What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-06 compared with 2020-11-04 · 467 added, 760 removed, 289 unchanged (81% of the section changed)

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These risks and uncertainties include, but are not limited to, the following:

● our ability to obtain additional liquidity, which if not realized or insufficient to generate the material amounts of additional liquidity that will be required until we are able to achieve more normalized levels of operating revenues, likely would result with us seeking an in-court or out-of-court restructuring of our liabilities, and in the event of such future liquidation or bankruptcy proceeding, holders of our common stock and other securities would likely suffer a total loss of their investment;

● The risks and uncertainties relating to the sufficiency of our existing cash and cash equivalents and available borrowing capacity to comply with minimum liquidity requirements under our debt covenants, fund operations, and satisfy obligations including cash outflows for increased rent and planned capital expenditures currently and through early May of 2022.

This requires that we achieve significant increases in attendance levels beginning in the third quarter of 2021 and ultimately reaching approximately 85% of pre COVID-19 attendance levels by the fourth quarter of 2021 and through the first and second quarters of 2022 as the vaccine rollout continues and more Hollywood product is released in our theatres.

If we are unable to achieve more normalized levels of attendance and operating revenues as described above, we may be required to obtain additional liquidity.

If such additional liquidity were not realized or insufficient we likely would seek an in-court or out-of-court restructuring of our liabilities, and in the event of such future liquidation or bankruptcy proceeding, holders of our common stock and other securities would likely suffer a total loss of their investment;

● the impact of the COVID-19 virus on us, the motion picture exhibition industry, and the economy in general, including our response to the COVID-19 virus related to suspension of operations at our theatres, personnel reductions and other cost-cutting measures and measures to maintain necessary liquidity and increases in expenses relating to precautionary measures at our facilities to protect the health and well-being of our customers and employees;

● risks and uncertainties relating to our significant indebtedness, including our borrowing capacity and our ability to meet our financial maintenance and other covenants;

● the manner, timing and amount of benefit we receive under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) or other applicable governmental benefits and support for which we are eligible domestically and internationally;

● risks and uncertainties relating to our significant indebtedness, including our borrowings and our ability to meet our financial maintenance and other covenants;

● shrinking exclusive theatrical release windows;

● certain covenants in the agreements that govern our indebtedness may limit our ability to take advantage of certain business opportunities and limit or restrict our ability to pay dividends;

● risks relating to impairment losses, including with respect to goodwill and other intangibles, and theatre and other closure charges;

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● increased use of alternative film delivery methods including premium video on demand or other forms of entertainment;

● shrinking exclusive theatrical release windows;

● AMC Stubs ® A-List may not meet anticipated revenue projections which could result in a negative impact upon operating results;

● general and international economic, political, regulatory, social and financial market conditions and other risks, including the effects of the exit of the United Kingdom from the European Union;

● limitations on the availability of capital may prevent us from deploying strategic initiatives;

● certain covenants in the agreements that govern our indebtedness may limit our ability to take advantage of certain business opportunities;

● our ability to achieve expected synergies, benefits and performance from our strategic theatre acquisitions and strategic initiatives;

● limitations on the availability of capital or poor financial results may prevent us from deploying strategic initiatives;

● our ability to achieve expected synergies, benefits and performance from our strategic initiatives;

● our ability to refinance our indebtedness on terms favorable to us or at all;

● optimizing our theatre circuit through new construction and the transformation of our existing theatres may be subject to delay and unanticipated costs;

● our ability to optimize our theatre circuit through new construction, the transformation of our existing theatres, and strategically closing underperforming theatres may be subject to delay and unanticipated costs;

● AMC Stubs ® A-List may not meet anticipated revenue projections which could result in a negative impact upon operating results;

● failures, unavailability or security breaches of our information systems;

● our ability to utilize interest expense deductions may be limited annually due to Section 163(j) of the Tax Cuts and Jobs Act of 2017;

● our ability to recognize interest deduction carryforwards and net operating loss carryforwards to reduce our future tax liability;

● our ability to recognize interest deduction carryforwards, net operating loss carryforwards and other tax attributes to reduce our future tax liability;

● our ability to recognize certain international deferred tax assets which currently do not have a valuation allowance recorded;

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● review by antitrust authorities in connection with acquisition opportunities;

● risks relating to the incurrence of legal liability, including costs associated with recently filed securities class action lawsuits;

● risks relating to the incurrence of legal liability, including costs associated with the ongoing securities class action lawsuits;

● dependence on key personnel for current and future performance and our ability to attract and retain senior executives and other key personnel, including in connection with any future acquisitions;

● risks of poor financial results may prevent us from deploying strategic initiatives;

● operating a business in international markets AMC is unfamiliar with, including acceptance by movie-goers of AMC initiatives that are new to those markets;

● increased costs in order to comply or resulting from failure to comply with governmental regulation, including the General Data Protection Regulation, the California Consumer Privacy Act and pending future domestic privacy laws and regulations;

● increased costs in order to comply or resulting from a failure to comply with governmental regulation, including the General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act (“CCPA”) and pending future domestic privacy laws and regulations;

● the dilution caused by recent and future sales of our Class A common stock could adversely affect the market price of the Class A common stock;

● the market price and trading volume of our shares of Class A common stock has been and may continue to be volatile, and purchasers of our securities could incur substantial losses;

● future offerings of debt, which would be senior to our Class A common stock for purposes of distributions or upon liquidation, could adversely affect the market price of our Class a common stock;

● geopolitical events, including the threat of terrorism or cyber-attacks, or widespread health emergencies, such as the novel coronavirus or other pandemics or epidemics, causing people to avoid our theatres or other public places where large crowds are in attendance;

● the ability to obtain suitable equity and/or debt financing and the continued availability of financing, in the amounts and on the terms necessary to support our future refinancing requirements and business;

● anti-takeover protections in our amended and restated certificate of incorporation and our amended and restated by laws may discourage or prevent a takeover of our Company, even if an acquisition would be beneficial to our stockholders;

● an issuance of preferred stock could dilute the voting power of the common stockholders and adversely affect the market value of our Class A common stock;

● other risks referenced from time to time in filings with the SEC.

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For further information about these and other risks and uncertainties as well as strategic initiatives, see Item 1A.

“Risk Factors” of Part II of this Form 10-Q and Item 1A.

“Risk Factors,” and Item 1.

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The forward-looking statements included herein are made only as of the date of this Quarterly Report on Form 10–Q, and we do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Temporarily Suspended Operations

As of March 17, 2020, we temporarily suspended all theatre operations in our U.S.

Temporarily Suspended or Limited Operations

On or before March 17, 2020, we temporarily suspended all theatre operations in our U.S.

markets and International markets in compliance with local, state, and federal governmental restrictions and recommendations on social gatherings to prevent the spread of COVID-19 and as a precaution to help ensure the health and safety of our guests and theatre staff.

As a result of these temporarily suspended operations, our revenues and expenses for the three and nine months ended September 30, 2020 are significantly lower than the revenues and expenses for the three and nine months ended September 30, 2019.

Industry Box Office.

The North American industry box office has been significantly impacted by COVID-19 in the third quarter ending September 30, 2020.

Although certain states authorized the reopening of theatres as early as June 2020, with limited seating capacities and social distancing guidelines, some states, including California, New York, and Maryland, remain partially closed for theatrical exhibition as of the end of October 2020.

As a result, studios have postponed new film releases or moved them to the home video market, and movie release dates may continue to move in the future.

Major movie releases that were previously scheduled to be released in the fourth quarter have either been rescheduled for 2021 or slated for direct to streaming in lieu of a theatrical release, leaving a reduced slate of movie releases for the remainder of the year, and release dates may continue to move.

Certain competitors have decided to temporarily reclose their theatres in light of the ongoing pandemic and the reduced slate of movie releases, which may further exacerbate the trend described above.

On October 23, 2020, we resumed operations at several AMC locations throughout the state of New York as a result of the state government allowing movie theatres to reopen throughout much of the state.

The combination of theatre reopening restrictions and limited new film distribution has resulted in a significantly lower industry box office for the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

In response to the current low attendance levels, the Company has made adjustments to theatre operating hours to align screen availability and associated theatre operating costs with attendance levels for each theatre.

We also introduced AMC Private Screening, which allows movie goers to reserve a separate AMC Safe & Clean TM auditorium for a private screening for up to 20 people, starting at $99 plus tax.

Update on Theatre Reopenings-U.S.

Our theatre operations in the U.S.

markets remained suspended for the entire second quarter ended June 30, 2020.

We resumed limited operations in our U.S.

markets in late August 2020 with the initial 115 theatre reopenings occurring on August 20, 2020.

We reopened 170 additional theatres on August 26, 2020, and 142 additional theatres on September 4, 2020.

As of September 30, the Company had resumed operations at 467 U.S.

theatres, with limited seating capacities of between 25% and 40%, representing approximately 78% of the U.S.

theatres and 73% of 2019 U.S.

same-theatre revenue.

Since the resumption of operations in its U.S.

markets, we have served more than 1,973,000 guests as of September 30, 2020, representing a same-theatre attendance decline of approximately 83% compared to the same period a year ago.

As of the end of October 2020, we operated approximately 539 of our 600 U.S.

theatres, with limited seating capacities.

The remaining 10% of the U.S.

theatres left to reopen are primarily located in California, Maryland, and New York, and include some of our most productive theatres, representing approximately 15% of 2019 U.S.

same theatre revenue.

In regions where theatres are not yet able to open, we continue to have productive discussions with local and state government authorities about the appropriate timing for a resumption of operations.

Update on Theatre Reopenings-International markets.

We resumed limited operations in the International markets in early June.

As of June 30, 2020, we had resumed operations at 37 theatres, with limited seating capacities, in nine countries and recorded attendance of 100,000 guests in June.

As of July 31, 2020, we had resumed operations at 182 leased and partnership theatres.

As of September 30, 2020, we had resumed operations at 321 leased and partnership theatres.

This represents approximately 91% of our international theatres and approximately 93% of 2019 international same-theatre revenue.

Seating capacity at the reopened international theatres remains limited to between 25% and 50% of capacity to ensure social distancing for guests.

Since the resumption of operations in our International markets on June 3, 2020, our theatres have served more than 4,637,000 guests as of September 30, 2020, representing a same-theatre attendance decline of approximately 74% compared to the same period a year ago.

As of the end of October 2020, we operated 261 of our 358 international theatres.

The reduction in open international theatres between September 30, 2020 and October 30, 2020 is a result of a recent resurgence of COVID-19 cases in our International markets.

Italy, Germany, Spain, Ireland and the UK have announced or enacted plans to reinstitute national or regional lockdowns to protect their citizenry.

As a result, we plan to close or have closed some or all of our previously reopened theatres in these countries, depending on the respective mandate.

We expect to reopen these theatres when the respective mandate has been lifted and it is safe to do so and permissible under local, provincial as well as national guidelines.

We resumed limited operations in the International markets in early June 2020 and limited operations in the U.S.

markets in late August 2020.

A COVID-19 resurgence during the fourth quarter of 2020 resulted in additional local, state, and federal governmental restrictions and many previously reopened theatres in International markets temporarily suspended operations again.

As a result of these temporarily suspended or limited operations, our revenues and expenses for the three months ended March 31, 2021 are significantly lower than the revenues and expenses for the three months ended March 31, 2020.

As of January 1, 2021, we were operating at 394 domestic theatres with limited seating capacities, representing approximately 67% of our domestic theatres.

During the first quarter ended March 31, 2021, in response to eased restrictions by state and local governments, we resumed operations in key markets such as New York and Los Angeles.

As of March 31, 2021, we were operating at 585 domestic theatres with limited seating capacities, representing approximately 99% of our domestic theatres.

As of January 1, 2021, we were operating at 109 International leased and partnership theatres, with limited seating capacities, representing approximately 30% of our International theatres.

As of March 31, 2021, we were operating at 97 International theatres with limited seating capacities, representing approximately 27% of our International theatres.

Our average screens operated during the three months ended March

31, 2021 declined by 24.2% from the prior year.

AMC is the world’s largest theatrical exhibition company and an industry leader in innovation and operational excellence.

We operate theatres in 15 countries and are the market leader in nine of those.

We operate theatres in 13 countries, including the U.S., Europe and Saudi Arabia.

Our theatrical exhibition revenues are generated primarily from box office admissions and theatre food and beverage sales.

The balance of our revenues are generated from ancillary sources, including on-screen advertising, fees earned from our AMC Stubs ® customer frequency membership program, rental of theatre auditoriums, income from gift card and exchange ticket sales, online ticketing fees and arcade games located in theatre lobbies.

As of September 30, 2020, we owned, operated or had interests in 958 theatres and 10,697 screens.

The balance of our revenues is generated from ancillary sources, including on-screen advertising, fees earned from our AMC Stubs® customer loyalty program, rental of theatre auditoriums, income from gift card and exchange ticket sales, and online ticketing fees.

As of March 31, 2021, we owned, operated or had interests in 945 theatres and 10,518 screens.

Box Office Admissions and Film Content

Box office admissions are our largest source of revenue.

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Film exhibition costs are accrued based on the applicable admissions revenues and estimates of the final settlement pursuant to our film licenses.

Licenses that we enter into typically state that rental fees are based on aggregate terms established prior to the opening of the picture.

These licenses typically state that rental fees are based on aggregate terms established prior to the opening of the picture.

In certain circumstances and less frequently, our rental fees are based on a mutually agreed settlement upon the conclusion of the picture.

In certain circumstances and less frequently, our rental fees are established on a weekly basis for the coming week’s percentage forecast.

Some European licenses use a per capita agreement instead, paying a flat amount per ticket, where the sum is agreed in advance of the film showing.

Under an aggregate terms formula, we pay the distributor a specified percentage of box office gross or pay based on a scale of percentages tied to different amounts of box office gross, or in Europe, we pay based on the number of weeks since release.

In some European territories, rental fees are established on a weekly basis for the coming week’s percentage forecast.

Some European licenses use a per capita agreement instead, paying a flat amount per ticket, where the sum is agreed in long-term agreements in advance of the film showing.

Under an aggregate terms formula, we usually pay the distributor a specified percentage of box office gross or pay based on a scale of percentages tied to different amounts of box office gross, or in Europe, we pay based on the number of weeks since release.

The settlement process allows for negotiation based upon how a film actually performs.

The North American and International industry box offices have also been significantly impacted by the COVID-19 pandemic during the three months ended March 31, 2021.

As a result, studios have postponed new film releases or moved them to the home video market, and movie release dates may continue to move in the future.

Major movie releases that were previously scheduled to be released in 2020 have either been rescheduled for 2021 or slated for direct to streaming or premium video on demand (“PVOD”) in lieu of a theatrical release, which left a reduced slate of movie releases for 2020, and release dates may continue to move.

As a result of the reduced slate of first-run movie releases, we have licensed and exhibited a larger number of films that were released in prior years or decades and where the film rental terms are much lower than for first-run movie releases.

The combination of theatre closures, reopening restrictions and limited new film distribution has resulted in a significantly lower industry box office for the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

In response to the current low attendance levels, (in addition to any local capacity restrictions) we have made adjustments to theatre operating hours in those markets where we are open to align screen availability and associated theatre operating costs with attendance levels for each theatre.

We also introduced AMC Private Screening, which allows moviegoers to reserve a separate AMC Safe & Clean auditorium for a private screening for up to 20 people, starting at $99 plus tax.

During 2020, we entered into an agreement with Universal, a division of Comcast Corporation (NASDAQ:CMCSA), to distribute films utilizing a minimum 17-day theatrical exhibition window, after which time Universal will have the option to make its titles available across PVOD platforms.

This multi-year agreement preserves exclusivity for theatrical viewing for at least the first three weekends of a film’s release, during which time a considerable majority of a movie’s theatrical box office revenue typically is generated.

AMC will also share in new revenue streams that will come to the movie ecosystem from PVOD.

Our revenues attributable to individual distributors may vary significantly from year to year depending upon the commercial success of each distributor’s films in any given year.

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Movie Screens

During the nine months ended September 30, 2020, we opened four new theatres with 29 screens, added five additional screens to existing theatres, permanently closed 399 screens, temporarily closed 26 screens to install consumer experience upgrades and reopened 33 screens to install consumer experience upgrades.

The following table provides details of our theatre circuit by segment for the periods indicated:

The following table provides detail with respect to digital delivery, 3D enabled projection, large screen formats, such as IMAX ® and our proprietary Dolby Cinema™, other Premium Large Format (“PLF”) screens, enhanced food and beverage offerings and our premium seating as deployed throughout our circuit on March 31, 2021.

This data represents available services in a pre-COVID-19 environment.

Due to mandated government attendance restrictions, the ability for guests to utilize all these amenities has been significantly curtailed:

International Markets

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Screens As of

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

March 31, 2021

March 31, 2020

March 31, 2021

March 31, 2020

Dolby Cinema TM

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Guest Amenities

We seek to upgrade the quality of our theatre circuit through substantial renovations featuring our seating concepts, acquisitions, new builds (including expansions), expansion of food and beverage offerings (including dine-in theatres), and by disposing of older screens through closures and sales.

Recliner seating is the key feature of theatre renovations, which historically drove a 34% increase in attendance prior to the COVID-19 pandemic, on average, at these locations in their first year post renovation.

These renovations, in conjunction with capital contributions from our landlords, involve stripping theatres to their basic structure in order to replace finishes throughout, upgrade the sight and sound experience, install modernized points of sale and, most importantly, replace traditional theatre seats with plush, electric recliners that allow customers to deploy a leg rest and fully recline at the push of a button.

As of September 30, 2020, in our U.S.

markets we now feature recliner seating in approximately 345 U.S.

We believe we are an industry leader in the development and operation of theatres.

Typically, our theatres have 12 or more screens and offer amenities to enhance the movie-going experience, such as stadium seating providing unobstructed viewing, digital sound and premium seat design.

As part of our long-term strategy, we seek to continually upgrade the quality of our theatre circuit through substantial renovations featuring our seating concepts, acquisitions, new builds (including expansions), expansion of food and beverage offerings (including dine-in theatres), and by disposing of older screens through closures and sales.

As discussed above, certain aspects of our long-term strategy, such as growth capital expenditures, with the exception of prior commitments are suspended at this time as a result of the impact of the COVID-19 pandemic on our business.

We cannot currently determine when we will be able to resume these aspects of our long-term growth strategy.

Recliner seating is the key feature of theatre renovations.

We believe that maximizing comfort and convenience for our customers will be increasingly necessary to maintain and improve our relevance.

These renovations, in conjunction with capital contributions from our landlords, involve stripping theatres to their basic structure in order to replace finishes throughout, upgrading the sight and sound experience, installing modernized points of sale and, most importantly, replacing traditional theatre seats with plush, electric recliners that allow customers to deploy a leg rest and fully recline at the push of a button.

As of December 31, 2019, prior to the COVID-19 pandemic, the quality improvement in the customer experience could drive a 33% increase in attendance, on average, at these locations in their first year post renovation.

These increases will only continue post-COVID-19 pandemic if attendance returns to normalized pre-COVID-19 levels.

Upon reopening a remodeled theatre, we typically increase the ticket price to reflect the enhanced consumer experience.

As of March 31, 2021, in our U.S.

markets we featured recliner seating in approximately 345 U.S.

theatres, including Dine-in-Theatres, totaling approximately 3,339 screens and representing 43.5% of total U.S.

In our International markets, we have recliner seating in approximately 79 International theatres, totaling approximately 505 screens and representing 17.6% of total International screens.

Open-source internet ticketing makes our AMC seats (over 1.0 million) in all our U.S.

In our International markets, as of March 31, 2021, we had recliner seating in approximately 83 International theatres, totaling approximately 531 screens and representing 18.7% of total International screens.

Open-source internet ticketing makes our AMC seats (approximately 1.1 million as of March 31, 2021) in all our U.S.

theatres and auditoriums, for all our showtimes as available as possible, on as many websites as possible.

Our tickets are sold over the internet, directly or through mobile apps, at our own website and app, and other third-party ticketing vendors.

