Cinemark Holdings Inc (CNK) 2009 Q1 法說會逐字稿

Good morning and welcome to the Cinemark first-quarter 2009 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. (Operator Instructions.) Thank you. Ms. Nikki Sacks with ICR, you may begin your conference.

Welcome to Cinemark's first-quarter 2009 earnings call. Before we begin, let me remind you that, in accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, the Company knows that certain matters to be discussed by members of management during this call may constitute forward-looking statements.

Such statements are subject to risks, uncertainties, and other factors that may cause Cinemark's actual performance to be materially different from the performance indicated or implied by such statements. Such risk factors are set forth in the Company's SEC filings.

Today, Cinemark's CEO Alan Stock and CFO Robert Copple will be discussing the first-quarter results. I'll now turn the call over to Alan.

Thank you all for joining us on the call this morning. On today's call, I would like to comment on the industry and Cinemark's calendar first-quarter 2009 results, the upcoming film slate, and Cinemark's digital cinema and 3-D strategy. After my comments, our Chief Financial Officer, Robert Copple, will take us through the details of our first-quarter results.

The first quarter set a box office record for the U.S. exhibition industry, and, according to industry sources, grew 9.5% despite the ongoing challenging economic environment. This performance provides further evidence of the resilience of our industry.

The first quarter of 2009 broke many industry records, including the highest grossing January and February in history. January alone was the seventh biggest month of the last five years, led by the hit Paul Blart: Mall Cop. Five films grossed more than $100 million during the first quarter of 2009, including Gran Torino, Taken, Slumdog Millionaire, and Watchmen.

During the first quarter of 2008, there were only two films that grossed more than $100 million.

Also, the 3-D film releases began to build steam, with three films opening during the first quarter of 2009, including Coraline, My Bloody Valentine, and the much-anticipated Monsters Vs. Aliens. Together, these 3-D films represented approximately 8% of the U.S. industry box office during the quarter.

This record-setting first-quarter box office performance comes on top of a record-breaking 2008. We believe our performance during recent periods has reinforced what we have experienced historically during difficult economic periods, that our industry is relatively recession-resistant.

Going to the movies continues to be one of the most convenient and affordable forms of out-of-home entertainment, and allows an escape from everyday issues for many people. Industrywide box-office revenues have increased in four of the last six recessions, and continued to increase in the succeeding recovery year in three of the last four recessions.

The quarter's results reinforce our experience that our customers go to the movies when there is appealing product, and that product quality is more important than quantity. During the first quarter of 2009, industry sources indicate that there were approximately 9% fewer releases than in 2008. Yet these films, as well as the holdovers from 2008, still generated a significant increase in box office performance.

Turning to Cinemark's performance in the first quarter of 2009, Cinemark's worldwide attendance for the quarter increased 8.9% to 54.1 million patrons. And our industry-leading adjusted EBITDA margin increased 200 basis points to 23%.

Our attendance growth was driven by increases in attendance in both our domestic and international segments, as well as the addition of new theaters.

We also experienced increases in both our domestic and international average ticket prices and concession revenues per patron before the impact of unfavorable changes in foreign exchange rates.

Our domestic box office revenues were up 11.2% in the first quarter, which outperformed the estimated U.S. industry box office increase of 9.5% for the calendar quarter, according to industry sources.

Our domestic attendance was up 8.7%, due to the strong performance of the films I mentioned earlier.

Our attendance increase is also due in part to our conservative approach to pricing for the past year, given the uncertainties in the economy. We are focused on delivering a strong value proposition to our customers, relative to other alternatives, and continuing to be affordable. We offer a wide array of pricing to entice many different customers.

Even with our more conservative pricing approach, our average ticket price increased 2.4% in our domestic circuit.

We have also been more conservative with our concession pricing and did not implement an increase during the latter half of 2008, when the economy began to show signs of recession. Despite the lack of price increase, we are pleased that concession revenue per person increased slightly during the quarter, and our margin improved.

Given the continued strong industry performance, we believe there is room for a modest increase in pricing in certain markets during the coming months.

Cinemark's international operations continue to provide a diversified revenue base and remains a competitive advantage for us. Our Latin American operations continued to show strength in this economic environment and outperformed our domestic operations in the first quarter of 2009 in both attendance growth and increases in average ticket and concessions per person in local currencies for the quarter.

Attendance grew 9.1% in our international operations during the first quarter of 2009, due to the success of films such as The Curious Case of Benjamin Button, Bedtime Stories, and Marley & Me.

In addition to the U.S. product, we benefited from the strong performance of local film product in Brazil and Mexico.

