Good morning. My name is Felisha, and I will be your conference operator today. At this time, I would to welcome everyone to the Cinemark 2012 Q1 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Rob Rinderman. Sir, you may begin.

Thank you, Felisha. Good morning, everyone. In accordance with the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995, certain matters that are 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. I would now like to turn the call over to Cinemark's CEO, Tim Warner, who's joined this morning by CFO, Robert Copple. Tim?

Good morning, everyone, and thank you for joining us. I'll begin with an overview of Cinemark's 2012 first quarter results, followed by a discussion of how the overall industry box office performed during the period. I will also preview the upcoming film slate and update you on Cinemark's digital initiatives. Following my comments, Robert will cover additional financial details of our Q1 results and capital structure. At that point, we'll open the lines and be happy to address any questions you may have. We have set a new record for total revenues, adjusted EBITDA and adjusted EBITDA margin for Cinemark in the first quarter. Our revenues increased 19.8% to $578.8 million, and our adjusted EBITDA increased $37.6 million to $140.3 million, resulting in a 24.2% adjusted EBITDA margin, a 290-basis-point increase over Q1 of 2011. After a slower than anticipated Q4, the North American industry bounced back with an estimated box office increase of 23.5% according to industry sources. This quarter, box office was led by a diverse group of films, many of which outperformed initial projections, reflecting a well thought-out release pattern that mixed different genres and attracted a broader audience. Although very -- another positive note is a broad mix of both major studio and smaller and independent distributor releases, which included films such as The Vow, Safe House, The Grey, Chronicle, The Woman in Black, The Devil Inside and Act of Valor. Notably, there was a 33% growth in box office films outside the top 20, which generated more than 45% of this quarter's box office growth. Of course, there were blockbusters during the quarter, and the top 5 films for Q1 grew 45% in box office versus the corresponding 2011 first quarter. We had The Lorax and the much anticipated release of The Hunger Games, which…

Good morning. As Tim mentioned, our worldwide total revenue increased 19.8% to $578.8 million, marking the highest-ever Q1 revenue in the company's history. Admission revenues increased 19.9% to $373.8 million, and adjusted EBITDA grew 36.6% to $140.3 million, resulting in a 24.2% margin. Our U.S. segment's total revenues also set a Q1 record at $409 million. Admission revenues were $266.6 million, an increase of 24.8%, 130 basis points in excess of the estimated North American box office increase of 23.5% for the period. Our domestic attendance increased 19.2% and the average ticket price rose 4.7% to $6.70, primarily reflecting the incremental 3D and premium pricing, which comprised 22.4% of our box office this quarter versus 19% last year. Our XD screens are increasing their momentum, with our 57 domestic XD screens generating 4.3% of this quarter's box office. Domestic concession revenues grew 25.3% in Q1 to $131.3 million, and concessions per patron rose 5.1% to $3.30, reflecting the positive impact of our high first quarter attendance in addition to price increases. Our U.S. segment adjusted EBITDA increased 51.6% from the prior year to $104.3 million, and we expanded our adjusted EBITDA margin, 460 basis points to 25.5%. International total revenues were up 10% to $169.8 million, exceeding the record revenues our international segment reported in Q1 of 2011. Admission revenues increased 9.3% to $107.2 million, and attendance rose 6.4%. Our International segment's average ticket price increased 2.7% to $4.94, 6.4% in constant currency. Q1 international concession revenues grew 15.8% versus the year-ago period, reflecting an increase in attendance and a 9.3% increase in average concession revenues per patron, 12.1% in constant currency. Our international segment adjusted EBITDA was $36 million, up 6.3% from the prior year, and adjusted EBITDA margin was approximately 21.2%. In Q1, consolidated worldwide film rentals and…

[Operator Instructions] Your first question comes from the line of Eric Handler with MKM Partners.

First, on your screen count outlook for the year, you gave us what you expect to be opening, but when you include closures in there, can you give us an estimate of what you think your year-end screen count is going to look like? And then secondly, with regard to concessions, you just put up your fourth out of 5 last quarters we've seen per cap spending in the U.S. up in excess of 5%. Is there something going on with the mix shift that allow -- the product mix that has allowed you to put up such good numbers there?

