Depreciation and amortization expense decreased to $49.1 million for the third quarter of 2024 compared with $51.9 million for the third quarter of 2023 due in part to lower levels of capital expenditures post-pandemic and the favorable impact of exchange rate fluctuations.

*Gain on Disposal of Assets and Other.* A gain on disposal of assets and other of $0.1 million was recorded for the third quarter of 2024 compared with a gain of $6.1 million for the third quarter of 2023. Activity for the third quarter of 2023 was primarily related to the sale of our Ecuador subsidiary in September 2023.

*Interest Expense.* Interest expense for Holdings, which includes amortization of debt issuance costs and original issue discount and amortization of accumulated gains for swap amendments, was $36.7 million during the third quarter of 2024 compared with $38.1 million during the third quarter of 2023. The interest expense attributable to CUSA, which includes amortization of debt issuance costs and original issue discount and amortization of accumulated gains for swap amendments, was $30.6 million during the third quarter of 2024 compared with $32.1 million during the third quarter of 2023. The decrease in interest expense was primarily due to the redemption of the remaining 8.75% Secured Notes, the extinguishment of the 5.875% Senior Notes, and the amendment and extension of our interest rate swaps, partially offset by the impact of the issuance of the 7.00% Senior Notes. See further discussion in *Liquidity and Capital Resources* below.

*Interest Income*. Interest income for Holdings was $14.2 million during the third quarter of 2024 compared with $15.3 million during the third quarter of 2023. The interest income attributable to CUSA was $11.1 million during the third quarter of 2024 compared with $12.2 million during the third quarter of 2023. The decrease in interest income primarily reflects the impact of interest rate fluctuations on our cash balances.

*Loss on Debt Amendments and Extinguishments.* We recorded a loss on amendment and extinguishment of debt of $3.0 million during the third quarter of 2024 related to the early extinguishment of the 5.875% Senior Notes. See Note 7 to the condensed consolidated financial statements for additional information.

*Foreign Currency Exchange and Other Related Loss.* We recorded a foreign currency exchange loss of $3.0 million during the third quarter of 2024 compared with a loss of $11.0 million during the third quarter of 2023. Activity for the third quarter of 2024 and 2023 includes losses of $0.9 million and $5.2 million, respectively, associated with Blue Chip Swap transactions. Excluding the impact of Blue Chip Swap transactions, the loss on foreign currency exchange is primarily related to currency exchange fluctuations from original transaction dates until settlement. See Note 14 to the condensed consolidated financial statements for a discussion of Blue Chip Swap transactions.

*Equity in Income of Affiliates.* Equity in income of affiliates of $5.0 million was recorded during the third quarter of 2024 compared with $1.5 million during the third quarter of 2023 driven by higher income earned from our investment in AC JV LLC during the third quarter of 2024. See Note 9 to the condensed consolidated financial statements for information about our equity investments.

*Net Gain on Investment in NCMI.* We recorded a net gain on our investment in NCMI of $11.6 million during the third quarter of 2024 compared with $4.7 million during the third quarter of 2023, related to the mark-to-market adjustment of our investment in NCMI under the fair value basis of accounting. See Note 8 to the condensed consolidated financial statements for information about our investment in NCMI.

*Income Taxes - Holdings.* An income tax benefit of $42.7 million was recorded for the third quarter of 2024 compared with income tax expense of $21.4 million for the third quarter of 2023. The effective tax rate was approximately (29.2)% for the third quarter of 2024 compared with 19.0% for the third quarter of 2023. The effective tax rate for the third quarter of 2024 was favorably impacted by changes in valuation allowances previously recorded against certain foreign tax credits, other federal deferred tax assets, certain state net operating losses and other state deferred tax assets. The effective tax rate for the third quarter of 2023 was favorably impacted by the use of certain foreign tax credits for which valuation allowances had been established in prior periods as well as the release of valuation allowances previously recorded against the net deferred tax assets in various jurisdictions. Income tax provisions for interim periods are generally based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.

*Income Taxes - CUSA.* An income tax benefit of $39.7 million was recorded for the third quarter of 2024 compared with income tax expense of $17.4 million for the third quarter of 2023. The effective tax rate was approximately (26.4)% for the third quarter of 2024 compared with 15.0% for the third quarter of 2023. The effective tax rate for the third quarter of 2024 was favorably impacted by changes in valuation allowances previously recorded against certain foreign tax credits, other federal deferred tax assets, certain state net operating losses and other state deferred tax assets. The effective tax rate for the third quarter of 2023 was favorably impacted by the use of certain foreign tax credits for which valuation allowances had been established in prior periods as well as the release of valuation allowances previously recorded against the net deferred tax assets in various jurisdictions. Income tax provisions for interim periods are generally based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.

