The company's exposure to volatile box office performance. Its geographic diversification. Its relatively lower EBITDA margins compared with its peers'. The mature and highly competitive U.S. movie exhibition industry. The company's high debt leverage. Its high dependence on dividend distribution from Viacom and CBS. Its modest discretionary cash flow generation. The stable rating outlook reflects S&P Global Ratings' expectation that although National Amusements Inc. (NAI) will remain exposed to volatile box-office performance, the company will be able to maintain an adequate cushion of compliance with its covenants and strong liquidity because of its equity holdings in Viacom Inc. and CBS Corp. We could lower our corporate credit rating on NAI if the company's EBITDA margin of covenant compliance approaches 10%.