Our tickets are currently on sale either directly or through mobile apps, at our own website and mobile apps and other third-party ticketing vendors.

Food and beverage sales are our second largest source of revenue after box office admissions.

Food and beverage items traditionally include popcorn, soft drinks, candy and hot dogs.

Different varieties of food and beverage items are offered at our theatres based on preferences in the particular geographic region.

Our traditional food and beverage strategy emphasizes prominent and appealing food and beverage offerings designed for rapid service and efficiency, including a customer friendly self-serve experience.

To address recent consumer trends, we have expanded our menu of enhanced food and beverage products to include made-to-order drinks and meals, customized coffee, healthy snacks, premium beers, wine and mixed drinks, flatbread pizzas, more varieties of hot dogs, four flavors of popcorn and other menu items.

We operate 50 Dine-In Theatres in the U.S.

and two Dine-In Theatres in Europe that deliver chef-inspired menus with seat-side or delivery service to luxury recliners with tables.

Our deployment initiatives also apply to food and beverage enhancements.

We have expanded our menu of enhanced food and beverage products to include meals, healthy snacks, premium beers, wine and mixed drinks, and other gourmet products.

Our long-term growth strategy calls for investment across a spectrum of enhanced food and beverage formats, ranging from simple, less capital-intensive food and beverage design improvements to the development of new dine-in theatre options.

As a result of the COVID-19 pandemic, we have temporarily modified our food and beverage operations to include more simplified concession menus, cashless transactions technology, hand sanitizer and disinfecting wipes, and condiment and drink refills available by request, all in an effort to reduce the number of touch-

points between guests and employees.

We have also upgraded our Coca Cola Freestyle beverage machines to include a mobile app allowing guests to dispense drinks without the need to utilize the machine’s touch screen.

Our MacGuffins Bar and Lounges (“MacGuffins”) give us an opportunity to engage our legal age customers.

As of March 31, 2021, we offer alcohol in approximately 341 AMC theatres in the U.S.

markets and 243 theatres in our International markets and continue to explore expansion globally.

Loyalty Programs and Other Marketing

markets, we begin the process of engagement with AMC Stubs® our customer loyalty program which allows members to earn rewards, receive discounts and participate in exclusive members-only offerings and services.

It features a traditional paid tier called AMC Stubs Premiere™ for a $15 annual membership fee and a non-

paid tier called AMC Stubs Insider™.

It features a traditional paid tier called AMC Stubs Premiere™ for a $15 annual membership fee and a non-paid tier called AMC Stubs Insider™.

Both programs reward loyal guests for their patronage of AMC theatres.

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The portion of the admissions and food and beverage revenues attributed to the rewards is deferred as a reduction of admissions and food and beverage revenues and is allocated between admissions and food and beverage revenues based on expected member redemptions.

Upon redemption, deferred rewards are recognized as revenues along with associated cost of goods.

Upon redemption, deferred rewards are recorded as revenues along with associated cost of goods.

We estimate point breakage in assigning value to the points at the time of sale based on historical trends.

The program’s annual membership fee is allocated to the material rights for discounted or free products and services and is initially deferred, net of estimated refunds, and recognized as the rights are redeemed based on estimated utilization, over the one-year membership period in admissions, food and beverage, and other revenues.

A portion of the revenues related to a material right are deferred as a virtual rewards performance obligation using the relative standalone selling price method and are recognized as the rights are redeemed or expire.

AMC Stubs ® A-List is our monthly subscription-based tier of the AMC Stubs ® loyalty program.

The program’s annual membership fee is allocated to the material rights for discounted or free products and services and is initially deferred, net of estimated refunds, and recorded as the rights are redeemed based on estimated utilization, over the one-year membership period in admissions, food and beverage, and other revenues.

A portion of the revenues related to a material right are deferred as a virtual rewards performance obligation using the relative standalone selling price method and are recorded as the rights are redeemed or expire.

AMC Stubs® A-List is our monthly subscription-based tier of our AMC Stubs® loyalty program.

This program offers guests admission to movies at AMC up to three times per week including multiple movies per day and repeat visits to already seen movies for $19.95 to $23.95 per month depending upon geographic market.

AMC Stubs® A-List also includes premium offerings including IMAX®, Dolby Cinema™ at AMC, RealD, Prime and BigD.

AMC Stubs® A-List also includes premium offerings including IMAX®, Dolby Cinema™ at AMC, RealD, Prime and other proprietary PLF brands.

AMC Stubs® A-List members can book tickets on-line in advance and select specific seats at AMC Theatres with reserved seating.

Upon the temporary suspension of theatre operations due to COVID-19, all monthly A-List subscription charges were put on hold.

As we re-opened theatres during the three months ended September 30, 2020, A-List members had the option to reactivate their subscription, which restarted the monthly charge for the program.

As of September 30, 2020, we had more than 23,200,000 member households enrolled in AMC Stubs® A-List, AMC Stubs Premiere™ and AMC Stubs Insider™ programs, combined.

Upon the temporary suspension of theatre operations due to the COVID-19 pandemic, all monthly A-List subscription charges were put on hold.

As we reopened theatres, A-List members had the option to reactivate their subscription, which restarted the monthly charge for the program.

As of March 31, 2021, we had more than 23,400,000 member households enrolled in AMC Stubs® A-List, AMC Stubs Premiere™ and AMC Stubs Insider™ programs, combined.

Our AMC Stubs® members represented approximately 35% of AMC U.S.

markets attendance during the year ended March 31, 2021.

Our large database of identified movie-goers also provides us with additional insight into our customers’ movie preferences.

This enables us to have a larger, more personalized and targeted marketing effort.

In our International markets, we currently have loyalty programs in the major territories in which we operate.

The movie-goers can earn points for spending money at the theatre, and those points can be redeemed for tickets and concession items at a later date.

Odeon currently has more than 14,200,000 members in these various loyalty programs.

We currently have more than 11,400,000 members in our various International loyalty programs.

We are currently evaluating the Odeon loyalty programs to determine how best to reward our European movie-goers and heighten guest loyalty to drive additional attendance to Odeon theatres.

The programs have been paused during the suspension of operations at all of our theatres.

Our marketing efforts are not limited to our loyalty programs as we continue to improve our customer connections through our website and mobile apps and expand our online and movie offerings.

In select markets during 2019, we upgraded our mobile applications with the ability to order food and beverage offerings via our mobile applications while ordering tickets ahead of scheduled showtimes.

Also, in 2019, we launched AMC Theatres On Demand, a new service where members of the AMC Stubs ® loyalty program can rent or buy movies.

We believe our competitive advantage of a robust and easy-to-use online and mobile presence combined with an effective loyalty program that provides better market intelligence to anticipate customers’ future behavior should allow us to capture incremental share of both entertainment dollars and time.

Our marketing efforts are not limited to our loyalty program as we continue to improve our customer connections through our website and mobile apps and expand our online and movie offerings.

We continued to roll out our upgraded mobile applications across the U.S.

circuit with the ability to order food and beverage offerings via our mobile applications while ordering tickets ahead of scheduled showtimes.

Our mobile applications also include AMC Theatres On Demand, a service for members of the AMC Stubs® loyalty program that allows them to rent or buy movies.

In response to the COVID-19 pandemic, AMC’s robust online and mobile platforms in our U.S.

markets offer customers the safety and convenience of enhanced social distancing by allowing them to purchase tickets and concession items online, avoid the ticket line, and limit other high-touch interactions with AMC employees and other guests.

Online and mobile platforms are also available in our International markets.

Critical Accounting Policies and Estimates

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Assets are evaluated for impairment on an individual theatre basis, which management believes is the lowest level for which there are identifiable cash flows.

The fair value

of assets is determined as either the expected selling price less selling costs (where appropriate) or the present value of the estimated future cash flows, adjusted as necessary for market participant factors.

We recorded impairment charges primarily related to long-lived assets and definite lived intangible assets of $34.5 million and $133.8 million during the three and nine months ended September 30, 2020, respectively.

The fair value of assets is determined as either the expected selling price less selling costs (where appropriate) or the present value of the estimated future cash flows, adjusted as necessary for market participant factors.

We recorded impairment charges primarily related to long-lived assets and definite lived intangible assets of $106.5 million during the three months ended March 31, 2020.

No impairment charges were recorded during the three months ended March 31, 2021.

There are a number of estimates and significant judgments that are made by management in performing these impairment evaluations.

Such judgments and estimates include estimates of future attendance, revenues, rent relief, cost savings, cash flows, capital expenditures, and the cost of capital, among others.

Attendance is expected to be significantly below historical levels following reopening with limited seating capacities and social distancing guidelines and studios have postponed new film releases or moved them to the home video market, and movie release dates may continue to move in the future.

Attendance is expected to be significantly below historical levels for the first several months following reopening but is expected to increase as customers become more comfortable with the experience.

We believe we have used reasonable and appropriate business judgments.

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Given the nature of our business and our recent history, future impairments are possible and they may be material, based upon business conditions that are constantly changing and the competitive business environment in which we operate.

We recorded non-cash impairment of long-lived assets of $28.1 million on 49 theatres in the U.S.

markets with 527 screens (in Alabama, California, Colorado, Florida, Illinois, Indiana, Iowa, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Wisconsin, Wyoming) and $0 in the International markets during the three months ended September 30, 2020.

During the nine months ended September 30, 2020, we recorded non-cash impairment of long-lived assets of $109.5 million on 75 theatres in the U.S.

markets with 851 screens (in Alabama, Arkansas, California, Colorado, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming) and $9.9 million on 23 theatres in the International markets with 213 screens (in Germany, Italy, Spain, UK and Sweden), respectively.

During the three and nine months ended September 30, 2020, we recorded impairment losses related to definite-lived intangible assets of $6.4 million and $14.4 million, respectively.

In addition, we recorded an impairment loss of $0 and $7.2 million within investment expense (income), related to equity interest investments without a readily determinable fair value accounted for under the cost method during the three and nine months ended September 30, 2020, respectively.

At September 30, 2020 and March 31, 2020, we performed a quantitative impairment evaluation of our indefinite-lived intangible assets related to the AMC, Odeon and Nordic tradenames and recorded impairment charges of $4.5 million and $10.4 million related to Odeon tradename and $0.1 million and $2.5 million related to Nordic for the three and nine months ended September 30, 2020, respectively.

No impairment charges were recorded related to the AMC trade name for the three and nine months ended September 30, 2020.

During the three months ended March 31, 2020, we recorded non-cash impairment of long-lived assets of $81.4 million on 57 theatres in the U.S.

During the three months ended March 31, 2020, we recorded impairment losses related to definite-lived intangible assets of $8.0 million.

In addition, we recorded an impairment loss of $7.2 million within investment expense (income), related to equity interest investments without a readily determinable fair value accounted for under the cost method.

No non-cash impairment charges of long-lived assets were recorded during the three months ended March 31, 2021.

During the three months ended March 31, 2020, we performed a quantitative impairment evaluation of our indefinite-lived intangible assets related to the AMC, Odeon and Nordic trade names and recorded impairment charges of $5.9 million related to Odeon trade names and $2.4 million related to Nordic trade names during the three months ended March 31, 2020.

To estimate fair value of our indefinite-lived trade names, we employed a derivation of the Income Approach known as the Royalty Savings Method.

The Royalty Savings Method values an intangible asset by estimating the royalties saved through ownership of the asset.

At September 30, 2020 and March 31, 2020, we applied royalty rates of 0.5% for AMC and Odeon tradenames and 1.0% for Nordic to the related theatre revenues on an after-tax basis using effective tax rates.

At September 30, 2020, related cash flows were discounted at 13.0% for AMC and 14.0% for Odeon and Nordic, and at March 31, 2020, related cash flows were discounted at 12.5% for AMC and 14.0% for Odeon and Nordic.

We applied royalty rates of 0.5% for AMC and Odeon trade names and 1.0% for Nordic to the related theatre revenues on an after-tax basis using effective tax rates.

Related cash flows were discounted at 12.5% for AMC and 14.0% for Odeon and Nordic.

No impairment charges related to our indefinite-lived trade names were recorded during the three months ended March 31, 2021.

We evaluate the goodwill recorded at our two reporting units (Domestic Theatres and International Theatres) for impairment annually as of the beginning of the fourth fiscal quarter or more frequently as specific events or circumstances dictate.

Our market capitalization has been below carrying value since May 24, 2019.

In accordance with ASC 350-20-35-30, we performed an assessment to determine whether there were any events or changes in circumstances that would warrant an interim ASC 350 impairment analysis as of September 30, 2020, June 30, 2020, and March 31, 2020.

Based on the suspension of operations at all of our theatres on or before March 17, 2020 due to the COVID-19 pandemic during the first quarter of 2020, the suspension of operations during the second and third quarters of 2020 for a longer period of time and the further delay or cancellation of film releases than originally estimated, we performed the Step 1 quantitative goodwill impairment test as of September 30, 2020.

The impairment test for goodwill involves estimating the fair value of the reporting unit and comparing that value to its carrying value.

If the estimated fair value

of the reporting unit is less than its carrying value, the difference is recorded as a goodwill impairment charge, not to exceed the total amount of goodwill allocated to that reporting unit.

In performing the Step 1 quantitative goodwill impairment test as of September 30, 2020, we used an enterprise value approach to measure fair value of the reporting units.

The enterprise fair value of the Domestic Theatres and International Theatres reporting units was less than their carrying values and goodwill impairment charges of $151.2 million and $5.6 million, respectively, were recorded during the three months ended September 30, 2020 for our Domestic Theatres and International Theatres reporting units.

We determined the fair value of our Domestic Theatres and International Theatres reporting units by using the income approach for the enterprise valuation methodology, which utilizes discounted cash flows.

We did not weight any of the enterprise valuation methodology on the market approach.

We believe that using 100% income approach provided a more reasonable measurement of the enterprise value basis at September 30, 2020.

Due to the volatility and unreliability in the market multiples, the lack of standalone Domestic and International public theatre companies, and the temporary suspension of operations due to the COVID-19 pandemic and the current impact on Adjusted EBITDA, we did not believe that placing any weight on the market approach was appropriate for this valuation.

The income approach provides an estimate of fair value by measuring estimated annual cash flows over a discrete projection period and applying a present value discount rate to the cash flows.

The present value of the cash flows is then added to the present value equivalent of the residual value of the business to arrive at an estimated fair value of the reporting unit.

The residual value represents the present value of the projected cash flows beyond the discrete projection period.

The discount rates were determined using a rate of return deemed appropriate for the risk of achieving the projected cash flows.

There was considerable management judgment with respect to cash flow estimates and discount rates to be used in estimating fair value, which are classified as Level 3 in fair value hierarchy.

Key rates used in the income approach were as follows:

September 30, 2020

International

Income approach:

Weighted average cost of capital/discount rate

Long-term growth rate

Based on increases in our enterprise market capitalization from December 31, 2020 to March 31, 2021, we performed a qualitative impairment test to evaluate whether it is more likely than not that the fair value of our two reporting units is less than their respective carrying amounts as of March 31, 2021.

We concluded that it is not more likely than not that the fair value of our two reporting units have been reduced below their respective carrying amounts.

As a result, we concluded that an interim quantitative impairment test as of March 31, 2021 was not required.

At March 31, 2020, we performed the Step 1 quantitative goodwill impairment test and used an enterprise value approach to measure fair value of the reporting units.

The enterprise fair values of the Domestic Theatres and International Theatres reporting units were less than their carrying values and goodwill impairment charges of $1,124.9 million and $619.4 million, respectively, was recorded as of March 31, 2020 for our Domestic Theatres and International Theatres reporting units.

The quantitative goodwill impairment test performed as of March 31, 2020 indicated our estimated enterprise fair value to our market enterprise value implied a premium of 22.7%.

Key assumptions used in the quantitative impairment test performed at March 31, 2020 were as follows:

March 31, 2020

International

Income approach:

Weighted average cost of capital/discount rate

Long-term growth rate

While the fair values of our reporting units approximate their respective carrying values at the present time, the performance of the reporting units may require improvement in future periods to maintain this level.

Further declines in the operating performance of our Domestic and International Theatres, further declines in the fair value of our debt, further declines in the trading price of our Class A common stock, small changes in certain key input assumptions, and/or other events or circumstances could occur and could have a significant impact on the estimated fair values.

Examples of adverse events or circumstances that could change include (i) the ultimate duration of the COVID-19 pandemic and the prolonged temporary suspension of certain of our theatre operations as well as the behavior of the movie-going public as we resume operations;

(ii) an adverse change in macroeconomic conditions;

(iii) increased cost factors that have a negative effect on our earnings and cash flows;

(iv) negative or overall declining financial performance compared with our actual and projected results of relevant prior periods;

(v) further declines in the fair

value of our debt, and (vi) a further sustained decrease in our share price.

A future impairment could result for a portion of the goodwill, long-lived assets or intangible assets.

Any impairment charges that we may take in the future could be material to our results of operations and financial condition.

Based on the suspension of operations at all of our theatres on or before March 17, 2020 due to the COVID-19 pandemic during the first quarter of 2020, the suspension of operations during the second and third quarters of 2020, the temporary suspension of operations of certain of our International Theatres during the fourth quarter of 2020 again after operations had previously been resumed, and the further delay or cancellation of film releases than originally estimated, we performed the Step 1 quantitative goodwill impairment test as of December 31, 2020.

The impairment test for goodwill involves estimating the fair value of the reporting unit and comparing that value to our carrying value.

If the estimated fair value of the reporting unit is less than our carrying value, the difference is recorded as a goodwill impairment charge, not to exceed the total amount of goodwill allocated to that reporting unit.

In performing the Step 1 quantitative goodwill impairment test as of December 31, 2020, we used an enterprise value approach to measure fair value of the reporting units.

The enterprise fair value of the Domestic Theatres and International Theatres reporting units were less than their carrying values as of March 31, 2020 and September 30, 2020, and the fair value of the International Theatres reporting unit was less than its fair value as of December 31, 2020 and goodwill impairment charges of $1,276.1 million and $1,030.3 million, were recorded during the year ended December 31, 2020 for our Domestic Theatres and International Theatres reporting units, respectively.

Significant Events

Equity Distribution Agreement.

On September 24, 2020, we entered into an equity distribution agreement (the “Equity Distribution Agreement”) with Citigroup Global Markets Inc.

and Goldman Sachs & Co.

LLC, as sales agents (each, a “Sales Agent” and collectively, the “Sales Agents”), to sell up to 15.0 million shares of our Class A common stock, par value $0.01 per share, from time to time, through an “at-the-market” offering program (the “Offering”).

Subject to the terms and conditions of the Equity Distribution Agreement, the Sales Agents will use reasonable efforts consistent with their normal trading and sales practices, applicable law and regulations, and the rules of the New York Stock Exchange to sell the Class A common stock from time to time based upon our instructions for the sales, including any price, time or size limits specified by us.

Additional equity financing.

On December 11, 2020, we entered into an equity distribution agreement with Goldman Sachs & Co.

Riley Securities, Inc., as sales agents to sell up to 178.0 million shares of our Class A common stock, par value $0.01 per share, through an “at-the-market” offering program.

On January 25, 2021, we entered into equity distribution agreements with Goldman Sachs & Co.

Riley Securities, Inc., as sales agents to sell up to 50.0 million shares of our Class A common stock, par value $0.01 per share, through an “at-the-market” offering program.

During the three months ended March 31, 2021, we raised gross proceeds of approximately $596.9 million through our at-the-market offering for the remaining available shares under the equity distribution agreement of 187,066,293 shares of our Class A common stock and paid fees to the sales agents of approximately $14.9 million and other fees of $0.4 million.

We intend to use the net proceeds from the sale of the Class A common stock pursuant to the equity distribution agreement for general corporate purposes, which may include the repayment, refinancing, redemption or repurchase of existing indebtedness or working capital, capital expenditures and other investments.