I'll start with your question -- this is Tim Warner speaking. I'll start with your question on the concessions. It has been a combination of product mixture and a slight price increase in some categories, but the other big part of that is that we've been successful in integrating our social media and sort of a direct correspondence in couponing to our customers that have also driven these sales. Regarding the screen count, Robert will...

Yes, so Eric, with respect to the screens, one thing -- the numbers we gave are those projects that we've signed leases for, and technically, probably almost everything is signed, although made a little variation internationally. So at this point, I think we're -- before we're talking 100-plus screens internationally to be built this year somewhere around, say, between acquisitions and new build in less acquisition, this one-off that we just had this quarter, price somewhere between in the 70 range or so for domestic. I foresee, as I said, some of the international to be delayed in particular so that, I think, that's probably going to be more in the 80 to 90 range, and the U.S. will still be in the 70 range. As far as closures, I think probably net screens, 10 to 12 screens probably will close this year, so we should have net U.S. growth. And those would be U.S. screens, so we should have net U.S. growth, as well as international growth.

Your next question comes from the line of Anthony DiClemente with Barclays.

This is actually Bo Tang in for Anthony. So first off, I guess on the ticket pricing growth, it looks like you guys put up 4.7% in the quarter. Can you kind of just break out how much of this growth is coming from base ticket price increases versus 3D?

Sure. If we look at, let's say, what we call our 2D ticket price, our base price, it probably be a real increases of about 1.5%. Most of the rest has to do with premium allocation, as well as increase in our 3D and premium pricing. So I think what you're looking for is probably in that 1.5% range.

Got it. Great. And then also, Robert, you mentioned you're adding -- you're looking to add a decent amount of new theaters in both the U.S. and Lat Am this year. Would you be able to remind us what your typical ROI is for a new build for both U.S. and Lat Am?

Sure. Our hurdle rate for any new build is to look for a 20% cash on cash return, and generally, that's within the first year. We also look for 20% margins. As you know, our EBITDA margins are one of the critical issues that we focus on as we build or buy theaters, and so we kind of look for that 20-20, if you will. And we've been very good at achieving that. Actually, our domestic has greatly exceeded the 20% returns for the last few years, kind of not necessarily reflecting more just like activity but probably just less theaters being built in the U.S. and looking for those that we really feel like going to have higher returns. Internationally, we've also definitely amounted 20% hurdles.

Your next question comes from the line of Townsend Buckles with JPMorgan.

As we think about the more indirect benefits of The Avengers success here, as look you back historically, how much of a lift do you feel a strong start to the summer season provides to the upcoming slate through things like higher trailer exposure, positive audience assignment toward the content that coming -- that's coming out, things like that?

Well, historically, a big film like this, this is a very, very big film, probably going to be one of the biggest in our history, drives a lot of additional attendance down the stream. As you know, the customers get exposed to all the great product that is coming, and probably especially this year because it feeds into a lot of great upcoming product [indiscernible] CinemaCon. And I think everybody come out of CinemaCon after seeing all the trailers and the previous in that really pumped on the -- the 2012 looks to be a very, very big year.

Great. And you talked about interest in M&A. Can you give us a sense of the level activity or opportunities you're seeing in Latin America versus the U.S. and any preference you have between the 2? And we've obviously just seen Clearview officially come up. Can you comment on whether a circuit like that interests you?

Well, we're interested in M&A activity in both Latin America and here in the U.S. Now in Latin America, last year, we did acquire a real premium circuit in Argentina in Hoyts. And although we're looking for other opportunities in Latin America, there may be more limited opportunities because of the new builds in Latin America. It's still a very developing market, so there's a lot of opportunity for organic growth. Now here in the U.S., of course, we are constantly looking for high-quality assets that would meet both our investment hurdles. And we think because of all the activity in the marketplace, that there will be continued focus on M&A activity in U.S. this year.

