Cinemark Holdings Inc

Previous wording

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 screens, average screens, average ticket price and concessions revenue per patron, are rounded in millions.

Current wording

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.

Previous wording

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 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.

Current wording

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.

Previous wording

Films leading the box office during the three months ended March 31, 2024 included new releases Dune: Part Two, Kung Fu Panda 4, Bob Marley: One Love, Godzilla x Kong: The New Empire, Ghostbusters: Frozen Empire, Mean Girlsand The Beekeeper as well as the carryover of 2023 releases Wonka, Migrationand Anything But You.

Current wording

Films leading the box office during the six months ended June 30, 2024 included Inside Out 2, Dune: Part Two, Godzilla x Kong: The New Empire, Kung Fu Panda 4, Kingdom of the Planet of the Apes, Bad Boys: Ride or Die, Ghostbusters: Frozen Empire, IF, Bob Marley: One Love, and The Fall Guy.

Previous wording

Equity in Income (Loss) of Affiliates. Equity in income of affiliates of $3.8 million was recorded during the 2024 period compared with equity in loss of affiliates of $2.1 million during the 2023 period. See Note 9 to the condensed consolidated financial statements for information about our equity investments.

Current wording

Equity in Income of Affiliates. Equity in income of affiliates of $2.5 million was recorded during the second quarter of 2024 compared with equity in income of affiliates of $1.8 million during the second quarter of 2023. See Note 9 to the condensed consolidated financial statements for information about our equity investments.

Previous wording

Three months ended March 31, 2024 (the “2024 period”) versus the three months ended March 31, 2023 (the “2023 period”)

Current wording

Six months ended June 30, 2024 (the “2024 period”) versus the six months ended June 30, 2023 (the “2023 period”)

Previous wording

2024 Period -The North American Industry box office generated approximately $1.7 billion during the 2024 period, which included new releases Dune: Part Two, Kung Fu Panda 4, Bob Marley: One Love, Godzilla x Kong: The New Empire, Ghostbusters: Frozen Empire, Mean Girlsand The Beekeeper as well as the carryover of 2023 releases Wonka, Migrationand Anything But You.

Current wording

2024 Period -The North American Industry box office generated approximately $3.7 billion during the 2024 period, which included Inside Out 2, Dune: Part Two, Godzilla x Kong: The New Empire, Kung Fu Panda 4, Kingdom of the Planet of the Apes, Bad Boys: Ride or Die, Ghostbusters: Frozen Empire, IF, Bob Marley: One Loveand The Fall Guy.

Previous wording

2023 Period -The North American Industry box office was approximately $1.8 billion during the 2023 period, which included the carryover of Avatar: The Way of Water and Puss in Boots: The Last Wish as well as new releases including Ant-Man and the Wasp: Quantumania, Creed III, John Wick: Chapter 4 and M3GAN.

Current wording

2023 Period -The North American Industry box office was approximately $4.5 billion during the 2023 period, which included the carryover of Avatar: The Way of Water and Puss in Boots: The Last Wish as well as new releases including The Super Mario Bros. Movie, Guardians of the Galaxy Vol. 3, Spider-Man: Across the Spider-Verse, The Little Mermaid, Ant-Man and the Wasp: Quantumania, John Wick: Chapter 4, Creed III, Fast X, Transformers: Rise of the Beastsand Indiana Jones and the Dial of Destiny.

Previous wording

U.S. Attendance decreased 6.3% to 23.6 million patrons during the 2024 period compared with 25.2 million patrons during the 2023 period due to less carryover benefit in the 2024 period from prior year releases and the scale of film releases due to the impact of the Hollywood strikes. Average ticket price increased 1.1% to $9.82 during the 2024 period compared with $9.71 during the 2023 period driven by strategic pricing actions partially offset by lower 3D penetration and a less favorable ticket type mix due to higher levels of family content in the 2024 period. Concession revenue per patron increased 2.2% to $7.57 during the 2024 period compared with $7.41 during the 2023 period primarily driven by inflationary and strategic pricing actions as well as product mix, partially offset by lower incidence rates associated with film content mix. Other revenue for the 2024 period decreased 2.1% to $46.6 million compared with $47.6 million during the 2023 period primarily due to a decrease in attendance, which resulted in a reduction in the variable component of other revenue.

