What changed in this filing

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Item 1. Financial Statements

2021-11-08 compared with 2021-08-09 · 327 added, 233 removed, 806 unchanged (41% of the section changed)

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions, except share and per share amounts)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Food and beverage

18 unchanged sentences

Non-cash NCM exhibitor services agreement

Equity in loss of non-consolidated entities

Equity in (earnings) loss of non-consolidated entities

Investment expense (income)

12 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Other comprehensive income (loss):

2 unchanged sentences

Pension adjustments:

Net gain arising during the period

Realized net gain reclassified into other expense

Other comprehensive income (loss)

6 unchanged sentences

(In millions, except share data)

June 30, 2021

September 30, 2021

December 31, 2020

30 unchanged sentences

Class A common stock ($ .01 par value, 524,173,073 shares authorized;

513,330,240 shares issued and outstanding as of June 30, 2021;

513,330,240 shares issued and outstanding as of September 30, 2021;

176,295,874 shares issued and 172,563,249 outstanding as of December 31, 2020)

Class B common stock ($ .01 par value, 0 shares authorized, issued and outstanding as of June 30, 2021 and 51,769,784 shares authorized, issued and outstanding as of December 31, 2020)

Class B common stock ($ .01 par value, 0 shares authorized, issued and outstanding as of September 30, 2021 and 51,769,784 shares authorized, issued and outstanding as of December 31, 2020)

Additional paid-in capital

Treasury stock ( 0 shares as of June 30, 2021 and 3,732,625 shares as of December 31, 2020, at cost)

Accumulated other comprehensive income

Treasury stock ( 0 shares as of September 30, 2021 and 3,732,625 shares as of December 31, 2020, at cost)

Accumulated other comprehensive income (loss)

Accumulated deficit

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

(In millions)

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

Cash flows from operating activities:

3 unchanged sentences

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

Amortization of net premium on corporate borrowings to interest expense

Loss on extinguishment of debt

Amortization of net discount (premium) on corporate borrowings to interest expense

Amortization of deferred financing costs to interest expense

2 unchanged sentences

Gain on disposition of Baltics

Gain on dispositions

Loss (gain) on dispositions

Loss on derivative asset and derivative liability

11 unchanged sentences

Proceeds from disposition of Baltics, net of cash and transaction costs

Acquisition of theatre assets

Proceeds from disposition of long-term assets

4 unchanged sentences

Proceeds from First Lien Toggle Notes due 2026

Principal payments under First Lien Toggle Notes due 2026

Premium paid to extinguish First Lien Toggle Notes due 2026

Proceeds from issuance of First Lien Notes due 2025

Proceeds from issuance of First Lien Notes due 2026

Borrowings (repayments) under revolving credit facilities

15 unchanged sentences

Interest (including amounts capitalized of $ 0.2 million and $ 0.8 million, respectively)

Income taxes (received) paid, net

Income taxes received, net

Schedule of non-cash activities:

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021

September 30, 2021

NOTE 1—BASIS OF PRESENTATION

10 unchanged sentences

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, the Company’s revenues and expenses for the six months ended June 30, 2021 were significantly lower than the revenues and expenses for the six months ended June 30, 2020, with significantly lower revenues and expenses during the first quarter of 2021 compared to the first quarter of 2020, partially offset by increased revenues and expenses during the second quarter of 2021 compared to the second quarter of 2020.

As of January 1, 2021, the Company was operating at 394 domestic theatres with limited seating capacities, representing approximately 67 % of its domestic theatres.

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

As of March 31, 2021, the Company was operating at 585 domestic theatres with limited seating capacities, representing approximately 99 % of its domestic theatres.

As of June 30, 2021, the Company was operating at 593 domestic theatres, representing approximately 100 % of its domestic theatres with remaining seating capacity restrictions winding down throughout the quarter.

As of January 1, 2021, the Company was operating at 109 International leased and partnership theatres, with limited seating capacities, representing approximately 30 % of its International theatres.

As of March 31, 2021, the Company was operating at 97 International theatres with limited seating capacities, representing approximately 27 % of its International theatres.

As of June 30, 2021, the Company was operating at 335 International theatres with limited seating capacities, representing approximately 95 % of its International theatres.

The Company’s average consolidated screens operated during the three months ended March 31, 2021 declined by 24.2 % from the prior year.

The Company’s average consolidated screens operated during the three months ended June 30, 2021 increased by 8,830 screens to 8,890 screens from 60 screens in the prior year.

As of June 30, 2021, the Company has cash and cash equivalents of approximately $ 1.8 billion.

As of March 31, 2021, the Company operated at 585 domestic theatres with limited seating capacities, representing approximately 99 % of its domestic theatres.

As of June 30, 2021, the Company operated 593 domestic theatres, representing approximately 100 % of its domestic theatres with remaining seating capacity restrictions winding down throughout the quarter.

As of September 30, 2021, the Company operated 596 domestic theatres representing essentially 100 % of its domestic theatres.

Total revenues for the U.S.

markets increased $ 490.6 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 and increased $ 325.6 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

As of March 31, 2021, the Company operated at 97 international theatres, with limited seating capacities, representing approximately 27 % of its international theatres.

As of June 30, 2021, the Company operated 335 international theatres with limited seating capacities, representing approximately 95 % of its international theatres.

The majority of international theatre operations were suspended for the first two months of the second quarter of 2021 due to a COVID-19 resurgence and did not reopen until early June 2021.

At September 30, 2021, the Company operated 351 international theatres representing approximately 99 % of its international theatres.

Total revenues for the International markets increased $ 153.1 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 and decreased $ 49.3 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

Consolidated revenues increased $ 643.7 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 and increased $ 276.3 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

As of September 30, 2021, the Company has cash and cash equivalents of approximately $ 1.6 billion.

In response to the COVID-19 pandemic, the Company adjusted certain elements of its business strategy and took significant steps to preserve cash, and is continuing to take significant steps to preserve cash, by eliminating non-essential costs, including reductions to its variable costs and elements of its fixed cost structure.

In addition to preserving cash, the Company enhanced liquidity through debt issuances, debt exchanges and equity sales as previously reported in its Annual Report on Form 10-K for the year ended December 31, 2020 and in its Quarterly Report on Form 10-Q for the three months ended March 31, 2021.

In addition to preserving cash, the Company enhanced liquidity through debt issuances, debt exchanges and equity sales as previously reported in its Annual Report on Form 10-K for the year ended December 31, 2020 and in its Quarterly Reports on Form 10-Q for the periods ended March 31, 2021 and June 30, 2021.

See Note 6 — Corporate Borrowings and Finance Lease Obligations and Note 7 — Stockholders’ Equity for further information.

Recent updates to the Company’s liquidity enhancement initiatives are as follows:

● The launch of two additional “at-the-market” equity offerings to raise capital through the sale of the Company’s Class A common stock.

During April and May of 2021, the Company sold 43.0 million shares, generating $ 427.5 million in gross proceeds and paid fees to sales agents of $ 10.7 million.

In June of 2021, the Company

sold 11.55 million shares, generating $ 587.4 million in gross proceeds and paid fees to sales agents of $ 14.7 million and other fees of $ 0.3 million.

● The June 2021 issuance of 8.5 million shares of Class A common stock to Mudrick Capital Management, LP (“Mudrick”) in a private placement for $ 230.5 million in gross proceeds and paid fees of approximately $ 0.1 million related to this transaction.

The table below summarizes net increase (decrease) in cash equivalents and restricted cash by quarter for the nine months ended September 30, 2021:

Three Months Ended

Nine Months Ended

September 30,

(In millions)

Cash flows from operating activities:

Net cash used in operating activities

Cash flows from investing activities:

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

The Company’s net cash used in operating activities improved by $ 79.1 million during the three months ended June 30, 2021, and has further improved by $ 119.9 million from ($ 233.8 ) million to $( 113.9 ) million during the three months ended September 30, 2021.