### Nine months ended September 30, 2024 (the “2024 period”) versus the nine months ended September 30, 2023 (the “2023 period”)

*2024 Period -* The North American Industry box office generated approximately $6.4 billion during the 2024 period, which included *Inside Out 2, Deadpool & Wolverine, Despicable Me 4, Dune: Part Two,* and *Twisters.*

*2023 Period -* The North American Industry box office was approximately $7.2 billion during the 2023 period, which included the carryover of *Avatar: The Way of Water* as well as new releases including *Barbie, The Super Mario Bros. Movie, Spider-Man: Across the Spider-Verse, Guardians of the Galaxy Vol. 3,* and *Oppenheimer.*

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

|  | U.S. Operating Segment Nine Months Ended September 30, 2024 | 2023 | International Operating Segment Nine Months Ended September 30, 2024 | 2023 | Constant Currency (3) 2024 | Consolidated Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Admissions revenue | $894.4 | $968.5 | $221.6 | $264.7 | $340.9 | $1,116.0 | $1,233.2 |
| Concession revenue | 709.6 | 751.1 | 174.8 | 197.9 | 265.2 | 884.4 | 949.0 |
| Other revenue (1) | 166.4 | 176.9 | 68.4 | 68.7 | 104.0 | 234.8 | 245.6 |
| Total revenue (1) | $1,770.4 | $1,896.5 | $464.8 | $531.3 | $710.1 | $2,235.2 | $2,427.8 |
| Attendance | 90.3 | 101.5 | 59.8 | 67.7 |  | 150.1 | 169.2 |
| Average ticket price (2) | $9.90 | $9.54 | $3.71 | $3.91 | $5.70 | $7.44 | $7.29 |
| Concession revenue per patron (2) | $7.86 | $7.40 | $2.92 | $2.92 | $4.43 | $5.89 | $5.61 |

(1) U.S. operating segment revenue includes eliminations of intercompany transactions with the international operating segment. See Note 16 to our condensed 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 2023. 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.* Attendance decreased 11.0% to 90.3 million patrons during the 2024 period compared with 101.5 million patrons during the 2023 period driven by less carryover benefit in the 2024 period from prior year releases and the overall mix of film releases due to the impact of the Hollywood strikes. Average ticket price increased 3.8% to $9.90 during the 2024 period compared with $9.54 during the 2023 period driven by strategic pricing actions. Concession revenue per patron increased 6.2% to $7.86 during the 2024 period compared with $7.40 during the 2023 period primarily driven by strategic pricing actions, product mix and higher incidence rates associated with the film content mix. Other revenue for the 2024 period decreased 5.9% to $166.4 million compared with $176.9 million during the 2023 period primarily due to a decrease in attendance, which resulted in a reduction in the variable component of other revenue.
- *International.* Attendance decreased 11.7% to 59.8 million patrons during the 2024 period compared with 67.7 million patrons during the 2023 period due to less carryover benefit in the 2024 period from prior year releases and the overall mix of film releases due to the impact of the Hollywood strikes. Revenues, average ticket price and concession revenue per patron for our international segment, as reported, were unfavorably impacted by exchange rate fluctuations for the 2024 period. In constant currency, the average ticket price increased 45.8% to $5.70 for the 2024 period primarily due to inflationary pricing actions. Similarly, in constant currency, concession revenue per patron increased 51.7% to $4.43 for the 2024 period primarily due to inflationary pricing actions. Other revenue increased 51.4% in constant currency to $104.0 million for the 2024 period primarily due to inflationary impacts.

*Cost of Operations.* The table below, presented by reportable operating segment, summarizes our year-over-year theatre operating costs.

|  | U.S. Operating Segment Nine Months Ended September 30, 2024 | 2023 | International Operating Segment Nine Months Ended September 30, 2024 | 2023 | Constant Currency (1) 2024 | Consolidated Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Film rentals and advertising | $513.2 | $558.6 | $110.7 | $134.3 | $173.0 | $623.9 | $692.9 |
| Concession supplies | $126.8 | $131.0 | $38.3 | $43.0 | $57.8 | $165.1 | $174.0 |
| Salaries and wages | $244.4 | $253.0 | $49.7 | $53.2 | $80.4 | $294.1 | $306.2 |
| Facility lease expense | $184.0 | $184.9 | $60.7 | $66.0 | $81.4 | $244.7 | $250.9 |
| Utilities and other | $255.7 | $269.7 | $76.4 | $83.8 | $120.6 | $332.1 | $353.5 |

(1) Constant currency expense amounts, which are non-GAAP measurements, were calculated using the average exchange rate for the corresponding month for 2023. 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 the 2024 period were 57.4% of admissions revenue compared with 57.7% for the 2023 period due to the overall mix of film releases. Concession supplies expense for the 2024 period was 17.9% of concession revenue compared with 17.4% for the 2023 period. The concession supplies rate for the 2024 period was impacted by inflationary pressures on certain concession categories, product mix and higher shrink, partially offset by the impact of strategic pricing actions.

