What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-08 compared with 2023-05-05 · 404 added, 185 removed, 335 unchanged (64% of the section changed)

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● the risks and uncertainties relating to the sufficiency of our existing cash and cash equivalents and available borrowing capacity to comply with the minimum liquidity requirement under our debt covenants related to borrowings pursuant to the Senior Secured Revolving Credit Facility (as defined in Note 6—Corporate Borrowings and Finance Lease Liabilities in the Notes to the Condensed Consolidated Financial Statements under Part I, Item 1 thereof), fund operations, and satisfy obligations including cash outflows for deferred rent and planned capital expenditures currently and through the next twelve months.

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

We believe the anticipated volume of titles available for theatrical release and the anticipated broad appeal of many of those titles will support increased operating revenues and attendance levels.

In order to achieve net positive operating cash flows and long-term profitability, operating revenues will need to increase from current levels to levels in line with pre-COVID-19 operating revenues.

However, there remain significant risks that may negatively impact operating revenues and attendance levels, including changes to movie studios release schedules and direct to streaming or other changing movie studio practices.

If we are unable to achieve significantly increased levels of attendance and operating revenues, we may be required to obtain additional liquidity.

If we are unable to achieve increased levels of attendance and operating revenues, we may be required to obtain additional liquidity.

If such additional liquidity is not obtained or insufficient, we likely would seek an in-court or out-of-court restructuring of our liabilities, and in the event of such future liquidation or bankruptcy proceeding, holders of our Common Stock, AMC Preferred Equity Units, and other securities would likely suffer a total loss of their investment;

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and the changing movie-going behavior of consumers;

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

● the risk that the North American and international box office in the near term will not recover sufficiently,

resulting in higher cash burn and the need to seek additional financing;

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

● the risk that the North American and international box office in the near term will not recover sufficiently, resulting in higher cash burn and the need to seek additional financing;

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

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● the seasonality of our revenue and working capital, which are dependent upon the timing of motion picture releases by distributor, such releases being seasonal and resulting in higher attendance and revenues generally during the summer months and holiday seasons;

● intense competition in the geographic areas in which we operate among exhibitors or from other forms of entertainment;

● intense competition in the geographic areas in which we operate among exhibitors, streaming platforms, or from other forms of entertainment;

● certain covenants in the agreements that govern our indebtedness may limit our ability to take advantage of certain business opportunities and limit or restrict our ability to pay dividends, pre-pay debt, and also to refinance debt and to do so at favorable terms;

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

● risks relating to motion picture production and performance, including labor stoppages affecting the production and supply of theatrical motion picture content;

● risks relating to motion picture production, promotion, marketing, and performance, including labor stoppages affecting the production, supply and release schedule of theatrical motion picture content, including but not limited to the Writers Guild of America strike that began on May 2, 2023 and the Screen Actors Guild – American Federation of Television and Radio Artists strike that began on July 14, 2023;

● general and international economic, political, regulatory, social and financial market conditions, including potential economic recession, inflation, the financial stability of the banking industry, and other risks that may negatively impact discretionary income and our operating revenues and attendance levels;

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● an issuance of preferred stock, including the Series A Convertible Participating Preferred Stock (represented by AMC Preferred Equity Units), could dilute the voting power of the common stockholders and adversely affect the market value of our Common Stock and AMC Preferred Equity Units;

● limitations on the authorized number of Common Stock shares prevents us from raising additional capital through Common Stock issuances;

● limitations on the authorized number of Common Stock shares and AMC Preferred Equity Units prevents us from raising additional capital through Common Stock or AMC Preferred Equity Unit issuances;

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

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

● impact of the elimination of the calculation of USD LIBOR rates on our contracts indexed to USD LIBOR;

● review by antitrust authorities in connection with acquisition opportunities;

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● future offerings of debt, which would be senior to our Common Stock and AMC Preferred Equity Units for purposes of distributions or upon liquidation, could adversely affect the market price of our Common Stock and AMC Preferred Equity Units;

● our ability to implement the Charter Amendment Proposals due to the Shareholder Litigation (as defined herein);

● our ability to implement the Charter Amendment Proposals due to the Shareholder Litigation;

● the potential for political, social, or economic unrest, terrorism, hostilities, cyber-attacks or war, including the conflict between Russia and Ukraine and that Sweden and Finland (countries where we operate approximately 100 theatres) have either signed or completed accession protocols.

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In addition, new risks and uncertainties may arise from time to time.

Accordingly, all

forward-looking statements should be evaluated with an understanding of their inherent uncertainty and we caution accordingly against relying on forward-looking statements.

Accordingly, all forward-looking statements should be evaluated with an understanding of their inherent uncertainty and we caution accordingly against relying on forward-looking statements.

Readers are urged to consider these factors carefully in evaluating the forward-looking statements.

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

We operate theatres in 11 countries, including the U.S.

We operate theatres in 11 countries throughout the U.S.

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

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

As of March 31, 2023, we owned, operated or had interests in 920 theatres and 10,264 screens.

As of June 30, 2023, we owned, operated or had interests in 906 theatres and 10,120 screens.

Box Office Admissions and Film Content

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Number of Screens

March 31, 2023

March 31, 2022

March 31, 2023

March 31, 2022

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Dolby Cinema TM

Other Premium Large Format ("PLF")

Other Premium Large Format ( “ PLF ” )

Dine-In theatres

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International Markets

Three Months Ended

Six Months Ended

Recliner screens operated

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Loyalty Programs and Other Marketing

As of March 31, 2023, we had more than 28,800,000 member households enrolled in AMC Stubs® A-List, AMC Stubs Premiere™ and AMC Stubs Insider™ programs, combined.