This is primarily attributable to continued increases in attendance and industry box office revenues during the nine months ended September 30, 2021.

The Company will continue to repay rent amounts that were deferred during the pandemic, which will increase its cash outflows from operating activities.

See Note 2—Leases for a summary of the estimated future repayment terms for the remaining $ 375.9 million of rentals that were deferred during the COVID-19 pandemic.

The Company’s net cash provided by (used in) investing activities included:

● $( 11.9 ) million of capital expenditures and $( 9.3 ) million of investments in non-consolidated entities, partially offset by proceeds from the disposition of the Baltics’ theatres of $ 3.8 million and proceeds from the disposition of long-term assets of $ 1.4 million during the three months ended March 31, 2021;

● $ 31.4 million of proceeds from the disposition of the Baltics’ theatres, partially offset by $( 17.9 ) million of capital expenditures during the three months ended June 30, 2021;

● $( 24.1 ) million of capital expenditures, $( 5.8 ) million related to the acquisition of assets at two theatres and $( 1.0 ) million of transaction costs related to the Baltics’ theatre sale, partially offset by $ 2.0 million of proceeds from disposition of long-term assets during the three months ended September 30, 2021.

The Company’s net cash provided by (used in) financing activities included:

● Net proceeds from the Company’s debt and equity issuances of $ 861.9 million during the three months ended March 31, 2021;

● Net proceeds from the Company’s equity issuances of $ 1,219.6 million during the three months ended June 30, 2021;

● Principal and premium payments of $( 40.3 ) million related to an optional redemption of the Company’s First Lien Toggle Notes due 2026 during the three months ended September 30, 2021.

The Company believes its existing cash and cash equivalents, together with cash generated from operations, will be sufficient to fund its operations, satisfy its obligations, including cash outflows for deferred rent and planned capital expenditures, and comply with minimum liquidity and financial covenant requirements under its debt covenants related to borrowings pursuant to the Senior Secured Revolving Credit Facility and Odeon Term Loan Facility for at least the next 12 months.

In order to achieve net positive operating cash flows and long-term profitability, the Company believes it will need to increase attendance levels significantly from their current levels to achieve levels in line with pre-COVID-19 attendance.

The Company believes the global re-opening of its theatres, the anticipated volume of titles available for theatrical release, and the anticipated broad appeal of many of those titles will support increased attendance levels.

However, there remain significant risks that may negatively impact attendance, including a resurgence of COVID-19 related restrictions, potential movie-goer reluctance to attend theatres due to concerns about the COVID-19 variant strains, movie studios release schedules and direct to streaming or other changing movie studio practices.

2 unchanged sentences

Following the expiration of the Extended Covenant Suspension Period, the Company will be subject to the financial covenant under the Senior Secured Revolving Credit Facility, beginning with the quarter ending June 30, 2022.

The Company currently expects it will be able to comply with this financial covenant.

The Company currently expects it will be able to comply with this financial covenant, however the Company does not anticipate the need to borrow under the Senior Secured Revolving Credit Facility during the next twelve months.

See Note 6—Corporate Borrowings and Finance Lease Obligations for further information.

The Company’s liquidity needs thereafter will depend, among other things, on the timing of a full resumption of operations, the timing of movie releases and its ability to generate cash from operations.

The Company’s liquidity needs thereafter will depend, among other things, on the timing of movie releases and its ability to generate cash from operations.

The Company received rent concessions provided by the lessors that aided in mitigating the economic effects of COVID-19 during the pandemic.

These concessions primarily consisted of rent abatements and the deferral of rent payments.

As a result of the deferral of rent payments of approximately $ 420.6 million as of June 30, 2021, the Company’s cash expenditures for rent are scheduled to increase significantly in the second half of 2021 and future years.

See Note 2—Leases for further information.

As a result, deferred lease amounts were approximately $ 375.9 million as of September 30, 2021.

The Company’s cash expenditures for rent increased significantly in both the second and third quarters of 2021.

See Note 2—Leases for a summary of the estimated future repayment terms for the deferred lease amounts due to COVID-19.

Use of estimates.

8 unchanged sentences

All significant intercompany balances and transactions have been eliminated in consolidation.

Due to the seasonal nature of the Company’s business and the suspension of operations at all the Company’s theatres due to the COVID-19 pandemic, results for the six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021.

Due to the seasonal nature of the Company’s business and the temporarily suspended or limited operations at the Company’s theatres due to the COVID-19 pandemic, results for the nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021.

The Company manages its business under two reportable segments for its theatrical exhibition operations, U.S.

6 unchanged sentences

In May 2021, the Company received cash consideration of $ 31.4 million (€ 26.2 million), net of cash of $ 0.1 million and transaction costs of $ 0.3 million, which completed the sale of its remaining 51 % equity interest in Lithuania and eliminated the Company’s noncontrolling interest in Forum Cinemas OU.

The Company recorded the net gain from the sale of its equity interest in Forum Cinemas OU of $ 5.5 million, net of transaction costs of $ 2.6 million, in investment income, during the three and six months ended June 30, 2021.

Accrued transaction costs of $ 1.0 million were paid during the three months ended September 30, 2021.

The Company recorded the net gain from the sale of its equity interest in Forum Cinemas OU of $ 0 million and $ 5.5 million (net of transaction costs of $ 2.6 million) in investment expense (income), during the three and nine months ended September 30, 2021, respectively.

Restricted cash.

7 unchanged sentences

Realized loss on foreign currency transactions reclassified into investment expense (income)

Balance June 30, 2021

Balance September 30, 2021

Accumulated depreciation and amortization.

Accumulated depreciation was $ 2,417.7 million and $ 2,243.1 million at June 30, 2021 and December 31, 2020, respectively, related to property.

Accumulated amortization of intangible assets was $ 43.3 million and $ 42.0 million at June 30, 2021 and December 31, 2020, respectively.

Accumulated depreciation was $ 2,484.2 million and $ 2,243.1 million at September 30, 2021 and December 31, 2020, respectively, related to property.

Accumulated amortization of intangible assets was $ 44.0 million and $ 42.0 million at September 30, 2021 and December 31, 2020, respectively.

Other expense (income).

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Derivative liability fair value adjustment for embedded conversion feature in the Convertible Notes

5 unchanged sentences

Non-operating components of net periodic benefit cost (income)

Loss on debt extinguishment

Financing fees related to modification of debt agreements

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Impairment of long-lived assets

5 unchanged sentences

Total impairment loss

There was no goodwill impairment charges during the three months ended June 30, 2021, the three months ended June 30, 2020, and the six months ended June 30, 2021.

During the six months ended June 30, 2020, 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 were recorded for the Company’s Domestic Theatres and International Theatres reporting units, respectively.

The Step 1 quantitative goodwill impairment test was performed due to a decline in the common stock price and prices of the Company’s corporate borrowings and the resulting impact on market capitalization, which were two of several factors considered when making this evaluation, including the sustained declines during 2020 in the Company’s enterprise market capitalization and the temporary suspension of operations at all of the Company’s theatres on or before March 17, 2020 due to the COVID-19 pandemic.

See Note 4—Goodwill for further information.

There was no goodwill impairment charge recorded during the three and nine months ended September 30, 2021.

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

During the nine months ended September 30, 2020, the enterprise fair values of the Domestic Theatres and International Theatres reporting units were less than their carrying values and goodwill impairment charges of $ 1,276.1 million and $ 625.0 million were recorded for the Company’s Domestic Theatres and International Theatres reporting units, respectively.