And any sense of just -- as we think about something like Clearview just maybe the size, location, it does sound like it needs maybe some capital investment there. Is that a profile that interests you?

Yes, Townsend, we don't unfortunately comment on any specific deals that we look at, but we will look at all the different opportunities that are out there. And whether it's investing in something that they have to clean it up or just a pristine circuit, I mean, in Denver, we're looking, as Tim said, to meet our -- the hurdles that we set for ourselves and whether or not any chain that has an opportunity for us will meet those hurdles.

Your next question comes from the line of Joe Hovorka with Raymond James.

A couple of quick questions. Did you give the number of XD screens in the quarter? I may have missed that.

I gave the U.S., I can give you the overall. So we have 57 in the U.S. and 30 internationally, so a total of 87 worldwide. So now we added 6 overall this quarter.

And the 4.3% of revenue, that is domestic admission revenue?

Yes, that is a domestic number.

Okay. And did you give the mix for premium tickets this quarter versus last?

Yes, I guess that I can fit that again. Let me grab that real quick. I think it was 22% this quarter, and if I remember last year, I think it was about 19%.

Okay. And this is the third quarter in a row where you've had attendance -- average attendance decline per screen internationally, and that kind of coincided with -- the beginning of that coincided with the Hoyts acquisition. Is that what is causing that or is there something else there? Why has attendance per screen been down 3 quarters now, internationally?

I think, Joe, it's a mix of factors. Arguably, Hoyts has a little to do with it. I think if you really look at the numbers, though, and I'm not saying this to put overly focus on it, I think it just had a lot to do with how the product played at different times. When we published our Q and you go through it, you'll see that we break out Brazil versus other countries. The other countries' total revenues were up meaningfully this quarter, Brazil was slightly off. Brazil's -- one, we're facing -- overall, we're facing FX worldwide. I think the average was a little over 3.5%. There's a headwind. However, Brazil, in particular, was a little more difficult. I think Brazil's FX, if you did calculations, you'd probably get more in the 5.5% range. And again, if you look at this quarter, you'll end up seeing total revenues in Brazil were slightly off, [indiscernible]. It's not that we feel like there's any issues in Brazil. I think Brazil was just up unfortunately against a number of different factors that have kept having some comp problems that we'll overcome. We know in Q4 we had the -- and again, I mean, I think if you look at -- go back to Q4 of last year and others, you tend to see the other countries outperforming Brazil at the moment. Last year, in Q4, we know the big film that was in Brazil from Q4 of 2010, those difficult comp Q1, just end up having a few other comp. So they came out, some of the films didn't play as well there, but they played well in some other markets. So it's just very -- Q2 being realistic about Brazil, you had some very big films last year such as Fast Five and Rio that probably overperformed, that were domestic films that overperformed in Brazil just because they're focused on Brazil, Fast Five being filmed there and Rio, obviously, being about Rio. So don't know that, that means Brazil won't do well this quarter, but we know, again, it's facing some comp issues. Not concerned about the country overall, we're still focused in building there. It's where the majority of it at least gets fair share of new builds are going on there. So overall, Latin America, we feel good, and it's just some tougher comps.

And just to clarify, the FX doesn't impact the average attendance per screen. That was just it?

No, no, you're right. Yes, attendance was not effect.

And it looks like it's got -- because I assume everybody knows about the tough comp we had in the fourth quarter from the local film down there, but it looks like the average attendance actually got worse, really down like 1.5% in December. Now I think we're down like 6.5% in this quarter. So it's not -- it's all set in Brazil, then. It's not the other countries?

Yes, I mean, primarily, I would put it on Brazil, but you're right, I mean, this quarter, internationally is down as you sit around 6.5%. Well, obviously, well, I have to say, this quarter, we feel good. Avengers did very well internationally. Hunger Games, unfortunately, was not one of those yet movies that worked well. If that would have worked as well internationally as it did domestically, we probably wouldn't be having this conversation. So it's just one of those realistically, Joe, that spins out of the film plays. The film plays well for us overall. In particular, Brazil just had some extraordinary film play last year, and some of them are playing out this year. But, again, it is film, we feel like we're comfortable with the long-term opportunities in Brazil.