Salaries and wages decreased 3.4% to $244.4 million for the 2024 period compared with $253.0 million for the 2023 period due to lower attendance and the impact of labor productivity initiatives, partially offset by higher wage rates and expanded operating hours. Facility lease expense, which is predominantly fixed in nature, decreased to $184.0 million primarily due to theatre closures and lease renegotiations, partially offset by higher percentage rent. Utilities and other costs decreased 5.2% to $255.7 million, as many of these costs are variable or semi-variable in nature and were impacted by the decrease in attendance. A decrease in property taxes also contributed to the decline in utilities and other costs.

- *International.* Our international operating costs, as reported, were favorably impacted by exchange rate fluctuations for the 2024 period.

Film rentals and advertising costs were 50.0% of admissions revenue as reported for the 2024 period compared with 50.7% for the 2023 period due to the overall mix of film releases. Concession supplies expense was 21.9% of concessions revenue as reported for the 2024 period compared with 21.7% for the 2023 period. The increase in the concession supplies rate was primarily driven by inflationary pressures offset by the impact of strategic pricing actions.

Salaries and wages, facility lease expense and utilities and other expenses, as reported, were lower for the 2024 period as a result of favorable exchange rate fluctuations. In constant currency, salaries and wages increased to $80.4 million for the 2024 period primarily driven by wage rate inflation, partially offset by labor productivity initiatives and lower attendance. Facility lease expense increased to $81.4 million in constant currency for the 2024 period primarily due to inflationary increases and the return of certain minimum rent thresholds, partially offset by lower percentage rent. Utilities and other costs increased to $120.6 million in constant currency for the 2024 period due to inflationary pressures and higher utility costs.

*General and Administrative Expense.* General and administrative expense for Holdings increased to $161.0 million for the 2024 period compared with $144.7 million for the 2023 period. General and administrative expense for CUSA increased to $158.2 million for the 2024 period compared with $142.2 million for the 2023 period. The increase for both Holdings and CUSA is primarily due to wages and benefits inflation, as well as higher incentive and share-based compensation and related payroll taxes, partially offset by the favorable impact of exchange rate fluctuations.

*Depreciation and Amortization.* Depreciation and amortization expense decreased to $148.3 million for the 2024 period compared with $159.6 million for the 2023 period due in part to lower levels of capital expenditures post-pandemic, the impairment of assets during 2023 and the favorable impact of exchange rate fluctuations.

*Loss (Gain) on Disposal of Assets and Other.* A loss on disposal of assets and other of $2.0 million was recorded for the 2024 period compared with a gain of $8.8 million for the 2023 period. Activity for the 2024 period was primarily related to the removal and disposal of equipment at closed theatres. Activity for the 2023 period was primarily related to the sale of our Ecuador subsidiary in September 2023 and the write-off of operating lease obligations for theatres that were closed during the 2023 period.

*Interest Expense.* Interest expense for Holdings, which includes amortization of debt issuance costs and original issue discount and amortization of accumulated gains for swap amendments, was $109.0 million during the 2024 period compared with $112.0 million during the 2023 period. The interest expense attributable to CUSA, which includes amortization of debt issuance costs and original issue discount and amortization of accumulated gains for swap amendments, was $90.8 million during the 2024 period compared with $93.9 million during the 2023 period. The decrease in interest expense was primarily due to the redemption of the remaining 8.75% Secured Notes, the extinguishment of the 5.875% Senior Notes, and the amendment and extension of our interest rate swaps, partially offset by a higher average interest rate on our term loan and the impact of the issuance of the 7.00% Senior Notes. See further discussion in Liquidity *and Capital Resources* below.

*Interest Income*. Interest income for Holdings was $40.3 million during the 2024 period compared with $40.2 million during the 2023 period. The interest income attributable to CUSA was $30.8 million during the 2024 period compared with $31.5 million during the 2023 period.

*Loss on Debt Amendments and Extinguishments.* We recorded a loss on amendments and extinguishments of debt of $5.5 million during the 2024 period related to the amendment of our Senior Secured Credit Facility, the redemption of the remaining 8.75% Secured Notes, and the extinguishment of the 5.875% Senior Notes. We recorded a loss on amendments and extinguishments of debt of $10.7 million during the 2023 period related to the amendment of our Senior Secured Credit Facility and the partial redemption of the 8.75% Secured Notes. See Note 7 to the condensed consolidated financial statements for additional information.

*Foreign currency exchange and other related loss.* We recorded a foreign currency exchange loss of $7.9 million during the 2024 period compared with a loss of $19.4 million during the 2023 period. Activity for the 2024 and 2023 period includes losses of $0.9 million and $10.1 million, respectively, associated with Blue Chip Swap transactions. Excluding the impact of Blue Chip Swap transactions, the loss on foreign exchange is primarily related to currency exchange fluctuations from original transaction dates until settlement. See note 14 to the condensed consolidated financial statements for a discussion of Blue Chip Swap transactions.

