Good morning. My name is Felicia, and I'll be your conference operator today. At this time, I would like to welcome everyone to Cinemark's Third Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Ms. Chanda Brashears, you may being your conference.

Thank you, Felicia, and good morning, everyone. At this time, I would like to welcome you to Cinemark Holdings, Inc.'s third quarter 2016 earnings release conference call hosted by Mark Zoradi, Chief Executive Officer; and Sean Gamble, Chief Financial Officer. 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. The company undertakes no obligation to publicly update or revise any forward-looking statements. Today's call and webcast may include non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release, within the company's quarterly filing on Form 10-Q and on the company's website, investors.cinemark.com. I would now like to turn the call over to Mark Zoradi.

Thank you, Chanda, and good morning, everyone. Happy Election Day. We appreciate you all joining us for our 2016 third quarter results call. The robust film environment coupled with our focus and execution on our strategic initiatives that are aimed that enriching the guest experience yet again yielded strong results. Our adjusted EBITDA margin continued to significantly lead the industry at 24.1%, an expansion of 140 basis points year-over-year validating the consistent health of our margin during strong, as well as challenging box office environment. Accolades to our worldwide team for their accomplishments. Furthermore, our third quarter net income and earnings per share increased, each increased more than 40% year-over-year. While the strength and diversity of the third quarter films translated across the globe we are especially pleased with the momentum of the North America industry box office growth of 12%. Cinemark's domestic operation accomplished both top and bottom line third quarter records including admissions revenue of $355 million, total revenues, $569 million and adjusted EBITDA of $138 million. While our admission revenue set third quarter record, our 11.4% year-over-year domestic box office growth slightly trailed the North American industry. This was driven by the way the film content mix translated in our key markets, a heightened level of screen closures associated with our recliner remodels and our significant 390 basis points over performance in the third quarter of last year that set a very high comp hurdle. I'd be remiss if I did not mention the fact that Cinemark has outperformed the North America industry box office 27 out of the past 31 quarters. Moving on to the Latin America market, our international segment's third quarter admission revenue increased a solid 16.8% in constant currency demonstrating the exhibition business continues to be most reliant upon film content rather than…

Thank you, Mark, and good morning, everyone. As a quick reminder we made a few minor modifications to the presentation of our financials that became effective in the first quarter of 2016 and that will continue on a go forward basis. These modifications include a change to our adjusted EBITDA calculation to capture all cash distributions from equity investments, a reclassification of certain maintenance and monitoring expenditures associated with our projection and sound equipment from film rental and advertising to utilities and other costs and the addition of constant currency metrics to the MD&A section of our 10-Q. These changes were made to provide a clearer presentation of our figures and to be more consistent with our peers. All periods presented in our earnings release and 10-Q have been updated accordingly. Turning to our third quarter performance, we are very pleased to report strong financial and operating results. Total worldwide revenues increased 9.8% to $768.6 million driven by growth in attendance, concessions, incidence and price. Our adjusted EBITDA increased 16.2% to $184.9 million and our adjusted EBITDA margin expanded 140 basis points to 24.1%. Domestically, strong film content and our focus on the guest experience continued to prove advantageous, yielding third quarter year-over-year attendance growth of 9.6% to 48 million patrons. Our average ticket price increased 1.7% to $7.39 and combined attendance end price drove domestic admissions revenues up 11.4% to $354.9 million. The benefits of our attendance growth also play through to concessions revenues which were up 17.2% versus the third quarter of last year. Furthermore, our continued focus on core product sales married with pricing initiatives, new concepts and field execution drove domestic concessions per patron up 6.8% to $4.11. Other revenues for the quarter declined 9.7% largely as a result of certain promotional benefits we began realizing…

Your first question comes from the line of Ben Mogil with Stifel. Benjamin Mogil - Stifel, Nicolaus & Co., Inc.: Hi. Good morning and thank you for taking my question. In terms of sort of the targeted venues that you're looking out for re-seating, are you targeting areas where there have not been upgrades? Or are you targeting areas where you think the market is – where there has been an upgrade but you think the market's sort of large enough to sort of have both players make an upgrade? And kind of curious your thoughts on – both Regal and AMC were talking about strong landlord contributions in terms of participating in this, curious if you were seeing the same thing? And any concerns that that's kind of distorting the economics of those projects, just given the landlords have a bit of a different agenda than you may?