And I mean, I would add, too, to Robert's points, it's just that last year, internationally sort of performed offset the U.S. The last -- international company really outperformed the U.S. -- the industry dramatically last year. And so they are up against a real tough comp issue.

Yes, I mean, to that point, if you look at the last 2 years, if you look at 2010, 2011 and put those against the U.S., I mean, I think you'll find international substantially outperformed domestic.

Your next question comes from the line of Ben Swinburne with Morgan Stanley.

It's Ben Swinburne. I wanted to ask you about your sort of leverage appetite and where you think you could end the year, because, Robert, given your new CapEx expectations, I think you guys are heading to a level that you're below -- you haven't been down at this level since the IPO. So can you help us think about where leverage could fall to where you're comfortable, and then same questions around the high end. And if you don't end up executing on acquisitions -- on acquisitions this year, should we think about -- will you look at dividend increases like you have in the past? And then on the CapEx, I know we're not giving '13 guidance, but it sounds like for the most part, all that was timing shift. So should we be thinking about the delayed capital moving into next year?

Yes, no, definitely. With respect to the CapEx, the primary change from where we were last quarter when we're suggesting 250, 300, now we're dropping down to 200 to 250, is all delayed. I mean, it's not half of it, it has to do with our rollout of our international digital projectors, which we had hoped to have all of our VPF agreements signed at this point. We haven't. And again, those VPF agreements will help us recover the costs over a period of time, but we're not willing to make that investment to those -- that work is done. Now we do clearly have projectors down there already. We're -- around 38% of our circuit is digitized and 3D-capable. But that next percentage, we're waiting for this VPF to get done. And then with respect -- as you said, this general capital, we've delayed a few projects that we think will be done next year. So our new build capital probably goes up a little more than we thought for next year. But again, we don't feel like one will be overly significant. It's something that we have enough free cash flow that we should be able to absorb that. But with respect to debt levels, I mean, I don't foresee us changing anything in our debt profile currently. If we were to make a significant acquisition, clearly, we consider the fact that we're very low levered and the market's fairly robust. And so we might explore that at market, but we also have a lot of cash and a lot of other assets that we can utilize to generate cash. So by no means is it necessary for us to go to the debt markets to make an acquisition of just about anything that's out there. So I think we're just in a very flexible position, fortunately. Once that we have a targeted debt level that we're trying to maintain, hopefully, we expect to continue to grow our EBITDA. And really, our debt-to-EBITDA ratio will go down -- continue to go down over time, and we'll just have more capacity. With respect to what happens if we don't make any acquisitions, clearly up to the board as far as making dividend policy. And as I think I said before, I mean, at some point, the company will need to look at where cash position is, what opportunities are to utilize that, to build and grow the company, and that is our first and foremost focus. But if we're unable to reinvest our cash in the company into significant balances, then I'm sure our board will adjust dividend policy. But I'm not suggesting there's anything being focused on right now.

Your next question comes from the line of Eric Wold with B. Riley.

Just a couple of follow-up questions on M&A strategy. As you look at the markets and the theater and the changes that you may be kind of pursuing internally, would you characterize those markets as competitive? And a lot of competition for the assets you are considering, they tend to be the markets that are kind of maybe off the beaten path of other acquired. And two, as you look at your strategy, would you consider yourself more likely to pay up for quality assets or you kind of more looking -- if you are going to be accretive this year, looking for screens to get -- or are you a little bit more desperate, I guess, just in a nice way as you get towards the 70 deadline approaching?

From an M&A standpoint, we always focus on quality. In our estimate, they have to be, what I'll call, sustainable growth theaters. And again, we are fairly rigid about sticking to our ROIs and our margins, which we feel have been the big key to our success. And as we look, we have a broad footprint in the U.S. from the -- from some of the smaller markets in the U.S. to some of the larger markets in the U.S. And so we feel that we're an acquirer of a broad base out there. And we'd look more to the assets themselves and the quality of the returns.