During the three months ended March 31, 2023 our AMC Stubs® members represented approximately 43.9% of AMC U.S.

As of June 30, 2023, we had more than 30 million member households enrolled in AMC Stubs® A-List, AMC Stubs Premiere™ and AMC Stubs Insider™ programs, combined.

During the six months ended June 30, 2023 our AMC Stubs® members represented approximately 45.7% of AMC U.S.

markets attendance.

We currently have approximately 15,000,000 members in our various International loyalty programs.

We currently have approximately 15 million members in our various International loyalty programs.

Business” in our 2022 Annual Report on Form 10-K for additional discussion and information of our screens, seating concepts, amenities, loyalty programs and other marketing initiatives.

Holders of Shares

As of March 31, 2023, approximately 7.9 million shares of our Class A common stock and approximately 124.7 million shares of our AMC Preferred Equity Units were directly registered with our transfer agent by 16,779 and 14,852 shareholders, respectively.

As of June 30, 2023, approximately 6.9 million shares of our Class A common stock and approximately 57.5 million shares of our AMC Preferred Equity Units were directly registered with our transfer agent by 17,160 stockholders.

Critical Accounting Estimates

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On January 24, 2023, the Saudi Ministry of Commerce recorded a sale of equity and we received the proceeds on January 25, 2023.

We recorded a gain on the sale of $15.5 million in investment income during the three months ended March 31, 2023.

We recorded a gain on the sale of $15.5 million in investment income during the six months ended June 30, 2023.

Debt Repurchases.

The below table summarizes the cash debt repurchase transactions during the three months ended March 31, 2023, including related party transactions with Antara, which became a related party on February 7, 2023:

The below table summarizes the cash debt repurchase transactions during the six months ended June 30, 2023, including related party transactions with Antara, which became a related party on February 7, 2023:

Aggregate Principal

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On December 22, 2022, we entered into a forward purchase agreement (the “Forward Purchase Agreement”) with Antara pursuant to which we agreed to (i) sell to Antara 106,595,106 AMC Preferred Equity Units for an aggregate purchase price of $75.1 million and (ii) simultaneously purchase from Antara $100.0 million aggregate principal amount of the Company’s 10%/12% Cash/PIK Toggle Second Lien Notes due 2026 in exchange for 91,026,191 AMC Preferred Equity Units.

On February 7, 2023, the Company issued 197,621,297 AMC Preferred Equity Units to Antara in exchange for $75.1 million in cash and $100.0 million aggregate principal amount of the Company’s 10%/12% Cash/PIK Toggle Second Lien Notes due 2026.

The Company recorded $193.7 million to stockholders’ deficit as a result of the transaction.

On February 7, 2023, we issued 197,621,297 AMC Preferred Equity Units to Antara in exchange for $75.1 million in cash and $100.0 million aggregate principal amount of our 10%/12% Cash/PIK Toggle Second Lien Notes due 2026.

We recorded $193.7 million to stockholders’ deficit as a result of the transaction.

We paid $1.4 million of accrued interest in cash upon exchange of the notes.

Equity Distribution Agreement.

During the three months ended March 31, 2023, we raised gross proceeds of approximately $80.3 million and paid fees to the Sales Agent and incurred other third-party issuance costs of approximately $2.0 million and $7.8 million, respectively, through our at-the-market offering of approximately 49.3 million shares of our AMC Preferred Equity Units.

The Company paid $6.8 million of other third-party issuance costs during the three months ended March 31, 2023.

See Note 13—Subsequent Events in the Notes to the Condensed Consolidated Financial Statements under Part I, Item 1, for information about additional AMC Preferred Equity Unit issuances.

During the six months ended June 30, 2023, we raised gross proceeds of approximately $114.5 million and paid fees to the Sales Agent and incurred other third-party issuance costs of approximately $2.9 million and $8.3 million, respectively, through our at-the-market offering of approximately 70.5 million shares of our AMC Preferred Equity Units.

We paid $11.0 million of other third-party issuance costs during the six months ended June 30, 2023.

We no longer have any authorized AMC Preferred Equity Units available for issuance under the Equity Distribution Agreement.

Special Awards.

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This modification resulted in the immediate additional vesting of 2,389,589 Common Stock 2022 PSUs and 2,389,589 AMC Preferred Equity Unit 2022 PSUs.

This was treated as a Type 3 modification (improbable-to-probable) which requires the Company to recognize additional stock compensation expense based on the modification date fair values of the Common Stock PSUs and AMC Preferred Equity Units PSUs of $6.23 and $2.22, respectively.

During the three months ended March 31, 2023, we recognized $20.2 million of additional stock compensation expense.

This was treated as a Type 3 modification (improbable-to-probable) which requires us to recognize additional stock compensation expense based on the modification date fair values of the Common Stock PSUs and AMC Preferred Equity Units PSUs of $6.23 and $2.22, respectively.

During the six months ended June 30, 2023, we recognized $20.2 million of additional stock compensation expense.

NCM Bankruptcy.

On April 11, 2023, National CineMedia, LLC filed a petition under Chapter 11 of the U.S.