International average ticket prices and concession revenues per patron also increased in local currency. These were offset, however, by the decline in the Brazilian real and the Mexican peso relative to the dollar when comparing to the first quarter of 2008. Since our international operations are conducted in local currency, and the majority of the cash generated remains in the respective country, currency fluctuations, whether favorable or unfavorable, do not impact our local currency cash flows.

We continue to see growth as the second-quarter U.S. industry box office is up a robust 30% through the first weekend in May. The second quarter started off strong, with the fourth installment of Fast & Furious on April 3. We achieved the highest opening-weekend gross for any film opening in April.

Wolverine opened this past weekend at $85 million.

We are optimistic about the upcoming lineup this year, which includes a number of high-profile films that should appeal to a wide variety of patrons. Tonight, a new Star Trek series will be introduced as a franchise, followed by Angels and Demons; Night at the Museum 2: Escape from the Smithsonian; Terminator Salvation: The Future; Disney Pixar's Up; Land of the Lost; the second installment of Transformers, Revenge of the Fallen; another follow-up of Ice Age, Dawn of the Dinosaurs; the next Harry Potter, Harry Potter and the Half-Blood Prince; Disney's G-Force; G.I. Joe; the next Twilight installment, New Moon; Robert Zemeckis' A Christmas Carol; and James Cameron's Avatar.

The 2009 release schedule reflects the ramp-up of movies being produced and released in 3-D, including Up, G-Force, Ice Age, Final Destination 4, Cloudy with a Chance of Meatballs, and re-release of Toy Story 1 and 2, A Christmas Carol and Avatar. Additionally, 25 3-D films have been announced for release over the next few years.

Having seen the success of the pictures released thus far in 2009, including Monsters Vs. Aliens, we remain excited about providing premium experiences for our customers, including 3-D and alternative content.

3-D box office per screen in 2009 outperformed the average 2-D per screen in the range of 3 to 6 times, depending on the film. As with all our pricing, our 3-D premium is based on what we believe each local market will support. Currently, we charge from $2 to $4, and the majority of our U.S. theaters have a 3-D premium of approximately $3.

Over the last six months, we have redeployed the majority of our digital projectors from fully digitized theaters to individual screens throughout the U.S. in order to maximize our 3-D footprint. We anticipate that we will have approximately 275 3-D projectors deployed worldwide by the time Up is released.

After the digital cinema agreements with DCIP are finalized and deployment begins, we will begin to roll out -- of up to 1,500 real-D 3-D screens throughout our worldwide circuit.

Regarding DCIP, five major studios have signed digital distribution agreements, for a total of six agreements. And negotiations with the final major studio are in progress. DCIP currently is in negotiations with both equity and debt investors, and hopefully will soon be able to approach the market.

We are continuing our growth strategy, both domestically and internationally. While there has been some slowdown in domestic project development, due to the current economic environment, resulting in lower new-build commitments than there were at this time last year, we continue to pursue opportunities for organic growth.

We are supplementing our organic growth with selective acquisitions. In the first quarter of 2009, we acquired 82 screens in four very high-quality theaters in the U.S.. Additionally, we have signed commitments to open five theaters with 62 additional screens during the remainder of 2009.

We are still seeing attractive development opportunities in our Latin American market. We opened five screens and one new theater internationally, and signed commitments to open an additional three theaters during the remainder of 2009. We will continue to seek high-quality locations for both organic builds and evaluate acquisition opportunities that meet our return metrics in both international and domestic markets.

In addition to expanding our circuit, we are also developing concepts to enhance and differentiate our existing theaters. During the quarter, we introduced our first extreme digital large-screen auditorium, which we have branded Cinemark XD. The auditorium features a wall-to-wall, ceiling-to-floor screen that is 70 feet wide. The patron is surrounded by a custom JBL digital sound system with over 30 speakers that immerses the patron in a complete digital experience.

One of the largest available digital projectors is used to project the film, and we have added real D's enhanced Accel system for maximum 3-D performance. The auditorium can be used for 3-D or 2-D presentations.

We will be rolling out 10 to 15 new XD auditoriums over the next three to six months in new and existing theaters, and will then begin a much broader expansion of the concept.

We are currently charging a VIP premium of approximately $3 for the auditorium and the initial response has been extremely positive. In the opening weekend of Monsters Vs. Aliens, with no marketing, our XD screens generated a 40% premium over our normal 3-D screens.

We are encouraged to see that the theater industry has continued to grow in this challenging economy. Our industry provides an attractive, low-cost form of entertainment and an escape from the everyday worries for our customers. While we remain focused on our cost structure and are planning conservatively during this economic challenge, we continue to focus on the long term, and are providing new and revolutionary ways to entertain our customers with a rollout of the next generation of technology, 3-D, and alternative content on the horizon.

We will continue to invest in areas that meet our investment return criteria, including our long-term organic growth strategy, accretive and attractive acquisitions, and on enhancing our industry-leading position.