Your next question comes from the line of Barton Crockett with Lazard Capital.

I was wondering about the comment that you've had some delay in reaching the virtual print fee agreements internationally with the studios. I was wondering if you could provide a little bit more color on what was happening there, what was the surprise and your confident that you'll actually be able to finish it when you expect to now, remembering that these things seem to drag on forever when you -- with the VPF domestically, what's the risk of a similar type of protracted delay, internationally?

Well, these are complicated negotiations. And we're very close on 4 of them, and you have some unique aspects of international VPF agreements. And -- but we think we're very, very close to agreement with 4, and the remaining 2 major studios are pretty far along in the process. And so hopefully, by -- on our next call, we'll be able to announce that these are behind us.

Okay. Switching to expenses, I was curious, Regal have had tremendous leverage in their theater labor cost. I was wondering if there's anything they're doing that you could learn from that might give you another opportunity to improve your labor cost, kind of following what your competitor is doing?

Well, I mean, I think the big benefit of Regal and their big increase is that they had a substantial decrease last year. And so they had -- where last year, we didn't go down to the -- I don't know what their margin level was last year in the first quarter, but, I mean, ours was still in the 20-plus range. And so obviously, since we didn't have a lower hurdle to work against the -- but when you look at our margins, they were in 20 -- I think it's over 20% last year in the first quarter domestic, and we went to 25.5%. And I think our margins, at least among the public companies, are the highest margins in the industry. And so I think that we're well represented in cost control, and that our managers do probably, at least, in my opinion, when you look at the actual results, probably the best job in the industry.

Your next question comes from the line of James Marsh with Piper Jaffray.

Just to follow up on that EBITDA margin issue there. I think very impressive that you guys get that in the seasonally light first quarter. And could you get it to some of the key drivers, the drivers beyond just the slate? And has this uptick in margins changed your mind on where EBIT margins could peak over time?

I mean, I think the great thing about Cinemark is that we've demonstrated. And I'll go back to the Q1 quarter of last year when the industry was down substantially, but we outperformed the industry from a revenue standpoint. But also, we were able to exert great cost control and adjusted the declining business, and we were able to maintain a very, very high robust margin. And I think the things that we've demonstrated is that we can go up and down. If business goes down, our expenses go down. But also, if business really comes up, we're able to hold the expenses and expand the margin. And that's the combination of labor and all other costs associated with operating our circuit.

Okay. And then just to, I guess, talk a little bit about the upcoming slate in your Latin American markets. Is there any particular local films that you guys are enthusiastic about? Or is there any unusual timing for U.S. releases that could help us model that market a little bit more effectively?

Well, I mean, I think the good news, Avengers set records in Brazil and Mexico and a lot of our International countries, which -- and the reason I'm bringing it up, I think that bodes well for movies like Spiderman and Batman in the international market. Also, Ice Age: Continental Drift, for whatever reason, always is one of the top performers in Latin America. And so I think that also bodes well. And so -- and Madagascar 3 will do very well in our Latin countries. So I think the upcoming slate looks very well, and it's going to translate very well into our Latin American circuit for the domestic films. Now on the local front, there are some films out there. I don't know if any of this is going to be the huge break to the movies, but they can do -- like Brazil, historically, tends to run about 10, 15 -- between 10% and 15% of our box office. And then on big years, they can go up as high as 22%. And -- but overall, we feel good and think that the 2012 year is also going to be a great year for domestic but also for our international holdings.

Your next question comes from the line of Robert Fishman with Nomura.

Given the strong expectations for this summer and holiday box office to come, can you help us think about this film rental cost and how that compares to last year where some of the tent pole movies underperformed? And then as a follow-up, if you think that you can offset this with higher concession spending and lower concession costs.