Bankruptcy Code in the Southern District of Texas.

NCM is the in-theatre advertising provider for the majority of our theatres in the United States.

Under the Chapter 11 plan of reorganization, which became effective on August 7, 2023 (the “Plan”), NCM has assumed its agreements with us.

We do not expect its bankruptcy to have a material impact on the Company.

However, certain payments due to AMC from NCM for periods prior to the bankruptcy filing have been delayed during the pendency of the Chapter 11 proceedings.

Additionally, as part of the Plan, on August 7, 2023, NCM issued, 16,581,829 common units (“NCM Common Units”) that were owed to AMC as part of the annual common unit adjustment.

But under the terms of the Plan and the restructuring of the equity of NCM thereunder, the NCM Common Units were immediately cancelled upon the efficacy of the Plan.

AMC has filed appeals with the United States District Court for the Southern District of Texas, objecting to, among other things, certain terms of the Plan, including appeal of the court’s order to approve cancellation of the NCM Common Unit Issuance.

Shareholder Litigation.

Two putative stockholder class actions have been filed that assert a breach of fiduciary duty against certain of the Company’s directors and a claim for breach of 8 Del.

§ 242 against those directors and the Company, arising out of the Company’s creation of AMC Preferred Equity Units, the Antara Transactions, and the Charter Amendment Proposals.

See Note 11—Commitments and Contingencies and Note 13—Subsequent Events in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I in this Form 10-Q for further information.

Operating Results

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Three Months Ended

Six Months Ended

(In millions)

March 31, 2023

March 31, 2022

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Food and beverage

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Operating costs and expenses

Operating loss

Other expense:

Operating income (loss)

Other expense:

Other expense (income)

Interest expense:

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Equity in (earnings) loss of non-consolidated entities

Investment income

Investment expense (income)

Total other expense, net

Net loss before income taxes

Net earnings (loss) before income taxes

Income tax provision

Net earnings (loss)

* Percentage change in excess of 100%

Three Months Ended

Six Months Ended

Operating Data:

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Operating costs and expenses

Operating loss

Operating income (loss)

Other expense (income):

Other expense

Interest expense:

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Equity in (earnings) loss of non-consolidated entities

Investment expense

Total other expense

Net earnings (loss) before income taxes

Income tax provision (benefit)

Net earnings (loss)

International Markets

Three Months Ended

Segment Operating Data:

Screen additions

Screen acquisitions

Screen dispositions

Construction openings (closures), net

Average screens (1)

Number of screens operated

Number of theatres operated

Screens per theatre

Attendance (in thousands) (1)

(1) Includes consolidated theatres only and excludes screens offline due to construction.

International Markets

Six Months Ended

(In millions)

Food and beverage

Other theatre

Total revenues

Operating Costs and Expenses

Film exhibition costs

Food and beverage costs

Operating expense

General and administrative expense:

Merger, acquisition and other costs

Depreciation and amortization

Operating costs and expenses

Operating income (loss)

Other expense (income):

Other expense (income)

Interest expense:

Corporate borrowings

Finance lease obligations

Non-cash NCM exhibitor service agreement

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

Investment expense (income)

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International Markets

Three Months Ended

Six Months Ended

Segment Operating Data:

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● does not reflect any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future.

During the three months ended March 31, 2023, Adjusted EBITDA in the U.S.

markets was $10.9 million compared to $(43.4) million during the three months ended March 31, 2022.

The year-over-year improvement was primarily due to the decreased net loss driven by an increase in attendance as a result of the popularity of new film releases compared to the prior year and decreases in rent expense, partially offset by increases in operating costs due to the increase in attendance.

During the three months ended March 31, 2023, Adjusted EBITDA in the International markets was $(3.8) million compared to $(18.3) million during the three months ended March 31, 2022.

The year-over-year improvement was primarily due to the decreased net loss driven by the increase in attendance as a result of the popularity of new film releases compared to the prior year and decreases in foreign currency translation rates, partially offset by increases in operating costs due to the increase in attendance and decreases in government assistance.

During the three months ended March 31, 2023, Adjusted EBITDA in the U.S.

markets and International markets was $7.1 million compared to $(61.7) million during the three months ended March 31, 2022, driven by the aforementioned factors impacting Adjusted EBITDA.

During the three months ended June 30, 2023, Adjusted EBITDA in the U.S.

markets was $174.8 million compared to $94.4 million during the three months ended June 30, 2022.

The year-over-year improvement was primarily due to the decreased net loss driven by an increase in attendance as a result of the popularity of new film releases compared to the prior year.

During the three months ended June 30, 2023, Adjusted EBITDA in the International markets was $7.7 million compared to $12.3 million during the three months ended June 30, 2022.

The year-over-year decrease was primarily due to a decline in gift card and package ticket expirations and theatre rentals for meetings and declines in government assistance, and primarily offset by the increase in attendance.

During the three months ended June 30, 2023, Adjusted EBITDA in the U.S.

markets and International markets was $182.5 million compared to $106.7 million during the three months ended June 30, 2022, driven by the aforementioned factors impacting Adjusted EBITDA.

During the six months ended June 30, 2023, Adjusted EBITDA in the U.S.

markets was $185.7 million compared to $51.0 million during the six months ended June 30, 2022.

During the six months ended June 30, 2023, Adjusted EBITDA in the International markets was $3.9 million compared to $(6.0) million during the six months ended June 30, 2022.