With that, I will now turn the call over to Robert to discuss the quarter's financial details -- results in more detail.

I will review our first quarter of 2009 financial performance in more detail and discuss our balance sheet.

During the first quarter, on a worldwide basis, our attendance increased by 8.9% over the first quarter of 2008, which drove an increase in our industry-leading adjusted EBITDA margin to 23%.

Our total revenues increased 6.2% to $425.8 million. Admission revenues increased 6.7% to $279.9 million, and concession revenues increased 6.4% to $130 million.

We experienced increases in both our domestic and international average ticket prices and concession revenues per patron before the impact of changes in foreign exchange rates.

Adjusted EBITDA for the first quarter of 2009 was $98 million, compared to $84.2 million for the first quarter of 2008, an increase of 16.4%.

On a segment basis for the quarter, our U.S. operations experienced an 8.7% increase in attendance. U.S. admission revenues were $225.5 million, representing an 11.2% increase over 2008, exceeding the estimated calendar quarter industry box office increase of 9.5% by 18%.

Our average ticket price increased 2.4%, driven primarily by the greater number of 3-D screens.

Concession revenues increased 9.6% to $106 million. Our concession revenues per patron increased by approximately 1%, driven by product mix, as we have taken a conservative approach to concession price increases with no meaningful increases since 2008.

The successful film slate has continued to drive concession purchases by our customers. Our total domestic revenues increased 10.6% to $340.6 million, and adjusted EBITDA increased 26% to $81.7 million.

Within our international segment, attendance was up 9.1% for the quarter, exceeding our U.S. operations' performance. Our average ticket prices and concession revenues per patron both experienced sizable increases for the quarter in local currencies. Admissions revenues were $54.4 million, driven by strong attendance increases, new theaters, and an increase in ticket prices in local currencies. Concession revenues were $24 million, driven higher in local currencies by pricing and attendance.

Our attendance and local price increases substantially reduced the impact of foreign exchange rates on our results. Adjusted EBITDA for our international segment decreased for the quarter, as a result of exchange rate variances, to $16.3 million, compared to $19.3 million in the first quarter of 2008.

Our consolidated film rentals and advertising costs for the quarter of 2000 -- for the first quarter of 2009 were $147.1 million, or 52.6% of admissions revenues, compared to $138.1 million, or 52.7% of admission revenues for 2008.

Concessions supplies' costs were $19.7 million, or 15.2% of concessions revenues, for the first quarter of 2009, compared to $18.7 million, or 15.3% of concessions revenues, for the first quarter of 2008.

For the first quarter of 2009, salaries and wages were $44.4 million, or 10.4% of revenues, compared to $42.6 million, or 10.6% of revenues for the first quarter of 2008, primarily driven by increased attendance, minimum wage increases, and new theater openings.

General and administrative expenses were $21.8 million, or 5.1% of revenues, consistent with the 5.1% of revenues in the first quarter of 2008. G&A expenses include non-cash share-based award compensation expense of $1.6 million for 2009, versus $0.9 million for 2008.

During the first quarter, we reported asset impairment charges of $1 million, compared to $4.5 million in the first quarter of 2008.

As a reminder, these impairments are non-cash charges to earnings, and did not affect the Company's liquidity or cash flows from operating activities.

Pretax net income for the quarter was $33 million, compared to $10 million in the first quarter of 2008. As a result of recent accounting pronouncements -- of a recent accounting pronouncement, net income for us is now called net income attributable to Cinemark Holdings. The derivation of the two numbers is the same. The minority interest line has moved to a line called net income attributable to non-controlling interest, and our former net income line is now called net income attributable to Cinemark Holdings.

Net income attributable to Cinemark Holdings for the quarter was $17.6 million, or $0.16 per diluted share, compared to net income of $5.3 million, or $0.05 per diluted share, in the first quarter of 2008.

Our effective tax rate was 44.4% for the first quarter of 2009.

Our balance sheet position remains one of the strongest in our industry. At March 31, 2009, our cash position was $306 million. Our net debt was $1.21 billion. This level of net debt results in a leverage ratio of approximately 3.1 times adjusted EBITDA.

We continue to believe that our cash position, relative to debt level, and the timing of the maturities of our long-term debt leave us well positioned to take advantage of opportunities that arise as a result of the current economic environment, including additional deleveraging.

At March 31, 2009, our total domestic screen count was 3,814 screens, 12 of which are in Canada. In late March, we acquired four theaters with 82 screens located in Florida and Maryland. As of March 31, 2009, we had signed commitments to open five new theaters with 62 screens in domestic markets during the remainder of 2009, and opened four new theaters with 62 screens in domestic markets subsequent to 2009.