Ben, thanks for the question. Good morning. Benjamin Mogil - Stifel, Nicolaus & Co., Inc.: Good morning.

Let me start with the first part of your question. In regards to the locations that we're targeting, we're really looking at both. There are places around the country where we are the first exhibitor into that marketplace and enjoying the benefits. And here are other places where we're not, and we're the second or in some cases even the third. And what we're doing is we're running very diligent financial models to say whether or not we think that these upgrades and the associated CapEx can have a return that meets our investment criteria. Thus far we've been able to find many, many locations like that in both brand-new markets and also in existing markets. As it relates to the second part of your question, generally there are places where we have taken some landlord contributions, but generally we have chosen to finance these upgrades ourselves and not taken on any additional obligations to landlords relative to either increased rent or extended lease terms. Benjamin Mogil - Stifel, Nicolaus & Co., Inc.: And that's good to know. Any concern that while you're sort of operating under that path because your competitors are kind of leaning more on landlords that there's going to be an oversupply of these kind of venues? And as we both unfortunately know oversupply's been the sort of Achilles' heel in the industry over the years.

You know, Ben, I can't speak for the economics of our competitors, but for us because our cost of capital is significantly less than what landlords would choose to extract to make contributions, it's proven to be a good investment for us. And like I said, I think the most important thing for us is we are very aggressive right now. We anticipate continuing to be aggressive in 2017, but along the way, literally each and every month, we're looking at the results of all of these to make sure that we know when to slow down so that we don't over supply in terms of re-seating. Benjamin Mogil - Stifel, Nicolaus & Co., Inc.: Have you given in the past, and I forget if you've given in the past, what your IRR target on these re-seatings is? Have you publicly disclosed that?

No we've not. Benjamin Mogil - Stifel, Nicolaus & Co., Inc.: Okay. And then – okay that's great on that topic, thank you. And then the last one is either for Mark or for Sean. So, clearly slowing screen counts in Latin America tied to Brazil, I don't think that's a big surprise to a lot of people. On the quality of that are you seeing Brazil or Brazilian operators now being little bit more open to M&A given the challenges in that market?

I'm going to let Sean answer that second question, but let me just give you a little bit more detail on the end of your previous question. You said did we have an ROI? The only ROI that we've come out public with is that it would continue to meet our investment hurdles, which was a minimum of 20% return on cash and 20% EBITDA margin. Sean, you want to take the Brazil question?

Sure. With regard to Brazil, I'd say we're just putting out that comment as a caution, based on some of the dynamics. While we're not seeing what's happening in the economy necessarily impact movie going at this point, we are concerned that it could play through to the screen additions. That said, we're still on track this year to be somewhere in the 75 to 80 new screen additions. So we're just putting that out of caution. With regard to M&A, it's something that we're certainly looking at. We haven't seen a lot movement on that yet, but in this environment, yes that's something that we're keeping an eye out for to be able to be opportunistic should something attractive come to market. Benjamin Mogil - Stifel, Nicolaus & Co., Inc.: And have you seen any kind of movement on that area or is it still – I mean, in the past, you've sort of talked about financial distressed times tend to be the most accelerant for M&A in that particular region.

Yup. We haven't seen a lot of movement yet, but we feel like we're in a great position to the extent that something does comes to market. Benjamin Mogil - Stifel, Nicolaus & Co., Inc.: And in the U.S., any interest in any of the, sort of, venues that AMC will have to divest from Carmike?

You know, Ben on that, I think, it's a little too early to say. They've not come out with any formal request at this point. With – at such point that they do, we'll certainly evaluate it. Benjamin Mogil - Stifel, Nicolaus & Co., Inc.: Okay. That's great. Thank you very much.

Thanks.

Your next question comes from the line of Eric Handler with MKM Partners.

Yes. Thanks for taking my question. Good morning. Two questions for you, guys. First, when you look at your Loyalty Rewards program, AMC last night talked about using a lot of the big data and using it to target their customers better, with targeted – pushing movies towards them when certain genres are coming out. Wondering what you're doing with that data?

Thank you, Eric. Two things I want to say on that. First, absolutely yes. That's the benefit of a loyalty program is you get more data on your customers. We started from ground zero. We anticipated a million Connections members within the first year. It looks like we're going to get there within eight months, so we're very pleased with that. But beyond just the Connections information, we have very honed and good e-mail addresses for about 4 million of our customers that we regularly are in contact with and try and segment those as well. Now we don't have as much information on those as we're going to have on our Connections, and as much ability to segment as much as we want, but we're doing a significant amount of communication with our existing customer base because of the pretty vast data source of customer e-mails that we've acquired over the years. So – but the short answer to your question is the biggest upside to a loyalty program is the ability to segment and communicate to your audience as well as provide them with the necessary and the desired reasons to come back to our specific theater.