During September 2020 and October 2020, we raised gross proceeds of approximately $2.9 million and $53.2 million, respectively, through our at-the-market offering of approximately 0.6 million and 14.4 million shares, respectively, of our Class A common stock and paid fees to the Sales Agents of approximately $0.1 million and $1.3 million, respectively.

In addition, we entered into an additional Equity Distribution Agreement with the Sales Agents, dated October 20, 2020, on substantially the same terms as the Equity Distribution Agreement, to sell 15.0 million additional shares of Class A common stock.

As of the October 30, 2020 settlement date, we have raised additional gross proceeds of approximately $33.8 million through the sale of approximately 11.8 million shares of our Class A common stock under the additional Equity Distribution Agreement and paid fees to the Sales Agents of approximately $0.8 million.

See Note 13—Subsequent Event in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for information regarding the additional at-the-market offerings of 43 million shares of the Company’s Class A common stock.

Baltics’ theatre sale agreement.

On August 28, 2020, we entered into an agreement to sell our equity interest in Forum Cinemas OU, which consists of nine theatres located in the Baltics’ region (Latvia, Lithuania and Estonia) and is included in our International markets reportable segment, for total consideration of approximately €77.25 million, including cash of approximately €64.35 million or $76.6 million prior to any transaction costs.

On August 28, 2020, we entered into an agreement to sell our equity interest in Forum Cinemas OU, which consists of nine theatres located in the Baltics’ region (Latvia, Lithuania and Estonia) and was included in our International markets reportable segment, for total consideration of approximately €77.25 million, including cash of approximately €64.35 million or $76.6 million prior to any transaction costs.

This transaction was undertaken by us to further increase our liquidity and strengthen our balance sheet at a transaction multiple that demonstrates that market participants ascribe positive value to the business.

The completion of the sale will take place in several steps and is contingent upon clearance from each regulatory competition council in each country.

We received $37.5 million (€31.53 million) cash consideration upon entering into the sale agreement on August 28, 2020, transferred an equity interest of 49% in Forum Cinemas OU to the purchaser and recognized a noncontrolling interest of $34.9 million in total equity (deficit).

Transaction costs of $1.0 million and net gain of $2.8 million related to the sale of 49% equity interest were recorded in additional paid-in capital during the three and nine months ended September 30, 2020.

The carrying amounts of the major classes of assets and liabilities included as part of the disposal group that were previously included in the International markets reportable segment were;

We received $37.5 million (€31.53 million) cash consideration upon entering into the sale agreement on August 28, 2020, transferred an equity interest of 49% in Forum Cinemas OU to the purchaser and recorded an initial noncontrolling interest of $34.9 million in total equity (deficit).

During the three months ended March 31, 2021 and the three months ended December 31, 2020, we received cash consideration for the remaining interest in Estonia and Latvia of $4.1

million (€3.4 million) and $6.4 million (€5.4 million), respectively.

Transaction costs of $1.4 million and net gain of $1.2 million related to the sale of 49% equity interest of Lithuania and Estonia and the 100% disposal of Latvia were recorded in additional paid-in capital during the six months ended December 31, 2020.

Additional transaction costs of $0.1 million and net gain of $0.3 million related to the sale of 51% equity interest of Estonia were recorded in additional paid-in capital during the three months ended March 31, 2021.

The transaction costs and net gain recorded in additional paid-in capital will be recognized in earnings when the remaining 51% interest in Lithuania is disposed.

At March 31, 2021, the carrying amounts of the major classes of assets and liabilities included as part of the disposal group that were previously included in the International markets reportable segment were;

goodwill of $36.3 million, property, net, of $9.1 million, operating lease right-of-use assets, net of $12.4 million, and current and long-term operating lease liabilities of $1.2 million and $11.4 million, respectively.

The remaining cash consideration is payable upon completion of the sale of the remaining 51% equity interest, which is expected to occur in three separate transactions by country following competition council clearance in each country.

At September 30, 2020, our noncontrolling interest of 49% in Forum Cinemas was $34.7 million.

We estimate that the sale of Forum Cinemas will be completed in 2021.

Exchange Offers.

On July 31, 2020, we closed our previously announced Exchange Offer for our Existing Senior Subordinated Notes for new Second Lien Notes due 2026 and reduced the principal amount of the Company’s total debt by approximately $555 million, which represented approximately 23.9% of the previously outstanding amount of the Company’s subordinated notes.

We raised $300 million in additional cash from the issuance of First Lien Notes due 2026, prior to deducting discounts of $30.0 million and deferred financing costs paid to lenders of $6.0 million.

Additionally, certain holders of the Company’s Existing Senior Subordinated Notes that agreed to backstop the offering of $200 million of the Company’s First Lien Notes due 2026 received five million Class A common shares, or 4.6% of AMC’s outstanding shares on July 31, 2020, worth $20.2 million at the market closing price on July 31, 2020.

The closing of the Exchange Offer also allowed us to extend maturities on approximately $1.7 billion of debt to 2026, most of which was maturing in 2024 and 2025 previously.

Interest due for the coming 12 to 18 months on the Second Lien Notes due 2026 is expected to be paid all or in part on an in-kind basis, thereby generating a further near-term cash savings for us of between approximately $120 million and $180 million.

See Note 6—Corporate Borrowings in the

Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information.

We performed an assessment on a lender by lender basis to identify certain lenders that met the criteria for troubled debt restructuring (“TDR”) under ASC 470-60, Troubled Debt Restructurings by Debtors (“ASC 470-60”) as we were experiencing financial difficulties and the lenders granted us a concession.

The portion of the loans that did not meet the assessment of TDR under ASC 470-60 were treated as modifications.

We accounted for the exchange of approximately $1,782.5 million principal amount of our Existing Senior Subordinated Notes for approximately $1,289.1 million principal amount of the Second Lien Notes due 2026 as TDR.

We accounted for the exchange of the remaining approximately $235.0 million principal amount of our Existing Senior Subordinated Notes for approximately $173.2 million principal amount of the Second Lien Notes due 2026 as a modification of debt as the lenders did not grant a concession and the difference between the present value of the old and new cash flows was less than 10%.

The TDR and modification did not result in a gain recognition and we established new effective interest rates based on the carrying value of the Existing Subordinated Notes and recorded the new fees paid to third parties of approximately $36.3 million and $39.1 million in other expense, during the three and nine months ended September 30, 2020, respectively.

We realized significant cancellation of debt income (“CODI”) in connection with our debt restructuring.

As a result of such CODI, we estimate a significant portion of our net operating losses and tax credits will be eliminated as a result of tax attribute reductions.

Any loss of tax attributes as a result of such CODI may adversely affect our cash flows and therefore our ability to service our indebtedness.

The remaining cash consideration of approximately $31.9 million (€26.3 million) was paid upon completion of the sale of the remaining 51% equity interest in Lithuania on May 6, 2021.

At March 31, 2021, our noncontrolling interest of 49% in Lithuania was $22.4 million in net assets.

Operating Results

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

(In millions)

12 unchanged sentences

Operating costs and expenses

Operating income (loss)

Operating loss

Other expense (income):

4 unchanged sentences

Non-cash NCM exhibitor service agreement

Equity in (earnings) loss of non-consolidated entities

Equity in loss of non-consolidated entities

Investment expense (income)

Total other expense, net

Loss before income taxes

Net loss before income taxes

Income tax provision (benefit)

Net income attributable to noncontrolling interests

Net loss attributable to noncontrolling interests

Net loss attributable to AMC Entertainment Holdings, Inc.

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

Operating Data:

Screen additions

Screen acquisitions

Screen dispositions

1 unchanged sentence

Average screens (1)

Number of screens operated

Number of theatres operated

10 unchanged sentences

Three Months Ended

September 30,

(In millions)

12 unchanged sentences

Operating costs and expenses

Operating income (loss)

Operating loss

Other expense (income):

4 unchanged sentences

Non-cash NCM exhibitor service agreement

Equity in (earnings) loss of non-consolidated entities

Equity in loss of non-consolidated entities

Investment expense (income)

Total other expense (income), net

Earnings (loss) before income taxes

Total other expense, net

Net loss before income taxes

Income tax provision (benefit)

Net earnings (loss)

net income attributable to noncontrolling interests

Net earnings (loss) attributable to AMC Entertainment Holdings, Inc.

net loss attributable to noncontrolling interests

Net loss attributable to AMC Entertainment Holdings, Inc.

International Markets

2 unchanged sentences

Three Months Ended

September 30,

Segment Operating Data:

Screen additions

Screen acquisitions

Screen dispositions

1 unchanged sentence

Average screens (1)

Number of theatres operated

Total number of circuit screens

Total number of circuit theatres

Screens per theatre

Attendance (in thousands) (1)

(1) Includes consolidated theatres only and excludes screens offline due to construction and temporary suspension of operations as consequence of the COVID-19 pandemic.

International Markets

Nine Months Ended

September 30,

(In millions)

Food and beverage

Other theatre

Total revenues

Operating Costs and Expenses

Film exhibition costs

Food and beverage costs

Operating expense

General and administrative expense:

Merger, acquisition and other costs

Depreciation and amortization

Impairment of long-lived assets, definite and indefinite-lived intangible assets and goodwill

Operating costs and expenses

Operating income (loss)

Other expense (income):

Other expense (income)

Interest expense:

Corporate borrowings

Finance lease obligations

Non-cash NCM exhibitor service agreement

Equity in (earnings) loss of non-consolidated entities (1)

Investment expense (income)

Total other expense (income), net

Earnings (loss) before income taxes

Income tax provision

Net earnings (loss)

net income attributable to noncontrolling interests

Net earnings (loss) attributable to AMC Entertainment Holdings, Inc.

International Markets

Nine Months Ended

September 30,

Segment Operating Data:

Screen additions

Screen acquisitions

Screen dispositions

Construction openings (closures), net

Average screens (1)

Number of screens operated

Number of theatres operated

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Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Adjusted EBITDA decreased $491.0 million during the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

Adjusted EBITDA in U.S.

markets decreased $375.4 million, primarily due to the decrease in attendance largely attributable to the temporary suspension of operations as consequence of the COVID-19 pandemic, partially offset by decreases in operating expenses due to the decrease in attendance, rent and general and administrative expenses.

Adjusted EBITDA in International markets decreased $115.6 million primarily due to the decreases in attendance, partially offset by decreases in operating expenses due to the decrease in attendance, decreases in rent, and increases in governmental assistance for COVID-19.

Adjusted EBITDA decreased $1,174.0 million during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

Adjusted EBITDA decreased $297.8 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Adjusted EBITDA in U.S.

markets decreased $900.3 million, primarily due to the decrease in attendance largely attributable to the temporary suspension of operations as a consequence of the COVID-19 pandemic, partially offset by a decrease in operating expenses due to the decrease in attendance, a decrease in rent and a decrease in general and administrative expenses.

Adjusted EBITDA in International markets decreased $273.7 million primarily due to the decreases in attendance, partially offset by a decrease in operating expenses due to the decrease in attendance, decreases in rent and general and administrative expenses and increases in governmental assistance for COVID-19.

markets decreased $196.6 million, primarily due to the decrease in attendance largely attributable to the limited or temporary suspension of operations as consequence of the COVID-19 pandemic, the increase in general and administrative expense:

other and the decrease in cash distributions from equity method investees, partially offset by decreases in operating expenses due to the decrease in attendance, rent, and increases in governmental assistance for COVID-19.

Adjusted EBITDA in International markets decreased $101.2 million primarily due to the decreases in attendance largely attributable to the limited or temporary suspension of operations as consequence of the COVID-19 pandemic, partially offset by decreases in operating expenses due to the decrease in attendance, decreases in rent, and increases in governmental assistance for COVID-19.

The following tables set forth our Adjusted EBITDA by reportable operating segment and our reconciliation of Adjusted EBITDA:

Three Months Ended

Nine Months Ended

September 30,

Adjusted EBITDA (In millions)

March 31, 2021

March 31, 2020

International markets

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Three Months Ended

Nine Months Ended

September 30,

(In millions)

Net loss attributable to AMC Entertainment Holdings, Inc.

March 31, 2021

March 31, 2020

Income tax provision (benefit)

2 unchanged sentences

Impairment of long-lived assets, definite and indefinite-lived intangible assets and goodwill (1)

Certain operating expenses (3)

Equity in (earnings) loss of non-consolidated entities (4)

Certain operating expense (2)

Equity in loss of non-consolidated entities

Cash distributions from non-consolidated entities (3)

2 unchanged sentences

Other expense (income) (5)

Other non-cash rent (8)

Other non-cash rent expense (benefit) (6)

General and administrative — unallocated:

2 unchanged sentences

Adjusted EBITDA

(1) For information on income tax provision, see Note 8 — Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q.

(2) During the three months ended September 30, 2020, we recorded goodwill non-cash impairment charges of $151.2 million and $5.6 million related to the enterprise fair values of our Domestic Theatres and International Theatres reporting units, respectively.

During the three months ended September 30, 2020, we recorded non-cash impairment charges related to our long-lived assets of $28.1 million on 49 theatres in the U.S.

markets with 527 screens which were related to property, net, operating lease right-of-use assets, net, and other long-term assets and $0 million in the International markets.

We recorded non-cash impairment charges of $6.4 million related to our definite-lived intangible assets in the Domestic Theatres reporting unit and indefinite-lived intangible assets of $4.5 million and $0.1 million related to the Odeon and Nordic tradenames, respectively, in the International Theatres reporting unit during the three months ended September 30, 2020.

During the nine months ended September 30, 2020, we recorded goodwill non-cash impairment charges of $1,276.1 million and $625.0 million related to the enterprise fair value of our Domestic Theatres and International Theatres reporting units, respectively.

During the nine months ended September 30, 2020, we recorded non-cash impairment charges related to our long-lived assets of $109.5 million on 75 theatres in the U.S.

markets with 851 screens which were related to property, net, operating lease right-of-use assets, net and other long-term assets and $9.9 million on 23 theatres in the International markets with 213 screens which were related to property, net and operating lease right-of-use assets, net.

We recorded non-cash impairment charges related to our indefinite-lived intangible assets of $10.4 million and $2.5 million related to the Odeon and Nordic tradenames, respectively, during the nine months ended September 30, 2020.

(1) During the three months ended March 31, 2020, we recorded non-cash impairment charges of $1,124.9 million and $619.4 million related to the enterprise fair values of our Domestic Theatres and International Theatres reporting units, respectively.

We recorded non-cash impairment charges related to our long-lived assets of $81.4 million on 57 theatres in the U.S.

markets with 658 screens which were related to property, net, operating lease right-of-use assets, net and other long-term assets and $9.9 million on 23 theatres in the

International markets with 213 screens which were related to property, net and operating lease right-of-use assets, net, during the three months ended March 31, 2020.

We recorded non-cash impairment charges related to our indefinite-lived intangible assets of $5.9 million and $2.4 million related to the Odeon and Nordic trade names, respectively, during the three months ended March 31, 2020.

We also recorded non-cash impairment charges of $8.0 million related to our definite-lived intangible assets.

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We have excluded these items as they are non-cash in nature or are non-operating in nature.

(4) Equity in (earnings) loss of non-consolidated entities was primarily due to equity in loss from DCIP of $7.5 million for the three months ended September 30, 2020, compared to equity in earnings from DCIP of $6.5 million for the three months ended September 30, 2019.

Equity in (earnings) loss of non-consolidated entities

was primarily due to equity in loss from DCIP of $19.1 million for the nine months ended September 30, 2020, compared to equity in earnings from DCIP of $21.1 million for the nine months ended September 30, 2019.

(3) Includes U.S.

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(4) Attributable EBITDA includes the EBITDA from equity investments in theatre operators in certain International markets.

See below for a reconciliation of our equity (earnings) loss of non-consolidated entities to attributable EBITDA.

See below for a reconciliation of our equity in (earnings) loss of non-consolidated entities to attributable EBITDA.

Because these equity investments are in theatre operators in regions where we hold a significant market share, we believe attributable EBITDA is more indicative of the performance of these equity investments and management uses this measure to monitor and evaluate these equity investments.

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

(In millions)

Equity in (earnings) loss of non-consolidated entities

Equity in (earnings) loss of non-consolidated entities excluding International theatre joint ventures

Equity in earnings (loss) of International theatre joint ventures

Income tax provision (benefit)

March 31, 2021

March 31, 2020

Equity in loss of non-consolidated entities

Equity in loss of non-consolidated entities excluding International theatre joint ventures

Equity in loss of International theatre joint ventures

Income tax benefit

Investment income

Interest expense

Depreciation and amortization

1 unchanged sentence

Attributable EBITDA

(7) For the three months ended September 30, 2020, we recorded increases in other expense related to financing fees of $36.3 million due to the Exchange Offers, increases in other expense due to the change in fair value of our derivative liability of $84.2 million for the embedded conversion feature in our Convertible Notes due 2026, increases in other expense due to the change in fair value of the Company’s derivative asset of $14.4 million for the contingent call option related to the Class B common stock purchase and cancellation agreement, and increases in other expense for credit losses due to the contingent lease guarantees of $6.1 million.

For the nine months ended September 30, 2020, we recorded increases in other expense related to financing fees of $39.1 million due to the Exchange Offers, increases in other expense due to the change in fair value of our derivative liability of $104.3 million for the embedded conversion feature in our Convertible Notes due 2026, increases in other expense due to the change in fair value of our derivative asset of $20.1 million for the contingent call option related to the Class B common stock purchase and cancellation agreement, and increase in other expense for the credit losses related to the contingent lease guarantees of $15.3 million.

For the nine months ended September 30, 2019, we recorded a loss on repayment of indebtedness of $16.6 million.

See Note 1 —Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information related to other expense (income).

(8) Reflects amortization expense for certain intangible assets reclassified from depreciation and amortization to rent expense due to the adoption of ASC 842 and deferred rent benefit related to the impairment of right-of-use operating lease assets.

(5) Other expense (income) for the three months ended March 31, 2021 included foreign currency transaction gains of $3.8 million and income related to contingent lease guarantees of $2.0 million, partially offset by financing fees of $1.0 million primarily related to deferred financing cost write-off for the Odeon revolving credit facility.

During the three months ended March 31, 2020, we recorded a loss of $20.1 million for the fair value adjustment of the derivative asset related to the Convertible Notes due 2026, credit losses related to contingent lease guarantees of $5.3 million, and foreign currency transaction losses of $2.0 million, partially offset by a gain of $0.5 million for the fair value adjustment of the derivative liability related to the Convertible Notes due 2026.

(6) Reflects amortization expense for certain intangible assets reclassified from depreciation and amortization to rent expense due to the adoption of ASC 842, Leases and deferred rent benefit related to the impairment of right-of-use operating lease assets.

(7) Merger, acquisition and other costs are excluded as they are non-operating in nature.

11 unchanged sentences

Segment Information

Our historical results of operations for the three and nine months ended September 30, 2020 and September 30, 2019, respectively, reflect the results of operations for our two Theatrical Exhibition reportable segments, U.S.

Our historical results of operations for the three months ended March 31, 2021 and March 31, 2020 reflect the results of operations for our two Theatrical Exhibition reportable segments, U.S.

markets and International markets.

Results of Operations— For the Three Months Ended September 30, 2020 Compared to the Three Months Ended September 30, 2019

Results of Operations— For the Three Months Ended March 31, 2021 Compared to the Three Months Ended March 31, 2020

Condensed Consolidated Results of Operations

Total revenues decreased 90.9%, or $1,197.3 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

Admissions revenues decreased 92.1%, or $734.4 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due a 92.5% decrease in attendance.

The decrease in attendance was primarily due to the temporary suspension of operations at all our theatres in U.S.

markets and International markets on or before March 17, 2020.

We reopened the majority of our Domestic and International Theatres during the three months ended September 30, 2020.

Our average screens operated during the three months ended September 30, 2020 declined by 62.3% from the prior year.

Food and beverage revenues decreased 93.1%, or $390.9 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to the decrease in attendance.

Total other theatre revenues decreased 72.4%, or $72.0 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to decreases in ticket fees, income from gift cards and package tickets and screen advertising due to the decrease in attendance.