We opened one theater with five screens in our international markets during the quarter, and closed three theaters with 14 screens. Our total international screen count at March 31, 2009, was 1,032 screens. As of March 31, 2009, we have signed commitments to open three new theaters with 15 screens in international markets during the remainder of 2009, and one new theater with 12 screens subsequent to 2009. We are also negotiating commitments for an additional two international theaters with 21 screens, scheduled to open in 2009.

During the first quarter, we invested $22.9 million in capital expenditures, including $7.7 million on new construction and theater additions, and $15.2 million in CapEx maintenance.

Currently, we estimate that our growth total CapEx before disposition proceeds for fiscal 2009 to be approximately $115 million to $125 million, which includes CapEx maintenance.

Regarding our investment in National CineMedia, as the result of the annual common unit adjustment, we received 1.2 million additional common units during the first quarter and currently owns 15.2 million common units. Ownership interest in National CineMedia is approximately 15%.

I wanted to briefly mention that the Company filed a shelf registration statement yesterday, solely to allow existing stockholders to facilitate potential future sales in the markets. The filing of this registration statement does not necessarily mean sales will occur at this time, and we have received no indication that such sales will occur at this time.

We also filed Form 10-Q for the quarter, which is now available on the EDGAR.

In summary, during the first quarter, we saw our customers continue to seek affordable entertainment at the movies, and frequent theaters when quality films are playing, even in this challenging economic environment. While we remain optimistic with respect to the film lineup for 2009, we are planning our business conservatively and will stay focused on controlling our costs.

We continue to focus on expanding our domestic and international footprint, and look forward to opportunities to reduce our outstanding debt. We are optimistic that we will be able to embark on our digital and 3-D rollout as DCIP works to wrap up the debt and equity negotiations and move forward with financing.

With the diversity of our international footprint, organic growth, acquisition opportunities, and opportunities associated with digital and 3-D technology, we remain optimistic about our long-term growth prospects.

We will now be glad to answer your questions.

(Operator Instructions). James Marsh, Piper Jaffray & Co..

I just wanted to follow up on the XD announcement. Do you view this as an IMAX substitution, or is this something that you'd use, maybe, in smaller markets or select markets?

Secondly, related to that, could you discuss the projection system and whether it's using the same file format, or it needs any remastering? The technology, if you could explain that a little better.

I think the best way to look -- to think about this is our goal when we developed the Cinemark XD was just to really develop a large-screen format that we control. It can provide complete flexibility in the 2-D and 3-D format. And I truly believe we have created and established that goal.

The difference starts when you first go into a complex. The auditorium look is different. It's segregated from the rest of the auditoriums, so it's an entirely different look and feel.

As far as the equipment goes, it's really just a large cinema-quality digital projector that we've put in there. So we combined that with the real D Accel system to accommodate both 2-D and 3-D.

And then, the cost of this whole thing, it really just varies on market but we anticipate, especially when you go into new theaters, that there is minimal cost to roll this thing out. Existing theaters are probably somewhere in the $200,000 to $450,000 range, depending on what's required to modify that.

I'll just add -- kind of your question there, independently, we are still negotiating with IMAX regarding whether there's a potential for us for a broader rollout of IMAX auditoriums. We do continue to operate six current IMAX auditoriums, so really, to summarize here, that XD goal was to just, again, provide a very large, extreme, good format to allow us to roll out this kind of presentation in all of our markets.

Related to Latin America, the attendance for the first quarter looked outstanding. I know I've got a few questions about the impact, potentially, from swine flu. I didn't know if you had any early glimpse into how that might affect attendance, if at all, and if you were taking any steps or precautions related to that.

Let me just -- kind of address to you -- initially, what has happened here -- we, of course, about a week, a little over a week ago, in Mexico City, and this has really been the only effect that we have had in all of our markets anywhere is in Mexico.

And a little over a week ago, we did begin shutting down, per the government, our theaters in Mexico City proper. And then, throughout last week, many of the rest of the theaters throughout the country began to close.

I think beginning as early as yesterday, theaters started to open back up. So we don't know, obviously, at this point. You're offscreen for those handful of theaters for that period of time, that we believe that's going to be a fairly minimal impact.

Let me just add one thing to it, is that all of the studios have reacted to this on their openings of films. So X-Men Wolverine did not open last week. It's been pushed back right now to May 29. So there were no new films or none of the summer has really begun in Mexico at this point in time.

We do believe that, at this point in time, it sounds like things are kind of back under control or a better understanding of what this thing is all about. We have certainly taken all the precautions necessary to make sure our theaters are -- continue to be clean and there is no concern of what's going on with them.

So at this point in time, we don't anticipate that there is going to be much of an impact from that.

That's very helpful. Thank you very much.

Barton Crockett, Lazard Capital Markets.