And I would just add that getting direct to the customer on an individualized basis, whether they're in our theaters or outside our theaters, is a very essential element of this. We hired a whole big data team that's focused exclusively on doing just that.

And so as a follow-up to that, where – any goal what you have over the next 12 months, by the end of 2017, of where you might be able to get that membership goal?

You know at this point, because we blew away our initial goal of a million in the first year, we'll be at least double that and potentially even more.

Great. And then, Sean, one last thing for you. If you look at the FX now, the real is probably a double-digit tailwind relative to the U.S. dollar on a year-over-year basis, so if all currencies stayed constant from where they are now, what type of FX impact would that mean for the fourth quarter?

We're looking at something in the kind of mid-single-digit favorable, somewhere around perhaps 5% is, if everything were to hold where it sits today.

Great. Thank you so much, guys. Appreciate it.

Thanks, Eric.

Your next question comes from the line of Chad Beynon with Macquarie. Chad Beynon - Macquarie Capital (USA), Inc.: Great. Thanks for taking my questions, guys. First just want to focus on pricing for the quarter. I believe you started some of the early inning initiatives on the tax-on-top. Could you talk about any benefit that you saw in the third quarter? And could you help us think about your approach over the next 12 months to 18 months regarding this? Thanks.

Tax-on-top we started last quarter and we are rolling that out across the nation. We specifically chose not to do it all at one time so that we could, in fact, make sure that we get it right from an operations standpoint. And then also to just roll it out over the course of several quarters just made financial sense to us. So we will finish that up in the fourth quarter with all remaining potential tax-on-top markets will be completed by the end of the first quarter. We had very little or no consumer resistance to it. We took a portion of that tax-on-top amount to lower the advertised price, and we took a portion of that tax-on-top to be an actual price increase as well.

And I'll just add we've had a very slow ramp up since we started in August, so the impact on third quarter is fairly negligible. Chad Beynon - Macquarie Capital (USA), Inc.: Got you. Okay. Thank you very much. And then with respect to the ramp of your reseats and some of the other initiatives as you're doing these, we understand that. You may have some auditoriums out of the circuit. Was this meaningful in the third quarter? And was that part of the reason why you underperformed the market outside of some of the things that you mentioned? And could you give us any sense of potential impact in the fourth quarter as well? Thank you.

Yes. We did have a significant number of auditoriums which were out of service during the third quarter. Close to 100 auditoriums during the third quarter, which was significantly more than the number that were out during the third quarter of 2015. And looking at the fourth quarter, yes, we're – we have a tremendous amount of theaters that are currently, right now, under construction being reseated and that number will exceed the number that we had under construction during the fourth quarter of 2015, probably about in the same line as the third quarter to third quarter, 2015 to 2016. Chad Beynon - Macquarie Capital (USA), Inc.: Okay. Thank you very much.

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

Hi. Good morning. I've a two-parter for Mark and one for Sean. Mark, following up on the loyalty question, Regal announced a partnership with your old employer to link their Regal Crown Club with Disney's own Loyalty program. And I was wondering if Cinemark has any plans to do similar deals with Disney or other studios? And how you determine the economic value of sharing your Connections data with partnerships with Hollywood studios?

As you know, we launched the Connections program just about – almost eight months ago and to be very specific, yes, we definitely will have partners into the future with studio-based and other promotional partners relative to our Connections program. I think, it will help create additional consumer benefits for the actual customers and also allow us to share certain portions of our data with partners as they would with us. So we anticipate that we will have a similar in nature kind of partnerships as we mature the Connections loyalty program.

Okay. And then just more broadly, Mark. Understanding that these conversations don't happen in a vacuum with the studios, is Cinemark also considering any partnerships on alternative or premium windowing strategies that can be a mutual win to both parties?

There's certainly discussions, I'd call them preliminary discussions going on with ourselves and various studios, but they're – at this point, I would categorize, them all as very preliminary. So there's nothing to really discuss or announce at this point.

Okay. Fair enough. Sean, given your comments on the lower or more conservative screen build for international next year, just wondering how does that impact your overall company CapEx spending, if you want to give any early sense of that.