The Step 1 quantitative goodwill impairment test was performed at March 31, 2020 and September 30, 2020 due to a decline in the common stock price and prices of the Company’s corporate borrowings and the resulting impact on market capitalization, which were two of several factors considered when making this evaluation, including the sustained declines during 2020 in the Company’s enterprise market capitalization and the temporary suspension of operations at all of the Company’s theatres on or before March 17, 2020 due to the COVID-19 pandemic.

The Company evaluates definite-lived and indefinite-lived intangible assets for impairment annually or more frequently as specific events or circumstances dictate or changes in circumstances indicate that the carrying amount of the asset group may not be fully recoverable.

There was no impairment charge of long-lived assets, definite-lived intangible assets, and other assets without a readily determinable fair value accounted for under the cost method during the three months ended June 30, 2021, the three months ended June 30, 2020, and the six months ended June 30, 2021.

During the six months ended June 30, 2020, the Company recorded non-cash impairment charges of long-lived assets 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, 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).

During the six months ended June 30, 2020, the Company recorded impairment losses related to definite-lived intangible assets of $ 8.0 million.

In addition, the Company 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.

There was no impairment charge of indefinite-lived intangible assets during the three months ended June 30, 2021, the three months ended June 30, 2020, and the six months ended June 30, 2021.

During the three months ended September 30, 2020, the Company 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, and Wyoming) and $ 0 million in the International markets.

During the nine months ended September 30, 2020, the Company recorded non-cash impairment charges 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).

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

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

There was no impairment charge of indefinite-lived intangible assets during the three and nine months ended September 30, 2021.

The Company first assessed the qualitative factors to determine whether the existence of events and circumstances indicated that it was more likely than not the fair value amounts of any indefinite-lived intangible assets were less than their carrying amounts and concluded it was not more likely than not that the fair value amounts were less than their carrying amounts.

During the six months ended June 30, 2020, the Company performed a quantitative impairment evaluation of its 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 six months ended June 30, 2020.

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

At September 30, 2020 and March 31, 2020, the Company performed a quantitative impairment evaluation of its indefinite-lived intangible assets related to the AMC, Odeon and Nordic trade names.

The Company recorded impairment charges of $ 4.5 million and $ 0.1 million related to the Odeon and Nordic trade names, respectively, during the three months ended September 30, 2020.

During the nine months ended September 30, 2020, the Company recorded impairment charges of $ 10.4 million and $ 2.5 million related to the Odeon and Nordic trade names,

respectively.

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

To estimate fair value of the Company’s indefinite-lived trade names, the Company employed a derivation of the Income Approach known as the Royalty Savings.

Accounting Pronouncements Recently Adopted

1 unchanged sentence

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to improve consistency and simplify several areas of existing guidance.

ASU 2019-12 removes certain exceptions to the general principles related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in

an interim period and the recognition of deferred tax liabilities for outside basis differences.

ASU 2019-12 removes certain exceptions to the general principles related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The new guidance also clarifies the accounting for transactions that result in a step-up in the tax basis for goodwill.

19 unchanged sentences

Increase (decrease)

September 30,

(In millions)

4 unchanged sentences

Total deferred lease amounts

(1) During the six months ended June 30, 2021, the increase in fixed operating lease deferred amounts is net of $ 55.0 million of decreases in the deferred balances as of December 31, 2020 related to payments and abatements.

(2) During the six months ended June 30, 2021, decreases in variable lease deferred amounts were primarily due to resolution of contingencies, therefore, variable amounts became fixed and were reclassified to fixed operating lease deferred amounts.

The following table reflects the lease costs for the three months ended June 30, 2021 and June 30, 2020:

(1) During the nine months ended September 30, 2021, the decrease in fixed operating lease deferred amounts includes $ 93.3 million of decreases in the deferred balances as of December 31, 2020 related to payments and abatements.

(2) During the nine months ended September 30, 2021, decreases in variable lease deferred amounts were primarily due to resolution of contingencies, therefore, variable amounts became fixed and were reclassified to fixed operating lease deferred amounts.

The following table reflects the lease costs for the periods presented:

Three Months Ended

Six Months Ended

Nine Months Ended

Consolidated Statement

September 30,

(In millions)

3 unchanged sentences

Theatre properties

Operating expense (income)

Operating expense

Office and other

7 unchanged sentences

Theatre properties

Operating expense (income)

Operating expense

Total lease cost

Cash flow and supplemental information is presented below:

Six Months Ended

Nine Months Ended

September 30,

(In millions)

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(1) Includes lease extensions and option exercises.

The following table represents the weighted-average remaining lease term and discount rate as of June 30, 2021:

As of June 30, 2021

The following table represents the weighted-average remaining lease term and discount rate as of September 30, 2021:

As of September 30, 2021

Weighted Average

4 unchanged sentences

Finance leases

Minimum annual payments, including deferred lease payments less contractual rent amounts due and not paid that were recorded in accounts payable, that are recorded as operating and finance lease liabilities and the net present value thereof as of June 30, 2021 are as follows:

Operating Lease

1 unchanged sentence

(In millions)

Six months ending December 31, 2021 (1)

Three months ending December 31, 2021 (1)

Total lease payments

1 unchanged sentence

Total operating and finance lease liabilities, respectively

(1) The minimum annual payments table above does not include contractual cash rent amounts that were due and not paid, which are recorded in accounts payable for deferred rent and now due as shown below, including estimated repayment dates:

(1) The minimum annual payments table above does not include contractual cash rent amounts that were due and not paid, which are recorded in accounts payable as shown below, including estimated repayment dates:

Accounts Payable

1 unchanged sentence

Lease Payments

Three months ended September 30, 2021

Three months ended December 31, 2021

1 unchanged sentence

Three months ended June 30, 2022

Three months ended September 30, 2022

Total deferred lease amounts recorded in AP

(2) The minimum annual payments table above includes deferred undiscounted cash lease payments related to operating and finance leases, as shown below:

(2) The minimum annual payments table above includes deferred undiscounted cash rent amounts that were due and not paid related to operating and finance leases, as shown below:

Operating Lease

1 unchanged sentence

(In millions)

Three months ended September 30, 2021

Three months ended December 31, 2021

4 unchanged sentences

Total deferred lease amounts

As of June 30, 2021, the Company had signed additional operating lease agreements for 6 theatres that have not yet commenced of approximately $ 156.6 million, which are expected to commence between the second half of 2021 and 2024 and carry lease terms of approximately 5 to 20 years .

As of September 30, 2021, the Company had signed additional operating lease agreements for 4 theatres that have not yet commenced of approximately $ 136.8 million, which are expected to commence between 2022 and 2024 and carry lease terms of approximately 15 to 20 years .

The timing of lease commencement is dependent on the landlord providing the Company with control and access to the related facility.

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Major revenue types

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Timing of revenue recognition

5 unchanged sentences

(In millions)

June 30, 2021

September 30, 2021

December 31, 2020

4 unchanged sentences

(In millions)

June 30, 2021

September 30, 2021

December 31, 2020

19 unchanged sentences

Foreign currency translation adjustment

Balance June 30, 2021

Balance September 30, 2021

(1) Includes movie tickets, food and beverage, gift cards, exchange tickets, and AMC Stubs® loyalty membership fees.

4 unchanged sentences

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

The Company has resumed a more normal recognition pattern for deferred revenues related to certain loyalty programs, gift cards and exchange tickets during the three months ended June 30, 2021.

Starting in July of 2021, all A-List monthly subscriptions were automatically reactivated and the Company has resumed a more normal recognition pattern for deferred revenues related to certain loyalty programs, gift cards and exchange tickets.