Thanks for taking the question. I was wondering if you could comment on a couple of things. One is that we all know about the National Amusements [book of] theaters that's circulating, and I doubt you can talk specifically about that. But generally, in terms of acquisitions, can you give us some sense of how much capacity you have on your balance sheet and in your cash to make acquisitions before you think you'd have to restructure your debt, potentially?

In other words, how big a deal could you do before you have to open up the kimono there?

We have -- just -- not necessarily addressing what we would do, but with respect to capacity, we do have, obviously, the $300 million on our balance sheet. We have another $100-plus million in revolver capability, I think around $121 million, so that gives us -- if you did it all-in, $400-plus million available without really considering anything with respect to our debt.

So I think that arguably gives us capacity to do just about any deal that would be out there that could be meaningful to us.

There's always -- our focus is looking at -- opportunities that we feel like will be accretive to us. We do, obviously, keep what we think is a relatively conservative balance sheet and we'll continue to stay focused in a manner that we think -- the relative strength of our balance sheet is used productively, and however, whatever capital expenditures we have, whether that's on new builds or on acquisition opportunities, we still obviously want to stay in a very strong position.

And with the balance sheet, just to your point, you don't want to have to go out and refinance in this kind of market.

But having said all that, I've got a pretty big bucket to play with. But we are only going to use that for deals that we think are meaningful to this circuit in both of -- in terms of where those opportunities are located and how they fit with our current theaters and, more importantly, being sure that they are accretive to our shareholders.

A quick follow-up on that. How much cash would you like at a minimum to maintain on your balance sheet?

I don't know we've really targeted a minimum number. Obviously, there's operating cash and everything you've got to look at, but I don't know I've come down to, per se, a minimum amount.

All right. Switching gears, Fox spoke at the ShoWest, when executives spoke, about wanting theaters to cover the cost of the 3-D glasses. Regal was saying on their call that Fox has dropped that. Can you update us on what you're hearing out of Fox in terms of -- are you going to have to pay for the glasses for Ice Age or not, and do you think this is an issue going forward between the theaters and the studios?

We do not think it's an issue going forward. It has been very well established in the past at how that model works. All the studios have accepted it. Fox, at this point, has indicated that they are going forward with the same model and there's just not going to be an issue. So we do not believe that's something to be concerned about as we roll forward.

That's good to hear. I'll leave it there. Thanks a lot.

David Gober, Morgan Stanley.

Thanks for taking the question. Just touching on the 3-D pricing premium. I was wondering if you could possibly give us a sense of what the impact on Q2 average ticket pricing might be, and I think a number of executives on both the studio side and the exhibitors have said that they feel that the 3-D premium can go up over time.

I was just wondering if you could give some comments on that, and what you've seen from consumers and their willingness to pay current premiums or potentially pay higher premiums.

This past quarter, and we definitely saw as Monsters Vs. Aliens opened, many people took the opportunity to review their pricing and look at what those markets and individual theaters could bear. I think, at it's stated earlier, most everybody did take some price increases.

At that point in time, for our circuit, again, we averaged in the $2 to $4 range, again depending on the market. We did not hear any pushback. In fact, you see as the result of Monsters Vs. Aliens in general, it's very good. It performed very well on the 3-D screen.

So that is a good indicator to us, as we roll forward, and as we come up to these next movies, Up and Ice Age and the ones that we have this summer, that people are willing, when there is good film and high-quality 3-D product that's out there, that they will pay a decent premium for it.

That's not to say that, over time and as the years progress, as we do in all pricing, there is the opportunity to continue to take that up. And we believe that would exist as we roll on through the future.

So right now, I don't know that -- through the next couple of films, will we see much change in what there is in the past for our Company? Probably not. We took those price increases for this summer and for the short term for us, but I think there is definitely opportunity as we roll into the future to continue to evaluate that.

Any comment on the impact of Monsters Vs. Aliens in Q2?

As far as -- are you talking about the average ticket price? Or -- again, it was a good film, so --

In terms of your aggregate numbers, how much of an impact might that have?

Again, we don't comment on forward-looking amounts. But with respect to Q1, 3-D definitely -- we had said we had, I think, about a 2.4% increase in our average ticket price. A fair amount of that was enhanced by 3-D.

So, obviously, we'd expect, going forward, because we do have more 3-D screens now than we had last year at this time, that any 3-D product, and considering that there is more 3-D today than there was last year, just films, and so between films and additional offerings in our circuit, that those will enhance our numbers.

Just one follow-up on the broader pricing. You guys intimated that you'll be taking another look at baseline pricing. Just wondering if that's going to be something that might roll through before the summer blockbuster season, or if that's going to be something that gets addressed maybe later in the year.