Sure. Well, we're in the midst of planning that for 2017. I think, we've obviously been spending a heightened amount on our domestic recliners, while we haven't fully nailed that down, I expect, as we look to next year, we're going to continue to see a healthy number of ongoing reclining activity. So I would say it may not have a significant reduction in CapEx, but some of that's going to depend on where we end up with our plan on domestic recliners.

Okay. Thank you, both.

We'll have more info on that next quarter. We'll have our kind of guidance for 2017.

Your next question comes from the line of Alexia Quadrani with JPMorgan.

Thank you. My question is really on, sort of, the outlook for Q4. Thank you for laying out the reasons why we did see slight underperformance versus the industry this quarter. I guess, I'm trying to get a sense of how much those challenges will impact Q4. I think, you did mention the same number of screens will be offline in conversion in Q4 as in Q3, if I understood that correctly. So should we assume the same impact on that front? And any commentary you can give us in terms of how the mix of films might be impacting the performance as well in Q4, from what you could see?

Sure. I'll take that one, Alexia. Thanks for the question. Just to clarify, I'd say as far as 3Q goes, the screen closures – the heightened screen closures this year versus last was certainly one component that impacted our overall performance. But another big factor was just our general over-performance last year. We over-performed the market by 390 basis points last year and a big driver of that was how well Straight Outta Compton played in some of our key markets, as well as just overall content mix this quarter. When you look at our top 10 DMAs which represent about 50% of our circuit and about 25% of the overall industry, those markets were down about 200 basis points year-over-year. So they had a disproportionate effect on us relative to the industry as a whole. So that was another big factor that just played into 3Q. When we look at 4Q, yes, we are going to continue to have that same kind of year-over-year pressure on a heightened number of closed screens, so that certainly will play into performance but we're going to just have to see. A lot of it will play – will depend on how Star Wars indexes year-over-year, the Rogue One relative to Force Awakens. That will be a factor. I'd say the industry as a whole also has a little bit of a challenge in the 4Q with the timing of the way the holidays fall for Christmas and New Years, where they fall on weekends, which historically tends to be not as advantageous as when they fall during the weekdays, so we'll have to see how that plays out, but for us I think we'll continue to have a drag. It doesn't necessarily mean we'll underperform the industry but it will be a hurdle that we'll have to overcome.

I think the only thing, Alexia, that I would add to that is thus far into the fourth quarter the industry is actually looking pretty good. I mean, we're clearly all very encouraged with what happened this past weekend, of course, with Doctor Strange and also Trolls. So as we look through the end of this year, I don't see the big Compton comp, which is going to be – which was one of the three things that caused a little bit of that underperformance.

And then just a follow-up. You've got some very big titles that are still TBD in terms of whether how successful they'll be coming out in the fourth quarter. Any sense – like Fantastic Beasts and Rogue One for example. Any sense on how those larger films might perform in Latin America in the quarter? I mean, do you think that content will translate well? Anything timing wise we should be aware of?

Nothing on the timing-wise standpoint. I mean, we're generally going to be similar to what the release patterns have been. I think, Fantastic Beasts is going to translate very well throughout the region, both in the United States and throughout Latin America. And we expect Star Wars to do very well. Now Star Wars isn't as mega-popular – it's popular, but it's not as mega-popular in Latin America as it is in North America, but we experienced that last year and had very good results. So we're actually pretty darn bullish on what we have remainder of this year, both with those two big movies and also just a number of other very strong family product and the family product usually over delivers in most of our markets.

All right. Thank you very much.

Thank you.

Your next question comes from the line of David Miller with Loop Capital.

Hey, guys. Sean, I just want to make sure I understand. So the screen closures that occurred in the third quarter, do all of those stay closed in the fourth quarter on top of the other screens that you announced you're closing in the fourth quarter? Or do some reopen sometime kind of, whatever, mid-fourth quarter? And then Mark, on the Latin American side, is there any kind of Portuguese film or sort of homegrown Brazilian film that you think could drive the quarter in the fourth quarter on the Latin American side? Thanks very much.

Sure. I'll start. Yeah, those screens will close and they'll reopen, but we're continuing to rollout new ones, so there will be new screens closed. And just to put some specific numbers to it, we had 95 – an average of 95 closed screens per day in the third quarter of this year versus 28 last year. So that type of over-indexing we expect will continue in the fourth quarter because we've had a heightened ramp up. So – but it's not that those exact same screens are closed, it's – we're closing new ones to remodel, new ones and the old ones that were closed are reopening.