The significant changes to contract liabilities included in the exhibitor services agreement in the condensed consolidated balance sheets, are as follows:

4 unchanged sentences

Negative Common Unit Adjustment–reduction of common units

Reclassification of the beginning balance to other theatre revenue, as the result of performance obligations satisfied

Balance June 30, 2021

Reclassification of portion of the beginning balance to other theatre revenue, as the result of performance obligations satisfied

Balance September 30, 2021

(1) Represents the carrying amount of the National CineMedia, LLC (“NCM”) common units that were previously received under the annual Common Unit Adjustment (“CUA”).

1 unchanged sentence

Gift cards and exchange tickets.

The total amount of non-redeemed gifts cards and exchange tickets included in deferred revenues and income as of June 30, 2021 was $ 311.5 million.

The total amount of non-redeemed gifts cards and exchange tickets included in deferred revenues and income as of September 30, 2021 was $ 292.3 million.

This will be recognized as revenues as the gift cards and exchange tickets are redeemed or as the non-redeemed gift card and exchange ticket revenues are recognized in proportion to the pattern of actual redemptions.

1 unchanged sentence

Loyalty programs.

As of June 30, 2021, the amount of deferred revenues allocated to the loyalty programs

included in deferred revenues and income was $ 65.8 million.

As of September 30, 2021, the amount of deferred revenues allocated to the loyalty programs included in deferred revenues and income was $ 66.5 million.

The earned points will be recognized as revenue as the points are redeemed.

3 unchanged sentences

NOTE 4—GOODWILL

The following table summarizes the changes in goodwill by reporting unit for the six months ended June 30, 2021:

The following table summarizes the changes in goodwill by reporting unit for the nine months ended September 30, 2021:

(In millions)

5 unchanged sentences

Baltics disposition-Lithuania (1)

Balance June 30, 2021

Balance September 30, 2021

(1) See Note 1 — Basis of Presentation for further information regarding the Baltics’ theatre sale.

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Investments in non-consolidated affiliates and certain other investments accounted for under the equity method generally include all entities in which the Company or its subsidiaries have significant influence, but not more than 50 % voting control, and are recorded in the condensed consolidated balance sheets in other long-term assets.

Investments in non-consolidated affiliates as of June 30, 2021 include interests in Digital Cinema Implementation Partners, LLC (“DCIP”) of 29.0 %, Digital Cinema Distribution Coalition, LLC (“DCDC”) of 14.6 %, AC JV, LLC (“AC JV”), owner of Fathom Events, of 32.0 %, SV Holdco LLC (“SV Holdco”), owner of Screenvision, of 18.4 %, Digital Cinema Media Ltd.

Investments in non-consolidated affiliates as of September 30, 2021 include interests in Digital Cinema Implementation Partners, LLC (“DCIP”) of 29.0 %, Digital Cinema Distribution Coalition, LLC (“DCDC”) of 14.6 %, AC JV, LLC (“AC JV”), owner of Fathom Events, of 32.0 %, SV Holdco LLC (“SV Holdco”), owner of Screenvision, of 18.4 %, Digital Cinema Media Ltd.

(“DCM”) of 50.0 %, and Saudi Cinema Company LLC (“SCC”) of 10.0 %.

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Indebtedness held by equity method investees is non-recourse to the Company.

During the three months ended June 30, 2021 and June 30, 2020, the Company recorded equity in loss of non-consolidated entities of $ 2.7 million and $ 12.4 million, respectively.

During the six months ended June 30, 2021 and June 30, 2020, the Company recorded equity in loss of non-consolidated entities of $ 5.5 million and $ 15.3 million, respectively.

During the three months ended September 30, 2021 and September 30, 2020, the Company recorded equity in (earnings) loss of non-consolidated entities of $( 6.7 ) million and $ 10.6 million, respectively.

During the nine months ended September 30, 2021 and September 30, 2020, the Company recorded equity in (earnings) loss of non-consolidated entities of $( 1.2 ) million and $ 25.9 million, respectively.

During the three months ended September 30, 2021, the Company received cash distribution of $ 6.1 million from DCIP, which the Company recorded as a reduction to its investment in DCIP.

The distribution reduced the Company’s recorded investment below $ 0 and therefore the Company recorded equity in earnings of $ 4.0 million to increase its investment to $ 0 as the Company has not guaranteed any of the liabilities of DCIP.

The Company will not record its share of any equity in earnings of DCIP until such time as the excess distribution amount recorded to earnings has been satisfied with prospective earnings from DCIP.

Related party transactions with equity method investees.

At June 30, 2021 and December 31, 2020, the Company recorded net receivable amounts due from equity method investees of $ 2.5 million and $ 6.9 million, respectively, primarily related to projector warranty expenditures and other transactions.

The Company recorded related party transactions with equity method investees in other revenues, film exhibition costs, and operating expenses (income) of $ 1.2 million, $ 0.4 million, and $( 0.3 ) million, respectively, during the three months ended June 30, 2021 and $0.0 million, $0.0 million, and $( 0.4 ) million, respectively, during the three months ended June 30, 2020.

The Company recorded related party transactions with equity method investees in other revenues, film exhibition costs, and operating expenses of $ 1.8 million, $ 0.7 million, and $ 0.1 million, respectively, during the six months ended June 30, 2021 and $ 5.7 million, $ 3.2 million, and $ 0.9 million, respectively, during the six months ended June 30, 2020.

At September 30, 2021 and December 31, 2020, the Company recorded net receivable (payable) amounts due from (to) equity method investees of $( 5.7 ) million and

$ 6.9 million, respectively, primarily related to the liability for the negative CUA due to NCM, on-screen advertising revenue, projector warranty expenditures and other transactions.

The Company recorded related party transactions with equity method investees in other revenues, film exhibition costs, and operating expenses (income) of $ 2.8 million, $ 1.4 million, and $ 0 million, respectively, during the three months ended September 30, 2021, and $ 0.3 million, $ 0.1 million, and $( 0.3 ) million, respectively, during the three months ended September 30, 2020.

The Company recorded related party transactions with equity method investees in other revenues, film exhibition costs, and operating expenses of $ 4.6 million, $ 2.1 million, and $ 0.1 million, respectively, during the nine months ended September 30, 2021, and $ 6.0 million, $ 3.3 million, and $ 0.6 million, respectively, during the nine months ended September 30, 2020.

NOTE 6—CORPORATE BORROWINGS AND FINANCE LEASE OBLIGATIONS

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(In millions)

June 30, 2021

September 30, 2021

December 31, 2020

First Lien Secured Debt:

Senior Secured Credit Facility-Term Loan due 2026 ( 3.0855 % as of June 30, 2021)

Senior Secured Credit Facility-Term Loan due 2026 ( 3.0829 % as of September 30, 2021)

Senior Secured Credit Facility-Revolving Credit Facility due 2024

10.75 % in Year 1, 11.25 % thereafter Cash/PIK Odeon Term Loan Facility due 2023 (£ 143.7 million and € 303.8 million par value as of June 30, 2021)

10.75 % in Year 1, 11.25 % thereafter Cash/PIK Odeon Term Loan Facility due 2023 (£ 147.6 million and € 312.2 million par value as of September 30, 2021)

Odeon Revolving Credit Facility due 2022

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Subordinated Debt:

6.375 % Senior Subordinated Notes due 2024 (£ 4.0 million par value as of June 30, 2021)

6.375 % Senior Subordinated Notes due 2024 (£ 4.0 million par value as of September 30, 2021)

5.75 % Senior Subordinated Notes due 2025

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(1) The following table provides the net premium (discount) amounts of corporate borrowings:

September 30,

(In millions)

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6.375 % Senior Subordinated Notes due 2024

The following table provides the principal payments required and maturities of corporate borrowings as of June 30, 2021:

The following table provides the principal payments required and maturities of corporate borrowings as of September 30, 2021:

(In millions)

Six months ended December 31, 2021

Three months ended December 31, 2021

Senior Secured Credit Facilities

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On March 8, 2021, the Company entered the Ninth Amendment to the Credit Agreement (the “Ninth Amendment”), with the requisite revolving lenders party thereto and the Administrative Agent, pursuant to which the requisite revolving lenders party thereto agreed to extend the suspension period for the financial covenant under its Credit Agreement from a period ending on March 31, 2021, to a period ending on March 31, 2022 (the “Extended Covenant Suspension Period”).