We, again, recently -- and typically, when we look at price increases and changes, that is done prior to the summer season. So we as a Company generally always look at this -- right now, in the May timeframe, and then we look at it again in the fall as we approach our Christmas season. So generally, yes, those are always taken prior to the summer.

Great. Thanks, guys.

Jeff Logsdon, BMO Capital Markets.

Great quarter, gang. Two questions. Number one, D&A in the quarter was down, both sequentially and year over year. Is that going to be closer to the run rate before you, perhaps, open a few other theaters? How should we model that out for the rest of the year?

For the most part, that's a result of FX. So it's -- with respect, I'd say -- really, if you're looking at the rest of the year, I don't know. Assuming the FX stays somewhere around where it's at right now, if the rates stay fairly stable, that might be something you can go ahead and look at through the rest of the year.

We'll have, obviously, some changes for new builds, and if we did any acquisitions. So those could affect it.

But I think probably if you go back to Q4 of last year and then Q1 of this year, with the FX running through both of those, you get a reasonable feel, I think, of what a run rate would be. No real change -- you know, no major changes in the calculations themselves. It's just more of a conversion issue.

In the fourth quarter, your D&A was $42.6 million. In the first quarter it was $36.5 million. So that's a pretty big spread.

Yes, it is, but keep it in mind that in the fourth quarter, the FX was starting to come down. The average was still higher for that quarter than what you would have had in Q1.

So, again, it's no -- there is no change in methodology or major changes in our balance sheet that impacted it. It literally is just -- minor things like that might have, but the major change would have been a result of the foreign exchange on our international operations.

Secondly, tax rate at 44% in the quarter. Is that going to be closer to the run rate this year?

It's a tough one. Taxes are one of those items that are always changing based on performance to date, and expected -- the way GAAP works, you project out where you think you'll be at year-end and all that. So I mean, to be safe, I would say 44%.

But it probably will run somewhere between, hopefully, 40% and 44%, barring any unusual items out there. So I think that's ballpark range. 44% is probably a little on the high side. I'm not sure it will stay at that, but if you want to be safe, you can go with that number.

Thank you.

Scott Barry, Credit Suisse.

Could you just remind us what the percentage is on fixed versus floating on the credit facility?

Right now, we have $300 million of our credit facility hedged. We might consider further hedges on it, so for the most part you're looking at about $800 million that's not hedged at this point. That's floating.

If you look at -- if you look at your cap structure, could you talk a little bit about what your priorities would be for deleveraging given, one, the attractiveness of your facility and, two, the fact that the senior discount notes go cash pay?

What we have been doing previously, and we haven't bought any this quarter, if you look at last year in particular, we bought a fair amount of our sub-debt, or the HoldCo notes, the [picc] notes.

And if you go back the last few years, we have just about bought as much each year as what we've had -- or of the accretion, so that they stayed fairly stable. You're right, they do go full pay and the first payment is later this year. So you get half of the overall amount this year.

At 9 3/4, versus LIBOR plus 175, the HoldCos would seem to be a more attractive opportunity. But having said that, if you look at today's rates and what refinancing would be, and actually even look at where those are trading, they are almost trading at par. We've just kind of got to look at it longer term, because those aren't bad debt using today's current marketplace. Leaving those out there might make a lot of sense to us.

Obviously, if we are -- if we do use our cash to start paying down, that's probably the first place we'd look. But we're having to evaluate that in terms of the relative price right now.

Great. Thanks.

Ben Mogil, Thomas Weisel Partners.

Good morning. A couple questions. In terms of the concessions, you sort of commented that you hadn't raised pricing in a number of months, so that -- you saw, obviously, saw good attendance growth but didn't continue on the concession line as much. When do you anticipate sort of increasing concessions? Can you give us a ballpark of what you're looking for on the -- sort of on average, if you will?

The timing, I think as Alan said, we actually looked at both ticket prices and concession price increases prior to the summer, which would be right now. We are still going to take a relatively conservative approach in what our increases would be. We realize, in looking at some other people's performance, that they have raised prices meaningfully more than what we have.

We will continue to focus, I think, in this economy of making sure we are driving attendance. And I would say it's hard to press, looking at data out there, whether -- how much price will impact anything, but I think it just is prudent to be careful on your pricing, and as we said, even last year we would expect price increases this year to probably run more in the couple percent price range rather than the 4% to 5% than what -- that we have seen historically.

So while we will be increasing our prices, we'll continue to monitor it and look at how that is affecting the consumer. But clearly, there's some opportunity there right now.

Are you finding that you're now at the stage, either looking at ticket price or looking at concessions, where you are actually sort of below competitors in similar film zones that have similar or comparable assets, if you will?

I don't think, necessarily. You have to look at it, obviously, at pricing on a market-by-market basis. And as we always evaluate that. Cinemark, as you look at our averages in general, you're going to look at them to be a little bit less, perhaps, then some.