Well, I mean, I think that film rental tracks performance. And I mean, ideally, if our performance goes through the roof, we wouldn't mind seeing a little increase in film rental, So -- but it does suggest -- and when you look at film rental, say, of 4-, 5-year basis, there's not a lot of difference in film rentals from year-to-year, and so -- because it does track the national box office. And -- but hopefully, we'll have a big year. And not that I want see film rental increase, but if we have a sensational year, I could easily give up 1 point or 2 of film rental. So -- and as you stated, there is a lot of high anticipation for 2012. And The Avengers set a real high watermark for sales performing, and I think everybody is highly anticipating Amazing Spiderman. And Batman, I think going into the year was probably one of the most anticipated films to come from Chris Nolan. But also, we're seeing some footage on The Hobbit, Life of Pie, which come in the fourth quarter, and the footage was absolutely sensational.

Okay. And if I could just add one more. How do you see the premium box office as a percent of your total box office trending over the next couple of years, specifically, if these new technologies that are successful, like the 48 frames per second, at expanding 3D into different genres outside of just animation and action?

Yes, no, we're well-positioned. First off, on the 48 frames, Cinemark will be able to play it in 3D on all our screens throughout the world. And so we're really looking forward to it. And also, they show some footage on the Great Gatsby, which was -- would not be your traditional 3D film, but the sets and the immersion into that film were, I mean, I would use the word amazing. And so that will probably be the first big budget movie that you didn't see from a great director that you wouldn't normally think as being in 3D. And so -- and I think it's going to be very, very successful. And our premium performance tracks the industry performance or maybe exceeds it a little bit, and we had a great performance on The Avengers in the premium, both the 3D and the XD and IMAX format. And so we're glad to see that continue, and I think it's going to be a great year for premium format.

Your next question comes from the line of Jeff Logsdon with BMO Capital.

We're a couple of weeks away from the opening of Men in Black. You want to give us some insight into who's going to be paying for the glasses?

Well, I think...

Come on, guys. It's getting close.

Yes, I know. Absolutely. I mean, I don't see the model changing. And I think that after they see the results on The Avengers, of course, we feel that the -- already that the customer pays for the glasses and the upcharge. And I think it's been a great model, and I think the studios have really benefited. And obviously, exhibition has really benefited from the new technology of 3D. And I think that the real RealD 3D gives a very superior experience in our theaters, and the audience love it. And it's achieving great results for both the studios and exhibition.

We'll take that the issue has been deferred on some of these parts?

Probably deferred. And if you were to ask me if would I like to cut out any of my expenses? Yes, I would. And I'm sure if you ask them, they would like to cut out some of their expenses, too.

And I'm sure they'd like to not just get the revenues from 2D tickets.

Right. Absolutely. So it's a tough question for them.

Your next question comes from the line of Ben Mogil with Stifel, Nicolaus.

So just 2 questions. Robert, and I apologize, I sort of missed this earlier, what was the -- was 12.1% the constant currency for FX, absolutely sort of adjusted for FX for tickets or for concessions?

No, it's concessions. Tickets was about 6.4%.

Concessions and tickets was 6.4%. Great. Now flipping over, and I don't really want to get too granular, but just by chance Regal announced during your call that they have sold $42 million of box office over the weekend on Avengers. So if you kind of strip out, take the $200 million number and you strip out sort of the share for Canada, it kind of looks like they were around 22%, 23% of the box office, which is sort of bigger than their overall share. And they've got big IMAX, so that helps them out. Can you talk about -- just looking beyond this weekend, can you talk about how you see yourself positioned on weekends when you've got big, big IMAX films, I'm looking at Spiderman, Batman, Hobbit, films like that. Talk about what you saw your market share look like in your direct markets over, say, this past weekend, even?

Yes. We normally probably perform in the 10%, 10.5% to 10.8% range. And on big weekends like this, we will tend to outperform that. And with -- I think you'll see a similar uptick in Cinemark's performance because of the high performance of Avengers in RealD 3D and XD and our IMAX range because a lot of people pay for the premium formats.

Are you seeing in markets where you compete where you got IMAX? And sort of maybe not the exact same film zone but in a relatively close film zone, are you seeing yourself holding your own in those core markets?

Yes. I mean, our XD screens perform on an equal basis to our IMAX premium screens. So people see this at high-quality premium experience, and they're every bit as engaged in XD as they are in IMAX.