The year-over-year improvement was primarily due to the decreased net loss driven by the increase in attendance as a result of the popularity of new film releases compared to the prior year, partially offset by a decline in gift card and package ticket expirations and theatre rentals for meetings, and decreases in government assistance.

During the six months ended June 30, 2023, Adjusted EBITDA in the U.S.

markets and International markets was $189.6 million compared to $45.0 million during the six months ended June 30, 2022, driven by the aforementioned factors impacting Adjusted EBITDA.

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

Three Months Ended

Six Months Ended

Adjusted EBITDA (In millions)

March 31, 2023

March 31, 2022

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

International markets

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Three Months Ended

Six Months Ended

(In millions)

March 31, 2023

March 31, 2022

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Net earnings (loss)

Income tax provision

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Attributable EBITDA (3)

Investment income (4)

Other expense (5)

Investment expense (income) (4)

Other expense (income) (5)

Other non-cash rent benefit (6)

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Three Months Ended

Six Months Ended

(In millions)

March 31, 2023

March 31, 2022

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

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

Equity in loss of International theatre joint ventures

Income tax benefit

Investment expense

Interest expense

Impairment of long-lived assets

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Attributable EBITDA

(4) Investment income during the three months ended March 31, 2023 primarily includes deterioration in estimated fair value of the Company’s investment in common shares of Hycroft Mining Holding Corporation of $2.3 million, deterioration in estimated fair value of the Company’s investment in warrants to purchase common shares of Hycroft Mining Holding Corporation of $2.3 million, a $(15.5) million gain on the sale of the Company’s investment in Saudi Cinema Company, LLC, and interest income of $(2.3) million.

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 Holding Corporation of $35.1 million.

(5) Other expense during the three months ended March 31, 2023 includes a non-cash litigation contingency reserve charge of $116.6 million, partially offset by income related to foreign currency transaction gains of $(8.7) million and gains on debt extinguishment of $(65.1) million.

Other expense during the three months ended March 31, 2022 included loss on debt extinguishment of $135.0 million, partially offset by foreign currency transaction losses of $4.8 million.

(4) Investment expense (income) during the three months ended June 30, 2023 primarily includes deterioration in estimated fair value of the Company’s investment in common shares of Hycroft Mining Holding Corporation of $3.2 million, deterioration in estimated fair value of the Company’s investment in warrants to purchase common shares of Hycroft Mining Holding Corporation of $2.3 million and interest income of $(2.5) million.

During the three months ended June 30, 2022, investment expense (income) included deterioration in estimated fair value of the Company’s investment in common shares of Hycroft Mining Corporation of $27.8 million and deterioration in estimated fair value of the Company's investment in warrants to purchase common shares of Hycroft Mining Holding Corporation of $20.0 million.

Investment expense (income) during the six months ended June 30, 2023 includes deterioration in estimated fair value of the Company’s investment in common shares of Hycroft Mining Holding Corporation of $5.5 million, deterioration in estimated fair value of the Company’s investment in warrants to purchase common shares of Hycroft Mining Holding Corporation of $4.6 million, a $(15.5) million gain on the sale of the Company’s investment in Saudi Cinema Company, LLC, and interest income of $(4.8) million.

During the six months ended June 30, 2022, investment expense (income) included appreciation in estimated fair value of the Company’s investment in common shares of Hycroft Mining Holding Corporation of $(1.0) million and appreciation in estimated fair value of the Company’s investment to purchase common shares of Hycroft Mining Holding Corporation of $(15.1) million.

(5) Other expense (income) during the three months ended June 30, 2023 includes a non-cash litigation contingency adjustment of $(1.2) million, income related to foreign currency transaction gains of $(7.5) million and gains on debt extinguishment of $(21.6) million.

During the three months ended June 30, 2022, other expense (income) included gain on debt extinguishment of $(38.6) million and foreign currency transaction losses of $3.6 million.

Other expense (income) during the six months ended June 30, 2023 includes a non-cash litigation contingency reserve charge of $115.4 million, partially offset by a gain on debt extinguishment of $(86.7) million and foreign currency transaction gains of $(16.2) million.

During the six months ended June 30, 2022, other expense (income) included loss on debt extinguishment of $96.4 million and foreign currency transaction losses of $8.4 million.

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

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Segment Information

Our historical results of operations for the three months ended March 31, 2023 and March 31, 2022 reflect the results of operations for our two theatrical exhibition reportable segments, U.S.

Our historical results of operations for the three and six months ended June 30, 2023 and June 30, 2022 reflect the results of operations for our two theatrical exhibition reportable segments, U.S.

markets and International markets.

Results of Operations— For the Three Months ended March 31, 2023 Compared to the Three Months ended March 31, 2022

Results of Operations—For the Three Months ended June 30, 2023 Compared to the Three Months ended June 30, 2022

Condensed Consolidated Results of Operations

Total revenues increased $168.7 million or 21.5%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022.

Admissions revenues increased $90.3 million or 20.3%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to an increase in attendance of 21.9% from 39.1 million patrons to 47.6 million patrons partially offset by a 1.2% decrease in average ticket price.

Total revenues increased $181.5 million or 15.6%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

Admissions revenues increased $93.1 million or 14.3%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to an increase in attendance of 12.2% from 59.1 million patrons to 66.4 million patrons and a 1.8% increase in average ticket price.

The increase in attendance was primarily due to the popularity of film product compared to the prior year.