But when we are in similar markets to competitors, I don't know that we're appreciably less than they necessarily are. That's not -- our concessions could be less than some. Our box office generally is not.

We are trying to always be, and as you see our results here and as we continue to be focused on, we are always geared toward how we get attendance and how we get that value proposition for attendance in our theaters to be good for our customers.

So we try to take that approach, we take that mix, and again, not to say there's not opportunity. I think we've always shown great results with that. As Robert stated, there continues to be some opportunities as we look at the future.

But you just want to make sure you are smart about how you do that and how the customer perceives, and that's why we offer many different pricing matrices in our box office and try to attract all customers -- a price point for them all to feel good about.

Sounds great. Another question, sort of -- you obviously bought a few assets from Muvico, I guess, a month ago, or so. Did you have the chance to look at all the Muvico assets and just chose those, or were those all that was effectively for sale? I know there were some lease and some payment problems they were having, so I just wanted to get a sense of whether or not -- unless the circuit wasn't of interest to you, or that's still potentially out there.

At the time, we obviously had been talking with and working with the Muvico guys for some period of time, and what ultimately came to fruition was the four facilities that we bought from them. That didn't occur until the latter half -- I believe it was March 18, so towards the last half of the quarter.

And they were just good assets, and it really was a way for those guys and a model that worked for them as they moved into the future, and worked for us from the assets that we were able to buy.

So again, not to say that other things don't occur either with Muvico or obviously other circuits, but it achieved our goals and I think it achieved their goals at the time. So that's why we chose to close and do the four that we did.

Do those automatically -- I apologize, I forget if Muvico is a Screenvision client or not, but do those automatically, if possible, move over to NCMI?

They were Screenvision assets, and they are assets that we'll be transitioning over to National CineMedia.

Did they transition immediately as an asset sale or does it have to wait until the Screenvision contract is up?

Generally, there is some playoff whenever there is a transition with the theater. So -- when you do an asset sale, the contract doesn't necessarily come with it. So it is an asset that's moved over to National CineMedia, but there is a transition phase.

You just have to work through all the existing contracts and all that kind of stuff.

Last question and then I'll let someone else on the queue. Can you give us a sense, on a same-currency basis -- I don't think you did earlier -- what the revenue was, what the box office and concession growth was in Latin America on a same-currency basis?

What I can give you on a same-currency basis that might help you would be what the average ticket price increase would have been and the concession per capita.

Sure, that's fine. (multiple speakers)

So, the average ticket price, same currency, would've been up 6.7%. On the average ticket. And again, that's just the ticket price. That's not reflecting the attendance increase. The concession per capita would have been up 9.1%.

That's great. Thank you very much, guys, and I'll let someone else get on the queue.

Tony Wible, Janney Montgomery Scott.

That last question -- someone answered mine. I was hoping you could give us a little help with thinking about the international ticket price going forward, especially for the second quarter, given that you have foreign exchange and possibly some modest impact from the swine flu and the closures in Mexico. Could you give us some sense for how to sort through that?

Maybe this does help to answer the last question. We did increase ticket prices on average about 6.7%, concession 9.1%. Across Latin America. That ought to be something that stays relatively stable.

With respect to swine flu, I think, as Alan said earlier, it primarily impacted Mexico and -- with the current status of the swine flu, Mexico is starting to address opening the theaters right now, so we see that as a very temporary period.

The distributors did move the major movies, so we don't feel like we've missed any significant opportunities in Mexico. If you look -- if you kind of want to get a relative sense of the size of Mexico in our total circuit, in Q1 -- and this [isn't] the Q that was [swapped], but in Q1, the relative revenues on a worldwide basis of Mexico represented about 3.3% of our revenues for the quarter.

As far as ticket pricing, Mexico versus the other regions, how does that generally compare?

We don't generally get into specific regions, but kind of across Latin America, it will vary a little bit by country. But I mean, I think the easiest thing for our calculations is just to assume that it's relatively the same everywhere.

And on the larger screens, what percentage of attendance would you think could eventually go to those larger screen formats that you are rolling out? And I'm sorry if I missed this before, but any sense on rolling that larger screen format out over the entire circuit internationally, as well?

Yes, the intent certainly is to roll it out on a worldwide basis, and we are looking at opportunities throughout our entire circuit. And that really is why it was developed.

I think it's a little early and hard to give you numbers or try to figure out what is going to happen there. I think at the end of the day, as we mentioned earlier, we have the one that we started with here that has performed very well.

I think the beauty of it is is just -- it creates such an environment and experience that people want to go to, and you can just see. in the short term that we've had it here, that it definitely is bringing better results, and people want to go, and especially when you have an event movie, they want to go into that auditorium.

So I don't know how to give you an exact, or where that's going to go with it, but as we've stated, there is today a $3 VIP price ticket on that movie right now. So I think there's some good advantages for us.

I know it's early, but any sense for what genres -- has it crossed all genres, or is it just heavy on the action and big tentpole films that you've seen the uptake on the --

The reality, we've put everything that's come down in there. So far. So I don't know that it's going to be limited to anything in particular. We started -- we opened the thing with Monsters Vs. Aliens, and, again, saw great results from that, and subsequent movies.

So I think that is the beauty of it is that we can put in any genre or any film that comes down into the theater. That's why we created it originally, was to provide us that flexibility.

Right now, I'm going to tell you I don't think there is a specific genre that we wouldn't put in there. Now, of course, movies like the X-Men and Transformers and movies of that nature, they lend themselves and people want to see them in that type of environment. But that's not to say that any film wouldn't play well, and people would want to see it that way.

Thank you.

George Hawkey, Barclays Capital.

Great quarter. Thanks for taking the question. I just had a quick follow-up question on the XD versus IMAX. What would -- if you can talk about it, what would the difference, I guess, and returns be in continuing to invest in XD versus making a partnership deal with IMAX? Or is it something you could do both?

There's the potential, obviously, that we could do both. That's why I think early on Alan said that we are still working with IMAX, and we're looking at the format IMAX brings. IMAX is a well-known product, and well-recognized, and we do continue to operate the six IMAXes we have, and have been negotiating for some time on other opportunities.

We see this as really just a different format for us, that's a large screen format. As we've said, on Monsters Vs. Aliens, when you compared to 3-D on opening weekend, and obviously 3-D was running two to three times of what 2-D was in Monsters Vs. Aliens.

And then, we just on -- compared to our normal 3-D screens, we were seeing revenues per screen at a 40% premium on this XD screen. And so, we are pretty excited about the product we have developed. I don't know if, by any means, it needs to be -- an exclusive product compared to IMAX. I think we could actually have both in our circuit.

We have arguably more flexibility, I think, with our Cinemark XD concept to push that out, if we really wanted to, to every theater. IMAX is a concept that is well-recognized and kind of is a territorial-type concept, the way it's been developed. So we are really looking to help both of those fit into our overall strategy.

Great. Thank you.

David Miller, Caris & Co.

I think every possible question that could've been asked has been asked. So I'll switch gears here. Robert, I just want to talk about the S3 a little bit. Why the timing now to file the S3, and what's going on with some of these insiders that they would want to telegraph to the market there intent to sell right now? In either open-market transactions or [bot] deals or what have you?

Your stock is trading roughly 40% below what it was last year at this time. What's going on with some of these insiders, in that they would want to telegraph their intent to sell right now?

I think I'd address it two ways. One, with respect to the prepared remarks we had, I don't think the filing itself reflects an intent to currently sell. That's obviously up to those individual shareholders. As we said, we've received no indication that they intend to, nor that sales will occur at this time, but that's their choice.

I think a little bit with respect to what you said, the fact our stock is down where it's at, this is not a bad time to register. It's a time to go ahead and get this out of the way. All the major shareholders registered. It just takes out somewhat of a compliance-type matter for us to get this behind us, rather than being reflective of an, again, an intent for them to really go do a transaction today.

Does this have anything to do with your free float? I believe only 25% of your diluted shares outstanding is free-floating. Is there pressure within the Board to sort of diversify your shareholder base a little bit, or is there something else going on?

I look at it as if I pulled back and said -- when is the best time to do this? I would nearly say at the time when maybe the stock is where it's at, so that it arguably would have minimal effect.

All it does is it facilitates sales into the market. It doesn't necessarily reflect that there is a change in anybody's intent to sell their stock. And so with respect to the float, whenever our shareholders, or the shareholders who just registered, that would be additional stock to the market.

But, again, this doesn't reflect their intent today to go do something. It facilitates it, if they wanted to, but it's not an offering that we've gone out and said (multiple speakers) going into the market.

Let me just reiterate, too, as Robert continues, I truly believe, and as we've had conversations with them, it really is -- they looked at it, and as we have had these discussions, it just simply is that. They felt timing was very good right now as they looked at the market, and it just felt like it was a good time to do it.

To register the stock. (multiple speakers)

Again, just because of where it is, and not to signify their intent, because I think their thought was, you're right. The market's suppressed, the stock is down, so what better time to just take this matter (multiple speakers)

And just kind of get it behind you. You know, have it registered and that way, it's not something that's dwelled on later.

Okay. Thanks very much.

I'd now like to turn the call back to Alan for any further remarks.

We'd like to thank everyone for your participation today, and we look forward to talking with you next quarter. Thanks.

This concludes today's conference call. Thank you for your participation. You may now disconnect.