Total revenues decreased 84.2%, or $793.2 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Admissions revenues decreased 87.8%, or $498.5 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to an 88.8% decrease in attendance, partially offset by an 8.9% increase in average ticket price.

The decrease in attendance was primarily due to the COVID-19 pandemic which prompted film distributors to delay or alternatively distribute films, deterred customers from attending our theatres and resulted in the temporary suspension of operations at our theatres in U.S.

markets and International markets.

The increase in average ticket price was primarily due to strategic pricing initiatives put in place over the prior year, an increase in foreign currency translation rates and lower frequency on our A-List subscription program, partially offset by decreases in attendance for 3D premium content.

Food and beverage revenues decreased 82.6%, or $238.0 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to the decrease in attendance.

Food and beverage per patron increased 54.8% from $4.76 to $7.37 due to several contributing factors including increases in units sold per transaction and increases in the percentage of patrons making purchases due to higher child percentages, private theatre rentals, an increase in dine-in percentages, mobile orders along with price increases, reduced loyalty program penetration and the increase in foreign currency translation rates.

Total other theatre revenues decreased 66.4%, or $56.7 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to decreases in ticket fees, income from gift cards and package tickets and screen advertising due to the decrease in attendance, partially offset by increases in foreign currency translation rates.

Operating costs and expenses.

Operating costs and expenses decreased $501.1 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019 primarily due to the decrease in attendance and a decrease in average screens operated.

Film exhibition costs decreased 93.6%, or $390.2 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to the decrease in admissions revenues.

As a percentage of admissions revenues, film exhibition costs were 42.3% for the three months ended September 30, 2020 and were 52.3% for the three months ended September 30, 2019.

The decrease in film exhibition cost percentage was due to an increase in the number of second-run films exhibited in the current period where the film rental terms are much lower than film rental terms for first-run films.

Food and beverage costs decreased 86.9%, or $58.4 million, during the three months ended September 30,

2020 compared to the three months ended September 30, 2019.

Operating costs and expenses decreased $2,351.5 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to declines in the impairment of long-lived assets of $1,851.9 million and declines in operating expenses due to the decrease in attendance and a decrease in average screens operated, partially offset by an increase in foreign currency translation rates.

Film exhibition costs decreased 91.9%, or $249.7 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to the decrease in admissions revenues.

As a percentage of admissions revenues, film exhibition costs were 31.7% for the three months ended March 31, 2021 and 47.8% for the three months ended March 31, 2020.

Food and beverage costs decreased 81.8%, or $43.7 million, during the three months ended March 31, 2021

compared to the three months ended March 31, 2020.

The decrease in food and beverage costs was primarily due to the decrease in food and beverage revenues.

As a percentage of food and beverage revenues, food and beverage costs were 30.2% for the three months ended September 30, 2020 and were 16.0% for the three months ended September 30, 2019.

Food and beverage costs included $3.2 million of charges for obsolete inventory during the three months ended September 30, 2020 due to the suspension of theatre operations.

As a percentage of revenues, operating expense was not meaningful for the three months ended September 30, 2020 due to the low level of revenues and the fixed nature of certain operating expenses and was 31.8% for the three months ended September 30, 2019.

Rent expense decreased 10.2%, or $24.4 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019 due primarily to cash rent abatements from landlords, declines in deferred rent expense due to the impairment of right of use assets in calendar 2019 and 2020, theatre closures and declines in common area maintenance charges.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases.

As a percentage of food and beverage revenues, food and beverage costs were 19.4% for the three months ended March 31, 2021 and 18.5% for the three months ended March 31, 2020.

Food and beverage costs included $1.3 million and $2.7 million of charges for obsolete inventory during the three months ended March 31, 2021 and 2020 respectively, due to the suspension of theatre operations.

As a percentage of revenues, operating expense was 121.2% for the three months ended March 31, 2021 and 37.9% for the three months ended March 31, 2020.

Rent expense decreased 19.2%, or $45.7 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020 due primarily to cash rent abatements from landlords, declines in deferred rent expense due to the impairment of right-of-use assets in calendar 2019 and 2020, and theatre closures, partially offset by the increase in foreign currency translation rates.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases and rent obligations of approximately $473 million that have been deferred to 2021 and future years as of March 31, 2021.

Merger, acquisition and other costs.

Merger, acquisition and other costs were $1.0 million during the three months ended September 30, 2020 compared to $4.7 million during the three months ended September 30, 2019, primarily due to a decline in merger related activities.

Other general and administrative expense decreased 12.8% or $4.8 million during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to decreases in bonus expense and decreases in salaries as a result of our furlough program that began in March of 2020 and ended in September of 2020 and lower legal fees, partially offset by higher expense related to projects in development.

Merger, acquisition and other costs were $6.7 million during the three months ended March 31, 2021 compared to $0.2 million during the three months ended March 31, 2020, primarily due to increases in legal and professional costs related to strategic contingent planning.

Other general and administrative expense increased 56.0% or $18.6 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to increases in bonus expense, stock-based compensation expense as a result of the modification and acceleration of vesting of awards during the current and prior year and increases in non-qualified deferred compensation expense due to increases in the fair values of related investments.

See Note 7—Stockholders’ Equity in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about stock-based compensation expense.

Depreciation and amortization.

Depreciation and amortization increased 10.2% or $11.4 million during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to recent capital expenditures, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and 2020.

Depreciation and amortization decreased 6.9% or $8.4 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to lower depreciation expense on theatres impaired in calendar 2019 and 2020, partially offset by the increase in foreign currency translation rates.

Impairment of long-lived assets, indefinite-lived intangible assets and goodwill.

During the three months ended September 30, 2020, we recognized non-cash impairment losses of $28.1 million on 49 theatres in the U.S.

markets with 527 screens (in Alabama, California, Colorado, Florida, Illinois, Indiana, Iowa, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Wisconsin, and Wyoming) which were related to property, net, operating lease right-of-use assets, net and other long-term assets and $0 in the International markets.

We performed a quantitative impairment evaluation of our indefinite-lived intangible assets as of September 30, 2020 related to the AMC, Odeon and Nordic tradenames and recorded impairment charges of $4.5 million and $0.1 million related to Odeon and Nordic tradenames, respectively, during the three months ended September 30, 2020.

In addition, we performed a quantitative impairment evaluation of our definite-lived intangible assets as of September 30, 2020 and recorded impairment charge of $6.4 million.

We performed a quantitative impairment evaluation of our goodwill as of September 30, 2020 and recorded impairment charges of $151.2 million and $5.6 million during the three months ended September 30, 2020 for our Domestic Theatres and International Theatres reporting units, respectively.

During the three months ended March 31, 2020, we recognized non-cash impairment losses of $81.4 million on 57 theatres in the U.S.

markets with 658 screens (in Alabama, Arkansas, California, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming) which were related to property, net, operating lease right-of-use assets, net and other long-term assets and $9.9 million on 23 theatres in the International markets with 213 screens (in Germany, Italy, Spain, Sweden, and UK), which were related to property, net and operating lease right-of-use assets, net.

No non-cash impairment charges of long-lived assets were recorded during the three months ended March 31, 2021.

We performed quantitative impairment evaluations of our indefinite-lived intangible assets as of March 31, 2020 related to the AMC, Odeon and Nordic trade names and recorded impairment charges of $8.3 million related to the Odeon and Nordic trade names during the three months ended March 31, 2020.

In addition, we performed quantitative impairment evaluations of our definite-lived intangible assets as of March 31, 2020 and recorded impairment charges of $8.0 million in U.S.

No impairment charges related to our indefinite-lived intangible assets were recorded during the three months ended March 31, 2021.

We performed quantitative impairment evaluations of our goodwill as of March 31, 2020 and recorded impairment charges of $1,124.9 million and $619.4 million during the three months ended March 31, 2020 for our Domestic Theatres and International Theatres reporting units, respectively.

No goodwill impairment charges were recorded during the three months ended March 31, 2021.

Other expense (income).

Other expense of $125.0 million during the three months ended September 30, 2020 was primarily due to third party expenses of $36.3 million related to the restructuring of our debt, the increase in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026 of $89.9 million, the decrease in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $5.9 million, estimated credit losses related to contingent lease guarantees of $6.1 million, partially offset by international government assistance related to COVID-19 of $13.5 million.

During the three months ended September 30, 2019, other income of $1.3 million was primarily due to $8.5 million of income related to the increase in the fair value our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement, partially offset by $5.7 million of expense related to the increase in the fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026.

See Note 1—The Company and Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about the components of other expense.

Other income of $17.4 million during the three months ended March 31, 2021 was primarily due to $12.4 million in government assistance related to COVID-19, foreign currency transaction gains of $3.8 million, and estimated credit income of $2.0 million related to contingent lease guarantees, partially offset by $1.0 million of financing fees related to the write-off of unamortized deferred charges on the Odeon revolver.

Other expense of $26.9 million during the three months ended March 31, 2020 was primarily due to the decrease in fair value of our

derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $20.1 million and estimated credit losses related to contingent lease guarantees of $5.3 million, partially offset by income due to a decrease in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2024 of $0.5 million.

See Note 1—Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about the components of other expense.

Interest expense.

Interest expense increased $9.2 million to $94.3 million for the three months ended September 30, 2020 compared to $85.1 million during the three months ended September 30, 2019 primarily due to the issuance of $500 million of 10.5% First Lien Notes due 2025 on April 24, 2020, borrowings under revolving credit facilities of approximately $325.0 million during the three months ended March 31, 2020 that remained outstanding as of September 30, 2020 and the issuance of $300 million of 10.5% First Lien Notes due 2026 on July 31, 2020, partially offset by a reduction in the effective interest rate on $2,017.5 million aggregate principal amount of our senior subordinated notes exchanged for $1,462.3 million aggregate principal amount of second lien notes from 6.37% to 4.46% on July 31, 2020.

See Note 6—Corporate Borrowings in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about our indebtedness.

Equity in (earnings) loss of non-consolidated entities.

Equity in (earnings) loss of non-consolidated entities were $10.6 million for the three months ended September 30, 2020 compared to $(7.5) million for the three months ended September 30, 2019.

The decrease in equity in earnings of $18.1 million was primarily due to decreases in equity in earnings from DCIP of $14.0 million as a result of accelerated depreciation charges for digital projectors during the three months ended September 30, 2020 and lower revenues due to the closure of theatres.

Investment income.

Investment income was $4.1 million for the three months ended September 30, 2020 compared to investment income of $0.5 million for the three months ended September 30, 2019.

Interest expense increased $80.0 million to $162.8 million for the three months ended March 31, 2021 compared to $82.8 million during the three months ended March 31, 2020 primarily due to:

● the issuance of $500 million of 10.5% First Lien Notes due 2025 on April 24, 2020;

● borrowings under revolving credit facilities of approximately $325.1 million during the three months ended March 31, 2020 that remained outstanding until February and March 2021;

● the issuance of $300 million of 10.5% First Lien Notes due 2026 on July 31, 2020;

● the issuance of $100 million of 15%/17% Cash/PIK/Toggle First Lien Notes due 2026 on January 15, 2021;

● the conversion of $600.0 million 2.95% Convertible Notes due 2026 to 44,422,860 Class A common shares on January 27, 2021 that resulted in the write-off to interest expense of $70.0 million of unamortized discount and deferred charges at the date of conversion following the guidance in ASC 815-15-40-1:

● the issuance of £140.0 million and €296.0 million 10.75%/11.25%/PIK Term Loans due 2023 on February 19, 2021,

partially offset by:

● a reduction in the effective interest rate from 6.37% to 4.46% on $2,017.5 million aggregate principal amount of our senior subordinated notes exchanged for $1,462.3 million aggregate principal amount of second lien notes on July 31, 2020;

● the extinguishment of $104.5 million of Second Lien Notes due 2026 on December 14, 2020 in exchange for common shares;

● the repayment of £89.7 million and €12.8 million outstanding amounts under the Odeon revolver on February 19, 2021;

● a decline in interest rates related to borrowings under the Senior Secured Term Loan due 2026;

● the repayment in March 2021 of $212.2 million under the Senior Secured Revolving Credit Facility.

See Note 6—Corporate Borrowings and Finance Lease Obligations in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about our indebtedness.

Equity in loss of non-consolidated entities.

Equity in loss of non-consolidated entities was $2.8 million for the three months ended March 31, 2021 compared to $2.9 million for the three months ended March 31, 2020.

The decrease in equity in loss of $0.1 million was primarily due to decreases in equity in losses from DCIP of $1.9 million partially offset by increases in equity losses on other investments of $1.8 million.

Investment (income) expense.

Investment income was ($2.0) million for the three months ended March 31, 2021 compared to investment expense of $9.4 million for the three months ended March 31, 2020.

Investment income includes increases in our non-qualified deferred compensation plan investments during the three months ended March 31, 2021.

Investment expense includes impairment charges of $7.2 million related to investments and declines in our non-qualified deferred compensation plan investments during the three months ended March 31, 2020.

Income tax provision (benefit).

The income tax provision (benefit) was $4.6 million and $(0.2) million for the three months ended September 30, 2020 and September 30, 2019, respectively.

See Note 8 — Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.

Net loss was $905.8 million and $54.8 million during the three months ended September 30, 2020 and September 30, 2019, respectively.

Net loss during the three months ended September 30, 2020 compared to net loss for the three months ended September 30, 2019 was negatively impacted by the decrease in attendance as a result of the temporary suspension of operations at all our theatres on or before March 17, 2020, increased impairment charges of long-lived assets, indefinite-lived intangible assets and goodwill, increased depreciation expense, declines in equity in earnings of non-consolidated entities and declines in other income, increased interest expense and an increase in translation rates partially offset by reduced operating expenses, lower amounts of rent expense, declines in general and administrative expenses and increases in investment income.

The income tax provision (benefit) was ($6.8) million and $68.2 million for the three months ended March 31, 2021 and March 31, 2020, respectively.

The decrease in income tax expense is primarily due to the recording of International valuation allowances against deferred tax assets held in Spain of $40.1 million and Germany of $33.1 million during the three months ended March 31, 2020.

See Note 8 — Income Taxes in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information.

Net loss was $567.2 million and $2,176.3 million during the three months ended March 31, 2021 and

March 31, 2020, respectively.

Net loss during the three months ended March 31, 2021 compared to net loss for the three months ended March 31, 2020 was positively impacted by the decline in impairment charges related to long-lived assets, definite and indefinite-lived intangible assets and goodwill, decreased depreciation expense, lower amounts of rent expense, increases in other income, increases in investment income and decreases in income tax provision, partially offset by the decrease in attendance as a result of the COVID-19 pandemic, higher interest expense and general and administrative costs, and increases in foreign currency translation rates.

Theatrical Exhibition–U.S.

Total revenues decreased 95.1%, or $923.4 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

Admissions revenues decreased 96.8%, or $559.7 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to a 96.8% decrease in attendance.

The decrease in attendance was due to the temporary suspension of operations at all our theatres in U.S.

markets on or before March 17, 2020.

We reopened the majority of our Domestic Theatres during the three months ended September 30, 2020.

Our average screens operated during the three months ended September 30, 2020 declined by 72.0% from the prior year.

Food and beverage revenues decreased 96.8%, or $316.5 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, due to the decrease in attendance.

Total other theatre revenues decreased 72.0%, or $47.2 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to decreases in ticket fees, income from gift cards and package tickets and screen advertising due to the decrease in attendance.

Operating costs and expenses.

Operating costs and expenses decreased $364.7 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019 primarily due to the decrease in attendance and a decrease in average screens operated.

Film exhibition costs decreased $312.2 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to the decrease in admissions revenues.

As a percentage of admissions revenues, film exhibition costs were 51.6% for the three months ended September 30, 2020 and were 55.6% for the three months ended September 30, 2019.

Food and beverage costs decreased 90.5%, or $42.1 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

The decrease in food and beverage costs was primarily due to the decrease in food and beverage revenues.

As a percentage of food and beverage revenues, food and beverage costs were 41.9% and 14.2% for the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

Food and beverage costs included $3.2 million of charges for obsolete inventory during the three months ended September 30, 2020 due to the suspension of theatre operations.

Rent expense decreased 10.1%, or $17.7 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019 due primarily to cash rent abatements from landlords, declines in deferred rent expense due to the impairment of right of use assets in calendar 2019 and 2020, theatre closures and declines in common area maintenance charges.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases.

Merger, acquisition and other costs.

Merger, acquisition and other costs were $0.7 million during the three months ended September 30, 2020 compared to $2.3 million during the three months ended September 30, 2019, primarily due to a decline in merger related activities.

Other general and administrative expense decreased 13.1% or $2.9 million during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to decreases in bonus expense and decreases in salaries as a result of our furlough program that began in March of 2020 and ended in September of 2020 and lower legal fees, partially offset by higher expense related to projects in development.

Depreciation and amortization.

Depreciation and amortization increased 8.7% or $7.3 million during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to recent capital expenditures, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and 2020.

Impairment of long-lived assets and goodwill.

During the three months ended September 30, 2020, we recognized non-cash impairment losses of $28.1 million on 49 theatres in the U.S.

markets with 527 screens (in Alabama, California, Colorado, Florida, Illinois, Indiana, Iowa, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Wisconsin, and Wyoming) which were related to property, net, operating lease right-of-use assets, net and other long-term assets.

We performed quantitative impairment evaluations of our definite-lived intangible assets as of September 30, 2020 and recorded an impairment charge of $6.4 million during the three months ended September 30, 2020.

We performed quantitative impairment evaluations of our goodwill as of September 30, 2020 and recorded an impairment charge of $151.2 million for our Domestic Theatres reporting unit.

Other expense (income).

Other expense of $132.2 million during the three months ended September 30, 2020 was primarily due to third party expenses of $36.3 million related to the restructuring of our debt, the increase in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026 of $89.9 million and the decrease in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $5.9 million.

During the three months ended September 30, 2019, other income of $1.6 million was primarily due to $8.5 million of income related to the increase in the fair value our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement offset by $5.7 million of expense related to the increase in the fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026.

Note 1—The Company and Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about the components of other expense.

Interest expense.

Interest expense increased $8.9 million to $91.9 million for the three months ended September 30, 2020 compared to $83.0 million during the three months ended September 30, 2019 primarily due to the issuance of $500 million of 10.5% First Lien Notes due 2025 on April 24, 2020, borrowings under revolving credit facilities of approximately $215.0 million during the three months ended March 31, 2020 that remained outstanding as

of September 30, 2020 and the issuance of $300 million of 10.5% First Lien Notes due 2026 on July 31, 2020, partially offset by a reduction in the effective interest rate on $2,017.5 million aggregate principal amount of our senior subordinated notes exchanged for $1,462.3 million aggregate principal amount of second lien notes from 6.37% to 4.46% on July 31, 2020.

See Note 6—Corporate Borrowings in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about our indebtedness.

Equity in (earnings) loss of non-consolidated entities.

Equity in loss of non-consolidated entities were

$8.4 million for the three months ended September 30, 2020 compared to $(7.2) million for the three months ended September 30, 2019.

The decrease in equity in earnings of $15.6 million was primarily due to decreases in equity in earnings from DCIP of $14.0 million as a result of accelerated depreciation charges for digital projectors during the three months ended September 30, 2020 and lower revenues due to the closure of theatres.

Investment income.

Investment income was $4.1 million for the three months ended September 30, 2020 compared to investment income of $0.4 million for the three months ended September 30, 2019.

Income tax provision (benefit).

The income tax provision was $6.2 million and $(0.4) million for the three months ended September 30, 2020 and September 30, 2019, respectively.

See Note 8 — Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.

Net loss was $778.1 million and $58.2 million during the three months ended September 30, 2020 and September 30, 2019, respectively.

Net loss during the three months ended September 30, 2020 compared to net loss for the three months ended September 30, 2019 was negatively impacted by the decrease in attendance as a result of the temporary suspension of operations at all our theatres on or before March 17, 2020, increase in impairment charges of long-lived assets and goodwill, increased depreciation expense, declines in equity in earnings of non-consolidated entities, declines in other income and declines in income tax benefit, partially offset by reduced operating expenses, lower amounts of rent expense, declines in general and administrative expenses and increases in investment income.