Current wording

U.S. Attendance decreased 17.7% to 52.7 million patrons during the 2024 period compared with 64.0 million patrons during the 2023 period driven by less carryover benefit in the 2024 period from prior year releases and the lower concentration of high-grossing titles and overall mix of film releases due to the impact of the Hollywood strikes. Average ticket price increased 2.0% to $9.85 during the 2024 period compared with $9.66 during the 2023 period driven by strategic pricing actions partially offset by lower 3D penetration in the 2024 period. Concession revenue per patron increased 3.0% to $7.78 during the 2024 period compared with $7.55 during the 2023 period primarily driven by inflationary and strategic pricing actions as well as product mix, partially offset by lower incidence rates associated with film content mix. Other revenue for the 2024 period decreased 11.5% to $99.8 million compared with $112.8 million during the 2023 period primarily due to a decrease in attendance, which resulted in a reduction in the variable component of other revenue.

Previous wording

International. Attendance decreased 9.0% to 16.1 million patrons during the 2024 period compared with 17.7 million patrons during the 2023 period due to less carryover benefit in the 2024 period from prior year releases and the scale 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 41.3% to $5.30 for the 2024 period primarily due to inflationary pricing actions. Similarly, in constant currency, concession revenue per patron increased 50.2% to $4.16 for the 2024 period primarily due to inflationary pricing actions. Other revenue increased 67.5% in constant currency to $27.3 million for the 2024 period primarily due to higher loyalty program and screen advertising revenue.

Current wording

International. Attendance decreased 14.5% to 37.0 million patrons during the 2024 period compared with 43.3 million patrons during the 2023 period due to less carryover benefit in the 2024 period from prior year releases and the lower concentration of high-grossing titles and reduced scale 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 42.7% to $5.65 for the 2024 period primarily due to inflationary pricing actions. Similarly, in constant currency, concession revenue per patron increased 50.5% to $4.38 for the 2024 period primarily due to inflationary pricing actions. Other revenue increased 48.3% in constant currency to $61.7 million for the 2024 period primarily due to higher loyalty program and screen advertising revenue driven by inflation.

Previous wording

U.S. Film rentals and advertising costs for the 2024 period were 54.5% of admissions revenue compared with 54.6% for the 2023 period primarily due to the concentration and mix of films, partially offset by higher marketing spend. Concession supplies expense for the 2024 period was 19.2% of concession revenue compared with 17.6% of concession revenue for the 2023 period. The concession supplies rate for the 2024 period was impacted by product mix, inflationary pressures on certain concession categories and higher shrink, partially offset by the impact of strategic pricing actions on concession revenue.

Current wording

U.S. Film rentals and advertising costs for the 2024 period were 56.0% of admissions revenue compared with 57.8% for the 2023 period due to the concentration of box office and mix of films. Concession supplies expense for the 2024 period was 18.9% of concession revenue compared with 17.2% of concession revenue 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.

Previous wording

Salaries and wages increased 1.4% to $72.5 million for the 2024 period compared with $71.5 million for the 2023 period due to higher wage rates and expanded operating hours, partially offset by labor productivity initiatives and lower attendance. Facility lease expense, which is predominantly fixed in nature, decreased 2.4% to $60.5 million primarily due to theatre closures. Utilities and other costs decreased 2.7% to $78.3 million, as many of these costs, such as utilities costs and credit card transaction fees, are variable in nature and were impacted by the decrease in attendance.

Current wording

Salaries and wages decreased 6.5% to $153.3 million for the 2024 period compared with $164.0 million for the 2023 period due to lower attendance and labor productivity initiatives, partially offset by higher wage rates. Facility lease expense, which is predominantly fixed in nature, decreased 2.7% to $120.5 million primarily due to theatre closures and lease renegotiations. Utilities and other costs decreased 7.3% to $158.4 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.

Previous wording

Film rentals and advertising costs were 48.3% of admissions revenue as reported for the 2024 period compared with 50.1% for the 2023 period primarily due to the concentration and mix of films. Concession supplies expense was 21.3% of concessions revenue as reported for the 2024 period compared with 21.8% of concession revenue for the 2023 period. The decrease in the concession supplies rate was primarily driven by the impact of strategic pricing actions to offset inflationary pressures.

Current wording

Film rentals and advertising costs were 49.4% of admissions revenue as reported for the 2024 period compared with 50.9% for the 2023 period due to the concentration of box office and mix of films. Concession supplies expense was 21.6% of concessions revenue as reported for the 2024 period compared with 22.0% of concession revenue for the 2023 period. The decrease in the concession supplies rate was primarily driven by the impact of strategic pricing actions to offset inflationary pressures.

Previous wording

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 $23.1 million for the 2024 period primarily due to wage rate increases. Facility lease expense increased to $21.2 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 $33.8 million in constant currency for the 2024 period primarily due to higher utility costs and inflationary pressures.