The decrease in average ticket price was primarily due to higher frequency on our A-List subscription program, a higher amount of discount-day ticket attendance, increased discount ticket attendance for non-adult tickets, which are typically discounted, and a decrease in foreign currency translation rates, partially offset by increased attendance for 3D content.

Food and beverage revenues increased $76.2 million 30.2%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to the increase in attendance and an increase in food and beverage per patron.

Food and beverage per patron increased 6.8% from $6.46 to $6.90 due primarily to an increase in average prices and units purchased per transaction and the lifting of COVID-19 restrictions on the sale of food and beverage, partially offset by higher frequency from our AMC Stubs loyalty members and a decrease in foreign currency translation rates.

Total other theatre revenues increased $2.2 million or 2.5%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to increases in ticket fees and screen and other advertising due to the increase in attendance, partially offset by lower income from gift cards and package tickets and the decrease in foreign currency translation rates.

The increase in average ticket price was primarily due to increased attendance for 3D content, partially offset by higher frequency of use by subscribers to our A-List program.

Food and beverage revenues increased $91.5 million or 23.1%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to the increase in attendance and an increase in food and beverage per patron.

Food and beverage per patron increased 9.7% from $6.71 to $7.36 due primarily to an increase in average prices, the percentage of guests making transactions, units purchased per transaction and the lifting of COVID-19 restrictions on the sale of food and beverage, partially offset by higher frequency from our AMC Stubs loyalty members.

Total other theatre revenues decreased $3.1 million or 2.6%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to decreases in income from gift cards and package tickets and theatre rentals for meetings, partially offset by increases in ticket fees due to the increase in attendance.

Operating costs and expenses.

Operating costs and expenses increased $110.0 million or 11.5%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022.

Film exhibition costs increased $56.4 million or 29.7%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to the increase in attendance.

As a percentage of admissions revenues, film exhibition costs were 46.1% for the three months ended March 31, 2023, compared to 42.8% for the three months ended March 31, 2022.

Operating costs and expenses increased $80.6 million or 6.8%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

Film exhibition costs increased $54.4 million or 16.6%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to the increase in attendance.

As a percentage of admissions revenues, film exhibition costs were 51.5% for the three months ended June 30, 2023, compared to 50.5% for the three months ended June 30, 2022.

The increase in film exhibition cost percentage is primarily due to the concentration of box office revenues in higher grossing films in the current year, which typically results in higher film exhibition costs.

Food and beverage costs increased $18.8 million or 44.1%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022.

The increase in food and beverage costs was primarily due to the

increase in food and beverage revenues and increases in product costs and obsolescence.

As a percentage of food and beverage revenues, food and beverage costs were 18.7% for the three months ended March 31, 2023 and 16.9% for the three months ended March 31, 2022.

As a percentage of revenues, operating expense was 40.2% for the three months ended March 31, 2023, and 43.9% for the three months ended March 31, 2022.

Rent expense decreased 7.8%, or $17.5 million, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, due primarily to the early termination of one theatre lease for a benefit of $16.7 million, which included an early termination payment from the landlord for $13.0 million and the decrease in foreign currency translation rates.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases and rent obligations of approximately $123.6 million that have been deferred to future years as of March 31, 2023.

Food and beverage costs increased $27.1 million or 42.0%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

The increase in food and beverage costs was primarily due to the increase in food and beverage sales and increases in product costs.

As a percentage of food and beverage revenues, food and beverage costs were 18.8% for the three months ended June 30, 2023 and 16.3% for the three months ended June 30, 2022.

As a percentage of revenues, operating expense was 30.6% for the three months ended June 30, 2023, and 34.5% for the three months ended June 30, 2022.

Rent expense decreased 0.7%, or $1.6 million, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases and rent obligations of approximately $96.5 million that have been deferred to future years as of June 30, 2023.

Merger, acquisition, and other costs.

Merger, acquisition, and other costs were $0.2 million during the three months ended March 31, 2023, compared to $0.4 million during the three months ended March 31, 2022.

Other general and administrative expense increased 36.2%, or $19.2 million, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022 due primarily to stock-based compensation expense of $20.2 million related to a February 23, 2023 special award grant accounted for as a modification to the 2022 PSU awards which lowered the Adjusted EBITDA and free cash flow performance targets such that 200% vesting was achieved for both tranches.

This modification resulted in the immediate additional vesting of 2,389,589 Class A Common Stock PSU’s and 2,389,589 Preferred Equity Unit PSU’s.

The modification was treated as a Type 3 modification (improbable to probable) which required us to recognize additional stock compensation expense based on the modification date fair values of the Class A Common Stock PSU’s and AMC Preferred Equity Unit PSU’s of $6.23 per unit and $2.22 per unit, respectively during the three months ended March 31, 2023.

Merger, acquisition, and other costs were $0.6 million during the three months ended June 30, 2023, compared to $(0.3) million during the three months ended June 30, 2022.

Other general and administrative expense decreased 13.9% or $9.4 million, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022 due primarily to declines in stock-based compensation expense of $11.6 million related to lower expectations of performance versus goals in the current year compared to the prior year, partially offset by higher legal costs in the current year.

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

Depreciation and amortization.

Depreciation and amortization decreased $5.1 million or 5.2%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to lower depreciation expense on theatres impaired during years ended December 31, 2021 and December 31, 2022 and the decrease in foreign currency translation rates, partially offset by accelerated depreciation related to the replacement of digital projectors.