Got it.

In regards to local content, we have a look forward of the six or seven key local titles that are coming. It's much harder to predict the big mega-success. There's tracking in the U.S. and we've lived and died by tracking in the U.S., both – especially from the studio side. You don't have that as well refined at all in the Latin American markets. There are a couple of products coming in Brazil, one in particular right after Christmas. Is it going to be a mega-success? I think, it would be premature for me to call that. We are looking forward to the product. And you know we've always said that local content is somewhere between 10% and 20% on an ongoing basis.

Okay. Thank you very much.

Thanks.

Your next question comes from the line of Barton Crockett with FBR Capital. Zack Silver - FBR Capital Markets & Co.: Hey, guys. This is Zack Silver on the line for Barton. I just had one question, on the receipts; I'm not sure how much you guys have done in the way of price increases for those? And given that the – I think, people feel pretty positively about the 2017 slate, are you guys thinking about doing any sort of price increases on the receipts next year? Thank you.

Zack, yeah, that is front and center in our mind. We look formally, twice a year, at all of our pricing from the bottom up and the reseats clearly give us a greater opportunity to increase price. We have not been overly aggressive in the price. In some cases we've increased price at day one, but in a larger majority, we've allowed consumers to experience sample and truly enjoy the re-seating and then we've taken price anywhere from a little as $0.25 up to $1. We tend to do that more in the high demand high time periods, on the weekends, Friday, Saturday, Sunday, because that's where we get or get very close to sell outs. So we believe that we have an ability to continue to move price in the fourth quarter and into next year in our re-seating and will do so. But we really look at it from a local market bottoms up approach because we have to take into effect all of the local concerns relative to it as opposed to dictating something straight out of Dallas downward. Zack Silver - FBR Capital Markets & Co.: Okay. Great. That's very helpful. And I guess just one more follow-up around the Connections. Do you have any sense of whether your members, Connections members are spending more money at the concession stands or are they more frequent movie goers than non-members? I know that AMC has broken out some of those metrics, and I wonder if – I was wondering if you guys could give us a little bit more color on that. Thank you.

You know I don't have specific numbers for you on that, but it – the early indication is it looks like they are number one, coming more. They're clearly using our app more. They're also much more active relative to our website and utilization of that. And when we're looking at the utilization and the – what rewards they're choosing, it's both a combination of rewards at the concession stand, as well as the many, many experiential rewards that we've been providing. So, we'll have more color and detail for you on that in the coming quarters. Zack Silver - FBR Capital Markets & Co.: Great. Thank you very much.

Thank you.

Your next question comes from the line of Eric Wold with B. Riley. Eric Wold - B. Riley & Co. LLC: Thank you and good morning. Not to beat a dead horse on the screens being taken off line, but as you think about moving into 2017 do you expect a similar cadence per quarter? How much flexibility do you have when you take those off given the film slate? And then, second question on Latin America and I apologize that I missed this in the early comments. But with the 50 to 75 screens now expected for next year, is that reduction a function of any projects being cancelled or down-sized and really pushed into 2018 or later and is there an opportunity for those to be made up in later years? Or should we consider them to be somewhat lost for now?

Thank you, Eric. To your first question relative to screens coming off line, we would expect probably a similar amount as we look at 2017 because we think we're going to do somewhere in the same neighborhood of number of conversions in 2017 as we did 2016, potentially slightly more. But, yes, we do take into account when those screens come off, we try and do it both on a – what market in particular is it most strategic to get done quickly, but given that we have so many projects that we have lined up for 2017, there's going to be likely a equal number of screens each and every quarter next year on a go-forward basis. They're not out all quarter. We're able to take a complex, say it has 14 or 20 screens and we might break that up. We're never closing all the screens in a complex at one time. We'll close half of them at a time or sometimes even only a third of them at a time so that we can continue to play movies as we go. And then your second question was...

And then I'll take the second question. The question on Brazil, it's more of a timing phenomenon. A lot of the developers, the projects are still there, they're just being a little hesitant in the speed that they go after them to kind of see how the policies and practices of kind of the current government now start to play through. So it's more of just a timing phenomenon than ultimate elimination of projects. Eric Wold - B. Riley & Co. LLC: Perfect. Thank you.

Thanks for the questions.

Your next question comes from the line of Ryan Fiftal with Morgan Stanley. Ryan Fiftal - Morgan Stanley & Co. LLC: Great. Thanks. Good morning. I have two follow-ups on some earlier questions. So first on tax on top, you've quantified what portion of the footprint is affected? And then is either I guess the breadth of the impact or the percentage increase meaningfully different for admissions versus concessions?

First, to answer your first question, it's approximately 60% of our footprint because it's not every state has tax on top.

And as I think Mark said, the way we're approaching this is kind of as a joint opportunity to take a little bit of price as well as, as a marketing opportunity to be able to advertise lower prices to our consumers to try to stimulate greater consumption. We're on average taking about a 3% price increase, and that would be consistent both in ticket prices as well as concessions. Ryan Fiftal - Morgan Stanley & Co. LLC: Okay. That's helpful. Thanks. And then my second one was on the luxury recliner upgrades. I think you gave rough ROIs. Can you remind us on the CapEx per screen that you're investing in those? And has that changed much over time, either in the last year or for your 2017 outlook?

It hasn't changed dramatically. It's come down slightly and it's somewhere in the $150,000 to $200,000 range and that depends both on the number of seats in the auditorium and also the additional amount of repositioning that we do in the theater. We tend to not go in and just do seats. But we tend to go in and like to reposition that theater and refresh the lobby area. Maybe we'll add beer, wine, and frozen alcoholic drinks. Maybe we'll refresh the overall concession stand. So it's somewhere in the $150,000 to $200,000.

And I would just add that it can creep up to $250,000 depends on the full extent of the theater conversions that we do. Ryan Fiftal - Morgan Stanley & Co. LLC: Okay. Thank you.

Thanks.

Your next question comes from the line of Tony Wible with Drexel Hamilton. And Tony your line is open.

Hi. Sorry about that. I was just curious if there was a big local price increase in international in the third quarter? In the first half of the year, I believe local pricing was up about 7%. You said it was up about 13% in the third quarter?

Yeah. Our overall pricing was up about 13% in constant currency. So yeah, I don't know if that answers your question but that generally our prices for the third quarter – our aim is to keep pace with inflation, we target to exceed slightly where possible. So for the third quarter it was about 13%. I think on the total year we're somewhere around 9% year-to-date.

Okay. And so that kind of ties to the second part of the question which is as conditions improve in Latin America and I presume that's behind why the foreign exchange rates are in-fluxing, do you anticipate sustaining around a 13% price increase or do you see that leveling off with the local economies?

I think it's going to depend on what happens in the local economies. Like I know, for instance, there's a big push in Argentina to reduce inflation, as an example, so if the government is successful in being able to do that, we'll see some of that play through and reduce pricing. I mean it kind of cuts across the board. Costs will come down at the same clip and we'll pull our prices down in line. So I would suspect that if anything, at least I would hope that that may come down a bit as many of these governments have initiatives to reduce inflation. We'll just have to see if they actually are effective in being able to do that.

Okay. And then on the pricing increase. Have you seen any kind of resistance to the pricing? I think the attendance per screen on international's been negative now for the last two quarters commensurate with the, I guess, higher local pricing. Is that just a function of film mix or is there any signs that there's a little bit more price sensitivity?

It's not pricing. In fact, what's interesting when you look across these markets, we continue to see the premium tickets, whether they be 3D, D-BOX, or VIP offerings way over index what we even see domestically. Really the biggest factor that's impacted attendance per screen this year is the strength of local content that was in the market last year, as kind of Mark alluded to. Just for example, in the third quarter alone, there was a huge title in Argentina, in Chile – or huge titles in Argentina, Chile, and Colombia. Third quarter alone, local attendance associated with local content was down almost 40% year-over-year. So it's really that factor that has played through. The local titles, while they're terrific, they will ebb and flow, quarter-to-quarter and year-to-year more variably than what we see with the Hollywood content. So really the impact that you're seeing on attendance per screen is a phenomenon with the local content, not anything related to pricing.

One addition I'd just like to put to that is, as Sean pointed out, on that local content, it's down nearly 40% on quarter-to-quarter. But to look at local content on a quarterly basis is really absolutely not the right way to look at it. You've got to look at it at least on an annualized basis. And when we do such, then we're in that category of somewhere between 10% and 20% of our overall revenue is going to come out of local titles as opposed to Hollywood provided titles. But looking quarter-to-quarter gives you an unrealistic look into the marketplace. Rather, I'd look at it year-to-year.