Current wording

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 $51.0 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 $50.4 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 $74.3 million in constant currency for the 2024 period due to inflationary pressures and higher utility costs.

Previous wording

General and Administrative Expense. General and administrative expense for Holdings increased to $48.9 million for the 2024 period compared with $46.5 million for the 2023 period. General and administrative expense for CUSA increased to $48.0 million for the 2024 period compared with $45.6 million for the 2023 period. The increase for both Holdings and CUSA is primarily due to wages and benefits inflation, higher share-based compensation and severance costs, partially offset by lower professional fees and the favorable impact of exchange rate fluctuations.

Current wording

General and Administrative Expense. General and administrative expense for Holdings increased to $104.6 million for the 2024 period compared with $96.5 million for the 2023 period. General and administrative expense for CUSA increased to $102.7 million for the 2024 period compared with $94.7 million for the 2023 period. The increase for both Holdings and CUSA is primarily due to wages and benefits inflation, as well as higher share-based compensation and related payroll taxes, partially offset by lower professional fees and the favorable impact of exchange rate fluctuations.

Previous wording

Depreciation and Amortization. Depreciation and amortization expense decreased to $49.4 million for the 2024 period compared with $54.9 million for the 2023 period primarily due to the impairment of assets during 2023.

Current wording

Depreciation and Amortization. Depreciation and amortization expense decreased to $99.2 million for the 2024 period compared with $107.7 million for the 2023 period due in part to the impairment of assets during 2023 and the favorable impact of exchange rate fluctuations.

Previous wording

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 $37.7 million during the 2024 period compared with $36.8 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 losses for swap amendments, was $31.6 million during the 2024 period compared with $30.8 million during the 2023 period. The increase in interest expense was primarily due to the impact of a higher average interest rate on our variable rate term loan borrowings, partially offset by the redemption of $100 million of 8.75% Secured Notes in May 2023.

Current wording

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 $72.3 million during the 2024 period compared with $73.9 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 losses for swap amendments, was $60.2 million during the 2024 period compared with $61.8 million during the 2023 period. The decrease in interest expense was primarily due to the redemption of our 8.75% Secured Notes, partially offset by a higher average interest rate on our term loan borrowings. See further discussion at Liquidity and Capital Resources below.

Previous wording

Interest Income. Interest income for Holdings was $13.6 million during the 2024 period compared with $11.9 million during the 2023 period. The interest income attributable to CUSA was $10.3 million during the 2024 period compared with $9.2 million during the 2023 period. The increase in interest income was primarily related to the impact of higher interest rates on higher average cash and cash equivalents balances.

Current wording

Interest Income. Interest income for Holdings was $26.1 million during the 2024 period compared with $24.9 million during the 2023 period. The interest income attributable to CUSA was $19.7 million during the 2024 period compared with $19.3 million during the 2023 period. The increase in interest income reflects higher average cash and cash equivalents balances and higher interest rates earned on those balances.

Previous wording

Foreign currency exchange gain (loss). We recorded a foreign currency exchange gain of $1.4 million during the 2024 period compared with a loss of $2.2 million during the 2023 period. The gain or loss on foreign exchange is primarily related to currency exchange fluctuations from original transactions dates until settlement.

Current wording

Foreign currency exchange and other related loss. We recorded a foreign currency exchange loss of $4.9 million during the 2024 period compared with a loss of $8.4 million during the 2023 period. Activity for the 2023 period includes a $4.9 million loss associated with Blue Chip Swap transactions. Excluding the impact of the Blue Chip Swap transactions, the loss on foreign exchange is primarily related to currency exchange fluctuations from original transactions dates until settlement. See note 14 to the condensed consolidated financial statements for a discussion of Blue Chip Swap transactions.

Previous wording

Unrealized Gain on Investment in NCMI. We recorded an unrealized gain on our investment in NCMI of $4.4 million during the 2024 period 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.

Current wording

Net Gain on Investment in NCMI. We recorded a net gain on our investment in NCMI of $1.2 million during the 2024 period compared with $9.2 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.

Previous wording

Income Taxes - Holdings. An income tax benefit of $27.7 million was recorded for the 2024 period compared with an income tax benefit of $3.9 million for the 2023 period. The effective tax rate was approximately 1,144.3% for the 2024 period compared with 60.5% for the 2023 period. During the 2024 period, a deferred tax benefit of $33.7 million was recorded discretely related to the release of valuation allowances 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 benefit derived by applying the statutory tax rate to Holdings’ pre-tax loss 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. Income tax provisions for interim (quarterly) 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.