And then flipping over to Latin America and sort of talk about the 48 seconds per frame for The Hobbit, are your competitors in Latin America mostly on RealD as well or some on MasterImager [ph] or the other sectors that are more 2D?

Well, that varies and I can't speak for all our competitors, but we have the same technology worldwide. And we will be able to take advantage of it. So we have the Barco projection, and we're already and excited about the potential because we think it's the next big enhancement in the 3D technology. And so we're ready to go.

Your next question comes from the line of David Miller with Caris & Company.

Most of my questions have been answered. Rob, just a quick housekeeping item. What was the free cash flow number in the quarter? I just don't see it on the press release, and I don't -- I assume you filed your Q right now. Actually, I'm out time to take a look at it.

Yes, no problem. We don't normally list free cash flow separately. Some of our competitors, I think if you want to do similar math, it'd be somewhere in the $50-plus million range.

Your next question comes from the line of Tony Wimble with Janney.

I was hoping you could speak to the drop in facilities cost per screen. How sustainable is that? And I got a couple of follow-ups.

Because most of our facility costs, especially domestically or fixed in nature, when I guess if you're doing on a per screen basis, it might have to do with just relative mix. It's not something I'd say normally would fall off. Convert revenues clearly can change, but with respect to per screen, it's going to have to do more with the mix of assets. So if we haven't been adding more screens, obviously, that, for some reason, have a lesser rate than that might fall off slightly. But in general, I won't expect that to happen. I may have thought something that there's -- we can easily achieve because it has to adjust with the rent rates.

So there was no particular timing issue that benefited the quarter?

No, I mean, prices have to do with how -- overall, how percentage [indiscernible] with International mix a little bit as well and how that fell in.

And on international, 2 things. One is, can I confirm that you said that there weren't any be closures in the numbers that you mentioned, that the only closures would be in the U.S.?

Yes, I mean, that's our expectation. That doesn't mean we won't end up -- international is a little unusual in that the casing will have a theater that landlord will come to us, and it might be a very robust mall. And then landlords looking for extra space and might make an offer to close one of our screens within a theater and the casing will get -- that it will just be a lucrative deal for us, they won't give it back. So that can happen, but we don't have any projected closures for the full theater at this time.

You guys have done so well in Latin America. I know you haven't had, I guess, an urge to grow outside of Latin America yet. But is there any reason to change that. And if so, what would it take to encourage you to look at another market?

Well, we -- I think we had a lot of work ahead of us in Latin America and a great opportunity in Latin America and have extensive knowledge of the marketplace that we've been for the last 15, 20 years. In the process, and I've explained this in some other calls, is that we have explored other opportunities in other areas of the world but felt that the -- that we needed to really have great focus and great execution and not be -- take a shotgun approach to this thing. And so our focus has been Latin America. As that market matures for us, obviously, we're very intrigued and very knowledgeable of the International marketplace. And it's -- from time to time, in the future, we might look at other international markets.

[Operator Instructions] Your next question comes from the line of Bishop Cheen with Wells Fargo.

I know you addressed leverage and dividends, but we can't leave the subject without talking about IPO, especially in a very good shrinking year like 2012. Do you have any thoughts around critical mass size as it pertains to Cinemark to meet whatever would be the standards of today's IPO market?

Again, I mean, I want to make sure we're all talking the same thing because obviously, we are a public company already.

Right. I'm sorry. Not of IPO but secondary.

Yes. With respect to the secondary market, yes, I mean, again, we feel like we have a significant amount of cash on our balance sheet. We have a line of credit that's available. So, I mean, going through the secondary market, I wouldn't say it's really in our plans. I guess it's always something that would be available, should we want to pursue a major acquisition and readjust our capital structure. But at least today, we feel pretty confident with our current mix.

Okay. And then 1 follow-up. On the digitization, I think you went over at the beginning of the call to your upgrade. And your digital plans are progressing. Can you give us -- I don't think you said in terms of what percentage of how much of your plans -- complete plans for digitizing would be complete in 2012, how much would carry over to 2013.

Actually, our U.S. circuit is pretty much fully digitized. That was done by the end of 2012 -- excuse me, 2011. And my year is right? So going into this year where our U.S. circuit was already done. Internationally, as we mentioned, we are still rolling out digital. I think the number is about 38% is digitized at this time. Again, we're adjusting our numbers now based on timing of when we end up having our VPF agreement signed. We would hope to move that up significantly by year-end, and then the hope is by the end of 2013, international will virtually be done.

Your next question comes from the line of Jim Goss with Barrington Research.

I was wondering about the perceived timing of some of the industry consolidation that I think everybody seems to agree should be in the cards. Do you think -- I mean, is this something that would probably begin in earnest over the course of the next year as some of the roll-ups might take place? And how does that tie in to the notion that the cost of the upgrade to digital and some of the smaller circuits might be pressured by any changes in the virtual print fee elements and anything else you think might matter?

I think that you have a combination. I mean, as you said, probably one of the items pushing this is conversion to digital. I think just having some groups that -- of investment groups that have owned a number of these chains a long time is also an issue out there. As far as timing goes, yes, it was mentioned with the earlier analysts, there are already some deals that have been announced in terms of companies being auctioned. We do feel like it's becoming a more active market. I would assume a number of these deals are resolved by year-end. Some probably will go into next year as well. But I think the bigger opportunity now is that we're actually hearing of deals starting to move, where before, we envisioned that they probably would. And I do think there's a number of catalysts driving this right now.

Do you think it becomes a competitive thing or you and your other larger peers will be trying to go after some of the same property and prices might start increasing to the point where you may second-guess whether it's worth doing it?

I think, at least with respect to Cinemark, as Tim mentioned earlier, I mean, we have certain hurdle rates we look at and quality standards, and I would assume my peer groups do as well. Whenever you have a competitive environment, it probably makes you think through what's the proper math to bid on deals. But -- and then we've always been very disciplined on our products, too, in acquisition, making sure it's strategic to us, making sure that it creates significant value for our shareholders. And that's really the driver. It's something ends up being highly competitive and is outside the price range that will allow us to accomplish that, and we will not be an acquirer of that asset. So I think the nice part is, this has been a very disciplined industry, and I assume people will continue to do that based on how they can create value.

Maybe 1 last item related to this. To the extent that each of the major change tends to have their own niche in terms of size of markets and the nature of their approach, aside from any sort of competing at the fringes, do you think that will weigh into any of these decisions about where some of these change will go? Or do you think you and others would look into other areas as potential targets as well?

I think what tends to be the issue around, where we look at change probably is more the inner markets outside our markets, what kind of issues will we have with those particular theaters we're acquiring. I can, again, speak for the other change. We're fortunate, as Tim mentioned, we're in big cities, we're in small cities, we're in 39 different states. So we're pretty open at just about any deal out there, again, if it meets our return hurdles. I would assume competitors are as well. I mean, I don't know that anybody will be precluded in any matter from pursuing these, and there's probably going to be -- to your point, there's also -- will probably change of all different sizes and shapes in different markets out there as well. So I think that there's definitely opportunity for -- probably anyone that's looking.

And I would now like to turn the call back over to management for any further remarks.

Yes, one of the things that I would like to do on this call is introduce our new Internal Investor Relations Manager that we've just hired, Chanda Brashears. Chanda joined Cinemark a few months ago, has been working kind of behind-the-scenes to better understand the company. She's still working on that, learning about our industry. And so we're working -- she's working closely with JCIR, which previously known as Jaffoni & Collins. Robert Rinderman, who introduced our call, is our primary contact there. So Chanda working with Rob closely, as well as myself will be introduced to all of you all. I think actually a number of you all might just have met her at a recent meeting we had. And so we're very excited to have Chanda on board.

And I'd like to thank everybody for joining us here today, and we look forward to speaking to you again, following our 2012 second quarter results. Thank you.

Thank you for participating in today's conference call. You may now disconnect.