Great. Thanks for clearing that up, guys.

Okay.

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

Thanks. This is probably a Sean question. With regard to expiring leases, your decision was traditionally renew the lease or maybe make some enhancements or close the theater and move on to the next place. With re-seating an option, does that change that dynamic so that that's much more likely? It seems like that's how AMC started with this in the first place. Some of the poorer locations wound up becoming destination locations. And does that recliner option shift your thinking as to expansion via organic versus – M&A versus just concentrating on the re-seatings?

Well, just to start with the very end of your question, no. I mean one of the luxuries we have as a result of our strong balance sheet is we can be opportunistic and go after recliners as well as M&A as well as new build. So if we believe that the right opportunity surfaces with the ability to deliver the returns we expect, we can go after each. One is not necessarily dependent on the other. With regard to the kind of end of lease analytics, I wouldn't say necessarily it's a huge change of mindset. We really look at what the situation is with regard to that particular theater, what's happening, the demographics of that location. Is it a healthy market? Is it an unhealthy market? Recliners obviously present one more opportunity. They're one more option that we can contemplate to see would we want to head down that path? Do we think the right lift is there? But it really just boils down to all the factors in the marketplace, again, the health of the market, the health of competition in the market, and the dynamics with our landlords. So there's many factors that come into play with that.

Okay. And one other thing, your XD preference is well known and well demonstrated. But I'm curious if you have any interest in doing something similar to what AMC has been doing, maybe pairing an IMAX with an XD to take advantage of both sort of options, since that's proven to be a valuable strategy?

We're certainly considering that and would look at it. As you noted, we're well documented relative to our commitment to XD. We currently have 15 IMAX locations that we're very happy with. And if the marketplace dictated and it was advantageous to us and IMAX to have one of each, we would certainly consider it.

All right. Thank you.

Thank you.

Your next question comes from the line of Matthew Harrigan with Wunderlich Securities.

Thank you. There's been a lot of hype about esports as kind of the first digitally made of sports genre, and generally a lot of executives think it could be a big growth area. You've done things I think with World of Warcraft and all that, but what potential do you see for that? And then some of the more out there AR and VR things that IMAX has talked about? I apologize if it's repetitive because I've been hopping across another call.

Yeah, Matthew, it's not competitive. Relative to alternative content around esports, we have been testing this actively with both Super League Gaming, Minecraft, and also League of Legends. And I would say we're probably leading the industry relative to testing this in our theaters. We've done it with youth sport leagues, with Minecraft, very successfully with Super League Gaming. And we're just starting a four city test rollout with League of Legends in which there will, again, be city playing city. And top 60 players from one city will then be matched up in groups of five and teams of 60 to play another city. So Los Angeles will play Chicago and other cities as well. So this is an area that we are really actively involved with. We are very close and collaborative with Super League Gaming and in success we hope that it can grow to scale and be significant. At this point, I'd categorize it as the beginning steps with both the youth league and also with an older demographic with League of Legends. Relative to VR and AR, we think that's a very interesting space for exhibition. We're looking at all kinds of potential alternatives. Whether that be the alternatives that IMAX is going to bring to exhibition or ones that we may generate ourselves. We envision an opportunity to potentially have pods of VR in our theater lobbies or potentially to test actually small auditoriums and have VR experiences in those auditoriums. It clearly takes a combination mix of both hardware and software to be able to provide the consumer with an outstanding experience but we're actively looking at both areas.

And this segues from an earlier question on your flexibility on the windows of some quid-pro-quos at the studios, but I actually asked this in another exhibitor call. But James Murdoch made that comment that if you just had day in date, your revenues would actually go up because there'd be even more product and people really value the social experience and I think most people's reaction is that kind of crazy? But when you look at that, does that sound completely crazy or do you think that it's more realistic? I mean, obviously, it's very favorable for you if people value the in-theater experience that much.

I wouldn't categorize it as crazy but I would say that at this point we don't have an interest in a day in date model. We'll certainly talk with our studio partners about potential premium video on demand and determine what would be advantageous to both them and us. And as I indicated earlier, we are in what I would categorize as preliminary discussions.

Thanks.

Thanks, Matt.

And at this time there are no further questions.

Thank you all very much for joining us this morning. We look forward to speaking with you again following our fourth quarter. Thanks again.

Thank you.

Bye now.

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