Theatrical Exhibition - International Markets

Total revenues decreased 79.1%, or $273.9 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

Admissions revenues decreased 79.7%, or $174.7 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to an 82.5% decrease in attendance, partially offset by increases in foreign currency translation rates.

The decrease in attendance was primarily due to the temporary suspension of operations at all our theatres in International markets on or before March 17, 2020.

We reopened the majority of our International theatres during the three months ended September 30, 2020.

Our average screens operated during the three months ended September 30, 2020 declined by 33.0% from the prior year.

Food and beverage revenues decreased 80.0%, or $74.4 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to the decrease in attendance, partially offset by increases in foreign currency translation rates.

Total other theatre revenues decreased 73.2%, or $24.8 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to decreases in ticket fees, income from gift cards and package tickets and screen advertising due to the decrease in attendance, partially offset by increases in foreign currency translation rates.

Operating costs and expenses.

Operating costs and expenses decreased $136.4 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019 primarily due to the decrease in attendance and a decrease in average screens operated.

Film exhibition costs decreased 82.0%, or $78.0 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to the decrease in admissions revenues.

As a percentage of admissions revenues, film exhibition costs were 38.4% for the three months ended September 30, 2020 and were 43.4% for the three months ended September 30, 2019.

Food and beverage costs decreased 78.7%, or $16.3 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

The decrease in food and beverage costs was primarily

due to the decrease in food and beverage revenues.

As a percentage of food and beverage revenues, food and beverage costs were 23.7% for the three months ended September 30, 2020 and were 22.3% for the three months ended September 30, 2019.

As a percentage of revenues, operating expense was not meaningful for the three months ended September 30, 2020 due to the low level of revenues and the fixed nature of certain operating expenses and was 33.3% for the three months ended September 30, 2019.

Rent expense decreased 10.5%, or $6.7 million, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019 due primarily to cash rent abatements from landlords, declines in deferred rent expense due to the impairment of right of use assets in calendar 2019 and 2020, declines in percentage rentals due to the decline in revenues, theatres closures and declines in common area maintenance charges, partially offset by increases in foreign currency exchange rates.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases.

Merger, acquisition and other costs.

Merger, acquisition and other costs were $0.3 million during the three months ended September 30, 2020 compared to $2.4 million during the three months ended September 30, 2019, primarily due to a decline in merger related activities.

Other general and administrative expense decreased 12.3% or $1.9 million during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to decreases in bonus expense and decreases in salaries as a result of our furlough program that began in March of 2020 and ended in September 2020 offset by increases in foreign currency exchange rates.

Depreciation and amortization.

Depreciation and amortization increased 14.7% or $4.1 million during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to recent capital expenditures and the increase in foreign currency translation rates, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and 2020.

Impairment of long-lived assets, indefinite-lived intangible assets and goodwill.

We performed quantitative impairment evaluations of our indefinite-lived intangible assets related to the Odeon and Nordic tradenames as of September 30, 2020 and recorded impairment charges of $4.5 million and $0.1 million related to the Odeon and Nordic tradenames, respectively, during the three months ended September 30, 2020.

We performed a quantitative impairment evaluation of our goodwill as of September 30, 2020 and recorded an impairment charge of $5.6 million for our International Theatres reporting unit during the three months ended September 30, 2020.

Other income.

Other income of $7.2 million during the three months ended September 30, 2020 was primarily due to the international government assistance related to COVID-19 of $13.5 million, partially offset by estimated credit losses related to contingent lease guarantees of $6.1 million.

Interest expense.

Interest expense increased $0.3 million to $2.4 million for the three months ended September 30, 2020 compared to $2.1 million during the three months ended September 30, 2019 primarily due to borrowings under revolving credit facilities of approximately $110 million during the three months ended March 31, 2020 that remained outstanding as of September 30, 2020.

Equity in (earnings) loss of non-consolidated entities.

Equity in loss of non-consolidated entities were $2.2 million for the three months ended September 30, 2020 compared to $(0.3) million for the three months ended September 30, 2019.

Investment income.

Investment income was $0.0 million for the three months ended September 30, 2020 compared to investment income of $0.1 million for the three months ended September 30, 2019.

Income tax provision (benefit).

The income tax benefit was ($1.6) million and $0.2 million for the three months ended September 30, 2020 and September 30, 2019, respectively.

See Note 8 — Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.

Net earnings (loss).

Net earnings (loss) was $(127.7) million and $3.4 million during the three months ended

September 30, 2020 and September 30, 2019, respectively.

Net loss during the three months ended September 30, 2020 compared to net earnings for the three months ended September 30, 2019 was negatively impacted by the decrease in attendance as a result of the temporary suspension of operations at all our theatres on or before March 17, 2020, increased depreciation expense, increased impairment of indefinite lived intangible assets and goodwill, declines in investment income, declines in equity in earnings of non-consolidated entities, and increases in foreign currency translation rates, partially offset by reduced operating expenses, lower amounts of rent expense, declines in general and administrative expenses, increases in other income and increases in income tax benefits.

Results of Operations— For the Nine Months Ended September 30, 2020 Compared to the Nine Months Ended September 30, 2019

Condensed Consolidated Results of Operations

Total revenues decreased 73.2%, or $2,943.4 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

Admissions revenues decreased 73.9%, or $1,792.5 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to a 74.6% decrease in attendance, partially offset by a 2.5% increase in average ticket price.

The decrease in attendance was primarily due to the temporary suspension of operations at all our theatres in U.S.

markets and International markets on or before March 17, 2020.

As some theatres across Europe began closing in late February 2020 and social distancing practices were initiated in the U.S.

in response to the ensuing COVID-19 global pandemic, attendance and revenues began to deteriorate in early March.

We reopened the majority of our Domestic and International Theatres during the three months ended September 30, 2020.

Our average screens operated during the nine months ended September 30, 2020 declined by 59.6% from the prior year.

The increase in average ticket price was primarily due to strategic pricing initiatives put in place over the prior year and lower frequency on our A-List subscription program, partially offset by decreases in attendance for 3D, IMAX and alternative premium content and declines in foreign currency exchange rates.

Food and beverage revenues decreased 75.2%, or $963.7 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to the decrease in attendance.

Total other theatre revenues decreased 58.9%, or $187.2 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to decreases in ticket fees, income from gift cards and package tickets and screen advertising due to the decrease in attendance.

Total revenues decreased 79.3%, or $524.1 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Admissions revenues decreased 83.3%, or $324.2 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to an 84.3% decrease in attendance, partially offset by a 6.0% increase in average ticket price.

Our average screens operated during the three months ended March 31, 2021 declined by 4.1% from the prior year.

Food and beverage revenues decreased 78.0%, or $169.0 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to the decrease in attendance.

Food and beverage per patron increased 39.7% from $5.46 to $7.63 due to several contributing factors including increases in units sold per transaction and increases in the percentage of patrons making purchases due to higher child percentages, private theatre rentals, an increase in dine-in percentages, mobile orders along with price increases and reduced loyalty program penetration.

Total other theatre revenues decreased 55.6%, or $30.9 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to decreases in ticket fees, income from gift cards and package tickets and screen advertising due to the decrease in attendance.

Operating costs and expenses.

Operating costs and expenses increased $282.3 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 primarily due to the impairment of long-lived assets, partially offset by a decrease in operating costs and expenses due to the decrease in attendance and a decrease in average screens operated.

Film exhibition costs decreased 76.4%, or $966.1 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to the decrease in admissions revenues.

As a percentage of admissions revenues, film exhibition costs were 47.2% for the nine months ended September 30, 2020 and 52.2% for the nine months ended September 30, 2019.

The decrease in film exhibition cost percentage is primarily due to the concentration of box office revenues in lower grossing films in the current year which typically results in lower film exhibition costs and an increase in the number of second-run films exhibited in the current period where the film rental terms are much lower than film rental terms for first-run films.

Food and beverage costs decreased 67.5%, or $138.4 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

Operating costs and expenses decreased $1,551.1 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to declines in the impairment of long-lived assets of $1,214.3 million and declines in operating expenses due to the decrease in attendance and a decrease in average screens operated.

Film exhibition costs decreased 89.8%, or $178.7 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to the decrease in admissions revenues.

As a percentage of admissions revenues, film exhibition costs were 31.1% for the three months ended March 31, 2021 and 51.1% for the three months ended March 31, 2020.

Food and beverage costs decreased 75.6%, or $26.4 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

The decrease in food and beverage costs was primarily due to the decrease in food and beverage revenues.

As a percentage of food and beverage revenues, food and beverage costs were 21.0% for the nine months ended September 30, 2020 and 16.0% for the nine months ended September 30, 2019.

Food and beverage costs included $10.4 million of charges for obsolete inventory during the nine months ended September 30, 2020 due to the suspension of theatre operations.

As a percentage of revenues, operating expense was 61.5% for the nine months ended September 30, 2020 and 31.3% for the nine months ended September 30, 2019.

Rent expense decreased 6.9%, or $50.4 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 due primarily to cash rent abatements from landlords, declines in deferred rent expense due to the impairment of right of use assets in calendar 2019 and 2020, theatre closures, declines in common area maintenance charges and decreases in foreign currency translation rates.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of

Part I of this Form 10-Q for further information on the impact of COVID-19 on leases.

As a percentage of food and beverage revenues, food and beverage costs were 17.9% for the three months ended March 31, 2021 and 16.1% for the three months ended March 31, 2020.

Food and beverage costs included $0.5 million and $0.7 million of charges for obsolete inventory during the three months ended March 31, 2021 and 2020 respectively, due to the suspension of theatre operations.

As a percentage of revenues, operating expense was 103.5% for the three months ended March 31, 2021 and 38.1% for the three months ended March 31, 2020.

Rent expense decreased 21.7%, or $37.9 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020 due primarily to cash rent abatements from landlords, declines in deferred rent expense due to the impairment of right-of-use assets in calendar 2019 and 2020 and theatre closures.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases and rent obligations of approximately $370 million that have been deferred to 2021 and future years as of March 31, 2021.

Merger, acquisition and other costs.

Merger, acquisition and other costs were $3.0 million during the nine months ended September 30, 2020 compared to $11.2 million during the nine months ended September 30, 2019, primarily due to a decline in merger related activities.

Other general and administrative expense decreased 28.1% or $35.6 million during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to decreases in bonus expense and decreases in salaries as a result of our furlough program that began in March of 2020 and ended in September 2020.

Merger, acquisition and other costs were $3.7 million during the three months ended March 31, 2021 compared to $0.3 million during the three months ended March 31, 2020, primarily due to increases in legal and professional costs related to strategic contingent planning.

Other general and administrative expense increased $18.7 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to increases in bonus expense, stock-based compensation expense as a result of the modification and acceleration of vesting of awards during the current and prior year and increases in non-qualified deferred compensation expense due to increases in the fair values of related investments.

Depreciation and amortization.

Depreciation and amortization increased 8.5% or $28.6 million during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to recent capital expenditures, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and 2020.

Depreciation and amortization decreased 6.5% or $6.0 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to lower depreciation expense on theatres impaired in calendar 2019 and 2020.

Impairment of long-lived assets, indefinite-lived intangible assets and goodwill.

During the nine months ended September 30, 2020, we recognized non-cash impairment losses of $109.5 million on 75 theatres in the U.S.

markets with 851 screens (in Alabama, Arkansas, California, Colorado, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming) which were related to property, net, operating lease right-of-use assets, net and other long-term assets and $9.9 million on 23 theatres in the International markets with 213 screens (in Germany, Italy, Spain, UK and Sweden) which were related to property, net and operating lease right-of-use assets, net.

We performed quantitative impairment evaluations of our indefinite-lived intangible assets as of March 31, 2020 and September 30, 2020 related to the AMC, Odeon and Nordic tradenames and recorded impairment charges of $12.9 million related to the Odeon and Nordic tradenames during the nine months ended September 30, 2020.

In addition, we performed quantitative impairment evaluations of our definite-lived intangible assets as of March 31, 2020 and September 30, 2020 and recorded impairment charges of $14.4 million.

We performed quantitative impairment evaluations of our goodwill as of March 31, 2020 and September 20, 2020 and recorded impairment charges of $1,276.1 million and $625.0 million during the nine months ended September 30, 2020 for our Domestic Theatres and International Theatres reporting units, respectively.

During the three months ended March 31, 2020, we recognized non-cash impairment losses of $81.4 million on 57 theatres in the U.S.

We performed quantitative impairment evaluations of our definite-lived intangible assets as of March 31, 2020 and recorded impairment charges of $8.0 million in U.S.

We performed quantitative impairment evaluations of our goodwill as of March 31, 2020 and recorded impairment charges of $1,124.9 million during the three months ended March 31, 2020 for our Domestic Theatres reporting unit.

Other expense (income).

Other expense of $145.3 million during the nine months ended September 30, 2020 was primarily due to third party expenses of $39.1 million related to the restructuring of our debt, the increase in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026 of $89.4 million, the decrease in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $19.6 million, estimated credit losses related to contingent lease guarantees of $15.3 million, partially offset by international government assistance related to COVID-19 of $17.9 million.

During the nine months ended September 30, 2019, other expense of $5.1 million was primarily due to a $16.6 million expense related to the repayment of indebtedness and $2.4 million of foreign currency transaction losses offset by $14.9 million of income related to the decrease in the fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026 and $0.5 million of income related to the increase in the fair value our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement.

Other income of $3.5 million during the three months ended March 31, 2021 was primarily due to $4.2 million in government assistance related to COVID-19 and foreign currency transaction loss of $0.9 million.

Other expense of $25.5 million during the three months ended March 31, 2020 was primarily due to the decrease in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $20.1 million and estimated credit losses related to contingent lease guarantees of $5.3 million, partially offset by income due to a decrease in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2024 of $0.5 million.

Interest expense.

Interest expense increased $13.2 million to $268.3 million for the nine months ended September 30, 2020 compared to $255.1 million during the nine months ended September 30, 2019 primarily due to the issuance of $500 million of 10.5% First Lien Notes due 2025 on April 24, 2020, borrowings under revolving credit facilities of approximately $325.0 million during the three months ended March 31, 2020 that remained outstanding as of September 30, 2020 and the issuance of $300 million of 10.5% First Lien Notes due 2026 on July 31, 2020, partially offset by a reduction in the effective interest rate on $2,017.5 million aggregate principal amount of our senior subordinated notes exchanged for $1,462.3 million aggregate principal amount of second lien notes from 6.37% to 4.46% on July 31, 2020.

See Note 6—Corporate Borrowings in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about our indebtedness.

Equity in (earnings) loss of non-consolidated entities.

Equity in loss of non-consolidated entities were $25.9 million for the nine months ended September 30, 2020 compared to $(24.2) million for the nine months ended September 30, 2019.

The decrease in equity in earnings of $50.1 million was primarily due to decreases in equity in earnings from DCIP of $40.2 million as a result of accelerated depreciation charges for digital projectors during the nine months ended September 30, 2020 and lower revenues due to the closure of theatres.

Interest expense increased $72.3 million to $153.1 million for the three months ended March 31, 2021 compared to $80.8 million during the three months ended March 31, 2020 primarily due to:

● the issuance of $500 million of 10.5% First Lien Notes due 2025 on April 24, 2020;

● borrowings under revolving credit facilities of approximately $212.2 million during the three months ended March 31, 2020 that remained outstanding until February and March 2021;

● the issuance of $300 million of 10.5% First Lien Notes due 2026 on July 31, 2020;

● the issuance of $100 million of 15%/17% Cash/PIK/Toggle First Lien Notes due 2026 on January 15, 2021;

partially offset by:

● the extinguishment of $104.5 million of Second Lien Notes due 2026 on December 14, 2020 in exchange for common shares;

● a decline in interest rates related to borrowings under the Senior Secured Term Loan due 2026;

● the repayment in March 2021 of $212.2 million under the Senior Secured Revolving Credit Facility.

Equity in loss of non-consolidated entities.

Equity in loss of non-consolidated entities was $0.9 million for the three months ended March 31, 2021 compared to $1.9 million for the three months ended March 31, 2020.

The decrease in equity in loss of 1.0 million was primarily due to decreases in equity in losses from DCIP of $1.9 million partially offset by increases in equity losses on other investments of $0.9 million.

Investment (income) expense.

Investment expense was $4.0 million for the nine months ended September 30, 2020 compared to investment income of $(18.7) million for the nine months ended September 30, 2019.

Investment expense includes an impairment charge of $7.2 million related to an investment, partially offset by a payment of $3.7 million under the NCM tax receivable agreement during the nine months ended September 30, 2020.

Investment income includes a gain on the sale of our Austria theatres of $12.9 million for the nine months ended September 30, 2019 and a payment of $4.0 million under the NCM tax receivable agreement for the nine months ended September 30, 2019.

Income tax provision.

The income tax provision was $66.7 million and $10.9 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.

The increase in income tax expense is primarily due to the recording of international valuation allowances against deferred tax assets held in Spain of $40.1 million and Germany of $33.1 million, partially offset by income tax benefit from net losses incurred in International markets during the nine months ended September 30, 2020 that are projected to offset previously unabsorbed deferred tax liabilities in International markets.

See Note 8 — Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.

Net loss was $3,643.3 million and $135.6 million during the nine months ended September 30, 2020 and September 30, 2019, respectively.

Net loss during the nine months ended September 30, 2020 compared to net loss for the nine months ended September 30, 2019 was negatively impacted by the decrease in attendance as a result of the temporary suspension of operations at all our theatres on or before March 17, 2020, impairment charges related to long-lived assets, definite and indefinite-lived intangible assets and goodwill, increased depreciation expense, declines in investment income, declines in equity in earnings of non-consolidated entities, increases in income tax provision and increases in other expense, partially offset by reduced operating expenses, lower amounts of rent expense and declines in general and administrative expenses.

Theatrical Exhibition–U.S.

Total revenues decreased 75.8%, or $2,274.8 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

Admissions revenues decreased 77.0%, or $1,366.6 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to a 77.9% decrease in attendance, partially offset by a 3.8% increase in average ticket price.

The decrease in attendance was primarily due to the temporary suspension of operations at all our theatres in U.S.

markets on or before March 17, 2020.

As social distancing practices were initiated in the U.S.

in response to the ensuing COVID-19 global pandemic, attendance and revenues began to deteriorate in early March.

We reopened the majority of our Domestic Theatres during the three months ended September 30, 2020.

Our average screens operated during the three months ended September 30, 2020 declined by 62.9% from the prior year.

Food and beverage revenues decreased 77.6%, or $788.6 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to the decrease in attendance.

Total other theatre revenues decreased 57.1%, or $119.6 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to decreases in ticket fees, income from gift cards and package tickets and screen advertising due to the decrease in attendance.

Operating costs and expenses.

Operating costs and expenses increased $20.5 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 primarily due to the impairment of long-lived assets, definite lived intangible assets and goodwill, partially offset by a decrease in operating costs and expenses due to the decrease in attendance and a decrease in average screens operated.

Film exhibition costs decreased 79.0%, or $781.0 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to the decrease in admissions revenues.

As a percentage of admissions revenues, film exhibition costs were 51.1% for the nine months ended September 30, 2020 and 55.8% for the nine months ended

September 30, 2019.

Food and beverage costs decreased 70.7%, or $103.0 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

The decrease in food and beverage costs was primarily due to the decrease in food and beverage revenues.

As a percentage of food and beverage revenues, food and beverage costs were 18.8% for the nine months ended September 30, 2020 and 14.3% for the nine months ended September 30, 2019.

Food and beverage costs included $7.2 million of charges for obsolete inventory during the nine months ended September 30, 2020 due to the suspension of theatre operations.

As a percentage of revenues, operating expense was 62.7% for the nine months ended September 30, 2020 and 30.3% for the nine months ended September 30, 2019.