*Equity in Income of Affiliates.* Equity in income of affiliates of $11.3 million was recorded during the 2024 period compared with $1.2 million during the 2023 period driven by higher income earned from our investment in AC JV, LLC during the 2024 period and the absence of a loss from our investment in NCMI, which is now accounted for under the fair value basis of accounting. See Note 8 and Note 9, respectively, to the condensed consolidated financial statements for information about our investment in NCMI and our equity investments.

*Net Gain on Investment in NCMI.* We recorded a net gain on our investment in NCMI of $12.8 million during the 2024 period compared with $13.9 million during the 2023 period, primarily related to the mark-to-market adjustment of our investment in NCMI under the fair value basis of accounting. See Note 8 to the condensed consolidated financial statements for information about our investment in NCMI.

*Income Taxes - Holdings.* An income tax benefit of $71.3 million was recorded for the 2024 period compared with income tax expense of $29.8 million for the 2023 period. The effective tax rate was approximately (37.6)% for the 2024 period compared with 12.5% for the 2023 period. During the 2024 period, a deferred tax benefit of $116.3 million was recorded discretely related to the release of valuation allowances previously recorded against certain foreign tax credits, other federal deferred tax assets, certain state net operating losses and other state deferred tax assets as well as deferred tax assets in certain foreign jurisdictions. The release of these valuation allowances was the result of the availability of positive evidence related to sustained taxable income in the relevant jurisdictions to support the future realizability of deferred tax assets. This discrete benefit favorably impacted the effective tax rate for the 2024 period, causing the income tax benefit to vary significantly from the tax expense derived by applying the statutory tax rate to the pre-tax income for the period. The effective tax rate for the 2023 period was favorably impacted by the use of certain foreign tax credits for which valuation allowances had been established in prior periods as well as the release of valuation allowances previously recorded against the net deferred tax assets in certain foreign jurisdictions. Income tax provisions for interim periods are generally based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.

*Income Taxes - CUSA.* An income tax benefit of $67.6 million was recorded for the 2024 period compared with income tax expense of $24.2 million for the 2023 period. The effective tax rate was approximately (33.7)% for the 2024 period compared with 9.7% for the 2023 period. During the 2024 period, a deferred tax benefit of 112.4 million was recorded discretely related to the release of valuation allowances previously recorded against certain foreign tax credits, other federal deferred tax assets, certain state net operating losses and other state deferred tax assets as well as deferred tax assets in certain foreign jurisdictions. The release of these valuation allowances was the result of the availability of positive evidence related to sustained taxable income in the relevant jurisdictions to support the future realizability of deferred tax assets. This discrete benefit favorably impacted the effective tax rate for the 2024 period, causing the income tax benefit to vary significantly from the tax expense derived by applying the statutory tax rate to the pre-tax income for the period. The effective tax rate for the 2023 period was favorably impacted by the use of certain foreign tax credits for which valuation allowances had been established in prior periods as well as the release of valuation allowances previously recorded against the net deferred tax assets in certain foreign jurisdictions. Income tax provisions for interim periods are generally based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. As a result, the interim rate may vary significantly from the normalized annual rate.

### Liquidity and Capital Resources

#### Operating Activities

We primarily collect our 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. 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 $269.6 million for Holdings and $279.5 million for CUSA for the nine months ended September 30, 2024, compared with cash provided by operating activities of $335.8 million for Holdings and $347.9 million for CUSA for the nine months ended September 30, 2023. The decrease in cash provided by operating activities was primarily driven by the timing and level of revenue earned during each period partially offset by the timing of payments to vendors for expenses incurred during each period.

#### Investing Activities

Investing activities have been principally related to the development and remodel of theatres. New theatre openings and remodels 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 $89.1 million and $74.9 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in cash used for investing activities was primarily due to the proceeds from the sale of our Ecuador subsidiary during the nine months ended September 30, 2023.

Below is a summary of capital expenditures, disaggregated by new and existing theatres, for the nine months ended September 30, 2024 and 2023 (in millions):

|  | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| New theatres | $16.5 | $5.4 |
| Existing theatres | 73.7 | 84.3 |
| Total capital expenditures | $90.2 | $89.7 |

We operated 499 theatres with 5,680 screens worldwide as of September 30, 2024. Theatres and screens opened and closed during the nine months ended September 30, 2024 were as follows:

| U.S. (42 states) | January 1, 2024 | Built | Closed | September 30, 2024 |
| --- | ---: | ---: | ---: | ---: |
| Theatres | 309 | — | (3) | 306 |
| Screens | 4,324 | — | (42) | 4,282 |
| International (13 countries) |  |  |  |  |
| Theatres | 192 | 2 | (1) | 193 |
| Screens | 1,395 | 10 | (7) | 1,398 |
| Worldwide |  |  |  |  |
| Theatres | 501 | 2 | (4) | 499 |
| Screens | 5,719 | 10 | (49) | 5,680 |

46

As of September 30, 2024, the following signed commitments were outstanding:

| Remainder of 2024 | Theatres (1) | Screens (1) | Estimated Remaining Investment (2) |
| --- | ---: | ---: | ---: |
| U.S. | — | — | $— |
| International | — | — | — |
| Total | — | — | $— |
| Subsequent to 2024 |  |  |  |
| U.S. | 2 | 22 | $14.3 |
| International | — | 2 | 2.7 |
| Total | 2 | 24 | $17.0 |
| Total commitments at September 30, 2024 | 2 | 24 | $17.0 |

(1) Based on the expected theatre opening date.