Depreciation and amortization decreased $0.6 million or 0.6%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to lower depreciation expense on theatres impaired during the year ended December 31, 2022, partially offset by accelerated depreciation related to the replacement of digital projectors and permanently closed theatres.

Other income.

Other income of $31.1 million during the three months ended June 30, 2023 was primarily due to $1.2 million of income related to a proposed settlement of the Shareholder Litigation comprised of $1.2 million of non-cash income for the decrease in estimated fair value as of June 30, 2023 of settlement shares proposed to be issued to holders of AMC Class A Common Stock, gains on extinguishment of debt of $21.6 million related to the redemption of $42.0 million aggregate principal amount of the Second Lien Notes due 2026 and $7.5 million in foreign currency transaction gains.

Other income of $43.7 million during the three months ended June 30, 2022 was primarily due to a gain on extinguishment of debt of $38.6 million related to the redemption of $72.5 million of aggregate principal amount of the Second Lien Notes due 2026, $8.5 million in government assistance related to COVID-19 and partially offset by $3.6 million of foreign currency transaction losses.

Interest expense.

Interest expense increased $12.3 million to $102.6 million for the three months ended June 30, 2023 compared to $90.3 million during the three months ended June 30, 2022 primarily due to:

● the issuance of $400.0 million 12.75% Odeon Senior Secured Notes due 2027 on October 20, 2022;

● the increase in interest rates on the Senior Secured Credit Facility Term Loan due 2026,

partially offset by:

● the extinguishment of $359.6 million of 10%/12% Cash/PIK/Toggle Second Lien Notes due 2026 from May 2022 to June 2023;

● the extinguishment of £147.6 million and €312.2 million ($476.6 million) 10.75%/11.25% Cash/PIK Term Loans due 2023 on October 20, 2022.

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

Equity in (earnings) loss of non-consolidated entities was ($0.8) million for the three months ended June 30, 2023, compared to a loss of $1.0 million for the three months ended June 30, 2022.

Investment expense.

Investment expense was $5.1 million for the three months ended June 30, 2023, compared to $57.3 million for the three months ended June 30, 2022.

Investment expense in the current year includes $3.2 million of decline in estimated fair value of our investment in common shares of Hycroft Mining Holding Corporation, $2.3 million of decline in estimated fair value of our investment in warrants to purchase common shares of Hycroft Mining Holding Corporation and $2.1 million of expense for NCM common units, partially offset by interest income of $2.5 million.

Investment expense of $57.3 million in the prior year includes $27.8 million of decline in estimated fair value of our investment in common shares of Hycroft Mining Holding Corporation, $20.0 million of decline in estimated fair value of our investment in warrants to purchase common shares of Hycroft Mining Holding Corporation and $9.6 million decline in estimated fair value of our investment in NCM common units.

Income tax provision.

The income tax provision was $0.4 million and $0.6 million for the three months ended June 30, 2023 and June 30, 2022, respectively.

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

Net earnings (loss).

Net earnings (loss) was $8.6 million and $(121.6) million during the three months ended June 30, 2023 and June 30, 2022, respectively.

Net earnings (loss) during the three months ended June 30, 2023 compared to net earnings (loss) for the three months ended June 30, 2022 was positively impacted by the increase in attendance as a result of the popularity of new film releases compared to the prior year, decreases in rent expense, decreases in depreciation and amortization expense, decreases in general and administrative expenses, decreases in equity in losses, decreases in investment expense and decreases in income tax provision, partially offset by decreases in other income and increases in interest expense.

Theatrical Exhibition — U.S.

Total revenues increased $179.5 million or 19.8%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

Admissions revenues increased $87.9 million or 17.5%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to an increase in attendance of 15.0% from 43.5 million patrons to 50.0 million patrons and a 2.3% increase in average ticket price.

The increase in attendance was primarily due to the popularity of film product compared to the prior year.

The increase in average ticket price was primarily due to increased attendance for 3D content, partially offset by higher frequency of use by subscribers to our A-List program.

Food and beverage revenues increased $83.8 million or 25.6%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to the increase in attendance and an increase in food and beverage per patron.

Food and beverage per patron increased 9.3% from $7.52 to $8.22 due primarily to an increase in average prices, the percentage of guests making transactions and units purchased per transaction, partially offset by higher frequency from our AMC Stubs loyalty members.

Total other theatre revenues increased $7.8 million or 9.8%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to increases in ticket fees due to the increase in attendance.

Operating costs and expenses.

Operating costs and expenses increased $82.9 million or 9.2%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

Film exhibition costs increased $51.3 million or 19.1%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to the increase in attendance.

As a percentage of admissions revenues, film exhibition costs were 54.3% for the three months ended June 30, 2023, compared to 53.6% for the three months ended June 30, 2022.

Food and beverage costs increased $24.3 million or 50.8%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

The increase in food and beverage costs was primarily due to the increase in food and beverage sales, increases in product costs, and product mix.

As a percentage of food and beverage revenues, food and beverage costs were 17.5% for the three months ended June 30, 2023 and 14.6% for the three months ended June 30, 2022.

As a percentage of revenues, operating expense was 28.7% for the three months ended June 30, 2023, and 32.5% for the three months ended June 30, 2022.

Rent expense increased 0.5%, or $0.8 million, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases and rent obligations of approximately $84.1 million that have been deferred to future years as of June 30, 2023.