Rent expense decreased 6.5%, or $34.7 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 due primarily to cash rent abatements from landlords, declines in deferred rent expense due to the impairment of right of use assets in calendar 2019 and 2020, theatre closures, declines in percentage rentals due to the decline in revenues and declines in common area maintenance charges.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases.

Merger, acquisition and other costs.

Merger, acquisition and other costs were $2.7 million during the nine months ended September 30, 2020 compared to $5.8 million during the nine months ended September 30, 2019, primarily due to a decline in merger related activities.

Other general and administrative expense decreased 32.4% or $24.1 million during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to decreases in bonus expense and decreases in salaries as a result of our furlough program that began in March of 2020 and ended in September of 2020.

Depreciation and amortization.

Depreciation and amortization increased 9.0% or $22.8 million during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to recent capital expenditures, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and 2020.

Impairment of long-lived assets and goodwill.

During the nine months ended September 30, 2020, we recognized non-cash impairment losses of $109.5 million on 75 theatres in the U.S.

markets with 851 screens (in Alabama, Arkansas, California, Colorado, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming) which were related to property, net, operating lease right-of-use assets, net and other long-term assets.

We performed quantitative impairment evaluations of our definite-lived intangible assets as of March 31, 2020 and September 30, 2020 and recorded impairment charges of $14.4 million during the nine months ended September 30, 2020.

We performed quantitative impairment evaluations of our goodwill as of March 31, 2020 and September 30, 2020 and recorded impairment charges of $1,276.1 million for our Domestic Theatres reporting unit.

Other expense.

Other expense of $157.8 million during the nine months ended September 30, 2020 was primarily due to third party expenses of $39.1 million related to the restructuring of our debt, the increase in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026 of $89.4 million, the decrease in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $19.6 million and estimated credit losses related to contingent lease guarantees of $9.2 million.

During the nine months ended September 30, 2019, other expense of $4.6 million was primarily due to a $16.6 million expense related to the repayment of indebtedness and $1.7 million of foreign currency transaction losses offset by $14.9 million of income related to the decrease in the fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026 and $0.5 million of income related to the increase in the fair value our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement.

See Note 1—The Company and Significant Accounting Policies in the Notes to the Condensed

Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about the components of other expense.

Interest expense.

Interest expense increased $12.6 million to $261.3 million for the nine months ended September 30, 2020 compared to $248.7 million during the nine months ended September 30, 2019 primarily due to the issuance of $500 million of 10.5% First Lien Notes due 2025 on April 24, 2020, borrowings under revolving credit facilities of approximately $325.0 million during the three months ended March 31, 2020 that remained outstanding as of September 30, 2020 and the issuance of $300 million of 10.5% First Lien Notes due 2026 on July 31, 2020, partially offset by a reduction in the effective interest rate on $2,017.5 million aggregate principal amount of our senior subordinated notes exchanged for $1,462.3 million aggregate principal amount of second lien notes from 6.37% to 4.46% on July 31, 2020.

See Note 6—Corporate Borrowings in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about our indebtedness.

Equity in (earnings) loss of non-consolidated entities.

Equity in (earnings) loss of non-consolidated entities were $21.7 million for the nine months ended September 30, 2020 compared to $(23.2) million for the nine months ended September 30, 2019.

The decrease in equity in earnings of $44.9 million was primarily due to decreases in equity in earnings from DCIP of $40.2 million as a result of accelerated depreciation charges for digital projectors during the nine months ended September 30, 2020 and lower revenues due to the closure of theatres.

Investment expense (income).

Investment expense was $4.1 million for the nine months ended September 30, 2020 compared to investment income of $(5.7) million for the nine months ended September 30, 2019.

Investment income includes a payment of $4.0 million under the NCM tax receivable agreement for the nine months ended September 30, 2019.

Income tax provision.

The income tax provision was $7.7 million and $8.9 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.

See Note 8 — Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.

Net loss was $2,657.3 million and $142.7 million during the nine months ended September 30, 2020 and September 30, 2019, respectively.

Net loss during the nine months ended September 30, 2020 compared to net loss for the nine months ended September 30, 2019 was negatively impacted by the decrease in attendance as a result of the temporary suspension of operations at all our theatres on or before March 17, 2020, impairment charges related to long-lived assets, definite-lived intangible assets and goodwill, increased depreciation expense, declines in investment income, declines in equity in earnings of non-consolidated entities and increases in other expense, partially offset by reduced operating expenses, lower amounts of rent expense, a decrease in income tax provision and declines in general and administrative expenses.

Investment income was $2.0 million for the three months ended March 31, 2021 compared to investment expense of $9.4 million for the three months ended March 31, 2020.

Investment income includes increases in our non-qualified deferred compensation plan investments during the three months ended March 31, 2021.

Income tax benefit.

The income tax (benefit) was $(4.5) million and $(2.9) million for the three months ended March 31, 2021 and March 31, 2020, respectively.

See Note 8 — Income Taxes in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information.

Net loss was $440.1 million and $1,437.8 million during the three months ended March 31, 2021 and March 31, 2020, respectively.

Net loss during the three months ended March 31, 2021 compared to net loss for the three months ended March 31, 2020 was positively impacted by the decline in impairment charges related to long-lived assets, definite and indefinite-lived intangible assets and goodwill, decreased depreciation expense, lower amounts of rent expense, increases in other income, increases in investment income and increases in income tax benefit, partially offset by the decrease in attendance as a result of the COVID-19 pandemic and higher interest expense and general and administrative costs.

Theatrical Exhibition - International Markets

Total revenues decreased 65.3%, or $668.6 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

Admissions revenues decreased 65.5%, or $425.9 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to a 66.4% decrease in attendance offset by a 2.8% increase in average ticket price.

The decrease in attendance was primarily due to the temporary suspension of operations at all our theatres in International markets on or before March 17, 2020.

As some theatres across Europe began closing in late February 2020, attendance and revenues began to deteriorate in early March.

We reopened the majority of our International theatres during the three months ended September 30, 2020.

Our average screens operated during the nine months ended September 30, 2020 declined by 49.4% from the prior year.

Food and beverage revenues decreased 65.9%, or $175.1 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to the decrease in attendance.

Total other theatre revenues decreased 62.4%, or $67.6 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to decreases in ticket fees, income from gift cards and package tickets and screen advertising due to the decrease in attendance.

Total revenues decreased 96.0%, or $269.1 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Admissions revenues decreased 97.4%, or $174.3 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to a 97.3% decrease in attendance and a 4.1% decrease in average ticket price.

Our average screens operated during the three months ended March 31, 2021 declined by 84.9% from the prior year.

The decrease in average ticket price includes the impact of an increase in foreign currency translation rates and reflects minimal volumes of attendance.

Food and beverage revenues decreased 96.5%, or $69.0 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to the decrease in attendance.

Food and beverage per patron increased 30.6% from $3.43 to $4.48 due to minimal volumes of attendance and the increase in foreign currency translation rates.

Total other theatre revenues decreased 86.6%, or $25.8 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to decreases in ticket fees, income from gift cards and package tickets and screen advertising due to the decrease in attendance, partially offset by increases in foreign currency translation rates.

Operating costs and expenses.

Operating costs and expenses increased $261.8 million, during the nine

months ended September 30, 2020 compared to the nine months ended September 30, 2019 primarily due to the impairment of long-lived assets, indefinite lived intangible assets and goodwill, partially offset by a decrease in operating costs and expenses due to the decrease in attendance and a decrease in average screens operated.

Film exhibition costs decreased 67.2%, or $185.1 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to the decrease in admissions revenues.

As a percentage of admissions revenues, film exhibition costs were 40.3% for the nine months ended September 30, 2020 and 42.4% for the nine months ended September 30, 2019.

Food and beverage costs decreased 59.5%, or $35.4 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

Operating costs and expenses decreased $800.4 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to declines in the impairment of long-lived assets of $637.6 million and declines in operating expenses due to the decrease in attendance and a decrease in average screens operated, partially offset by an increase in foreign currency translation rates.

Film exhibition costs decreased 97.5%, or $71.0 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to the decrease in admissions revenues.

As a percentage of admissions revenues, film exhibition costs were 39.1% for the three months ended March 31, 2021 and 40.7% for the three months ended March 31, 2020.

Food and beverage costs decreased 93.5%, or $17.3 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

The decrease in food and beverage costs was primarily due to the decrease in food and beverage revenues.

As a percentage of food and beverage revenues, food and beverage costs were 26.6% for the nine months ended September 30, 2020 and 22.4% for the nine months ended September 30, 2019.

Food and beverage costs included $3.2 million of charges for obsolete inventory during the nine months ended September 30, 2020 due to the suspension of theatre operations.

As a percentage of revenues, operating expense was 59.0% for the nine months ended September 30, 2020 and 34.1% for the nine months ended September 30, 2019.

Rent expense decreased 8.0%, or $15.7 million, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 due primarily to cash rent abatements from landlords, declines in deferred rent expense due to the impairment of right of use assets in calendar 2019 and 2020, theatre closures, declines in percentage rentals due to the decline in revenues, declines in common area maintenance charges and declines in foreign currency translation rates.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases.

As a percentage of food and beverage revenues, food and beverage costs were 48.0% for the three months ended March 31, 2021 and 25.9% for the three months ended March 31, 2020.

Food and beverage costs included $0.8 million and $2.0 million of charges for obsolete inventory during the three months ended March 31, 2021 and 2020 respectively, due to the suspension of theatre operations.

As a percentage of revenues, operating expense was not meaningful for the three months ended March 31, 2021 due to the low levels of revenues and 37.5% for the three months ended March 31, 2020.

Rent expense decreased 12.3%, or $7.8 million, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020 due primarily to cash rent abatements from landlords, declines in deferred rent expense due to the impairment of right-of-use assets in calendar 2019 and 2020, and theatre closures, partially offset by the increase in foreign currency translation rates.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases and rent obligations of approximately $103 million that have been deferred to 2021 and future years as of March 31, 2021.

Merger, acquisition and other costs.

Merger, acquisition and other costs were $0.3 million during the nine months ended September 30, 2020 compared to $5.4 million during the nine months ended September 30, 2019, primarily due to a decline in merger related activities.

Other general and administrative expense decreased 21.9% or $11.5 million during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to decreases in bonus expense and decreases in salaries as a result of our furlough program that began in March of 2020 and ended in September of 2020 and declines in foreign currency translation rates.

Merger, acquisition and other costs were $3.0 million during the three months ended March 31, 2021 compared to ($0.1) million during the three months ended March 31, 2020, primarily due to increases in legal and professional costs related to strategic contingent planning.

Other general and administrative expense decreased 0.6% or $0.1 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Depreciation and amortization.

Depreciation and amortization increased 6.8% or $5.8 million during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to recent capital expenditures, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and 2020.

Depreciation and amortization decreased 8.0% or $2.4 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to lower depreciation expense on theatres impaired in calendar 2019 and 2020 partially offset by the increase in foreign currency translation rates.

Impairment of long-lived assets, indefinite-lived intangible assets and goodwill.

During the nine months ended September 30, 2020, we recognized non-cash impairment losses of $9.9 million on 23 theatres in the International markets with 213 screens (in Germany, Italy, Spain, UK and Sweden) which were related to property, net, and operating lease right-of-use assets, net.

We performed quantitative impairment evaluations of our indefinite-lived intangible assets related to the Odeon and Nordic tradenames as of March 31, 2012 and September 30, 2020 and recorded impairment charges of $12.9 million related to these assets during the nine months ended September 30, 2020.

We performed a quantitative impairment evaluation of our goodwill as of March 31, 2020 and September 30, 2020 and recorded impairment charges of $625.0 million for our International Theatres reporting unit during the nine months ended September 30, 2020.

During the three months ended March 31, 2020, we recognized non-cash impairment losses of $9.9 million on 23 theatres in the International markets with 213 screens (in Germany, Italy, Spain, Sweden, and UK), which were related to property, net and operating lease right-of-use assets, net.

We performed quantitative impairment evaluations of our indefinite-lived intangible assets as of March 31, 2020 related to the Odeon and Nordic trade names and recorded impairment charges of $8.3 million related to the Odeon and Nordic trade names during the three months ended March 31, 2020.

We performed quantitative impairment evaluations of our goodwill as of March 31, 2020 and recorded impairment charges of $619.4 million during the three months ended March 31, 2020 for our International Theatres reporting unit.

Other expense (income).

Other income of $(12.5) million during the nine months ended September 30, 2020 was primarily due to the international government assistance related to COVID-19 of $17.9 million, partially offset by estimated credit losses related to contingent lease guarantees of $6.1 million.

Other income of $13.9 million during the three months ended March 31, 2021 was primarily due to $8.2 million in government assistance related to COVID-19, foreign currency transaction gains of $4.7 million, and estimated credit income of $2.0 million related to contingent lease guarantees, partially offset by $1.0 million of financing fees related to the write-off of unamortized deferred charges on the Odeon revolver.

Interest expense.

Interest expense increased $0.6 million to $7.0 million for the nine months ended September 30, 2020 compared to $6.4 million during the nine months ended September 30, 2019 primarily due to borrowings under revolving credit facilities of approximately $110 million during the nine months ended September 30, 2020 that remained outstanding as of September 30, 2020.

Equity in (earnings) loss of non-consolidated entities.

Equity in loss of non-consolidated entities were $4.2 million for the nine months ended September 30, 2020 compared to earnings of $(1.0) million for the nine months ended September 30, 2019.

Investment income.

Investment income was $0.1 million for the nine months ended September 30, 2020 compared to investment income of $13.0 million for the nine months ended September 30, 2019.

Investment income includes a gain on the sale of our Austria theatres of $12.9 million for the nine months ended September 30, 2019.

Income tax provision.

The income tax provision was $59.0 million and $2.0 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.

The increase in income tax provision is primarily due to the recording of international valuation allowances against deferred tax assets held in Spain of $40.1 million and Germany of $33.1 million, partially offset by income tax benefit from net losses incurred in International markets during the nine months ended September 30, 2020 that are projected to offset previously unabsorbed deferred tax liabilities in International markets.

See Note 8 — Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.

Net earnings (loss).

Net earnings (loss) was $(986.0) million and $7.1 million during the nine months ended September 30, 2020 and September 30, 2019, respectively.

Net loss during the nine months ended September 30, 2020 compared to net earnings for the nine months ended September 30, 2019 was negatively impacted by the decrease in attendance as a result of the temporary suspension of operations at all our theatres on or before March 17, 2020,impairment charges related to long-lived assets, indefinite-lived intangible assets and goodwill increased depreciation expense, increased income tax provision, declines in investment income and declines in equity in earnings of non-consolidated entities, partially offset by reduced operating expenses, lower amounts of rent expense, declines in general and administrative expenses and increases in other income.

Interest expense increased $7.7 million to $9.7 million for the three months ended March 31, 2021 compared to $2.0 million during the three months ended March 31, 2020 primarily due to:

● the issuance of £140.0 million and €296.0 million 10.75%/11.25%/PIK Term Loans due 2023 on February 19, 2021,

partially offset by:

● the repayment of £89.7 million and €12.8 million outstanding amounts under the Odeon revolver on February 19, 2021.

indebtedness.

Equity in loss of non-consolidated entities.

Equity in loss of non-consolidated entities was $1.9 million for the three months ended March 31, 2021 compared to $1.0 million for the three months ended March 31, 2020.

Investment (income) expense.

Investment income was $0 million for the three months ended March 31, 2021 and March 31, 2020.

Income tax provision (benefit).

The income tax provision (benefit) was ($2.3) million and $71.1 million for the three months ended March 31, 2021 and March 31, 2020, respectively.

See Note 8 — Income Taxes in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information.

Net loss was $127.1 million and $738.5 million during the three months ended March 31, 2021 and March 31, 2020, respectively.

Net loss during the three months ended March 31, 2021 compared to net loss for the three months ended March 31, 2020 was positively impacted by the decline in impairment charges related to long-lived assets, definite and indefinite-lived intangible assets and goodwill, decreased depreciation expense, lower amounts of rent expense, increases in other income and decreases in income tax provision, partially offset by the decrease in attendance as a result of the COVID-19 pandemic, higher interest expense and general and administrative costs, and increases in foreign currency translation rates.

LIQUIDITY AND CAPITAL RESOURCES

Our consolidated revenues are primarily collected in cash, principally through box office admissions and food and beverage sales.

We have an operating “float” which partially finances our operations, and which generally permits us to maintain a smaller amount of working capital capacity.

This float exists because admissions revenues are received in cash, while exhibition costs (primarily film rentals) are ordinarily paid to distributors from 20 to 45 days following receipt of box office admissions revenues.

Prior to the impact of COVID-19 on our business, we had an operating “float” which partially financed our operations and which generally permitted us to maintain a smaller amount of working capital capacity.

This float existed because admissions revenues are received in cash, while exhibition costs (primarily film rentals) are ordinarily paid to distributors from 20 to 45 days following receipt of box office admissions revenues.

Film distributors generally release the films which they anticipate will be the most successful during the summer and year-end holiday seasons.

Consequently, we typically generate higher revenues during such periods.

We had working capital deficits (excluding restricted cash) as of September 30, 2020 and December 31, 2019 of $990.5 million and $1,270.6 million, respectively.

As of September 30, 2020 and December 31, 2019, working capital included operating lease liabilities of $511.0 million and $585.8 million, respectively, and deferred revenues of $400.9 million and $449.2 million, respectively.

We have borrowed all available amounts under our Revolving Credit Facility to meet obligations as they come due.

As of September 30, 2020, we had borrowed $212.7 million (the full availability net of letters of credit) under our $225.0 million Senior Secured Revolving Credit Facility.

We also maintain a revolving credit facility due February 14, 2022 at our Odeon subsidiary (the “Odeon Revolver”).

As of September 30, 2020, we had borrowed $113.6 million (the full availability net of letters of credit) under our £100.0 million Odeon Revolver ($128.3 million based on the foreign currency translation rate of 1.2834 on September 30, 2020).

In response to the COVID-19 pandemic, we have taken and are continuing to take significant steps to preserve cash by eliminating non-essential costs, including reductions to executive cash compensation and elements of its fixed cost structure:

● Suspended non-essential operating expenditures, including marketing & promotional and travel and entertainment expenses;

and where possible, for example:

utilities, reduced essential operating expenditures to minimum levels necessary while theatres are closed.

● Terminated or deferred all non-essential capital expenditures to minimum levels necessary while theatres are closed.

● Implemented measures to reduce corporate-level employment costs, including full or partial furloughs of all corporate-level Company employees, including senior executives, with individual work load and salary reductions ranging from 20% to 100%;

cancellation of pending annual merit pay increases;

We had working capital deficits (excluding restricted cash) as of March 31, 2021 and December 31, 2020 of $597.5 million and $1,104.6 million, respectively.

As of March 31, 2021 and December 31, 2020, working capital included operating lease liabilities of $591.1 million and $583.6 million, respectively, and deferred revenues of $404.3 million and $405.4 million, respectively.

At March 31, 2021, we had $211.9 million available for borrowing, net of letters of credit, under our $225.0 million Senior Secured Revolving Credit Facility.

At December 31, 2020, we had borrowed all available amounts under our Senior Secured Revolving Credit Facility.

We had borrowed $212.2 million (the full availability net of standby letters of credit) under our $225.0 million Senior Secured Revolving Credit Facility as of December 31, 2020.

We also maintained a revolving credit facility due February 14, 2022 at our Odeon subsidiary (the “Odeon Revolver”).

This facility was replaced on February 15, 2021 by the Odeon Term Loan Facility.

Reference is made to Note 6—Corporate Borrowings and Finance Lease Obligations in the Notes to the Condensed Consolidated Financial Statements thereof under Item 1 of Part I of this Form 10-Q for further information about the Odeon Term Loan Facility.

As of December 31, 2020, we had borrowed $120.8 million (the full availability net of standby letters of credit) under our £100.0 million Odeon Revolver ($136.3 million based on the foreign currency translation rate of 1.3628 on December 31, 2020).