Current wording

Income Taxes - Holdings. An income tax benefit of $28.6 million was recorded for the 2024 period compared with income tax expense of $8.4 million for the 2023 period. The effective tax rate was approximately (66.0)% for the 2024 period compared with 6.7% for the 2023 period. During the 2024 period, a deferred tax benefit of $39.5 million was recorded discretely related to the release of valuation allowances 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.

Previous wording

Income Taxes - CUSA. An income tax benefit of $26.6 million was recorded for the 2024 period compared with an income tax benefit of $8.5 million for the 2023 period. The effective tax rate was approximately (2,120.5)% for the 2024 period compared with 387.6% for the 2023 period. During the 2024 period, a deferred tax benefit of $33.7 million was recorded discretely related to the release of valuation allowances 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. Income tax provisions for interim (quarterly) 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.

Current wording

Income Taxes - CUSA. An income tax benefit of $27.9 million was recorded for the 2024 period compared with income tax expense of $6.8 million for the 2023 period. The effective tax rate was approximately (55.0)% for the 2024 period compared with 5.0% for the 2023 period. During the 2024 period, a deferred tax benefit of $39.5 million was recorded discretely related to the release of valuation allowances 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.

Previous wording

Cash used for operating activities was $(22.7) million for Holdings and $(16.4) million for CUSA for the three months ended March 31, 2024, compared with cash provided by operating activities of $7.9 million for Holdings and $15.7 million for CUSA for the three months ended March 31, 2023. The decrease in cash provided by operating activities was primarily driven by the timing and level of revenue earned during each period and the timing of payments to vendors for expenses incurred during each period.

Current wording

Cash provided by operating activities was $162.2 million for Holdings and $164.9 million for CUSA for the six months ended June 30, 2024, compared with cash provided by operating activities of $251.1 million for Holdings and $256.0 million for CUSA for the six months ended June 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.

Previous wording

Investing activities have been principally related to the development, remodel and acquisition of theatres. New theatre openings, remodels and acquisitions historically have been financed with internally generated cash and by debt financing, including borrowings under our senior secured credit facility. Cash used for investing activities was $23.3 million and $26.3 million for the three months ended March 31, 2024 and 2023, respectively. The decrease in cash used for investing activities was primarily due to the timing of capital expenditures during each period.

Current wording

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 $46.4 million and $54.6 million for the six months ended June 30, 2024 and 2023, respectively. The decrease in cash used for investing activities was primarily due to the level of capital expenditures during each period.

Previous wording

Below is a summary of capital expenditures, disaggregated by new and existing theatres, for the three months ended March 31, 2024 and 2023 (in millions):

Current wording

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

Previous wording

We operated 502 theatres with 5,708 screens worldwide as of March 31, 2024. Theatres and screens opened and closed during the three months ended March 31, 2024 were as follows:

Current wording

We operated 502 theatres with 5,708 screens worldwide as of June 30, 2024. Theatres and screens opened and closed during the six months ended June 30, 2024 were as follows:

Previous wording

The timing of payments is subject to change in the event of construction or other delays.

Current wording

Approximately $12.9 million is expected to be paid during the remainder of 2024 and $4.3 million, $7.9 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.

Previous wording

Cash used for financing activities was $10.4 million and $4.9 million for the three months ended March 31, 2024 and 2023, respectively. The increase in cash used for financing activities was primarily due to higher restricted stock withholdings for payroll taxes during the three months ended March 31, 2024 and proceeds from a sale leaseback transaction recognized during the three months ended March 31, 2023.

Current wording

Cash used for financing activities was $168.1 million and $110.8 million for the six months ended June 30, 2024 and 2023, respectively. The increase in cash used for financing activities was primarily due to the redemption of the remaining 8.75% secured notes during the six months ended June 30, 2024.

Previous wording

Holdings, at the discretion of its board of directors and subject to applicable law, may pay dividends on its common stock. The amount, if any, of the dividends to be paid in the future will depend upon available cash balances, anticipated cash needs, overall financial condition, loan agreement restrictions as discussed below, future prospects for earnings and cash flows, as well as other relevant factors. As a result of the impact of the COVID-19 pandemic, Holdings suspended its quarterly dividend to its shareholders.

Current wording

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.

Previous wording

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. 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, or during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of Holdings’ common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to $18.66 per share (130% of the initial conversion price of $14.35 per share), on each applicable trading day. Upon conversion of the 4.50% Convertible Senior Notes, Holdings will pay or deliver cash, shares of its common stock or a combination of cash and shares of its common stock, at its election.