Merger, acquisition, and other costs.

Merger, acquisition, and other costs were $0.6 million during the three months ended June 30, 2023, compared to $0.4 million during the three months ended June 30, 2022.

Other general and administrative expense decreased 18.6% or $9.2 million, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022 due primarily to declines in stock-based compensation expense of $10.2 million related to lower expectations of performance versus goals in the current year compared to the prior year, partially offset by higher legal costs in the current year.

Depreciation and amortization.

Depreciation and amortization decreased $1.7 million or 2.2%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to lower depreciation expense on theatres impaired during the year ended December 31, 2022, partially offset by accelerated depreciation related to the replacement of digital projectors and permanently closed theatres.

Other income.

Other income of $23.7 million during the three months ended June 30, 2023 was primarily due to $1.2 million of income related to a proposed settlement of the Shareholder Litigation comprised of $1.2 million of non-cash income for the decrease in estimated fair value as of June 30, 2023 of settlement shares proposed to be issued

to holders of AMC Class A Common Stock, gains on extinguishment of debt of $21.6 million related to the redemption of $42.0 million aggregate principal amount of the Second Lien Notes due 2026.

Other income of $38.8 million during the three months ended June 30, 2022 was primarily due to a gain on extinguishment of debt of $38.6 million related to the redemption of $72.5 million of aggregate principal amount of the Second Lien Notes due 2026.

See Note 1—Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about the components of other income and Note 11—Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this form 10-Q for additional information about our legal contingencies and settlements.

Interest expense.

Interest expense increased $15.3 million to $86.9 million for the three months ended June 30, 2023 compared to $71.6 million during the three months ended June 30, 2022, primarily due to:

● the increase in interest rates on the Senior Secured Credit Facility Term Loan due 2026,

partially offset by:

● the extinguishment of $359.6 million of 10%/12% Cash/PIK/Toggle Second Lien Notes due 2026 from May 2022 to June 2023.

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

Equity in (earnings) loss of non-consolidated entities was $(1.3) million for the three months ended June 30, 2023, compared to a loss of $0.5 million for the three months ended June 30, 2022.

Investment expense.

Investment expense was $5.1 million for the three months ended June 30, 2023, compared to $57.3 million for the three months ended June 30, 2022.

Income tax provision.

The income tax provision was $0.6 million and $0.2 million for the three months ended June 30, 2023 and June 30, 2022, respectively.

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

Net earnings (loss).

Net earnings (loss) was $31.7 million and $(88.1) million during the three months ended June 30, 2023 and June 30, 2022, respectively.

Net earnings (loss) during the three months ended June 30, 2023 compared to net earnings (loss) for the three months ended June 30, 2022 was positively impacted by the increase in attendance as a result of the popularity of new film releases compared to the prior year, decreases in depreciation and amortization expense, decreases in general and administrative expenses, decreases in equity in losses and decreases in investment expense, partially offset by increases in rent expense, decreases in other income, increases in interest expense and increases in income tax provision.

Theatrical Exhibition—International Markets

Total revenues increased $2.0 million or 0.8%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

Admissions revenues increased $5.2 million or 3.5%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to an increase in attendance of 4.6% from 15.6 million patrons to 16.3 million patrons and partially offset by a 1.1% decrease in average ticket price.

The increase in attendance was primarily due to the popularity of film product compared to the prior year.

Food and beverage revenues increased $7.7 million or 11.1%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to the increase in attendance and an increase in food and beverage per patron.

Food and beverage per patron increased 6.3% from $4.44 to $4.72 due primarily to the lifting of COVID-19 restrictions on the sale of food and beverage and strategic pricing initiatives put in place over the prior year.

Total other theatre revenues decreased $10.9 million or 27.7%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to the decline in gift card and package ticket expirations and theatre rentals for meetings.

Operating costs and expenses.

Operating costs and expenses decreased $2.3 million or 0.8%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

Film exhibition costs increased $3.1 million or 5.2%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to the increase in attendance.

As a percentage of admissions revenues, film exhibition costs were 40.7% for the three months ended June 30, 2023, compared to 40.1% for the three months ended June 30, 2022.

Food and beverage costs increased $2.8 million or 16.7%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

The increase in food and beverage costs was primarily due to the increase in food and beverage revenues and increases in product costs.

As a percentage of food and beverage revenues, food and beverage costs were 25.4% for the three months ended June 30, 2023 and 24.2% for the three months ended June 30, 2022.

As a percentage of revenues, operating expense was 38.2% for the three months ended June 30, 2023, and 41.3% for the three months ended June 30, 2022.

Rent expense decreased 4.3%, or $2.4 million, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases and rent obligations of approximately $12.4 million that have been deferred to future years as of June 30, 2023.

Merger, acquisition, and other costs.

Merger, acquisition, and other costs were $0.0 million during the three months ended June 30, 2023, compared to $(0.7) million during the three months ended June 30, 2022.

Other general and administrative expense decreased 1.1% or $0.2 million, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022 due primarily to declines in stock-based compensation expense of $1.4 million related to lower expectations of performance goals in the current year compared to the prior year.

Depreciation and amortization.

Depreciation and amortization increased $1.1 million or 5.2%, during the three months ended June 30, 2023, compared to the three months ended June 30, 2022.

Other income.