During the Extended Covenant Suspension Period, the Company will not, and will not permit any of its restricted subsidiaries to, (i) make certain restricted payments, (ii) subject to certain exceptions, incur any indebtedness for borrowed money that is pari passu or senior in right of payment or security with the Revolving Loans (as defined in the Credit Agreement) or (iii) make any investment in or otherwise dispose of any assets to any subsidiary of the Company that is not a Loan Party (as defined in the Credit Agreement) to facilitate a new financing incurred by a subsidiary of the Company.

subsidiary of the Company that is not a Loan Party (as defined in the Credit Agreement) to facilitate a new financing incurred by a subsidiary of the Company.

In addition, as an ongoing condition to the suspension of the financial covenant, the Company 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.

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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 (the “Odeon Term Loan due 2023”) 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.

then-existing revolving credit facility and the remaining net proceeds will be used for general corporate purposes.

The Company recorded deferred financing cost write-off of $ 0 million and $ 1.0 million in other expense during the three and six months ended June 30, 2021.

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 then-existing revolving credit facility and the remaining net proceeds will be used for general corporate purposes.

The Company recorded deferred financing cost write-off of $ 0 million and $ 1.0 million in other expense during the three and nine months ended September 30, 2021, respectively.

The Odeon Term Loan Facility has a maturity of August 19, 2023 ( 2.5 years from the date on which it was first drawn).

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The Company currently expects it will be able to comply with this financial covenant.

The Company’s liquidity needs thereafter will depend, among other things, on the timing of movie releases and its ability to generate cash from operations.

First Lien Toggle Notes due 2026

On January 15, 2021, the Company issued $ 100.0 million aggregate principal amount of its 15 %/ 17 % Cash/PIK Toggle First Lien Secured Notes due 2026 as contemplated by the previously disclosed commitment letter with Mudrick Capital Management, LP, dated as of December 10, 2020.

On January 15, 2021, the Company issued $ 100.0 million aggregate principal amount of its 15 %/ 17 % Cash/PIK Toggle First Lien Secured Notes due 2026 (the “First Lien Toggle Notes due 2026”) as contemplated by the previously disclosed commitment letter with Mudrick Capital Management, LP (“Mudrick”), 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 the Company, the guarantors named therein and the U.S.

Bank National Association, as trustee and collateral agent.

On September 30, 2021, the Company exercised an option to repurchase $ 35.0 million of its First Lien Toggle Notes due 2026.

The total cost to exercise this repurchase option was $ 41.3 million, including principal, redemption price and accrued and unpaid interest.

As a result of this debt reduction, the Company’s annual cash interest cost will be reduced

by $ 5.25 million.

During the three and nine months ended September 30, 2021, the Company recorded loss on debt extinguishment of $ 14.4 million in other expense.

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.

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(“Wanda”) dated as of September 14, 2018, 5,666,000 shares of the Company’s Class B common stock held by Wanda were forfeited and cancelled in connection with the Conversion.

During the three and six months ended June 30, 2020, the Company recorded other expense (income) of $ 0 million and $( 0.5 ) million, respectively, related to the derivative liability fair value adjustment for the embedded conversion feature in the Convertible Notes due 2026.

During the three and nine months ended September 30, 2020, the Company recorded other expense (income) of $ 89.9 million and $ 89.4 million, respectively, related to the derivative liability fair value adjustment for the embedded conversion feature in the Convertible Notes due 2026.

The derivative liability was remeasured at fair value each reporting period until the conversion price reset on September 14, 2020, with changes in fair value recorded in the condensed consolidated statements of operations as other expense or income.

The Company bifurcated the conversion feature from the principal balance of the Convertible Notes due 2026 as a derivative liability because (1) a conversion feature was not clearly and closely related to the debt instrument and the reset of the conversion price caused the conversion feature to not be considered indexed to the Company’s equity, (2) the conversion feature standing alone met the definition of a derivative, and (3) the Convertible Notes due 2026 were not remeasured at fair value each reporting period with changes in fair value recorded in the condensed consolidated statement of operations.

During the three and six months ended June 30, 2020, the Company recorded other expense (income) of $( 6.4 ) million and $ 13.7 million, respectively, related to the derivative asset fair value adjustment for the contingent call option related to the Class B common stock purchase and cancellation agreement.

During the three and nine months ended September 30, 2020, the Company recorded other expense (income) of $ 5.9 million and $ 19.6 million, respectively, related to the derivative asset fair value adjustment for the contingent call option related to the Class B common stock purchase and cancellation agreement.

Pursuant to the Stock Repurchase and Cancellation Agreement between the Company and Wanda, the conversion feature of the Convertible Notes due 2026 would result in 5,666,000 shares of the Company’s Class B common stock held by Wanda being subject to forfeiture and retirement by the Company at no additional cost.

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In December of 2020 and the first half of 2021, the Company entered into equity distribution agreements with sales agents to sell up to 241.6 million shares of the Company’s Class A common stock, par value $ 0.01 per share, through “at-the-market” offering programs.

During the six months ended June 30, 2021, the Company raised gross proceeds of approximately $ 1,611.8 million related to the “at-the-market” offering programs and paid fees to the sales agents of approximately $ 40.3 million and other fees of $ 0.7 million.

During the nine months ended September 30, 2021, the Company raised gross proceeds of approximately $ 1,611.8 million related to the “at-the-market” offering programs and paid fees to the sales agents of approximately $ 40.3 million and other fees of $ 0.8 million.

The Company intends 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.

The gross proceeds raised from the “at-the-market” sale of Class A common stock during the six months ended June 30, 2021 are summarized in the table below:

The gross proceeds raised from the “at-the-market” sale of Class A common stock during the nine months ended September 30, 2021 are summarized in the table below:

"At-the-market"

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and Citigroup Global Markets Inc.

(1) Included in the Class A common stock shares sold of 43.0 million was the reissuance of treasury stock shares of

approximately 3.7 million shares.

(1) Included in the Class A common stock shares sold of 43.0 million was the reissuance of treasury stock shares of approximately 3.7 million shares.

Upon the sales of treasury stock, the Company reclassified amounts recorded in treasury stock to additional paid-in capital of $ 37.1 million and loss of $ 19.3 million to retained earnings.

(2) On December 11, 2020, the Company 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 the Company’s Class A common stock, of which approximately 40.93 million shares of Class A common stock were sold and settled during December 2020 and approximately 137.07 million shares of Class A common stock were sold and settled during the six months ended June, 2021.

Class A common stock issuance to Mudrick.

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The Third Amended and Restated Certificate of Incorporation of the Corporation provides that Class B common stock may not be reissued by the Company.

There were no dividends declared to stockholders during the six months ended June 30, 2021.

The following is a summary of dividends and dividend equivalents declared to stockholders during the six months ended June 30, 2020:

There were no dividends declared to stockholders during the nine months ended September 30, 2021.

The following is a summary of dividends and dividend equivalents declared to stockholders during the nine months ended September 30, 2020:

Declaration Date

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Related Party Transactions .

As of June 30, 2021 and December 31, 2020, the Company recorded a receivable due from Wanda of $ 0 million and $ 0.7 million, respectively, for reimbursement of general administrative and other expense incurred on behalf of Wanda.

For the three months ended June 30, 2021 and June 30, 2020, the Company recorded approximately $ 0 million and $ 0.1 million, respectively, of cost reductions for general and administrative services provided on behalf of Wanda.

For the six months ended June 30, 2021 and June 30, 2020, the Company recorded approximately $ 0 million and $ 0.2 million, respectively, of cost reductions for general and administrative services provided on behalf of Wanda.

As of September 30, 2021 and December 31, 2020, the Company recorded a receivable due from Wanda of $ 0 million and $ 0.7 million, respectively, for reimbursement of general administrative and other expense incurred on behalf of Wanda.

For the three months ended September 30, 2021 and September 30, 2020, the Company did not record any cost reductions for general and administrative services provided on behalf of Wanda.

For the nine months ended September 30, 2021 and September 30, 2020, the Company recorded approximately $ 0 million and $ 0.2 million, respectively, of cost reductions for general and administrative services provided on behalf of Wanda.

Stock-Based Compensation

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Board of director stock award expense

3 unchanged sentences

Total stock-based compensation expense

As of June 30, 2021, the estimated remaining unrecognized compensation cost related to stock-based compensation arrangements was approximately $ 44.6 million, which reflects assumptions related to attainment of performance targets based on the scales as described below.

As of September 30, 2021, the estimated remaining unrecognized compensation cost related to stock-based compensation arrangements was approximately $ 29.5 million, which reflects assumptions related to attainment of performance targets based on the scales as described below.

The weighted average period over which this remaining compensation expense is expected to be recognized is approximately 1.4 years.

Awards Granted in 2021

During the six months ended June 30, 2021, AMC’s Board of Directors approved awards of stock, restricted stock units (“RSUs”), and performance stock units (“PSUs”) to certain of the Company’s employees and directors under the 2013 Equity Incentive Plan.

The grant date fair value of these awards during the six months ended June 30, 2021 was based on the closing price of AMC’s Class A common stock on February 23, 2021 of $ 7.70 per share.

During the nine months ended September 30, 2021, AMC’s Board of Directors approved awards of stock, restricted stock units (“RSUs”), and performance stock units (“PSUs”) to certain of the Company’s employees and directors under the 2013 Equity Incentive Plan.

The grant date fair value of these awards during the nine months ended September 30, 2021 was based on the closing price of AMC’s Class A common stock on February 23, 2021 of $ 7.70 per share.

Each RSU and PSU held by a participant as of a dividend record date is entitled to a dividend equivalent equal to the amount paid with respect to one share of Class A common stock underlying the unit.

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Additionally, vesting is subject to the participant’s continued employment through the end of the three-year cumulative period, ending on December 31, 2023.

The vested PSUs will be settled within 30 days of vesting which will occur upon certification of performance results by the Compensation Committee of the Board of Directors.

The Compensation Committee establishes the annual performance targets at the beginning of each year, therefore, the grant date (and fair value measurement date) for each Tranche Year is the date at the beginning of each year when a mutual understanding of the key terms and conditions are reached per ASC 718, Compensation – Stock compensation.

The vested PSUs will be settled within

30 days of vesting, which will occur upon certification of performance results by the Compensation Committee of the Board of Directors.

The Compensation Committee establishes the annual performance targets at the beginning of each year.

Therefore, the grant date (and fair value measurement date) for each Tranche Year is the date at the beginning of each year when a mutual understanding of the key terms and conditions are reached per ASC 718, Compensation – Stock compensation.

The 2021 PSU award grant date fair value on February 23, 2021 for the 2021 Tranche Year award of 895,836 units was approximately $ 6.9 million, measured using performance targets at 100%.

In addition, the February 23, 2021 grant date fair value for the 2021 Tranche Year under the 2020 PSU award agreement of 438,244 units and the 2019 PSU award agreement of 181,916 units was approximately $ 3.4 million and $ 1.4 million, respectively, measured using performance targets at 100%.

At June 30, 2021, the Company estimated that 2021 Tranche Year target performance conditions for the annual Adjusted EBITDA and free cash flow are expected to be achieved at 200 % and 160 %, respectively.

At September 30, 2021, the Company estimated that 2021 Tranche Year target performance conditions for both the annual Adjusted EBITDA and free cash flow are expected to be achieved at 100 %.

● Special Performance Stock Unit (“SPSU”) Executive Award Agreement:

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The stock-based compensation costs for SPSUs are recorded on a straight-line basis through October 30, 2021, which is the end of the service requirement period.

The following table represents the nonvested RSU, PSU and SPSU activity for the six months ended June 30, 2021:

The following table represents the nonvested RSU, PSU and SPSU activity for the nine months ended September 30, 2021:

Shares of RSU

Beginning balance at January 1, 2021 (1)

Nonvested at June 30, 2021

Nonvested at September 30, 2021

Tranche Years 2022 and 2023 awarded under the 2021 PSU award with grant date fair values to be determined in years 2022 and 2023, respectively

Total Nonvested at June 30, 2021

Total Nonvested at September 30, 2021

(1) Includes awards modified during 2020 where grant date fair value was not determined until 2021.

(2) The number of PSU shares granted under the Tranche Year 2021 assumes the Company will attain a performance target at 200 % for the Adjusted EBITDA target and 160 % for the free cash flow target.

(2) The number of PSU shares granted under the Tranche Year 2021 assumes the Company will attain a performance target at 100 % for both the Adjusted EBITDA target and the free cash flow target.

The PSUs vest ratably based on a scale ranging from 80 % to 120 % of the performance target with the vested amount ranging from 50 % to 200 % for Tranche Year 2021 awards granted under the 2021 and 2020 PSU award and 30 % to 200 % for Tranche Year 2021 awards granted under the 2019 PSU award.

Condensed Consolidated Statements of Stockholders’ Deficit

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2021

Class A Voting

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Balances June 30, 2021

Other comprehensive loss

Class A common stock, accrued dividend equivalent adjustment

Class A common stock issuance fees

Stock-based compensation

Balances September 30, 2021

Condensed Consolidated Statements of Stockholders’ Deficit

For the Six Months Ended June 30, 2020

For the Nine Months Ended September 30, 2020

Class A Voting

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Stockholders’

Noncontrolling

(In millions, except share and per share data)

Equity (Deficit)

Balances December 31, 2019

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Balances June 30, 2020

Other comprehensive income

Baltics noncontrolling capital contribution

Class A common stock issuance

Exchange Offer Class A common stock issuance

Derivative asset valuation allowance adjustment

Reclassification of derivative liability and derivative asset for Conversion Price Reset of Convertible Notes due 2026

Stock-based compensation

Balances September 30, 2020

NOTE 8—INCOME TAXES

The Company’s worldwide effective income tax rate is based on actual income (loss), statutory rates, valuation allowances against deferred tax assets and tax planning opportunities available in the various jurisdictions in which it operates.

The Company is using a discrete income tax calculation for the three and six months ended June 30, 2021 due to the inability to determine reliable annual estimates of taxable income (loss) due to COVID-19.

The Company is using a discrete income tax calculation for the three and nine months ended September 30, 2021 due to the inability to determine reliable annual estimates of taxable income (loss) due to COVID-19.

Historically, for interim financial reporting, the Company estimated the worldwide annual income tax rate based on projected taxable income (loss) for the full year and recorded a quarterly income tax provision or benefit in accordance with the anticipated annual rate, adjusted for discrete items, if any.

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A valuation allowance is recorded against the Company’s U.S.

deferred tax assets and most of the Company’s International deferred tax assets as we have determined the realization of these assets does not meet the more likely than not criteria.

For purposes of determining the current and deferred tax provision, and uncertain tax positions for the six months ended June 30, 2021, the Company estimated a significant portion of its net operating losses and tax credits have been eliminated as a result of tax attribute reduction related to the debt exchange transaction that occurred in July 2020.

deferred tax assets and most of the Company’s International deferred tax assets as the Company has determined the realization of these assets does not meet the more likely than not criteria.

For purposes of determining the current and deferred tax provision, and uncertain tax positions for the nine months ended September 30, 2021, the Company estimated a significant portion of its net operating losses and tax credits had been eliminated as a result of tax attribute reduction related to the debt exchange transaction that occurred in July 2020.

The process of determining the attribute reduction is complex, subject to the taxpayer making certain elections regarding which attributes are to be reduced and cannot be calculated until the completion of taxable income for the year in which the cancellation of debt income (“CODI”) was incurred.

Therefore, the estimated impact of the tax attribute reduction is subject to change until the finalization of its 2020 tax returns that will contain the tax consequences of the debt exchange.

The effective tax rate for the six months ended June 30, 2021 reflects the impact of these valuation allowances against U.S.

and international deferred tax assets generated during the six-month period.

The actual effective rate for the six months ended June 30, 2021 was 1.3 %.

The Company’s consolidated tax rate for the six months ended June 30, 2021 differs from the U.S.

The effective tax rate for the nine months ended September 30, 2021 reflects the impact of these valuation allowances against U.S.

and international deferred tax assets generated during the nine-month period.

The actual effective rate for the nine months ended September 30, 2021 was 1.2 %.

The Company’s consolidated tax rate for the nine months ended September 30, 2021 differs from the U.S.

statutory tax rate primarily due to the valuation allowances in U.S.

and foreign jurisdictions, foreign tax rate differences, federal and state tax credits, permanent differences and other discrete items.

At June 30, 2021 and December 31, 2020, the Company has recorded net deferred tax liabilities of $ 25.8 million and $ 40.2 million, respectively.

At September 30, 2021 and December 31, 2020, the Company has recorded net deferred tax liabilities of $ 26.5 million and $ 40.2 million, respectively.

Utilization of the Company’s net operating loss carryforwards, disallowed business interest carryforwards and other tax attributes became subject to the Section 382 ownership change limitation due to changes in the Company’s stock ownership on January 27, 2021.

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Recurring Fair Value Measurements.

The following table summarizes the fair value hierarchy of the Company’s financial assets and liabilities carried at fair value on a recurring basis as of June 30, 2021:

Fair Value Measurements at June 30, 2021 Using

The following table summarizes the fair value hierarchy of the Company’s financial assets and liabilities carried at fair value on a recurring basis as of September 30, 2021:

Fair Value Measurements at September 30, 2021 Using

Total Carrying

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(In millions)

June 30, 2021

September 30, 2021

Other long-term assets:

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The Company is required to disclose the fair value of financial instruments that are not recognized at fair value in the statement of financial position for which it is practicable to estimate that value:

Fair Value Measurements at June 30, 2021 Using

Fair Value Measurements at September 30, 2021 Using

Significant other

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(In millions)

June 30, 2021

September 30, 2021

Current maturities of corporate borrowings

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Revenues (In millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

International markets

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Adjusted EBITDA (In millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

International markets

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Capital Expenditures (In millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

International markets

1 unchanged sentence

Long-term assets, net (In millions)

June 30, 2021

September 30, 2021

December 31, 2020

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Income tax provision (benefit)

3 unchanged sentences

Certain operating expense (income) (2)

Equity in loss of non-consolidated entities

Equity in (earnings) loss of non-consolidated entities

Cash distributions from non-consolidated entities (3)

1 unchanged sentence

Investment expense (income)

Other expense (income) (5)

Other expense (5)

Other non-cash rent benefit (6)

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Adjusted EBITDA

(1) During the six months ended June 30, 2020, the Company recorded non-cash impairment charges of $ 1,124.9 million and $ 619.4 million related to the enterprise fair values of its Domestic Theatres and International Theatres reporting units, respectively.

The Company recorded non-cash impairment charges during the six months ended June 30, 2020 related to its long-lived assets of $ 81.4 million on 57 theatres in the U.S.

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

The Company recorded non-cash impairment charges related to its 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 during the three months ended September 30, 2020.

The Company recorded non-cash impairment charges related to definite-lived intangible assets of $ 6.4 million 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 trade names, respectively, in the International Theatres reporting unit during the three months ended September 30, 2020.

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

During the nine months ended September 30, 2020, the Company recorded non-cash impairment charges related to its 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.

The Company recorded non-cash impairment charges related to its indefinite-lived intangible assets of $ 5.9 million and $ 2.4 million related to the Odeon and Nordic trade names, respectively, during the six months ended June 30, 2020.

The Company also recorded non-cash impairment charges of $ 8.0 million related to its definite-lived intangible assets.

The Company recorded non-cash impairment charges related to indefinite-lived intangible assets of $ 10.4 million and $ 2.5 million related to the Odeon and Nordic trade names, respectively, in the International Theatres reporting unit during the nine months ended September 30, 2020.

The Company also recorded non-cash impairment charges of $ 14.4 million related to its definite-lived intangible assets in the Domestic Theatres reporting unit during the nine months ended September 30, 2020.

(2) Amounts represent preopening expense related to temporarily closed screens under renovation, theatre and other closure expense for the permanent closure of screens, including the related accretion of interest, non-cash deferred digital equipment rent expense, and disposition of assets and other non-operating gains or losses included in operating expenses.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 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

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)

4 unchanged sentences

Attributable EBITDA

(5) Other expense (income) during the three months ended June 30, 2021, included income related to contingent lease guarantees of $( 3.7 ) million, partially offset by foreign currency transaction losses of $ 3.4 million.

Other expense (income) during the three months ended June 30, 2020, included a gain of $( 6.4 ) million for the fair value adjustment of the derivative asset related to the contingent call option related to the Class B common stock purchase and cancellation agreement and the foreign currency transaction gains of $( 2.1 ) million, partially offset by credit losses related to contingent lease guarantees of $ 3.9 million and financing fees of $ 2.8 million related to debt modification.

During the six months ended June 30, 2021, other expense (income) primarily consisted of income related to contingent lease guarantees of $( 5.7 ) million and foreign currency transaction gains of $( 0.4 ) 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 six months ended June 30, 2020, other expense (income) primarily related to a loss of $ 13.7 million for the fair value adjustment of the derivative asset related to the contingent call option related to the Class B common stock purchase and cancellation agreement, credit losses related to contingent lease guarantees of $ 9.2 million, and financing fees of $ 2.8 million related to debt modification, 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 and foreign currency transaction losses of approximately $( 0.1 ) million.

(5) Other expense during the three months ended September 30, 2021, included loss on debt extinguishment of $ 14.4 million, partially offset by foreign currency transaction gains of $( 0.7 ) million.

Other expense during the three months ended September 30, 2020, primarily related to a loss of $ 89.9 million for the fair value adjustment of the derivative liability related to the Convertible Notes due 2026, financing fees of $ 36.3 million related to debt modification, credit losses related to contingent lease guarantees of $ 6.1 million, a loss of $ 5.9 million for the fair value adjustment of the derivative asset related to the contingent call option related to the Class B common stock purchase and cancellation agreement, and foreign currency transaction losses of approximately $ 0.1 million.

During the nine months ended September 30, 2021, other expense primarily consisted of a loss on debt extinguishment of $ 14.4 million and financing fees of $ 1.0 million, partially offset by income related to contingent lease guarantees of $( 5.7 ) million and foreign currency transaction gains of $( 1.1 ) million.

During the nine months ended September 30, 2020, other expense primarily related to a loss of $ 89.4 million for the fair value adjustment of the derivative liability related to the Convertible Notes due 2026, financing fees of $ 39.1 million related to debt modification, a loss of $ 19.6 million for the fair value adjustment of the derivative asset related to the contingent call option related to the Class B common stock purchase and cancellation agreement, and credit losses related to contingent lease guarantees of $ 15.3 million.