Current wording

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. 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, or 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. 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.

Previous wording

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

Current wording

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.

Previous wording

The 4.50% Convertible Notes are effectively subordinated to any of Holdings’, or its subsidiaries’, existing and future secured debt to the extent of the value of the assets securing such indebtedness, including obligations under the Credit Agreement. The 4.50% Convertible Notes are structurally subordinated to all existing and future debt and other liabilities, including trade payables, and including CUSA’s 8.75% Secured Notes due 2025, 5.25% Senior Notes due 2028 and 5.875% Senior Notes due 2026, or, collectively, CUSA’s senior notes (but excluding all obligations under the Credit Agreement, 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.

Current wording

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 5.875% Senior Notes due 2026, 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.

Previous wording

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 is 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. The revolving credit facility is subject to springing maturity dates of January 30, 2025, December 14, 2025 and April 15, 2028 if CUSA’s 8.75% Senior Secured Notes due 2025, 5.875% Senior Notes due 2026 and 5.25% Senior Notes due 2028 have not been paid or refinanced as required under the Credit Agreement prior to such dates, as more specifically described in the Credit Agreement.

Current wording

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 is 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. The revolving credit facility is subject to springing maturity dates of December 14, 2025 and April 15, 2028 if CUSA’s 5.875% Senior Notes due 2026 and 5.25% Senior Notes due 2028 have not been paid or refinanced as required under the Credit Agreement prior to such dates, as more specifically described in the Credit Agreement.

Previous wording

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 3.75% 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 2.75%.

Current wording

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.

Previous wording

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 March 31, 2024, the applicable margin was 3.25%, 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 0.25% at March 31, 2024.

Current wording

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 June 30, 2024, the applicable margin was 3.25%, 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

Previous wording

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 March 31, 2024, there were no revolving credit loans outstanding under the revolving line of credit, and CUSA’s Consolidated Net Senior Secured Leverage Ratiowas 0.4 to 1.

Current wording

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 June 30, 2024, there were no revolving credit loans outstanding, and CUSA’s Consolidated Net Senior Secured Leverage Ratio was 0.2 to 1.

Previous wording

The Restricted Payments covenant, as defined in the Credit Agreement generally does not limit the abilityof 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 March 31, 2024, the Consolidated Net Total Leverage Ratio was 2.26 to 1.00 and the Available Amount was $631.6 million. In addition, the Credit Agreement contains other baskets that allow certain Restricted Payments in excess of the Applicable Amount.

Current wording

The Restricted Payments covenant, as defined in the Credit Agreement generally does not limit the abilityof 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 June 30, 2024, the Consolidated Net Total Leverage Ratio was 2.34 to 1.00 and the Available Amount was $654.0 million. In addition, the Credit Agreement contains other baskets that allow certain Restricted Payments in excess of the Applicable Amount.

Previous wording

As of March 31, 2024, there was $643.5 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 March 31, 2024 was approximately 7.6% per annum, after giving effect to the interest rate swap agreements.

Current wording

As of June 30, 2024, there was $641.9 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 June 30, 2024 was approximately 7.1% per annum, after giving effect to the interest rate swap agreements.

Previous wording

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

Current wording

The 5.875% Senior Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of CUSA's subsidiaries that guarantee, assume or become liable with respect to any of CUSA's or a guarantor’s debt. The 5.875% Senior Notes and the guarantees are senior unsecured obligations and rank equally in right of payment with all of CUSA's and its guarantor’s existing and future senior debt and senior in right of payment to all of CUSA’s and its guarantors’ existing and future senior subordinated debt. The 5.875% Senior Notes and the guarantees are effectively subordinated to all of CUSA’s and its guarantor’s existing and future secured debt to the extent of the value of the collateral securing such debt, including all borrowings under CUSA’s Credit Agreement. The 5.875% Senior Notes and the guarantees are structurally subordinated to all existing and future debt and other liabilities of CUSA's subsidiaries that do not guarantee the 5.875% Senior Notes. CUSA may redeem the 5.875% Senior Notes in whole or in part at redemption prices specified in the indenture. See Note 20 to the condensed consolidated financial statements and Recent Developments above for a discussion of the tender offer for the 5.875% Senior Notes completed on July 18, 2024.

Previous wording

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, beginning January 15, 2022. The 5.25% Senior Notes mature on July 15, 2028.

Current wording

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.

Previous wording

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

Current wording

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.