In response to the COVID-19 pandemic, we adjusted certain elements of our business strategy and took and continue to take significant steps to preserve cash by eliminating non-essential costs, including reductions to our variable costs and elements of our fixed cost structure, including, but not limited to:

● Suspended non-essential operating expenditures, including some marketing and promotional and travel and entertainment expenses, and where possible, utilities and reduced essential operating expenditures to minimum levels necessary while theatres are closed;

● Terminated or deferred all non-essential capital expenditures to minimum levels necessary while theatres are operating for limited hours or closed;

● Implemented measures to reduce corporate-level employment costs while closed, including full or partial furloughs of all corporate-level Company employees for a period of time, including senior executives, with individual work load and salary reductions ranging from 20% to 100%;

cancellation of pending annual merit

pay increases;

and elimination or reduction of non-healthcare benefits.

With the resumption of operations, we eliminated the full and partial furloughs and employment costs increased.

The increase in employment costs during the three months ended March 31, 2021 was primarily due to increases in bonus expense, stock-based compensation expense as a result of the modification and acceleration of vesting of awards during the current and prior year and increases in non-qualified deferred compensation expense due to increases in the fair values of related investments;

● All domestic theatre-level crew members were fully furloughed and theatre-level managements’ hours were reduced to the minimum levels necessary to begin resumption of operations when permitted.

1 unchanged sentence

As we resumed limited operations, employment costs increased;

● Working with our landlords, vendors, and other business partners to manage, defer, and/or abate the related rent expenses and operating expenses during the disruptions caused by the COVID-19 pandemic.

● Working with our landlords, vendors, and other business partners to manage, defer, and/or abate the related rent expenses and operating expenses;

● Introduced an active cash management process, which, among other things, requires senior management approval of all outgoing payments;

● Since April 24, 2020, we have been prohibited from making dividend payments in accordance with the covenant suspension conditions in its Senior Secured Credit Facility Agreement.

We had also previously elected to decrease the dividend paid in the first quarter of 2020 by $0.17 per share when compared to the first quarter of 2019.

The cash savings as a result of the prior decrease and current prohibition on making dividend payments was $59.1 million during the nine months ended September 30, 2020 in comparison to the nine months ended September 30, 2019.

● We are prohibited from making purchases under its recently authorized stock repurchase program in accordance with the covenant suspension conditions in its Senior Secured Credit Facility Agreement.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law.

The CARES Act provides opportunities for additional liquidity, loan guarantees, and other government programs to support companies affected by the COVID-19 pandemic and their employees.

Based on our analysis of the CARES Act, we expect to recognize the following benefits:

● Approximately $17.4 million of cash tax refunds from overpayments and refundable alternative minimum tax credits with the filing of our 2019 federal tax return, amending 2018 state tax returns and filing 2019 state tax returns in which we expect a refund.

Thus far in 2020 we have received approximately $7.1 million of cash tax refunds.

● Deferral of social security payroll tax matches that would otherwise be required in 2020.

● Receipt of a payroll tax credit in 2020 for expenses related to paying wages and health benefits to employees who are not working as a result of temporarily suspended operations and reduced receipts associated with COVID-19.

We intend to seek any available potential benefits, including loans, investments or guarantees, under future government programs for which we qualify domestically and internationally, including those described above.

We have taken advantage of many forms of governmental assistance internationally including but not limited to revenue and fixed cost reimbursements, payroll subsidies, rent support programs, direct grants, and property tax holidays.

We cannot predict the manner in which such benefits will be allocated or administered, and we cannot assure the reader that we will be able to access such benefits in a timely manner or at all.

During the three months ended September 30, 2020, we exchanged more than 87% of our senior subordinated notes for newly issued 10%/12% Cash/PIK Toggle Second Lien Subordinated Secured Notes due 2026 (the “Second Lien Notes due 2026”), thereby generating a near-term cash savings for the Company of between approximately $120 million to $180 million as a result of the ability to pay interest in kind on the Second Lien Notes due 2026 for the first three interest payment periods that would be payable semi-annually in arrears on June 15 and December 15, beginning on December 15, 2020 through December 15, 2021, subject to certain limitations described herein, and received proceeds from the issuance of the new 10.5% first lien secured notes due 2026 (the “First Lien Notes due 2026”) of $270.0 million, net of discounts of $30.0 million and deferred financing costs paid to lenders of $6.0 million.

Further, as discussed in Note 6—Corporate Borrowings in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q, our lenders have granted relief from the maintenance covenants in the revolving credit agreements through March 31, 2021.

The first required compliance in the next 12 months is June 30, 2021.

Our ability to maintain compliance with the covenants will depend on the recovery of our theatre operations and the generation of sufficient cash flow (or EBITDA).

If we are not in compliance with financial covenants, our lenders could

exercise remedies including declaring the principal and interest on all outstanding indebtedness due or payable immediately.

Our cash and cash equivalents as of September 30, 2020 were $417.9 million.

our total cash burn for the three months ended September 30, 2020 was approximately $388 million and included approximately $39 million of third party costs and $23.3 million of accrued interest payments related to the Exchange Offers.

Our total cash burn is impacted by, among other things, the timing of resumption of theatre operations, costs associated with the AMC Safe and Clean initiative, landlord negotiations and minimum lease payments, the timing of movie releases, theatre attendance levels, and food and beverage receipts.

Going forward, our ability to reduce cash burn rates and ultimately generate positive cash flow, and therefore the extent to which we will require additional sources of liquidity, will depend almost entirely on our future attendance levels that drive admission and food and beverage revenue.

Attendance in the fourth quarter of 2020 will be influenced by, among other things, the timing of new film releases, the ability to open remaining theatres in our major markets, the expansion or contraction of mandated seating capacity limitations, and consumer confidence in moviegoing.

If we experience negative developments with any of these factors, among others, our cash burn rates and liquidity will also be negatively affected, and we may require additional sources of liquidity in amounts that could be material.

Furthermore, commencing in 2021, absent further negotiations with landlords, our cash expenditures for rent will increase significantly following periods of agreed deferrals.

Given the reduced movie slate for the fourth quarter, in the absence of significant increases in attendance from current levels or incremental sources of liquidity, at the existing cash burn rate, we anticipate that existing cash resources would be largely depleted by the end of 2020 or early 2021.

Thereafter, to meet our obligations as they become due, we will require additional sources of liquidity or increases in attendance levels.

The required amounts of additional liquidity are expected to be material.

● Since April 24, 2020, we have been prohibited from making dividend payments in accordance with the covenant suspension conditions in our Senior Secured Credit Facility Agreement.

We had also previously elected to decrease the dividend paid in the first quarter of 2020 by $0.17 per share.

The cash savings as a result of the prior decrease and current prohibition on making dividend payments was $4.3 million during the three months ended March 31, 2021 in comparison to the three months ended March 31, 2020;

● We are prohibited from making purchases under our stock repurchase program in accordance with the covenant suspension conditions in our Senior Secured Credit Facility Agreement.

We intend to seek any available potential benefits, including loans, investments or guarantees, under future government programs for which we qualify domestically and internationally.

We have taken advantage of many forms of governmental assistance in the U.S.

and internationally including but not limited to revenue and fixed cost reimbursements, payroll subsidies, rent support programs, direct grants, and property tax holidays.

We cannot predict the manner in which such benefits will be allocated or administered, and we cannot assure that it will be able to access such benefits in a timely manner or at all.

In addition to preserving cash, we enhanced liquidity through debt issuances, debt exchanges and equity sales as follows.

See Note 6 — Corporate Borrowings and Finance Lease Obligations and Note 7 — Stockholders’ Equity in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I in this Form 10-Q for further information.

● The April 2020 issuance of $500 million of First Lien Notes due 2025.

● The July 2020 completion of a debt exchange offer in which we issued approximately $1.46 billion aggregate principal amount of Second Lien Notes due 2026 in exchange for approximately $2.02 billion principal amount of our senior subordinated notes, reducing the principal amounts of our debt by approximately $555 million and extending maturities on approximately $1.7 billion of debt to 2026, most of which was maturing in 2024 and 2025 previously.

Interest on the Second Lien Notes due 2026 for the first three six-month interest periods after the issue date is expected to be paid all or in part on an in-kind basis pursuant to the terms of the Second Lien Notes due 2026.

● The July 2020 issuance of the First Lien Notes due 2026 in which we received proceeds of $270.0 million, net of discounts and deferred charges.

● The launch of several “at-the-market” equity offerings to raise capital through the sale of our Class A common stock.

During the year ended December 31, 2020, we sold 91.0 million shares, generating $272.8 million in gross proceeds and paid fees to sales agents of $6.8 million.

In January 2021, we sold 187.1 million shares, generating $596.9 million in gross proceeds and paid fees to sales agents of $14.9 million and other fees of $0.4 million.

See Note 13 — Subsequent Event in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for information regarding the additional at-the-market offerings of 43 million shares related to our remaining authorized shares of Class A common stock.

● The December 2020 issuance of 21,978,022 shares of Class A common stock to Mudrick Capital Management, LP (“Mudrick”) in exchange for $104.5 million aggregate principal amount of the Second Lien Notes due 2026 and a commitment from Mudrick to purchase $100 million aggregate principal amount of 15%/17%

Cash/PIK Toggle First Lien Secured Notes due 2026 (“First Lien Toggle Notes due 2026”) which we issued to Mudrick in January 2021 for cash.

● The January 2021 conversion by holders of all $600 million of our 2.95% Convertible Senior Secured Notes due 2026 into shares of our Class A common stock at a conversion price of $13.51 which resulted in the issuance of 44,422,860 shares of our Class A Common Stock and reduced annual cash interest expense by $17.7 million.

● The February 2021 entry into a new £140.0 million and €296.0 million term loan facility agreement (the “Odeon Term Loan Facility”) by Odeon Cinemas Group Limited (“Odeon”).

Approximately £89.7 million and €12.8 million of the net proceeds from the Odeon Term Loan Facility was used to repay in full Odeon’s obligations (including principal, interest, fees and cash collateralized letters of credit) under our existing revolving credit facility and the remaining net proceeds will be used for general corporate purposes .

If attendance levels increase consistent with our assumptions described below, we currently estimate that our existing cash and cash equivalents will be sufficient to comply with minimum liquidity requirements under our debt covenants, fund operations, and satisfy obligations including cash outflows for increased rent and planned capital expenditures currently and through early May of 2022.

This requires that we achieve significant increases in attendance levels beginning in the third quarter of 2021 and ultimately reaching 85% of pre COVID-19 attendance levels by the fourth quarter of 2021 and through the first and second quarters of 2022 as the vaccine rollout continues and more Hollywood product is released in our theatres.

We entered into the Ninth Amendment, pursuant to which the requisite revolving lenders party thereto agreed to extend the suspension period for the financial covenant applicable to the Senior Secured Revolving Credit Facility from March 31, 2021 to March 31, 2022, as described, and on the terms and conditions specified, therein.

As a result, we will be subject to the financial covenant beginning with the quarter ending June 30, 2022.

We are subject to minimum liquidity requirements of approximately $145 million of which $100 million is required under the conditions for the Extended Covenant Suspension Period under the Senior Secured Revolving Credit Facility during the Extended Covenant Suspension Period, as amended, and £32.5 million (approximately $45 million) required under the Odeon Term Loan Facility.

Our liquidity needs thereafter will depend, among other things, on the timing of a full resumption of operations, the timing of movie releases and our ability to generate cash from operations.

We continue to explore potential sources of additional liquidity, including:

● Additional debt and equity financing;

to date, we raised gross proceeds of approximately $2.9 million and $53.2 million during September 2020 and October 2020, respectively, through our at-the-market offering of approximately 15.0 million shares of its Class A common stock, see Note 7—Stockholders’ Equity in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.

In addition, we announced on October 20, 2020, we authorized the sale of 15.0 million additional shares of our Class A common stock through at the market offerings, under which, as of the October 30, 2020 settlement date, we raised additional gross proceeds of approximately $33.8 million through the sale of approximately 11.8 million shares of our Class A common stock ;

● Further renegotiations with landlords regarding our lease payments;

● Potential asset sales;

● Joint-venture or other arrangements with existing business partners;

● Minority investments in our capital stock.

There is a significant risk that these potential sources of liquidity will not be realized or that they will be insufficient to generate the material amounts of additional liquidity that would be required until we are able to achieve more normalized levels of operating revenues.

In the event we determine that these sources of liquidity will not be available to us or will not allow us to meet our obligations or does not comply with financial covenants as they become due, we would likely seek an in-court or out-of-court restructuring of our liabilities, and in the event of a future liquidation or bankruptcy proceeding, holders of our common stock would likely suffer a total loss of their investment.

Our cash burn is impacted by, among other things, the timing of resumption of theatre operations, including with respect to some of our most productive theatres which remain closed, the timing of movie releases and the slate of future releases, theatre attendance levels, landlord negotiations and minimum lease payments, costs associated with the AMC Safe and Clean initiative, and food and beverage receipts.

See Item 1A “Risk Factors” of Part II of this Form 10-Q — “We will require significant amounts of additional liquidity and there is a substantial doubt about our ability to continue as a going concern for a reasonable period of time;

holders of our Class A common stock could suffer a total loss of their investment.”

While we have used our best estimates based on currently available information, it is very difficult to estimate our liquidity requirements and future cash burn rates, and depending on the assumptions used regarding the timing and ability to achieve more normalized levels of operating revenue, the estimates of amounts of required liquidity vary significantly.

There can be no assurance that the accuracy of the assumptions used to estimate our liquidity requirements and future cash burn will be correct, or that we will be able to achieve more normalized levels of attendance described above, which are materially higher than our current attendance levels, and our ability to be predictive is uncertain due to the unknown magnitude and duration of the COVID-19 pandemic, which has resulted in stay-at-home orders, governmental closure orders, film production and scheduling disruption, reopening uncertainties and the cessation of our entire U.S.

and International theatre operations for the first time in its history.

We realized significant cancellation of debt income (“CODI”) in connection with our debt restructuring.

As a result of such CODI, we estimate a significant portion of our net operating losses and tax credits will be eliminated as a result of tax attribute reductions.

● Additional equity financing.

On April 27, 2021, the Board of Directors (the “Board”) determined not to seek stockholder approval of the proposal to approve an amendment to our Third Amended and Restated Certificate of Incorporation to increase the total number of shares of Class A common stock (par value $0.01 per share) we shall have the authority to issue by 500,000,000 shares to a total of 1,024,173,073 shares of Class A common stock (“Proposal 1”), and has withdrawn Proposal 1 from the agenda for the 2021 annual meeting of stockholders (the “Annual Meeting”).

The Board reserves the right to propose an amendment of the Certificate of Incorporation to increase the authorized shares or for other items at any point in the future.

We plan to pursue equity issuances for our remaining authorized shares.

See Note 13 — Subsequent Event in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for information regarding the additional at-the-market offerings of 43 million shares related to our remaining authorized shares of Class A common stock.

The amount of liquidity we might generate will primarily depend on the market price of our Class A common stock, trading volumes, which impact the number of shares we are able to sell, and the available periods during which sales may be made.

Because our market price and trading volumes are volatile, there is no guarantee as to the amounts of liquidity we might generate or that our prior experience accurately predicts the results we will achieve.

● Landlord negotiations .

Commencing in 2021, our cash expenditures for rent are scheduled to increase significantly as a result of rent obligations that had been deferred to 2021 and future years that were approximately $473.0 million as of March 31, 2021.

In light of our liquidity challenges, and in order to establish our long-term viability, we believe we must continue to reach accommodations with our landlords to abate or defer a substantial portion of our rent obligations, in addition to generating sufficient amounts of liquidity through equity issuances and the other potential financing arrangements discussed below.

Accordingly, we entered into additional landlord negotiations to seek material reductions, abatements and deferrals in our rent obligations.

In connection with these negotiations, we have finalized agreements or agreements in principle with the landlords for a majority of leases where we have entered into negotiations.

the extent we achieve substantial deferrals but not abatements, our cash requirements will increase substantially in the future.

● Other creditor discussions .

While the liquidity we have raised has substantially extended our liquidity runway, the new debt we have issued or that has been committed, together with the higher interest rate payments that will be required in the future but have largely been deferred, will substantially increase our leverage and future cash requirements.

These future cash requirements, like our deferred rent obligations, will present a challenge to our long-term viability if our operating income does not return to pre-COVID levels.

Even then, we believe we will need to engage in discussions with our creditors to substantially reduce our leverage.

We expect to continue to explore alternatives that include new-money financing and may involve converting debt to equity, which would help manage our leverage but could be dilutive to holders of our common stock.

These discussions may not result in any agreement on commercially acceptable terms.

● Covenant suspension.

See Note 6 — Corporate Borrowings and Finance Lease Obligations in the Notes to the Condensed Consolidated Financial Statements under Item 1 of the Part I thereof for further information.

● Joint-venture or other arrangements with existing business partners and minority investments in our capital stock.

We continue to explore other potential arrangements, including equity investments, to generate additional liquidity.

It is very difficult to estimate our liquidity requirements, future cash burn rates and future attendance levels.

Depending on our assumptions regarding the timing and ability to achieve more normalized levels of operating revenue, the estimates of amounts of required liquidity vary significantly.

Similarly, it is very difficult to predict when theatre attendance levels will normalize, which we expect will depend on the widespread availability and use of effective vaccines for the coronavirus.

However, our current cash burn rates are not sustainable.

Further, we cannot accurately predict what future changes may occur to the supply or release date of movie titles available for theatrical exhibition once moviegoers are prepared to return in large numbers.

Nor can we know with certainty the impact on consumer movie-going behavior of Warner Bros.’s decision to release its entire 2021 slate of movies on HBO Max at the same time as the movies debut in theatres, or the potential attendance impact of other studio decisions to accelerate in home availability of their theatrical movies.

Studio negotiations regarding evolving theatrical release models and film licensing terms are ongoing.

There can be no assurance that the attendance levels and other assumptions used to estimate our liquidity requirements and future cash burn rates will be correct, and our ability to be predictive is uncertain due to the unknown magnitude and duration of the COVID-19 pandemic.

Further, there can be no assurances that we will be successful in generating the additional liquidity necessary to meet our obligations beyond twelve months from the issuance of these financial statements on terms acceptable to us or at all.

If we are unable to maintain or renegotiate our minimum liquidity covenant requirements, it could have a significant adverse effect on our business, financial condition and operating results.

We also realized significant cancellation of debt income (“CODI”) in connection with our debt restructuring.

As a result of such CODI, we estimate a significant portion of our net operating losses will be eliminated as a result of tax attribute reductions.

Any loss of tax attributes as a result of such CODI may adversely affect our cash flows and therefore our ability to service our indebtedness.

Due to these factors, substantial doubt exists about our ability to continue as a going concern for a reasonable period of time.

Cash Flows from Operating Activities

Cash flows provided by (used in) operating activities, as reflected in the condensed consolidated statements of cash flows, were $(771.6) million and $210.2 million during the nine months ended September 30, 2020 and September 30, 2019, respectively.

The decrease in cash flows provided by operating activities was primarily due to decreased attendance levels and temporary suspension of operations at all of our theatres on or before March 17, 2020, which resulted in lower operating results during the nine months ended September 30, 2020 and higher payments for accounts payable primarily due to timing.

Cash flows used in operating activities, as reflected in the condensed consolidated statements of cash flows, were $312.9 million and $184.0 million during the three months ended March 31, 2021 and March 31, 2020, respectively.

The increase in cash flows used in operating activities was primarily due to decreased attendance levels and temporary suspension of operations at all of our theatres on or before March 17, 2020, which resulted in lower operating results during the three months ended March 31, 2021.

Cash Flows from Investing Activities

Cash flows used in investing activities, as reflected in the condensed consolidated statements of cash flows, were $154.8 million and $348.4 million during the nine months ended September 30, 2020 and September 30, 2019, respectively.

Cash outflows from investing activities include capital expenditures of $156.0 million and $348.2 million during the nine months ended September 30, 2020 and September 30, 2019, respectively.