(2) Approximately $3.2 million is expected to be paid during the remainder of 2024 and $7.8 million, $1.2 million and $4.8 million is expected to be paid during 2025, 2026 and 2027, respectively. The timing of payments is subject to change in the event of construction 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 was $94.7 million and $118.0 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease in cash used for financing activities was primarily due to the repayment of the 5.875% Senior Notes and the redemption of the remaining 8.75% secured notes, partially offset by the issuance of the 7.00% Senior Notes during the nine months ended September 30, 2024.

Holdings, at the discretion of its board of directors and subject to applicable law, may pay dividends on its common stock. The amount of the dividends to be paid in the future, if any, will depend upon available cash balances, anticipated cash needs, overall financial condition, loan agreement restrictions as discussed below, and 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’ Board of Directors has suspended the quarterly dividend to 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, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

We expect to repay the principal amount of our 4.50% Convertible Senior Notes upon their maturity in August 2025 with cash on hand, and could fund the remainder with a combination of cash, shares or a combination thereof. See “*4.50% Convertible Senior Notes”* below. Also see Note 7 to the condensed consolidated financial statements for a summary of long-term debt outstanding as of September 30, 2024 for Holdings and CUSA.

#### Contractual Obligations

There have been no material changes in the contractual obligations previously disclosed in “Liquidity and Capital Resources” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed February 16, 2024.

#### 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 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.

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 Holdings’ 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 Holdings’ 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; or (3) upon the occurrence of specified corporate events as described further in the indenture. Prior to May 15, 2025, holders may convert their notes during any calendar quarter (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. The closing price of Holdings' common stock exceeded $18.66 per share (130% of the initial conversion price of $14.35 per share) during at least 20 of the last 30 trading days of the quarter ended September 30, 2024 and, therefore, the 4.50% Convertible Senior Notes will be convertible during the fourth quarter of 2024. Beginning May 15, 2025, holders may convert their notes at any time prior to the close of business on the third scheduled trading day immediately preceding the maturity date. 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 current 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 notes in connection with such make-whole fundamental change.

Holdings entered into hedge transactions with counterparties in connection with the issuance of the 4.50% Convertible Senior Notes. The convertible note hedge transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the 4.50% Convertible Senior Notes, the number of shares of Holdings' common stock underlying the 4.50% Convertible Notes, which initially gives Holdings the option to purchase approximately 32.0 shares of its common stock at a price of approximately $14.35 per share. Concurrently with entering into the convertible note hedge transactions, Holdings also entered into warrant transactions with each option counterparty whereby Holdings sold to such option counterparty warrants to purchase, subject to customary anti-dilution adjustments, up to the same number of shares of Holdings' common stock, which initially gives the option counterparties the option to purchase approximately 32.0 shares at a price of approximately $22.08 per share. The economic effect of these transactions is to effectively raise the strike price of the 4.50% Convertible Senior Notes to approximately $22.08 per share of Holdings’ common stock. The warrants expire 1/80th per trading day between November 15, 2025 and March 12, 2026.

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 5.25% Senior Notes due 2028 and 7.00% Senior Notes due 2032, or, collectively, CUSA’s senior notes (but excluding all obligations under the Credit Agreement, as defined below, 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 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 Notes. The 4.50% Convertible Notes are not guaranteed by any of Holdings' subsidiaries.

#### Senior Secured Credit Facility

On May 26, 2023, CUSA amended and restated its senior secured credit facility (the “Credit Agreement”) to provide for an aggregate principal amount of $775.0 million, consisting of a $650.0 million term loan with a maturity date of May 24, 2030 and a $125.0 million revolving credit facility with a maturity date of May 26, 2028. The term loan and revolving credit facility are subject to a springing maturity date of April 15, 2028 if CUSA’s 5.25% Senior Notes due 2028 have not been paid or refinanced as required under the Credit Agreement prior to such date, as more specifically described in the Credit Agreement.

On May 28, 2024, CUSA amended and restated its senior secured credit facility to reduce the rate at which the term loan bears interest by 0.50% and reset the 101% soft call for another six months (the “2024 Amendment”). See below for additional discussion of interest rates on the term loan, and Note 7 to the condensed consolidated financial statements for additional information on the 2024 Amendment.

Under the Credit Agreement, principal payments of $1.6 million are due on the term loan quarterly through March 31, 2030, with a final principal payment of the remaining unpaid principal due on May 24, 2030.