(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.

13 unchanged sentences

AMC Entertainment Holdings, Inc., et al.

1:18-cv-00510-AJN (the

“Nichols Action,” and together with the Hawaii Action, the “Actions”), respectively, were filed against the Company in the U.S.

1:18-cv-00510-AJN (the “Nichols Action,” and together with the Hawaii Action, the “Actions”), respectively, were filed against the Company in the U.S.

District Court for the Southern District of New York.

5 unchanged sentences

On March 30, 2021, the court granted the motion to certify the class.

On September 2, 2021, the parties reached an agreement in principle to resolve the Actions for $ 18.0 million.

The Company agreed to the settlement and the payment of the settlement amount to eliminate the distraction, burden, expense, and uncertainty of further litigation.

The Company and the other defendants continue to expressly deny any liability or wrongdoing with respect to the matters alleged in the Actions.

On November 1, 2021, the parties to the Actions signed a stipulation of settlement, which memorialized the terms of the agreement in principle, and which the plaintiffs filed with the court.

Also on November 1, 2021, plaintiffs filed a motion to preliminarily approve the settlement.

The settlement remains subject to notice to class members and is contingent upon final court approval.

On May 21, 2018, a stockholder derivative complaint, captioned Gantulga v.

23 unchanged sentences

Aron, et al ., Case No.

1:20-cv-02870-AJN (the “Dinkevich Action”), was filed in the U.S.

02870-AJN (the “Dinkevich Action”), was filed in the U.S.

District Court for the Southern District of New York.

1 unchanged sentence

The parties filed a joint stipulation to stay the action, which was granted on June 25, 2020.

On September 23, 2021, a stockholder derivative complaint, captioned Lyon v.

1:21-cv-07940-AJN (the “Lyon Action”), was filed in the U.S.

District Court for the Southern District of New York against certain of the Company’s current and former officers and directors.

The Lyon Action asserts claims for contribution and indemnification under the Exchange Act and for breaches of fiduciary duty, waste of corporate assets, and unjust enrichment/constructive trust based on allegations substantially similar to the Actions, the Gantulga Action, the Kenna Action, the Manuel Action, and the Dinkevich Action.

On December 31, 2019, the Company received a stockholder litigation demand, requesting that the Board investigate the allegations in the Actions and pursue claims on the Company’s behalf based on those allegations.

8 unchanged sentences

On July 18, 2019, the Company’s Board of Directors formed a Special Litigation Committee to investigate and evaluate the claims and allegations asserted in the Lao Action and make a determination as to how the Company should proceed with respect to the Lao Action.

On January 8, 2021, the Special Litigation Committee filed a report with the court recommending that

the court dismiss all of the claims asserted in the Lao Action, and moved to dismiss all of the claims in the Lao Action.

On January 8, 2021, the Special Litigation Committee filed a report with the court recommending that the court dismiss all of the claims asserted in the Lao Action, and moved to dismiss all of the claims in the Lao Action.

The court has not yet ruled on the Special Litigation Committee’s motion to dismiss.

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Net loss for basic loss per share attributable to AMC Entertainment Holdings, Inc.

5 unchanged sentences

Diluted loss per common share

Vested RSUs, PSUs, and SPSUs have dividend rights identical to the Company’s Class A common stock and are treated as outstanding shares for purposes of computing basic and diluted earnings per share.

Unvested RSUs of 3,812,964 for both the three and six months ended June 30, 2021 and unvested RSUs of 2,249,263 for the three and six months ended June 30, 2020 were not included in the computation of diluted loss per share because they would be anti-dilutive.

Vested RSUs, PSUs, and SPSUs have dividend rights identical to the Company’s Class A common stock and

are treated as outstanding shares for purposes of computing basic and diluted earnings per share.

Unvested RSUs of 3,794,123 for both the three and nine months ended September 30, 2021 and unvested RSUs of 2,203,996 for both the three and nine months ended September 30, 2020 were not included in the computation of diluted loss per share because they would be anti-dilutive.

Unvested PSUs and SPSUs are subject to performance and market conditions, respectively, and are included in diluted earnings per share, if dilutive, based on the number of shares, if any, that would be issuable under the terms of the Company’s 2013 Equity Incentive Plan if the end of the reporting period were the end of the contingency period.

Unvested PSUs of 2,161,222 at certain performance targets for both the three and six months ended June 30, 2021;

unvested PSUs of 782,992 at certain performance targets for both the three and six months ended June 30, 2020;

unvested SPSUs of 1,156,656 at the minimum market condition for both the three and six months ended June 30, 2021;

and unvested SPSUs of 595,003 at the minimum market condition for both the three and six months ended June 30, 2020, were not included in the computation of diluted loss per share because they would not be issuable if the end of the reporting period were the end of the contingency period or they would be anti-dilutive.

Unvested PSUs of 2,149,498 at certain performance targets for both the three and nine months ended September 30, 2021;

unvested PSUs of 769,414 at certain performance targets for both the three and nine months ended September 30, 2020;

unvested SPSUs of 1,156,656 at the minimum market condition for both the three and nine months ended September 30, 2021;

and unvested SPSUs of 578,328 at the minimum market condition for both the three and nine months ended September 30, 2020, were not included in the computation of diluted loss per share because they would not be issuable if the end of the reporting period were the end of the contingency period or they would be anti-dilutive.

On January 29, 2021, the $ 600.0 million principal amount of the Company’s Convertible Notes due 2026 were converted into the Company’s Class A common stock at a conversion price of $ 13.51 per share and resulted in the issuance of 44,422,860 shares.

For both the three and six months ended June 30, 2020, the Company used the if-converted method for calculating any potential dilutive effect of the Convertible Notes due 2026.

For the three months ended June 30, 2020, the Company has not adjusted net loss to eliminate the interest expense of $ 8.3 million related to the Convertible Notes due 2026 in the computation of diluted loss per share because the effects would be anti-dilutive.

For the six months ended June 30, 2020, the Company has not adjusted net loss to eliminate the interest expense of $ 16.6 million and other expense (income) of $( 0.5 ) million for the derivative liability related to the Convertible Notes due 2026 in the computation of diluted loss per share because the effects would be anti-dilutive.

For both the three and six months ended June 30, 2020, the Company has not included in diluted weighted average shares of approximately 31.7 million shares issuable upon conversion as the effects would be anti-dilutive.

For both the three and nine months ended September 30, 2020, the Company used the if-converted method for calculating any potential dilutive effect of the Convertible Notes due 2026.

For the three and nine months ended September 30, 2020, the Company has not adjusted net loss to eliminate the interest expense of $ 7.8 million and $ 24.4 million, respectively, related to the Convertible Notes due 2026 in the computation of diluted loss per share because the effects would be anti-dilutive.

For the three and nine months ended September 30, 2020, the Company has not adjusted net loss to eliminate other expense (income) of $ 89.9 million and $ 89.4 million, respectively, for the derivative liability related to the Convertible Notes due 2026 in the computation of diluted loss per share because the effects would be anti-dilutive.

For the three and nine months ended September 30, 2020, the Company has not included in diluted weighted average shares of approximately 34.0 million and 32.5 million shares, respectively, issuable upon conversion as the effects would be anti-dilutive.

NOTE 13—SUPPLEMENTAL BALANCE SHEET INFORMATION

Accrued expenses and other liabilities consist of the following:

(In millions)

September 30, 2021

December 31, 2020

Accrued expenses and other liabilities:

Taxes other than income

Payroll and vacation

Current portion of casualty claims and premiums

Accrued bonus

Accrued licensing and variable rent

Current portion of pension

Group insurance reserve

Accrued tax payable

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 1. Financial Statements