Our capital expenditures primarily consisted of strategic growth initiatives and remodels, capital improvements to existing locations in our theatre circuit, and technology upgrades.

During the nine months ended September 30, 2020, cash flows used in investing activities included an additional investment in SCC, a non-consolidated entity of $9.3 million, and proceeds from the disposition of assets of $8.6 million primarily related to seven properties and other asset sales.

During the nine months ended September 30, 2019, cash inflows from investing activities included the proceeds from the disposition of long-term assets of $21.4 million primarily from the sale of theatres located in Austria of $15.3 million and disposition of assets of $6.1 million, partially offset by cash outflows of $11.8 million for the acquisition of assets related to four theatres in the U.S.

Cash flows used in investing activities, as reflected in the condensed consolidated statements of cash flows, were $16.0 million and $87.4 million during the three months ended March 31, 2020 and March 31, 2020, respectively.

Cash outflows from investing activities include capital expenditures of $11.9 million and $91.7 million during the three months ended March 31, 2021 and March 31, 2020, respectively.

In 2020, as a result of the COVID-19 pandemic, we

significantly reduced capital expenditures to maintenance levels and with the exception of prior commitments, have temporarily suspended growth capital expenditures at this time.

During the three months ended March 31, 2021, cash flows used in investing activities included proceeds from the disposition of assets of $5.2 million, primarily related to the sale of our remaining interest in one of the Baltic’s theatres located in Estonia of $3.8 million and proceeds received from the disposition of one property of $1.4 million.

During the three months ended March 31, 2021, we made an additional investment of $9.3 million in Saudi Cinema Company LLC.

During the three months ended March 31, 2020, cash flows used in investing activities included the proceeds from the disposition of long-term assets of $3.4 million related to one property.

We fund the costs of constructing, maintaining and remodeling our theatres through existing cash balances, cash generated from operations, landlord contributions, or borrowed funds, as necessary.

We generally lease our theatres pursuant to long-term non-cancelable operating leases which may require the developer, who owns the property, to reimburse us for the construction costs.

We terminated or deferred all non-essential capital expenditures to minimum levels necessary while theatres are closed.

We expect capital expenditures (net of landlord contributions) to be between $130 million and $160 million for calendar year 2020, which includes $124.1 million net spend during the nine months ended September 30, 2020.

In addition, we expect capital expenditures (net of landlord contributions) to be between $80 million and $100 million for calendar year 2021 to maintain operations.

We expect capital expenditures (net of landlord contributions) to be between $100 million and $120 million for year ended December 31, 2021, primarily to maintain operations.

Cash Flows from Financing Activities

Cash flows provided by (used in) financing activities, as reflected in the condensed consolidated statements of cash flows, were $1,082.5 million and $(72.9) million during the nine months ended September 30, 2020 and September 30, 2019, respectively.

The increase in cash flows from financing activities during the nine months ended September 30, 2020 compared to September 30, 2019 was primarily due to the borrowings under our First Lien Notes due 2025, First Lien Notes due 2026, revolving credit facilities, proceeds from sale of the noncontrolling interest in Forum Cinemas OU and the reduction in cash dividends paid.

Borrowings, net of discounts, under our First Lien Notes due 2025, First Lien Notes due 2026, and revolving credit facilities were $490.0 million, $270.0 million, and $322.2 million, respectively, during the nine months ended September 30, 2020.

On August 28, 2020, we entered into an agreement to sell our equity interest in Forum Cinemas OU, which consists of nine theatres located in the Baltic’s region (Latvia, Lithuania and Estonia) in several steps.

For further information, see Note 1—Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q.

We received $37.5 million (€31.5 million) cash consideration and transferred an equity interest of 49% in Forum Cinemas OU to the purchaser during the nine months ended September 30, 2020.

During the nine months ended September 30, 2019, cash inflows from financing activities included the proceeds from the issuance of $1,990.0 million of Term Loan due 2026, offset by cash outflows for the repayment of the Term Loan due 2022 of $849.8 million, repayment of the Term Loan due 2023 of $488.7 million, repayments of the 6.0% Senior Secured Notes due 2023 of $230.0 million, and payment of the 5.875% Senior Subordinated Notes due 2023 of $375.0 million.

Call premiums paid related to the repayment of the 6.0% Senior Secured Notes due 2023 and the 5.875% Senior Subordinated Notes due 2022 were $15.9 million and deferred financing costs paid were $11.7 million.

The following is a summary of dividends and dividend equivalents declared to stockholders:

Cash flows provided by financing activities, as reflected in the condensed consolidated statements of cash flows, were $854.7 million and $312.4 million during the three months ended March 31, 2021 and March 31, 2020, respectively.

The increase in cash flows from financing activities during the three months ended March 31, 2021 was primarily due to the borrowings under the Odeon Term Loan Facility of $534.3 million, the issuance of First Lien Toggle Notes due 2026 of $100.0 million, and net proceeds from the sale of Class A common stock of $581.6 million, partially offset by the repayments under the revolving credit facilities of $335.0 million, payment for deferred financing costs of $19.0 million, and principal payments under the Term Loan due 2026 of $5.0 million.

During the three months ended March 31, 2020, cash inflows from financing activities included borrowings under our revolving credit facilities were $325.1 million, partially offset by principal payments under the Term Loan due 2026 of $5.0 million.

During the three months ended March 31, 2020, we paid dividends and dividend equivalents of $4.3 million.

The following is a summary of dividends declared to stockholders:

Declaration Date

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March 23, 2020

October 24, 2019

December 2, 2019

December 16, 2019

August 2, 2019

September 9, 2019

September 23, 2019

June 10, 2019

June 24, 2019

February 15, 2019

March 11, 2019

March 25, 2019

During the nine months ended September 30, 2020 and September 30, 2019, we paid dividends and dividend equivalents of $4.3 million and $63.4 million, respectively.

As of September 30, 2020, we accrued $1.1 million for the remaining unpaid dividend equivalents.

As of April 24, 2020, we are prohibited from making dividend payments in accordance with the covenant suspension conditions in our Senior Secured Credit Facility Agreement.

Senior Secured Credit Facility (Revolving Credit Facility and Term Loan due 2026).

On April 23, 2020, we entered into an amendment to the Senior Secured Credit Facility pursuant to which the requisite lenders thereunder granted a waiver of the maintenance covenant thereunder for the period from the and after the effective date of the Senior Secured Credit Agreement Amendment to and including the earlier of (a) March 31, 2021 and (b) the day immediately preceding the last day of the Test Period (as defined in the Senior Secured Credit Facility).

On July 31, 2020, we entered into the Eighth Amendment with the administrative agent to the Senior Secured Credit Facility to add restrictive provisions, including modifying covenants limiting indebtedness, liens, investments, asset sales and restricted payments, to ensure that the terms and conditions of the First Lien Notes due 2026, the Convertible Notes due 2026 and the Second Lien Notes due 2026 (subject to certain exceptions) are not materially more favorable (when taken as a whole) to the noteholders than the terms and conditions of the Senior Secured Credit Facility Agreement (when taken as a whole).

Odeon Revolving Credit Facility.

On April 24, 2020, we entered into an amendment to the Odeon Revolving Credit Facility, pursuant to which the requisite lenders thereunder granted a waiver of the maintenance covenant thereunder for the period from and after the effective date of the Odeon Amendment to and including the earlier of (a) March 31, 2021 and (b) the day immediately preceding the last day of the Relevant Period (as defined in the Odeon Amendment).

First Lien Notes due 2025.

On April 24, 2020, we issued $500.0 million aggregate principal amount of our 10.5% First Lien Notes due 2025, with an original issue discount of $10.0 million.

The First Lien Notes due 2025 bear interest at a rate of 10.5% per annum, payable semi-annually on April 15 and October 15 each year, commencing October 15, 2020 and are secured, on a pari passu basis with the Senior Secured Credit Facility.

The First Lien Notes due 2025 will mature on April 15, 2025.

Senior Subordinated Debt Exchange Offers .

On July 31, 2020, we closed our previously announced private offers to exchange (the “Exchange Offers”) any and all of our outstanding 6.375% Senior Subordinated Notes due 2024, 5.75% Senior Subordinated Notes due 2025, 5.875% Senior Subordinated Notes due 2026 and 6.125% Senior Subordinated Notes due 2027 (together the “Existing Subordinated Notes”) for approximately $1.46 billion in aggregate principal amount of newly issued 10%/12% Cash/PIK Toggle Second Lien Subordinated Secured Notes due 2026 .

T he aggregate principal amounts of the Existing Subordinated Notes set forth in the table below were validly tendered and subsequently accepted.

Such accepted Existing Subordinated Notes were retired and cancelled.

(In thousands)

Total Aggregate Principal Amount Validly Tendered

Percentage of Outstanding Existing Subordinated Notes Validly Tendered

6.375% Senior Subordinated Notes due 2024 (£496,014 par value)

5.75% Senior Subordinated Notes due 2025

5.875% Senior Subordinated Notes due 2026

6.125% Senior Subordinated Notes due 2027

The Exchange Offers reduced the principal amounts of our debt by approximately $555 million, which represented approximately 23.9% of the principal amount of the Existing Subordinated Notes.

We raised $300 million in additional cash from the issuance of the incremental 10.5% first lien secured notes due 2026 (the “First Lien Notes due 2026”), prior to deducting $36 million related to discounts and deferred financing costs paid to the lenders.

Additionally, certain holders of the Existing Subordinated Notes that agreed to backstop the rights offering for $200 million of the First Lien Notes due 2026 received five million Class A common shares.

The closing of the Exchange Offers also allowed us to extend maturities on approximately $1.7 billion of debt to 2026, most of which was maturing in 2024 and 2025 previously.

In connection with the Exchange Offers, we also received consents from eligible holders of the Existing Subordinated Notes to amend the indentures governing the Existing Subordinated Notes to among other things, (i) release the existing subsidiary guarantees of the Existing Subordinated Notes, (ii) eliminate substantially all of the restrictive covenants, certain affirmative covenants and certain events of default contained in the indentures governing the Existing Subordinated Notes, and (iii) makes other conforming changes to internally conform to certain proposed amendments.

We performed an assessment on a lender by lender basis to identify certain lenders that met the criteria for a troubled debt restructuring (“TDR”) under ASC 470-60, Troubled Debt Restructurings by Debtors (“ASC 470-60”) as we were experiencing financial difficulties and the lenders granted us a concession.

The portion of the loans that did not meet the assessment of TDR under ASC 470-60 were treated as modifications.

The TDR and modification did not result in a gain recognition and we established new effective interest rates based on the carrying value of the Existing Subordinated Notes and recorded the new fees paid to third parties of approximately $36.3 million and $39.1 million in other expense, during both the three and nine months ended September 30, 2020.

Convertible Notes.

On April 24, 2020, we entered into a supplemental indenture (the “Supplemental Indenture”) to the Convertible Notes due 2024 indenture, dated as of September 14, 2018.

The Supplemental Indenture amended the debt covenant under the Convertible Notes due 2024 Indenture to permit us to issue the First Lien Notes due 2025, among other changes.

Concurrently with the Exchange Offers, to obtain the consent of the holders of the Convertible Notes due 2024, we restructured $600 million of Convertible Notes due 2024 issued in 2018 to Silver Lake and others pursuant to which the maturity of the Convertible Notes due 2024 were extended to May 1, 2026 (the “Convertible Notes due 2026”) and a first-priority lien on the collateral was granted to secure indebtedness thereunder.

We accounted for this transaction as a modification of debt as the lenders did not grant a concession and the difference between the present value of the old and new cash flows was less than 10%.

The modification did not result in the recognition of any gain or loss and the Company established new effective interest rates based on the carrying value of the Convertible Notes due 2024.

Third party costs related to the transaction were expensed as incurred and amounts paid to lenders were capitalized and amortized through maturity of the debt.

Second Lien Notes due 2026.

In connection with the Exchange Offers on July 31, 2020, we issued $1,462.3

million aggregate principal amount of the new Second Lien Notes due 2026 in exchange for the Existing Subordinated Notes.

We have reflected a premium of $535.1 million on the Second Lien Notes due 2026 as the difference between the principal balance of the Second Lien Notes due 2026 and the $1,997.4 million carrying value of the Existing Subordinated Notes exchanged.

The premium will be amortized to interest expense over the term of the Second Lien Notes due 2026 using the effective interest method.

In connection with the Exchange Offers and the First Lien Notes due 2026, we issued five million shares of Class A common stock to certain holders of subordinated notes as consideration for their commitment to backstop the issuance of $200 million of the First Lien Notes due 2026.

Pursuant to the Backstop Commitment Agreement dated July 10, 2020, certain of the actual or beneficial holders of Existing Subordinated Notes agreed to purchase 100% of the First Lien Notes due 2026 that were not subscribed for in connection with the $200 million rights offering to holders of the existing Subordinated Notes participating in the Exchange Offers.

Those providing a backstop commitment pursuant to the Backstop Commitment Agreement received their pro-rata share of 5 million shares of the Class A common stock, or 4.6% of AMC’s outstanding shares as of July 31, 2020, worth $20.2 million at the market closing price on July 31, 2020.

T he equity issuance was recorded by us in stockholders’ deficit with an offset in corporate borrowings as a discount.

The discount will be amortized to interest expense over the term of the Second Lien Notes due 2026 using the effective interest method.

As part of the registration rights agreement related to the issuance of the Class A common stock, we filed a shelf registration statement in August 2020 providing for the resale of the shares of Class A common stock issued as consideration for the backstop commitment described above.

First Lien Notes due 2026.

In connection with the Exchange Offers, certain holders of the Existing Subordinated Notes purchased 10.5% First Lien Notes due 2026 in an aggregate principal amount of $200 million.

The 10.5% First Lien Notes due 2026 issued to certain holders of the Existing Subordinated Notes were issued pursuant to an indenture, dated as of July 31, 2020, among the Company, the guarantors named therein and GLAS Trust Company LLC, as trustee and collateral agent.

Separately, upon the closing of its private debt exchange, Silver Lake Alpine, L.P.

and Silver Lake Alpine (Offshore Master), L.P., each affiliates of Silver Lake Group, L.L.C.

(“Silver Lake”), purchased from us $100 million principal amount of First Lien Notes due 2026.

The 10.5% First Lien Notes due 2026 issued to affiliates of Silver Lake were issued pursuant to an indenture, dated as of July 31, 2020, among the Company, the guarantors named therein and U.S.

Senior Secured Credit Facilities (Senior Secured Revolving Credit Facility and Senior Secured Term Loan due 2026).

On March 8, 2021, we entered into the Ninth Amendment, pursuant to which the requisite revolving lenders party thereto agreed to extend the suspension period for the financial covenant under our Credit Agreement from a period ending on March 31, 2021 to a period ending on March 31, 2022 (the “Extended Covenant Suspension Period”).

As an ongoing condition to the suspension of the financial covenant, we also agreed to (i) a minimum liquidity test of $100 million, (ii) an anti-cash hoarding test at any time Revolving Loans are outstanding and (iii) additional reporting obligations.

On March 8, 2021, we entered into the Tenth Amendment, pursuant to which we agreed not to consent to certain modifications to the Credit Agreement described in the Tenth Amendment without the consent of the majority of the revolving lenders party to the Tenth Amendment.

Odeon Term Loan Facility.

On February 15, 2021, Odeon Cinemas Group Limited (“Odeon”), a wholly-owned subsidiary of the Company entered into a new £140.0 million and €296.0 million term loan facility agreement (the “Odeon Term Loan Facility”), by and among Odeon, the subsidiaries of Odeon party thereto, the lenders and other loan parties thereto and Lucid Agency Services Limited as agent and Lucid Trustee Services Limited as security agent.

Approximately £89.7 million and €12.8 million of the net proceeds from the Odeon Term Loan Facility were used to repay in full Odeon’s obligations (including principal, interest, fees and cash collateralized letters of credit) under its existing revolving credit facility and the remaining net proceeds will be used for general corporate purposes.

The Odeon Term Loan Facility has a maturity of 2.5 years from the date on which it is first drawn.

Borrowings under the Odeon Term Loan Facility bear interest at a rate equal to 10.75% per annum during the first year and 11.25% thereafter.

The interest is capitalized on the last day of each interest period and added to the outstanding principal amount, however Odeon has the option to elect to pay interest in cash.

All obligations under the Odeon Term Loan Facility are guaranteed by certain subsidiaries of Odeon.

We are subject to minimum liquidity requirements of £32.5 million (approximately $45 million) required under the Odeon Term Loan Facility, measured at each quarter end date.

First Lien Toggle Notes due 2026.

On January 15, 2021, we issued $100.0 million aggregate principal amount of our First Lien Toggle Notes due 2026 as contemplated by the previously disclosed commitment letter with Mudrick Capital Management, LP, dated as of December 10, 2020.

The First Lien Toggle Notes due 2026 were issued pursuant to an indenture dated as of January 15, 2021 among us, the guarantors named therein and the U.S.

Bank National Association, as trustee and collateral agent.

The terms of the 10.5% First Lien Notes due 2026 issued to the holders of the Existing Subordinated Notes and the 10.5% First Lien Notes due 2026 issued to Silver Lake are substantially identical.

The $300 million principal amount of new funding is prior to deducting discounts of $30.0 million and deferred financing costs paid to lenders of $6.0 million related to the First Lien Notes due 2026.

The discount and deferred financing costs will be amortized to interest expense over the term using the effective interest method.

See Note 6—Corporate Borrowings in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information regarding the above.

The First Lien Toggle Notes due 2026 bear cash interest at a rate of 15% per annum payable semi-annually in arrears on January 15 and July 15, beginning on July 15, 2021.

Interest for the first three interest periods after the issue date may, at our option, be paid in PIK interest at a rate of 17% per annum, and thereafter interest shall be payable solely in cash.

The First Lien Toggle Notes due 2026 will mature on April 24, 2026.

The indenture provides that the First Lien Toggle Notes due 2026 are general senior secured obligations of the Company and are secured on a pari passu basis with the Senior Credit Facilities, the First Lien Notes due 2026, the First Lien Notes due 2025, and the Convertible Notes due 2026.

Convertible Notes.

On January 27, 2021, affiliates of Silver Lake and certain co-investors (collectively, the “Noteholders”) elected to convert (the “Conversion”) all $600.0 million principal amount of our Convertible Notes due 2026 into shares of our Class A common stock at a conversion price of $13.51 per share.

The Conversion settled on January 29, 2021 and resulted in the issuance of 44,422,860 shares of our Class A common stock to the Noteholders.

The Conversion reduced our first-lien indebtedness by $600.0 million.

Pursuant to the Stock Repurchase and Cancellation Agreement with Dalian Wanda Group Co., Ltd.

(“Wanda”) dated as of September 14, 2018, 5,666,000 shares of our Class B common stock held by Wanda were forfeited and cancelled in connection with the Conversion.

Contractual Obligations, Commitments and Contingencies

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Except as set forth above and below with respect to corporate borrowings and leases, since December 31, 2020, there have been no material changes to the commitments and contingencies outside of the ordinary course of business.

We borrowed under our revolving lines of credit, issued First Lien Notes due 2025, and consummated the Senior Subordinated Debt Exchange Offers.

See Note 6—Corporate Borrowings in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information, including a table that provides the principal payments required and maturities of corporate borrowings as of September 30, 2020.

We borrowed under our Odeon Term Loan Facility, issued First Lien Toggle Notes due 2026, and Silver Lake and certain co-investors elected to convert all of our Convertible Notes due 2026 into shares of our Class A common stock.

See Note 6—Corporate Borrowings and Finance Lease Obligations in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information, including a table that provides the principal payments required and maturities of corporate borrowings as of March 31, 2021.

We received rent concessions provided by the lessors that aided or will aid, in mitigating the economic effects of COVID-19.

These concessions primarily consist of deferral of rent payments and rent abatements.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information, including a table of the minimum annual payments required under existing operating and finance lease liabilities (net present value thereof) as of September 30, 2020.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis