What changed in this filing

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Item 1. Financial Statements

2022-05-09 compared with 2021-11-08 · 286 added, 531 removed, 602 unchanged (58% of the section changed)

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In millions, except share and per share amounts)

March 31, 2022

March 31, 2021

Food and beverage

9 unchanged sentences

Depreciation and amortization

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

Operating costs and expenses

6 unchanged sentences

Non-cash NCM exhibitor services agreement

Equity in (earnings) loss of non-consolidated entities

Investment expense (income)

Equity in loss of non-consolidated entities

Investment income

Total other expense, net

11 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In millions)

March 31, 2022

March 31, 2021

Other comprehensive income (loss):

Unrealized foreign currency translation adjustments, net of tax

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

Unrealized foreign currency translation adjustments

Pension adjustments:

Realized net gain reclassified into other expense

Other comprehensive income (loss)

Net gain arising during the period

Other comprehensive loss

Total comprehensive loss

5 unchanged sentences

(In millions, except share data)

September 30, 2021

March 31, 2022

December 31, 2021

10 unchanged sentences

Other long-term assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:

17 unchanged sentences

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

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

516,820,595 shares issued and outstanding as of March 31, 2022;

513,979,100 shares issued and outstanding as of December 31, 2021)

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

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Accumulated deficit

Total AMC Entertainment Holdings, Inc.'s stockholders’ deficit

Noncontrolling interests

Total deficit

Total stockholders' deficit

Total liabilities and stockholders’ deficit

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

Three Months Ended

(In millions)

September 30, 2021

September 30, 2020

March 31, 2022

March 31, 2021

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Deferred income taxes

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

Loss on extinguishment of debt

Unrealized gain on investments in Hycroft

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

2 unchanged sentences

Non-cash portion of stock-based compensation

Gain on disposition of Baltics

Loss (gain) on dispositions

Loss on derivative asset and derivative liability

Gain on disposition of assets

Equity in loss from non-consolidated entities, net of distributions

2 unchanged sentences

Deferred rent

Net periodic benefit cost (income)

Net periodic benefit income

Change in assets and liabilities:

4 unchanged sentences

Capital expenditures

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

Acquisition of theatre assets

Proceeds from disposition of long-term assets

2 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of First Lien Notes due 2029

Proceeds from issuance of Odeon Term Loan due 2023

Proceeds from First Lien Toggle Notes due 2026

Principal payments under First Lien Notes due 2025

Principal payments under First Lien Notes due 2026

Principal payments under First Lien Toggle Notes due 2026

Premium paid to extinguish First Lien Notes due 2025

Premium paid to extinguish First Lien 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

Repayments under revolving credit facilities

Scheduled principal payments under Term Loan due 2026

Net proceeds from Class A common stock issuance

Net proceeds from Class A common stock issuance to Mudrick

Payments related to sale of noncontrolling interest

3 unchanged sentences

Taxes paid for restricted unit withholdings

Net cash provided by 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 in 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

3 unchanged sentences

Interest (including amounts capitalized of $ 0 million and $ 0.2 million, respectively)

Income taxes received, net

Income taxes paid (received), net

Schedule of non-cash activities:

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

March 31, 2022

NOTE 1—BASIS OF PRESENTATION

3 unchanged sentences

Temporarily suspended or limited operations.

Throughout the first quarter of 2020, the Company temporarily suspended theatre operations in its 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 the Company’s guests and theatre staff.

As of March 17, 2020, all of the Company’s U.S.

and International theatre operations were temporarily suspended.

The Company 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.

Total consolidated revenues increased $ 637.4 million for the three months ended March 31, 2022, compared to the three months ended March 31, 2021.

The increase in total consolidated revenues was primarily due to the COVID-19 pandemic impact on the prior year which resulted in the temporary suspension of operations at the Company’s theatres in U.S.

markets and International markets.

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 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.

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.

During the three months ended March 31, 2022, the Company operated substantially 100 % of its U.S.

and International theatres.

As of March 31, 2022, the Company has cash and cash equivalents of approximately $ 1.2 billion.

In response to the COVID-19 pandemic, the Company adjusted certain elements of its business strategy and took significant steps to preserve cash.

The Company is continuing to take measures to further strengthen its financial position and enhance its operations, by minimizing non-essential costs, including reductions to its variable costs and elements of its fixed cost structure, introducing new initiatives, and optimizing its theatrical footprint.

Additionally, the Company enhanced future liquidity through debt refinancing at lower interest rates.

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

The Company’s net cash used in operating activities improved by $ 79.1 million during the three months ended June 30, 2021 compared to the three months ended March 31, 2021, $ 119.9 million during the three months ended September 30, 2021 compared to the three months ended June 30, 2021, and $ 160.4 million during the three months ended December 31, 2021 compared to the three months ended September 30, 2021.

The Company’s net cash provided by (used in) operating activities deteriorated by $ 341.5 million during the three months ended March 31, 2022 compared to the three months ended December 31, 2021 from $ 46.5 million to $( 295.0 ) million.

The decline in net cash provided by operating activities from the three months ended December 31, 2021 to the three months ended March 31, 2022 was primarily attributable to a decrease in attendance and increase in net loss and increases in seasonal working capital uses as the Company paid for the strong late fourth quarter 2021 results in early first quarter of 2022.

The Company has also continued to repay rent amounts that were deferred during the COVID-19 pandemic, which increases its cash outflows from operating activities.

See Note 2—Leases for a summary of the estimated future repayment terms for the remaining $ 271.7 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

The Company’s net cash used in investing activities of $ 54.9 million included $ 34.8 million of capital expenditures and $ 27.9 million of investments in non-consolidated entities, partially offset by proceeds from the disposition of long-term assets of $ 7.2 million during the three months ended March 31, 2022.

The Company’s net cash used in financing activities of $ 76.3 million included principal and premium payments of $ 955.7 million, taxes paid for restricted unit withholdings of $ 52.2 million, and cash used to pay for deferred financing costs of $ 17.7 million, partially offset by proceeds from the Company’s debt issuance of $ 950.0 million, during the three months ended March 31, 2022.

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 increased 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 compared to 2021 and achieve levels in line with pre COVID-19 attendance.

The Company believes that the sequential increases in attendance experienced each quarter of 2021 are positive signs of continued demand for the moviegoing experience.

The Company’s business is seasonal, with higher attendance and revenues generally occurring during the summer months and holiday seasons.

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.

The Company entered the Ninth Amendment (as defined below) to the Credit Agreement (as defined below) pursuant to which the requisite revolving lenders party thereto agreed to extend the suspension period for the financial covenant (the secured leverage ratio) applicable to the Senior Secured Revolving Credit Facility (as defined below) from March 31, 2021 to March 31, 2022 (the “Extended Covenant Suspension Period”), as described, and on the terms and conditions specified, therein.

The Company entered the Ninth Amendment to the Credit Agreement, dated as of March 8, 2021, pursuant to which the requisite revolving lenders party thereto agreed to extend the suspension period for the financial covenant (the secured leverage ratio) applicable to the Senior Secured Revolving Credit Facility from March 31, 2021 to March 31, 2022, which was further extended from March 31, 2022 to March 31, 2023 by the Eleventh Amendment, dated as of December 20, 2021, as described, and on the terms and conditions specified, therein.

The Company is currently subject to minimum liquidity requirements of approximately $ 143 million, of which $ 100 million is required under the conditions for the Extended Covenant Suspension Period, as amended, under the Senior Secured Revolving Credit Facility, and £ 32.5 million (approximately $ 43 million) of which is required under the Odeon Term Loan Facility.

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, 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 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.

Following the expiration of the Extended Covenant Suspension Period ending March 31, 2023, the Company will be subject to the financial covenant under the Senior Secured Revolving Credit Facility as of the last day of each quarter on which the aggregate principal amount of revolving loans and letters of credit (excluding letters of credit that are cash collateralized) in excess of $ 25 million outstanding under the Senior Secured Revolving Credit Facility exceeds 35 % of the principal amount of commitments under the Senior Secured Revolving Credit facility then in effect, beginning with the quarter ending June 30, 2023.

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.

The Company received rent concessions provided by the lessors that aided in mitigating the economic effects of COVID-19 during the pandemic during the years 2021 and 2020.

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

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.

As a result, deferred lease amounts were approximately $ 271.7 million as of March 31, 2022.

The Company’s cash expenditures for rent increased significantly during the three months ended March 31, 2022, compared to the three months ended March 31, 2021.

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

9 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 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.

Due to the seasonal nature of the Company’s business and the recovery of the industry from the global COVID-19 pandemic, results for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022.

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

markets and International markets.

Baltics’ theatre sale.

On August 28, 2020, the Company entered into an agreement to sell its equity interest in Forum Cinemas OU, which consisted of nine theatres located in the Baltics’ region (Latvia, Lithuania and Estonia) and was included in the Company’s International markets reportable segment.

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

In October 2020, the Company completed the divestiture of its equity interest in Latvia.

In February 2021, the Company received cash consideration for the remaining equity interest in Estonia of $ 3.8 million (€ 3.2 million), net of cash of $ 0.3 million.

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.

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.

Cash and equivalents.

At March 31, 2022, cash and cash equivalents for the U.S.

markets and International markets were $ 963.8 million and $ 201.1 million respectively, and at December 31, 2021, cash and cash equivalents were $ 1,311.4 million and $ 281.1 million, respectively .

Restricted cash.

6 unchanged sentences

Other comprehensive income (loss)

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

Balance September 30, 2021

Balance March 31, 2022

Accumulated depreciation and amortization.

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.

Accumulated depreciation was $ 2,642.9 million and $ 2,583.4 million at March 31, 2022 and December 31, 2021, respectively, related to property.

Accumulated amortization of intangible assets was $ 41.9 million and $ 41.2 million at March 31, 2022 and December 31, 2021, respectively.

Other expense (income).

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

(In millions)

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

Derivative asset fair value adjustment for contingent call option related to the Class B common stock purchase and cancellation agreement

Credit losses (income) related to contingent lease guarantees

March 31, 2022

March 31, 2021

Decreases related to contingent lease guarantees

Governmental assistance due to COVID-19 - International markets

Governmental assistance due to COVID-19 - Domestic markets

Governmental assistance due to COVID-19 - U.S.

Foreign currency transaction (gains) losses

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

Loss on debt extinguishment

Non-operating components of net periodic benefit income

Loss on extinguishment of debt

Financing fees related to modification of debt agreements

Total other expense (income)

The following table summarizes the Company’s assets that were impaired:

Three Months Ended

Nine Months Ended

September 30,

(In millions)

Impairment of long-lived assets

Impairment of definite-lived intangible assets

Impairment of indefinite-lived intangible assets

Impairment of goodwill

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

Impairment of other assets recorded in investment expense (income)

Total impairment loss

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 and nine months ended September 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.

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

Income taxes.

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.

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

ASU 2019-12 was effective for the Company in the first quarter of 2021.

The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated financial statements.

Government Assistance.

In November 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-10, Government Assistance (Topic 832) Disclosures by Business Entities about Government Assistance (“ASU 2021-10”).

The amendments in ASU 2021-10 require annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy, including (1) information about the nature of the transactions and the related accounting policy used to account for the transactions, (2) the line items on the balance sheet and income statement that are affected by the transactions and the amounts applicable to each financial statement line item, and (3) significant terms and conditions of the transactions, including commitments and contingencies.

The Company is applying the amendments in ASU 2021-10 prospectively as of January 1, 2022 and the annual government assistance disclosure requirements are effective for the Company during the year ending December 31, 2022.

NOTE 2—LEASES

5 unchanged sentences

Equipment leases primarily consist of food and beverage equipment.

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

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.

6 unchanged sentences

In addition, the Company included deferred lease payments in operating lease right-of-use assets as a result of lease remeasurements.

A summary of deferred payment amounts related to rent obligations for which payments were deferred to 2021 and future years are provided below:

Increase (decrease)

September 30,

A summary of deferred payment amounts related to rent obligations for which payments were deferred to future periods are provided below:

(In millions)

4 unchanged sentences

Total deferred lease amounts

(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.

(1) During the three months ended March 31, 2022, the decrease in fixed operating lease deferred amounts includes $ 37.9 million of decreases in the deferred balances as of December 31, 2021 related to payments and abatements.

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

Three Months Ended

Nine Months Ended

Consolidated Statement

September 30,

(In millions)

of Operations

Consolidated Statements of Operations

Operating lease cost

15 unchanged sentences

Cash flow and supplemental information is presented below:

Nine Months Ended

September 30,

Three Months Ended

(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 September 30, 2021:

As of September 30, 2021

The following table represents the weighted-average remaining lease term and discount rate as of March 31, 2022:

As of March 31, 2022

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 September 30, 2021 are as follows:

Operating Lease

1 unchanged sentence

(In millions)

Three months ending December 31, 2021 (1)

Nine months ending December 31, 2022 (1)

Total lease payments

5 unchanged sentences

Lease Payments

Three months ended December 31, 2021

Three months ended March 31, 2022

Three months ended June 30, 2022

Three months ended September 30, 2022

Three months ended December 31, 2022

Three months ended March 31, 2023

Total deferred lease amounts recorded in AP

3 unchanged sentences

(In millions)

Three months ended December 31, 2021

Three months ended March 31, 2022

Three months ended June 30, 2022

2 unchanged sentences

Total deferred lease amounts

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 .

As of March 31, 2022, the Company had signed additional operating lease agreements for 5 theatres that have not yet commenced of approximately $ 99.5 million, which are expected to commence between years 2022 and 2024 and carry lease terms ranging from 5 to 20 years .

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

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Three Months Ended

Nine Months Ended

September 30,

(In millions)

March 31, 2022

March 31, 2021

Major revenue types

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Other theatre

Total revenues

Three Months Ended

Nine Months Ended

September 30,

(In millions)

March 31, 2022

March 31, 2021

Timing of revenue recognition

5 unchanged sentences

(In millions)

September 30, 2021

March 31, 2022

December 31, 2021

4 unchanged sentences

(In millions)

September 30, 2021

March 31, 2022

December 31, 2021

19 unchanged sentences

Foreign currency translation adjustment

Balance September 30, 2021

Balance March 31, 2022

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

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(4) Amounts relate to income from non-redeemed or partially redeemed gift cards, non-redeemed exchange tickets, AMC Stubs® loyalty membership fees and other loyalty programs.

The Company suspended the recognition of deferred revenues related to certain loyalty programs, gift cards, and exchange tickets during the period in which its operations were temporarily suspended.

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

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:

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Balance December 31, 2021

Negative Common Unit Adjustment–reduction of common units

Common Unit Adjustment–additions of common units

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

Balance September 30, 2021

Balance March 31, 2022

(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 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.

Historically, the Company has estimated this to occur over the next 24 months , but due to the COVID-19 pandemic and the limited or temporary suspension of theatre operations, the pattern of actual redemptions may occur over a longer period of time.

The total amount of non-redeemed gift cards and exchange tickets included in deferred revenues and income in the condensed consolidated balance sheet as of March 31, 2022 was $ 295.3 million.

Loyalty programs.

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.

Historically, the Company has estimated this to occur over the next 24 months , but due to the COVID-19 pandemic and the limited or temporary suspension of theatre operations, the recognition of points redeemed may occur over a longer period of time.

As of March 31, 2022, the amount of deferred revenues allocated to the loyalty programs

included in deferred revenues and income in the condensed consolidated balance sheet was $ 64.4 million.

The earned points will be recognized as revenue as the points are redeemed, which is estimated to occur over the next 24 months .

The AMC Stubs® annual membership fee is recognized ratably over the one-year membership period.

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NOTE 4—GOODWILL

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

The following table summarizes the changes in goodwill by reporting unit for the three months ended March 31, 2022:

(In millions)

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Currency translation adjustment

Baltics disposition-Estonia (1)

Baltics disposition-Lithuania (1)

Balance September 30, 2021

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

The Company evaluates goodwill recorded at the Company’s two reporting units (Domestic Theatres and International Theatres) for impairment annually as of the beginning of the fourth fiscal quarter and any time an event occurs or circumstances change that would more likely than not reduce the fair value for a reporting unit below its carrying amount.

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 goodwill impairment charge, not to exceed the total amount of goodwill allocated to that reporting unit.

Balance March 31, 2022

NOTE 5—INVESTMENTS

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 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.

Investments in non-consolidated affiliates as of March 31, 2022 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 %.

2 unchanged sentences

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

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.

During the three months ended March 31, 2022 and March 31, 2021, the Company recorded equity in loss of non-consolidated entities of $ 5.1 million and $ 2.8 million, respectively.

Related party transactions with equity method investees.

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.

At March 31, 2022 and December 31, 2021, the Company recorded net receivable amounts due from equity method investees of $ 4.1 million and $ 2.6 million, respectively, primarily related to 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 of $ 5.5 million, $ 1.4 million, and $ 0 million, respectively, during the three months ended March 31, 2022, and $ 0.6 million, $ 0.3 million, and $ 0.4 million, respectively, during the three months ended March 31, 2021.

Investment in Hycroft

On March 14, 2022, the Company purchased 23.4 million units of Hycroft Mining Holding Corporation (NASDAQ:

HYMC) (“Hycroft”), for $ 27.9 million, with each unit consisting of one common share of Hycroft and one common share purchase warrant.

The units were priced at $ 1.193 per unit.

Each warrant is exercisable for one common share of Hycroft at a price of $ 1.068 per share over a 5-year term through March 2027.

Hycroft filed a resale registration statement to register the common shares and warrant shares for sale under the Securities Act on April 14, 2022.

The Company accounts for the common shares of Hycroft under the equity method and has elected the fair value option in accordance with ASC 825-10.

The Company accounts for the warrants as derivatives in accordance with ASC 815.

Accordingly, the fair value of the investments in Hycroft are remeasured at each subsequent reporting period and unrealized gains and losses are reported in investment income.

The Company believes the fair value option to be the most appropriate election for this equity method investment as the Company is not entering the mining business.

During the three months ended March 31, 2022, the Company recorded unrealized gains related to the investment in Hycroft of $ 63.9 million in investment income.

Hycroft has outstanding warrants with other investors that could dilute the Company’s share of earnings.

See Note 9 — Fair Value Measurements for fair value information and Note 13 — Supplemental Balance Sheet Information for the asset value for investments in Hycroft measured under the fair value option as well as the total asset value for other equity method investments.

NCM Transaction

Pursuant to the Company’s Common Unit Adjustment Agreement, from time-to-time common units of NCM held by the Founding Members will be adjusted up or down through a formula (“Common Unit Adjustment” or “CUA”), primarily based on increases or decreases in the number of theatre screens operated and theatre attendance generated by each Founding Member.

The CUA is computed annually, except that an earlier CUA will occur for a Founding Member if its acquisition or disposition of theatres, in a single transaction or cumulatively since the most recent CUA, will cause a change of 2 % or more in the total annual attendance of all of the Founding Members.

In March 2022, the NCM CUA resulted in a positive adjustment of 5,954,646 common units for the Company.

The Company received the units and recorded the common units as an addition to deferred revenues for the ESA at fair value of $ 15.0 million, based upon a price per share of National CineMedia, Inc.

(“NCM, Inc.”) of $ 2.52 on March 30, 2022.

See Note 9 — Fair Value Measurements for information regarding the fair value measurement on March 31, 2022.

NOTE 6—CORPORATE BORROWINGS AND FINANCE LEASE OBLIGATIONS

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(In millions)

September 30, 2021

March 31, 2022

December 31, 2021

First Lien Secured Debt:

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 (£ 147.6 million and € 312.2 million par value as of September 30, 2021)

Odeon Revolving Credit Facility due 2022

Senior Secured Credit Facility-Term Loan due 2026 ( 3.352 % as of March 31, 2022)

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 March 31, 2022)

7.5 % First Lien Notes due 2029

2.95 % Senior Secured Convertible Notes due 2026

10.5 % First Lien Notes due 2025

10.5 % First Lien Notes due 2026

15 %/ 17 % Cash/PIK Toggle First Lien Secured Notes due 2026

2 unchanged sentences

Subordinated Debt:

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

6.375 % Senior Subordinated Notes due 2024 (£ 4.0 million par value as of March 31, 2022)

5.75 % Senior Subordinated Notes due 2025

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Finance lease obligations

Paid-in-kind interest

Deferred financing costs

3 unchanged sentences

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

September 30,

(In millions)

10 %/ 12 % Cash/PIK/Toggle Second Lien Subordinated Notes due 2026

2.95 % Senior Secured Convertible Notes due 2026

15 %/ 17 % Cash/PIK Toggle First Lien Secured Notes due 2026

4 unchanged sentences

6.375 % Senior Subordinated Notes due 2024

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

The following table provides the principal payments required and maturities of corporate borrowing as of March 31, 2022:

(In millions)

Three months ended December 31, 2021

Senior Secured Credit Facilities

The Company is party to that certain Credit Agreement, dated as of April 30, 2013 (as amended by the First Amendment to Credit Agreement, dated as of December 11, 2015, that certain Second Amendment to Credit Agreement, dated as of November 8, 2016, that certain Third Amendment to Credit Agreement, dated as of May 9, 2017, that certain Fourth Amendment to Credit Agreement, dated as of June 13, 2017, that certain Fifth Amendment to Credit Agreement, dated as of August 14, 2018, the Sixth Amendment, dated as of April 22, 2019, the Seventh Amendment, dated as of April 23, 2020, the Eighth Amendment, dated as of July 31, 2020, the Ninth Amendment, dated March 8, 2021, and the Tenth Amendment, also dated March 8, 2021, with the issuing banks and lenders from time to time party thereto and Wilmington Savings Fund Society, FSB, as administrative agent (as successor to Citicorp North America, Inc., the “Administrative Agent”), pursuant to which the lenders have agreed to provide senior secured financing consisting of (a) $ 2,000.0 million in aggregate principal amount of senior secured tranche B loans maturing April 22, 2026 (the “Senior Secured Term Loan Facility”) and (b) a $ 225.0 million senior secured revolving credit facility (which is also available for letters of credit and for swingline borrowings on same-day notice) maturing April 22, 2024 (the “Senior Secured Revolving Credit Facility” and, together with the Senior Secured Term Loan Facility, collectively, the “Senior Secured Credit Facilities”).

The Senior Secured Credit Facilities are provided by a syndicate of banks and other financial institutions.

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.

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.

On March 8, 2021, the Company also entered into the Tenth Amendment to Credit Agreement (the “Tenth Amendment”), with the requisite revolving lenders party thereto and the Administrative Agent, pursuant to which the Company agreed that certain modifications to the Credit Agreement described in the Tenth Amendment require 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 (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.

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).

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 and each interest period is 3 months , or such other period agreed between the Company and the Agent.

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.

The principal amount of new funding is prior to deducting discounts of $ 19.1 million and deferred financing costs of $ 15.6 million related to the Odeon Term Loan Facility.

The discount and deferred financing costs will be amortized to interest expense over the term using the effective interest method.

All obligations under the Odeon Term Loan Facility are guaranteed by certain subsidiaries of Odeon.

The Company is subject to minimum liquidity requirements of £ 32.5 million (approximately $ 44 million) required under the Odeon Term Loan Facility, measured at each quarter end date.

Nine months ended December 31, 2022

First Lien Notes due 2029

On February 14, 2022, the Company issued $ 950.0 million aggregate principal amount of its 7.5 % First Lien Senior Secured Notes due 2029 (“First Lien Notes due 2029”), pursuant to an indenture, dated as of February 14, 2022, among the Company, the guarantors named therein and U.S.

Bank Trust Company, National Association, as trustee and collateral agent.

The Company used the net proceeds from the sale of the notes, and cash on hand, to fund the full redemption of the then outstanding $ 500 million aggregate principal amount of the Company’s 10.5 % First Lien Notes due 2025 (“First Lien Notes due 2025”), the then outstanding $ 300 million aggregate principal amount of the Company’s 10.5 % First Lien Notes due 2026 (“First Lien Notes due 2026”), and the then outstanding $ 73.5 million aggregate principal amount of the Company’s 15 %/ 17 % Cash/PIK Toggle First Lien Secured Notes due 2026 (“First Lien Toggle Notes due 2026”) and to pay related accrued interest, fees, costs, premiums and expenses.

The Company recorded a loss on debt extinguishment related to this transaction of $ 135.0 million in other expense, during the three months ended March 31, 2022.

The deferred charges will be amortized to interest expense over the term of the First Lien Notes due 2029 using the effective interest method.

The First Lien Notes due 2029 bear cash interest at a rate of 7.5 % per annum payable semi-annually in arrears on February 15 and August 15, beginning on August 15, 2022.

The First Lien Notes due 2029 have not been registered under the Securities Act of 1933, as amended, and will mature on February 15, 2029.

The Company may redeem some or all of the First Lien Notes due 2029 at any time on or after February 15, 2025, at the redemption prices equal to (i) 103.750 % for the twelve-month period beginning on February 15, 2025;

(ii) 101.875 % for the twelve-month period beginning on February 15, 2026, and (iii) 100.0 % at any time thereafter, plus accrued and unpaid interest.

In addition, the Company may redeem up to 35 % of the aggregate principal amount of the First Lien Notes due 2029 using net proceeds from certain equity offerings completed prior to February 15, 2025 at a redemption price equal to 107.5 % of their aggregate principal amount and accrued and unpaid interest to, but not including the date of redemption.

The Company may redeem some or all of the First Lien Notes due 2029 at any time prior to February 15, 2025 at a redemption price equal to 100 % of their aggregate principal amount and accrued and unpaid interest to, but not including, the date of redemption, plus an applicable make-whole premium.

Upon a Change of Control (as defined in the

indenture governing the First Lien Notes due 2029), the Company must offer to purchase the First Lien Notes due 2029 at a purchase price equal to 101 % of the principal amounts, plus accrued and unpaid interest.

The First Lien Notes due 2029 are general senior secured obligations of the Company and are fully and unconditionally guaranteed on a joint and several senior secured basis by all of the Company’s existing and future subsidiaries that guarantee the Company’s other indebtedness, including the Company’s Senior Secured Credit Facilities under the credit agreement dated as of April 30, 2013 (as amended through the Eleventh Amendment thereto dated December 20, 2021).

The First Lien Notes due 2029 are secured, on a pari passu basis with the Senior Secured Credit Facilities, on a first-priority basis by substantially all of the tangible and intangible assets owned by the Company and guarantors that secure obligations under the Senior Secured Credit Facilities including pledges of capital stock of certain of the Company’s and the guarantor’s wholly-owned material subsidiaries (but limited to 65 % of the voting stock of any foreign subsidiary), subject to certain thresholds, exceptions and permitted liens.

The indentures governing the First Lien Notes due 2029 contain covenants that restrict the ability of the Company to, among other things:

(i) incur additional indebtedness, including additional senior indebtedness;

(ii) pay dividends on or make other distributions in respect of its capital stock;

(iii) purchase or redeem capital stock or prepay subordinated debt or other junior securities (iv) create liens ranking pari passu in right of payment with or subordinated in right of payment to First Lien Notes due 2029;

(v) enter into certain transactions with its affiliates;

and (vi) merge or consolidate with other companies or transfer all or substantially all of their respective assets.

These covenants are subject to a number of important limitations and exceptions.

The indentures governing the First Lien Notes due 2029 also provides for events of default, which, if any occur, would permit or require the principal, interest and any other monetary obligations on all the then outstanding notes to be due and payable immediately.

Financial Covenants

The Company currently estimates that its existing cash and cash equivalents will be sufficient to 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, currently and through the next twelve months.

The Company entered the Ninth Amendment to the Credit Agreement pursuant to which the requisite revolving lenders party thereto agreed to extend the suspension period for the financial covenant (the secured leverage ratio) applicable to the Senior Secured Revolving Credit Facility from March 31, 2021 to March 31, 2022, the Extended Covenant Suspension Period, as described, and on the terms and conditions specified therein.

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 (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.

Interest for the first three interest periods after the issue date may, at the Company’s 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 Secured Credit Facilities, the First Lien Notes due 2026, and the First Lien Notes due 2025.

On December 14, 2020, Mudrick received a total of 21,978,022 shares of the Company’s Class A common stock;

of which 8,241,758 shares (“Commitment Shares”) relates to consideration received for a commitment fee and 13,736,264 shares (“Exchange Shares”) as consideration received for the second lien exchange.

Mudrick exchanged $ 100 million aggregate principal amount of the Second Lien Notes due 2026 that were held by Mudrick for the Exchange Shares (the “Second Lien Exchange”) and waived its claim to PIK interest of $ 4.5 million principal amount.

The fair value of 21,978,022 shares of the Company’s Class A common stock was $ 70.1 million based on the market closing price of $ 3.19 per share on December 14, 2020.

On December 14, 2020, the Class A common shares issued were recorded by the Company in stockholders’ deficit.

During the three months ended March 31, 2021, the Company reclassified the prepaid commitment fee and deferred charges of $ 28.6 million to corporate borrowings from other long-term assets for the Commitment Shares and deferred charges.

The prepaid commitment fee was recorded as a discount and, together with deferred charges, will be amortized to interest expense over the term of the First Lien Toggle Notes due 2026 using the effective interest method.

The Company filed a shelf registration statement in December 2020, which was declared effective providing for the resale of the Exchange Shares.

Convertible Notes due 2026

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 the Company’s Convertible Notes due 2026 (“Convertible Notes due 2026”) into shares of the Company’s Class A common stock at a conversion price of $ 13.51 per share.

The non-cash Conversion settled on January 29, 2021, and resulted in the issuance of 44,422,860 shares of the Company’s Class A common stock to the Noteholders.

The Company recorded $ 70.0 million of non-cash interest expense in the first quarter of 2021 for unamortized discount and deferred charges at the date of conversion following the guidance in ASC 815-15-40-1.

The non-cash Conversion reduced the Company’s 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 the Company’s Class B common stock held by Wanda were forfeited and cancelled in connection with the Conversion.

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 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.

This cancellation agreement was a contingent call option for the forfeiture shares and was a freestanding derivative.

The forfeiture shares feature was not clearly and closely related to the Convertible Notes due 2026 host and it was bifurcated and accounted for as a derivative asset measured at fair value through earnings each reporting period until the conversion feature reset on September 14, 2020, with changes in fair value recorded in the condensed consolidated statement of operations as other expense or income.

Following the expiration of the Extended Covenant Suspension Period ending March 31, 2023, the Company will be subject to the financial covenant under the Senior Secured Revolving Credit Facility as of the last day of each quarter on which the aggregate principal amount of revolving loans and letters of credit (excluding letters of credit that are cash collateralized) in excess of $ 25 million outstanding under the Senior Secured Revolving Credit Facility exceeds 35 % of the principal amount of commitments under the Senior Secured Revolving Credit Facility then in effect, beginning with the quarter ending June 30, 2023.

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.

NOTE 7—STOCKHOLDERS’ EQUITY

Class A common stock issuance.

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 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 nine months ended September 30, 2021 are summarized in the table below:

"At-the-market"

Equity Distribution Agreement Dates

Number of Class A common stock shares sold (in millions) (1)

Gross Proceeds (in millions)

December 11, 2020

Goldman Sachs & Co.

Riley Securities, Inc.

January 25, 2021

Goldman Sachs & Co.

Riley Securities, Inc.

April 27, 2021

Goldman Sachs & Co.

Riley Securities, Inc.

and Citigroup Global Markets Inc.

Riley Securities, Inc.

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.

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 nine months ended September 30, 2021.

Class A common stock issuance to Mudrick.

On June 1, 2021, the Company issued to Mudrick 8.5 million shares of the Company’s Class A common stock and raised gross proceeds of $ 230.5 million and paid fees of approximately $ 0.1 million related to this transaction.

The Company issued the shares in reliance on an exemption from registration provided by section 4(a)(2) of the Securities Act of 1933.

The Company intends to use the proceeds from the share sale primarily for the pursuit of value creating acquisitions of theatre assets and leases, as well as investments to enhance the consumer appeal of its theatres.

In addition, with these funds, the Company intends to continue exploring deleveraging opportunities.

Class B common stock.

On January 27, 2021, pursuant to the Stock Repurchase and Cancellation Agreement with Wanda dated as of September 14, 2018, and in connection with the Conversion of the Convertible Notes due 2026 into shares of the Company’s Class A common stock by Silver Lake and certain co-investors, 5,666,000 shares of the Company’s Class B common stock held by Wanda were forfeited and cancelled.

On February 1, 2021, Wanda exercised their right to convert all outstanding Class B common stock of 46,103,784 to Class A common stock, thereby reducing the number of outstanding Class B common stock to zero, which resulted in the retirement of Class B common stock.

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 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

(In millions)

February 26, 2020

March 9, 2020

March 23, 2020

Related Party Transactions .

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

Nine Months Ended

September 30,

(In millions)

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Total stock-based compensation expense

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.

As of March 31, 2022, the estimated remaining unrecognized compensation cost related to stock-based compensation arrangements was approximately $ 52.5 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 1.1 years.

Awards Granted in 2022

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.

During the three months ended March 31, 2022, 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 three months ended March 31, 2022 was based on the closing price of AMC’s Class A common stock (“Common Stock” or “Common Shares”) on February 16, 2022 of $ 19.67 per share and on March 7, 2022 of $ 15.21 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 Common Stock underlying the unit.

Any such accrued dividend equivalents are paid to the holder upon vesting of the units.

Each unit represents the right to receive one share of Class A common stock at a future date.

Each unit represents the right to receive one share of Common Stock at a future date.

The 2022 award agreements generally had the following features:

● Stock Award Agreement:

On February 23, 2021, the Company granted awards of 124,054 fully vested shares of Class A common stock to its independent members of AMC’s Board of Directors with a grant date fair value of $ 0.9 million.

During the three months ended March 31, 2022, the Company granted awards of 41,650 fully vested shares of Common Stock to its independent members of AMC’s Board of Directors with a grant date fair value of $ 0.8 million.

● Restricted Stock Unit Award Agreement:

On February 23, 2021, the Company granted RSU awards of 2,687,813 to certain members of management with a grant date fair value of $ 20.7 million.

Each RSU represents the right to receive one share of Class A common stock at a future date.

During the three months ended March 31, 2022, the Company granted RSU awards of 688,269 to certain members of management with a grant date fair value of $ 13.4 million.

The Company records stock-based compensation expense on a straight-line recognition method over the requisite vesting period.

Each RSU represents the right to receive one share of Common Stock at a future date.

The RSUs vest over three years , with 1/3 vesting in each year.

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● Performance Stock Unit Award Agreement:

On February 23, 2021, total PSUs of 2,687,813 were awarded (“2021 PSU award”) to certain members of management and executive officers, with the total PSUs divided into three separate year tranches, with each tranche allocated to a fiscal year within the performance period (“Tranche Year”).

The PSUs within each Tranche Year are further divided between 2 performance targets;

During the three months ended March 31, 2022, total PSUs of 688,269 were awarded (“2022 PSU award”) to certain members of management and executive officers, with the total PSUs divided into three separate year tranches, with each tranche allocated to a fiscal year within the performance period (“Tranche Year”).

The PSUs within each Tranche Year are further divided between two performance targets;

the Adjusted EBITDA performance target and free cash flow performance target.

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No PSUs will vest for each Tranche Year if the Company does not achieve 80% of the Tranche Year’s Adjusted EBITDA and free cash flow targets.

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 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 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:

In January 2021, the market condition requirement for SPSUs awarded in calendar year 2020 was met as a result of exceeding the 20-day trailing volume weighted average stock price threshold target for tranche 5 and tranche 6 of $ 4 and $ 8 , respectively.

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 nine months ended September 30, 2021:

During the three months ended March 31, 2022, the 2022 PSU award grant date fair value for the 2022 Tranche Year award of 229,316 units was approximately $ 4.5

million and the 2021 PSU award grant date fair value for the 2022 Tranche Year award of 878,540 units was approximately $ 17.3 million, measured using performance targets at 100 %.

The 2020 PSU award for the 2022 Tranche Year was previously granted in year 2020, and was subsequently modified on October 30, 2020 where the grant date fair value was not determined until the three months ended March 31, 2022 when the performance targets were established.

As a result, the 2020 PSU award grant date fair value for the 2022 Tranche Year award of 429,683 units was approximately $ 8.5 million, measured using performance targets at 100 %.

The following table represents the nonvested RSU and PSU activity for the three months ended March 31, 2022:

Shares of RSU

Beginning balance at January 1, 2021 (1)

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 September 30, 2021

Nonvested at January 1, 2022 (1)

( 2,799,845 )

Cancelled (2)

( 2,358,278 )

Nonvested at March 31, 2022 (3)

Tranche Years 2023 and 2024 awarded under the 2022 PSU award and Tranche Year 2023 awarded under the 2021 PSU award with grant date fair values to be determined in years 2023 and 2024, respectively

Total Nonvested at March 31, 2022

(1) Includes awards modified during 2020 where grant date fair value was not determined until 2022.