Pursuant to the 2024 Amendment noted above, interest on the term loan accrues, at CUSA's option, at either (i) a rate determined by reference to the secured overnight financing rate (“SOFR”) as published by CME Group Benchmark Administration Limited and identified by Barclay's Bank PLC (the Administrative Agent) as the forward-looking term rate based on SOFR for a period of 1, 3, or 6 months (depending upon the Interest Period (as defined in the Credit Agreement) chosen by CUSA) (the “Term SOFR Rate”), subject to a floor of 0.50% per annum, plus an applicable margin of 3.25% per annum, or (ii) for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Reserve Bank of New York Rate in effect on such day, plus 1/2 of 1.00% and (c) the Term SOFR Rate for a one month Interest Period, as published two U.S. Government Securities Business Days prior to such day (or if such day is not a U.S. Government Securities Business Day, the immediately preceding U.S. Government Securities Business Day), plus 1.00% (this clause (ii), the "Alternate Base Rate"), subject in the case of this clause (ii) to a floor of 1.50% per annum, plus, in the case of this clause (ii), an applicable margin of 2.25% per annum effective.

Interest on revolving credit loans accrues, at CUSA's option, at either (i) the Term SOFR Rate plus an applicable margin that ranges from 3.00% to 3.50% per annum, or (ii) the Alternate Base Rate, subject, in the case of this clause (ii) to a floor of 1.00% per annum, plus, in the case of this clause (ii), an applicable margin that ranges from 2.00% to 2.50%. The applicable margin with respect to revolving credit loans is a function of the Consolidated Net Senior Secured Leverage Ratio as defined in the Credit Agreement. As of September 30, 2024, the applicable margin was 3.00%, however, there were no borrowings outstanding under the revolving line of credit. In addition, CUSA is required to pay a commitment fee on the revolving line of credit that accrues at a rate ranging from 0.20% to 0.375% per annum of the daily unused portion of the revolving line of credit. The commitment fee rate is a function of the Consolidated Net Senior Secured Leverage Ratio and was 0.20% at September 30, 2024.

CUSA’s obligations under the Credit Agreement are guaranteed by Holdings and certain subsidiaries of Holdings other than CUSA (the “Other Guarantors”) and are secured by security interests in all of CUSA, and substantially all of Holdings’ and the Other Guarantors’ personal property.

The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on the ability of Holdings, CUSA and their subsidiaries to: merge, consolidate, liquidate, or dissolve; sell, transfer or otherwise dispose of assets; create, incur or permit to exist certain indebtedness and liens; pay dividends, repurchase stock and make other Restricted Payments (as defined in the Credit Agreement); prepay certain indebtedness; make investments; enter into transactions with affiliates; and change the nature of their business. At any time that CUSA has revolving credit loans outstanding, it is not permitted to allow the Consolidated Net Senior Secured Leverage Ratio to exceed 3.5 to 1.0. As of September 30, 2024, there were no revolving credit loans outstanding, and CUSA’s Consolidated Net Senior Secured Leverage Ratio was below zero.

The Credit Agreement also includes customary events of default, including, among other things, payment default, covenant default, breach of representation or warranty, bankruptcy, cross-default, material ERISA events, a change of control, material money judgments and failure to maintain security interests. If an event of default occurs, all commitments under the Credit Agreement may be terminated and all obligations under the Credit Agreement could be accelerated by the Lenders, causing all loans outstanding (including accrued interest and fees payable thereunder) to be declared immediately due and payable.

The Restricted Payments covenant, as defined in the Credit Agreement generally does not limit the ability of Holdings and its subsidiaries to pay dividends and make other Restricted Payments if the Consolidated Net Total Leverage Ratio (as defined in the Credit Agreement) is less than or equal to 2.75 to 1.00. If the Consolidated Net Total Leverage Ratio is greater than 2.75 to 1.00, but not greater than 5.00 to 1.00, Restricted Payments generally may be made in an aggregate amount not to exceed the Available Amount (as defined in the Credit Agreement), which is a function of CUSA’s Consolidated EBITDA minus 1.75 times its Consolidated Interest Expense (as such terms are defined in the Credit Agreement) and certain other factors as specified in the Credit Agreement. As of September 30, 2024, the Consolidated Net Total Leverage Ratio was 2.14 to 1.00 and the Available Amount was $752.8 million. In addition, the Credit Agreement contains other baskets that allow certain Restricted Payments in excess of the Applicable Amount.

We have three 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. See Note 7 to the condensed consolidated financial statements for discussion of the interest rate swaps.

As of September 30, 2024, there was $640.3 million outstanding under the term loan and no borrowings were outstanding under the $125.0 million revolving line of credit. The average interest rate on outstanding term loan borrowings under the Credit Agreement as of September 30, 2024 was approximately 6.9% per annum, after giving effect to the interest rate swap agreements.

#### 7.00% Senior Notes

On July 18, 2024, CUSA issued $500.0 million 7.00% senior unsecured notes, at par (the “7.00% Senior Notes”). The notes will mature on August 1, 2032. Interest on the 7.00% Senior Notes will be payable on February 1 and August 1 of each year, beginning on February 1, 2025. CUSA incurred debt issuance costs of approximately $8.7 million in connection with the issuance, which were recorded as a reduction of long-term debt on the Company’s consolidated balance sheet. Proceeds, net of fees, were used to repay CUSA’s 5.875% $405.0 million aggregate principal amount of Senior Notes due March 2026 (the “5.875% Senior Notes”), as discussed below under *5.875% Secured Notes.* The remainder of the net proceeds will be used for general corporate purposes.

The notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of CUSA’s subsidiaries, or its guarantors, 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 7.00% Senior Notes when they are due, CUSA’s guarantors must make them instead. The 7.00% 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, including the 5.25% senior notes due 2028 and all borrowings under CUSA’s Credit Agreement. The notes and the guarantees will be structurally subordinated to all existing and future debt and other liabilities of CUSA’s non-guarantor subsidiaries. The notes and the guarantees will be structurally senior to the 4.50% convertible senior notes due 2025, and all future debt, if any, issued by Holdings that is not guaranteed by CUSA or any of its subsidiaries.

CUSA may redeem the 7.00% Senior Notes in whole or in part at any time on or after August 1, 2027 at redemption prices set forth in the indenture governing the 7.00% Senior Notes, plus accrued and unpaid interest, if any, on the 7.00% Senior Notes redeemed, to the applicable redemption date, if redeemed during the 12-month period beginning on August 1 of the years indicated below:

|  | Percentage of Principal Amount |
| --- | ---: |
| 2027 | 103.50% |
| 2028 | 101.75% |
| 2029 and Thereafter | 100.00% |

Prior to August 1, 2027, CUSA has the option to redeem all or a portion of the 7.00% Senior Notes at a price equal to 100.0% of the principal amount thereof, plus accrued and unpaid interest, if any, plus a make-whole premium. In addition, prior to August 1, 2027, CUSA may redeem up to 40% of the aggregate principal amount of the 7.00% Senior Notes with funds in an amount equal to the net proceeds of certain equity offerings at a redemption price equal to 107.0% of the principal amount of the 7.00% Senior Notes redeemed, plus accrued and unpaid interest, if any, as long as (i) at least 60% of the principal amount of the 7.00% Senior Notes outstanding issued under the indenture governing the 7.00% Senior Notes (including any additional notes) remains outstanding immediately after each such redemption and (ii) the redemption occurs within 120 days of the date of the closing of such equity offerings.

The indenture governing the 7.00% Senior Notes contains covenants that limit, among other things, the ability of CUSA and certain of its subsidiaries to (1) incur or guarantee additional indebtedness, (2) pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments, (3) make certain investments, (4) engage in certain transactions with affiliates, (5) incur or assume certain liens, and (6) consolidate, merge or transfer all or substantially all of its assets. Additionally, upon a change in control, as defined in the indenture governing the 7.00% Senior Notes, CUSA would be required to make an offer to repurchase all of the 7.00% Senior Notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, through the date of repurchase.

#### 5.875% Senior Notes

On March 16, 2021, CUSA issued $405.0 million aggregate principal amount of 5.875% senior notes due 2026, at par value (the “5.875% Senior Notes”). Interest on the 5.875% Senior Notes was payable on March 15 and September 15 of each year. The 5.875% Senior Notes were scheduled to mature on March 15, 2026.

Concurrently with the 7.00% Senior Notes bond offering discussed above, on July 9, 2024, CUSA commenced a cash tender offer to purchase any and all of CUSA’s 5.875% Senior Notes. On July 18, 2024, CUSA completed the tender of $345.3 aggregate principal amount of the notes. After the expiration of the tender offer, $59.7 million aggregate principal amount of the 5.875% Senior Notes remained outstanding.

On September 19, 2024, CUSA, as permitted by the terms of the indenture governing the 5.875% Senior Notes, irrevocably deposited non-callable U.S. government treasury securities with a trustee in an amount sufficient to fund the repayment of the remaining $59.7 million principal amount of the 5.875% Senior Notes on March 15, 2025 (the “Redemption Date”) at 100% of the principal amount plus accrued and unpaid interest thereon. After the deposit of such funds with the trustee, CUSA’s obligations under the indenture with respect to the 5.875% Senior Notes were satisfied and discharged and the transaction was accounted for as a debt extinguishment.

As a result of the debt extinguishment CUSA recognized a loss of $3.0 related to the write-off of unamortized debt issuance costs as well as legal and other fees incurred in connection with the transactions, which is reflected in “Loss on debt amendments and extinguishments” in the Company’s condensed consolidated statement of income for the three and nine months ended September 30, 2024. See Note 7 to the condensed consolidated financial statements for a discussion of the satisfaction and discharge of the 5.875% Senior Notes completed on September 19, 2024.

#### 5.25% Senior Notes

On June 15, 2021, CUSA issued $765.0 million aggregate principal amount of 5.25% senior notes due 2028, at par value (the “5.25% Senior Notes”). Interest on the 5.25% Senior Notes is payable on January 15 and July 15 of each year. The 5.25% Senior Notes mature on July 15, 2028.

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, 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.

CUSA may redeem the 5.25% Senior Notes in whole or in part at redemption prices specified in the indenture.

#### 8.75% Secured Notes

On April 20, 2020, CUSA issued $250.0 million 8.75% senior secured notes (the “8.75% Secured Notes”) with a maturity date of May 1, 2025. Interest on the 8.75% Secured Notes was payable on May 1 and November 1 of each year. CUSA could redeem the 8.75% Secured Notes in whole or in part at redemption prices specified in the indenture.

On May 1, 2023, CUSA redeemed $100.0 million in principal amount of the 8.75% Secured Notes plus accrued interest thereon for $106.6 million in cash. Following the redemption, $150.0 million in aggregate principal amount of the 8.75% Secured Notes remained outstanding.

On May 1, 2024, CUSA redeemed the remaining $150.0 million in outstanding principal amount of the 8.75% Secured Notes at par plus accrued interest thereon for $156.6 million in cash. Upon redemption, the indenture governing the 8.75% Secured Notes was fully satisfied and discharged. See Note 7 to the condensed consolidated financial statements for additional information on the redemption.

#### Borrowing of International Subsidiaries

In August, 2024, one of the Company’s international subsidiaries paid off its outstanding bank loan. The bank loan was scheduled to mature in January 2029.

#### Covenant Compliance

The indentures governing the 7.00% Senior Notes and the 5.25% Senior 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 September 30, 2024, CUSA could have distributed up to approximately $3.9 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 7.00% Senior Notes and the 5.25% Senior Notes at a price equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest, if any, through the date of repurchase. The 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 September 30, 2024 was 5.1 to 1.

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

As of September 30, 2024, we believe we were in full compliance with all agreements, including all related covenants, governing our outstanding debt.

## Market risk

As filed, 3,140 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 related to this variable rate debt. At September 30, 2024, we had an aggregate of $190.3 million of variable rate debt outstanding, after giving effect to the interest rate swaps. Based on the interest rates in effect on the variable rate debt outstanding at September 30, 2024, a 100 basis point increase in market interest rates would increase our annual interest expense by $1.9 million.

The tables below provide information about Holdings' and CUSA’s fixed rate and variable rate long-term debt agreements as of September 30, 2024. The Company has three interest rate swap agreements that are used to hedge a portion of the interest rate risk associated with the variable interest rates on the Company’s term loan debt. See *Interest Rate Swap Agreements* below. Holdings’ long-term debt agreements include fixed rate and variable rate long-term debt of CUSA, which is guaranteed by Holdings.

#### Holdings Debt

*(in millions)*

|  | Expected Maturity for the Twelve Months Ending September 30, 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | Fair Value | Average Interest Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Fixed rate | $460.0 | $— | $— | $765.0 | $— | $950.0 | $2,175.0 | $2,643.0 | 5.7% |
| Variable rate | 6.4 | 6.4 | 6.4 | 6.4 | 6.5 | 158.2 | 190.3 | 191.0 | 7.9% |
| Total debt (1) | $466.4 | $6.4 | $6.4 | $771.4 | $6.5 | $1,108.2 | $2,365.3 | $2,834.0 | 5.9% |

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

#### CUSA Debt

*(in millions)*

|  | Expected Maturity for the Twelve Months Ending September 30, 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | Fair Value | Average Interest Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Fixed rate | $— | $— | $— | $765.0 | $— | $950.0 | $1,715.0 | $1,729.1 | 6.1% |
| Variable rate | 6.4 | 6.4 | 6.4 | 6.4 | 6.5 | 158.2 | 190.3 | 191.0 | 7.9% |
| Total debt (1) | $6.4 | $6.4 | $6.4 | $771.4 | $6.5 | $1,108.2 | $1,905.3 | $1,920.1 | 6.3% |

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

#### 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 condensed consolidated balance sheet as an asset or liability with the related gains or losses reported as a component of accumulated other comprehensive loss. See Note 7 to the condensed consolidated financial statements for further discussion of the interest rate swap agreements.

#### Foreign Currency Exchange Rate Risk

There have been no material changes in foreign currency exchange rate risk previously disclosed in “Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed February 16, 2024.

## Controls and procedures

As filed, 1,733 characters.

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

As of September 30, 2024, under the supervision and with the participation of Holdings’ and CUSA’s principal executive officer and principal financial officer, Holdings and CUSA 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 September 30, 2024, 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 September 30, 2024 that materially affected, or are reasonably likely to materially affect, Holdings’ and CUSA’s internal control over financial reporting.

## Risk factors

As filed, 211 characters.

We believe there have been no material changes in our risk factors from those disclosed in “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed February 16, 2024.

Filed Oct 31, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-119234. Last ingested by Listed: Nov 3, 2026, 08:34 ET. No prices; not investment advice.