(2) Represents vested RSUs and PSUs surrendered in lieu of taxes and cancelled awards returned to the 2013 Equity Incentive plan.

As a result, the Company paid taxes for restricted unit withholdings of approximately $ 52.2 million during the three months ended March 31, 2022.

(3) The number of PSU shares granted under the Tranche Year 2022 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.

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 2022 awards granted under the 2022, 2021 and 2020 PSU awards.

Condensed Consolidated Statements of Stockholders’ Deficit

For the Nine Months Ended September 30, 2021

For the Three Months Ended March 31, 2022

Class A Voting

Class B Voting

Treasury Stock

Comprehensive

Stockholders’

Noncontrolling

(In millions, except share and per share data)

Income (Loss)

Equity (Deficit)

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Other comprehensive loss

Baltics noncontrolling capital contribution

Class A common stock, accrued dividend equivalent adjustment

Class A common stock issuance

Wanda conversion of Class B shares to Class A shares

( 46,103,784 )

Convertible Notes due 2026 stock conversion

Wanda forfeit and cancellation of Class B shares

( 5,666,000 )

Taxes paid for restricted unit withholdings

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Balances March 31, 2022

Other comprehensive income

100% liquidation of Baltics

Class A common stock, accrued dividend equivalent adjustment

Class A common stock issuance

( 3,732,625 )

Class A common stock issuance to Mudrick

Stock-based compensation

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

(1) Includes 41,650 shares awarded to Board of Directors and 2,799,845 vested RSUs and PSUs.

Condensed Consolidated Statements of Stockholders’ Deficit

For the Nine Months Ended September 30, 2020

For the Three Months Ended March 31, 2021

Class A Voting

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(In millions, except share and per share data)

Equity (Deficit)

Income (Loss)

Equity (Deficit)

Balances December 31, 2020

Cumulative effect adjustment for the adoption of new accounting principle (ASU 2016-13)

Other comprehensive loss

Dividends declared:

Class A common stock, $ 0.03 /share, net of forfeitures

Class B common stock, $ 0.03 /share

Taxes paid for restricted unit withholdings

Stock-based compensation

Balances March 31, 2020

Other comprehensive income

Class A common stock, accrued dividend equivalent adjustment

Stock-based compensation

Balances June 30, 2020

Other comprehensive income

Baltics noncontrolling capital contribution

Class A common stock, accrued dividend equivalent adjustment

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

Wanda conversion of Class B shares to Class A shares

( 46,103,784 )

Convertible Notes due 2026 stock conversion

Wanda forfeit and cancellation of Class B shares

( 5,666,000 )

Stock-based compensation

Balances September 30, 2020

Balances March 31, 2021

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 nine months ended September 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 months ended March 31, 2022 due to the lingering effects of the COVID-19 pandemic on the industry.

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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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 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.

The effective tax rate for the three months ended March 31, 2022 reflects the impact of these valuation allowances against U.S.

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

The actual effective rate for the three months ended March 31, 2022 was 0 %.

The Company’s consolidated tax rate for the three months ended March 31, 2022 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 September 30, 2021 and December 31, 2020, the Company has recorded net deferred tax liabilities of $ 26.5 million and $ 40.2 million, respectively.

At March 31, 2022 and December 31, 2021, the Company has recorded net deferred tax liabilities of $ 30.5 million and $ 30.7 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.

Accordingly, although they are fully valued and there would be no financial statement impact, the Company’s ability to utilize any net operating loss carryforwards and other tax attributes in future periods may be significantly limited.

The Company does not believe, however, that tax attributes generated prior to this event are significantly impacted by Section 382.

NOTE 9—FAIR VALUE MEASUREMENTS

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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 September 30, 2021:

Fair Value Measurements at September 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 March 31, 2022:

Fair Value Measurements at March 31, 2022 Using

Total Carrying

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(In millions)

September 30, 2021

March 31, 2022

Other long-term assets:

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Investments measured at net asset value (1)

Investment in Hycroft Mining Holding Corporation warrants

Marketable equity securities:

Investment in Hycroft Mining Holding Corporation

Investment in NCM

Total assets at fair value

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The Company has an equivalent liability for this related-party transaction recorded in other long-term liabilities for the deferred compensation obligation.

The plan was terminated on May 3, 2021 and will be liquidated over the next twelve months.

The plan was terminated on May 3, 2021 and will be liquidated in May 2022.

Valuation Techniques.

The Company’s money market mutual funds are invested in funds that seek to preserve principal, are highly liquid, and therefore are recorded on the balance sheet at the principal amounts deposited, which equals fair value.

The equity method investment in Hycroft was measured at fair value using Hycroft’s stock price at the date of measurement.

The investment in NCM was measured at fair value using National CineMedia, Inc.’s underlying stock price at the date of measurement.

To estimate the fair value of the Company’s investment in Hycroft warrants, the Company valued the warrants using the Black Scholes pricing model.

Such judgments and estimates included estimates of volatility of 75.0 % and discount rate of 2.4 %.

The discount rate is based on the treasury yield that matches the term as of the measurement date.

Other inputs included the term of 5 years, exercise price of $ 1.068 and Hycroft’s stock price at the date of measurement.

There is considerable management judgment with respect to the inputs used in determining fair value, and, according, actual results could vary significantly from such estimates, which fall under Level 3 within the fair value measurement hierarchy.

See Note 5 — Investments for further information regarding the investments in Hycroft.

Other Fair Value Measurement Disclosures.

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 September 30, 2021 Using

Fair Value Measurements at March 31, 2022 Using

Significant other

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(In millions)

September 30, 2021

March 31, 2022

Current maturities of corporate borrowings

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The Company reports information about operating segments in accordance with ASC 280-10, Segment Reporting, which requires financial information to be reported based on the way management organizes segments within a company for making operating decisions and evaluating performance.

The Company has identified two

reportable segments and reporting units for its theatrical exhibition operations, U.S.

The Company has identified two reportable segments and reporting units for its theatrical exhibition operations, U.S.

markets and International markets.

The International markets reportable segment has operations in or partial interest in theatres in the United Kingdom, Germany, Spain, Italy, Ireland, Portugal, Sweden, Finland, Norway, Denmark, and Saudi Arabia.

The Company divested of its interest in Estonia, Latvia, and Lithuania operations, see Note 1 — Basis of Presentation for information on the Baltics’ theatre sale.

Each segment’s revenue is derived from admissions, food and beverage sales and other ancillary revenues, primarily screen advertising, AMC Stubs® membership fees and other loyalty programs, ticket sales, gift card income and exchange ticket income.

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Three Months Ended

Nine Months Ended

September 30,

Revenues (In millions)

March 31, 2022

March 31, 2021

International markets

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Three Months Ended

Nine Months Ended

September 30,

Adjusted EBITDA (In millions)

March 31, 2022

March 31, 2021

International markets

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Capital Expenditures (In millions)

March 31, 2022

March 31, 2021

International markets

1 unchanged sentence

Long-term assets, net (In millions)

September 30, 2021

March 31, 2022

December 31, 2021

1 unchanged sentence

Total long-term assets (1)

(1) Long-term assets are comprised of property, operating lease right-of-use assets, intangible assets, goodwill, deferred tax assets, and other long-term assets.

(1) Long-term assets are comprised of property, net, operating lease right-of-use assets, intangible assets, goodwill, deferred tax assets, net and other long-term assets.

The following table sets forth a reconciliation of net loss to Adjusted EBITDA:

Three Months Ended

Nine Months Ended

September 30,

(In millions)

March 31, 2022

March 31, 2021

Income tax provision (benefit)

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Depreciation and amortization

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

Certain operating expense (income) (2)

Equity in (earnings) loss of non-consolidated entities

Certain operating expense (1)

Equity in loss of non-consolidated entities

Cash distributions from non-consolidated entities (2)

Attributable EBITDA (3)

Investment expense (income)

Other expense (5)

Investment income (4)

Other expense (income) (5)

Other non-cash rent benefit (6)

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Adjusted EBITDA

(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 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.

(1) 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, disposition of assets and other non-operating gains or losses included in operating expenses.

The Company has excluded these items as they are non-cash in nature or are non-operating in nature.

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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)

Investment income

Interest expense

March 31, 2022

March 31, 2021

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

Impairment of long-lived assets

Depreciation and amortization

1 unchanged sentence

Attributable EBITDA

(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.

(4) Investment income during the three months ended March 31, 2022 includes appreciation in estimated fair value of the Company’s investment in common shares of Hycroft Mining Holding Corporation of $ 28.8 million and appreciation in estimated fair value of the Company’s investment in warrants to purchase common shares of Hycroft Mining Holdings corporation of $ 35.1 million.

(5) Other expense during the three months ended March 31, 2022, included loss on debt extinguishment of $ 135.0 million and foreign currency transaction losses of $ 4.8 million.

During the three months ended March 31, 2021, other expense (income) included foreign currency transaction gains of $ 3.8 million and estimated credit income of $ 2.0 million related to decreases in contingent lease guarantees, partially offset by financing

fees of $ 1.0 million primarily related to deferred financing cost write-off for the Odeon revolving credit facility.

(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.

(8) Non-cash expense included in general and administrative:

(8) Non-cash or non-recurring expense included in general and administrative:

NOTE 11—COMMITMENTS AND CONTINGENCIES

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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 November 8, 2021, the court preliminarily approved the settlement, approved the form of notice to be disseminated to class members, and scheduled a final fairness hearing on the settlement for February 10, 2022.

On February 14, 2022, the court issued a final judgment approving the settlement and dismissing the action.

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

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The parties filed a joint stipulation to stay the action, which the court granted on December 17, 2018.

The stay was lifted as of February 9, 2022.

On October 2, 2019, a stockholder derivative complaint, captioned Kenna v.

Aron , et al., Case No.

1:19-cv-09148-AJN (the “Kenna Action”), was filed in the U.S.

09148-AJN (the “Kenna Action”), was filed in the U.S.

District Court for the Southern District of New York.

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The Kenna Action asserts claims under Sections 10(b), 14(a), and 21D of the Exchange Act and for breaches of fiduciary duty and unjust enrichment based on allegations substantially similar to the Actions and the Gantulga Action.

The action remains stayed.

The stay was lifted as of February 9, 2022.

On March 20, 2020, a stockholder derivative complaint, captioned Manuel v.

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Aron, et al ., Case No.

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

1:20-cv-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 January 11, 2022, the court lifted the stay.

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

2 unchanged sentences

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 January 14, 2022, defendants moved to dismiss the complaint.

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.

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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.

NOTE 12—LOSS PER SHARE

Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding.

Diluted loss per share includes the effects of potential dilutive shares from the conversion feature of the Convertible Notes, if dilutive.

Diluted loss per share includes the effects of unvested RSUs with a service condition only and unvested contingently issuable RSUs and PSUs that have service and performance conditions, if dilutive.

The following table sets forth the computation of basic and diluted loss per common share:

Three Months Ended

Nine Months Ended

September 30,

(In millions)

March 31, 2022

March 31, 2021

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 3,794,123 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.

Vested RSUs, PSUs, and special performance stock units (“SPSUs”) have dividend rights identical to the Company’s Common Stock and are treated as outstanding shares for purposes of computing basic and diluted earnings per share.

For the three months ended March 31, 2022 and March 31, 2021, unvested RSUs of 2,807,026 and 3,812,964 , respectively, 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 2,149,498 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 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.

Unvested PSUs of 1,476,989 and 2,161,337 at 100% performance targets for the three months ended March 31, 2022 and March 31, 2021, respectively, and unvested SPSUs of 1,156,656 at the minimum market condition for the three months ended March 31, 2021, 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.

NOTE 13—SUPPLEMENTAL BALANCE SHEET INFORMATION

Accrued expenses and other liabilities consist of the following:

Other current assets and other long-term assets consist of the following:

(In millions)

September 30, 2021

March 31, 2022

December 31, 2021

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

Other current assets:

Income taxes receivable

Merchandise inventory

Other long-term assets:

Investments in real estate

Deferred financing costs revolving credit facility

Investments in equity method investees

Computer software

Investment in common stock

Pension asset

Investment in Hycroft common stock (2)

Investment in Hycroft warrants (2)

(1) The increase primarily relates to prepaid insurance.

(2) The equity method investment in Hycroft is measured under the fair value option.

See Note 5 — Investments and Note 9 — Fair Value Measurements for further information regarding the investment in Hycroft .

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