Other income of $7.4 million during the three months ended June 30, 2023 was primarily due to $7.5 million in foreign currency transaction gains.

Other income of $4.9 million during the three months ended June 30, 2022 was primarily due to $8.5 million in government assistance related to COVID-19 and partially offset by $3.6 million of foreign currency transaction losses.

Interest expense.

Interest expense decreased $3.0 million to $15.7 million for the three months ended June 30, 2023 compared to $18.7 million during the three months ended June 30, 2022, primarily due to:

● the extinguishment of £147.6 million and €312.2 million ($476.6 million) 10.75%/11.25% Cash/PIK Term Loans due 2023 on October 20, 2022,

partially offset by:

● the issuance of $400.0 million 12.75% Odeon Senior Secured Notes due 2027 on October 20, 2022.

Equity in loss of non-consolidated entities.

Equity in loss of non-consolidated entities was $0.5 million for the three months ended June 30, 2023 and 2022.

Income tax provision (benefit).

The income tax provision (benefit) was ($0.2) million and $0.4 million for the three months ended June 30, 2023 and June 30, 2022, respectively.

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

Net loss was $23.1 million and $33.5 million during the three months ended June 30, 2023 and June 30, 2022, respectively.

Net loss during the three months ended June 30, 2023 compared to net loss for the three months ended June 30, 2022 was positively impacted by the increase in attendance as a result of the popularity of new film releases compared to the prior year, decreases in rent expense, increases in other income and decreases in income tax provision, partially offset by increases in general and administrative expenses, increases in depreciation and amortization expense and decreases in other revenues.

Results of Operations—For the Six Months ended June 30, 2023 Compared to the Six Months ended June 30, 2022

C ondensed Consolidated Results of Operations

Total revenues increased $350.2 million or 17.9%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

Admissions revenues increased $183.4 million or 16.8%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to an increase in attendance of 16.1% from 98.2 million patrons to 114.0 million patrons and a 0.5% increase in average ticket price.

The increase in attendance was primarily due to the popularity of film product compared to the prior year.

The increase in average ticket price was primarily due to increased attendance for 3D content partially offset by higher frequency of use by subscribers to our A-List program and a decrease in foreign currency translation rates.

Food and beverage revenues increased $167.7 million or 25.8%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to the increase in attendance and an increase in food and beverage per patron.

Food and beverage per patron increased 8.5% from $6.61 to $7.17 due primarily to an increase in average prices, the percentage of guests making transactions, units purchased per transaction and the lifting of COVID-19 restrictions on the sale of food and beverage in certain international markets, partially offset by higher frequency from our AMC Stubs loyalty members and a decrease in foreign currency translation rates.

Total other theatre revenues decreased $0.9 million or 0.4%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to lower income from gift cards and package tickets, lower income from theatre meetings and the decrease in foreign currency translation rates, partially offset by the increase in ticket fees due to the increase in attendance, advertising and retail sales.

Operating costs and expenses.

Operating costs and expenses increased $190.6 million or 8.9%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

Film exhibition costs increased $110.8 million or 21.4%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to the increase in attendance.

As a percentage of admissions revenues, film exhibition costs were 49.2% for the six months ended June 30, 2023, compared to 47.4% for the six months ended June 30, 2022.

Food and beverage costs increased $45.9 million or 42.8%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

The increase in food and beverage costs was primarily due to the increase in food and beverage revenues and increases in product costs and obsolescence.

As a percentage of food and beverage revenues, food and beverage costs were 18.7% for the six months ended June 30, 2023 and 16.5% for the six months ended June 30, 2022.

As a percentage of revenues, operating expense was 34.5% for the six months ended June 30, 2023, and 38.3% for the six months ended June 30, 2022.

Rent expense decreased 4.3%, or $19.1 million, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, due primarily to the early termination of one theatre lease for a benefit of $16.7 million, which included an early termination payment from the landlord for $13.0 million and the decrease in foreign currency translation rates.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases and rent obligations of approximately $96.5 million that have been deferred to future years as of June 30, 2023.

Merger, acquisition, and other costs.

Merger, acquisition, and other costs were $0.8 million during the six months ended June 30, 2023, compared to $0.1 million during the six months ended June 30, 2022.

Other general and administrative expense increased $9.8 million or 8.1%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022 due primarily to stock-based compensation expense of $20.2 million related to a February 23, 2023 special award grant accounted for as a modification to the 2022 PSU awards which lowered the Adjusted EBITDA and free cash flow performance targets such that 200% vesting was achieved for both tranches.

This modification resulted in the immediate additional vesting of 2,389,589 Class A Common Stock PSUs and 2,389,589 Preferred Equity Unit PSUs.

The modification was treated as a Type 3 modification (improbable to probable) which required us to recognize additional stock compensation expense based on the modification date fair values of the Class A Common Stock PSUs and AMC Preferred Equity Unit PSUs of $6.23 per unit and $2.22 per unit, respectively, during the six months ended June 30, 2023.

The increase in stock-based compensation expense was partially offset by lower expectations of performance goals in the current year than in the prior year.

Depreciation and amortization.

Depreciation and amortization decreased $5.7 million or 2.9%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to lower depreciation expense on theatres impaired during the year ended December 31, 2022 and the decrease in foreign currency translation rates, partially offset by accelerated depreciation related to the replacement of digital projectors and permanently closed theatres.

Other expense.

Other expense of $39.2 million during the three months ended March 31, 2023 was primarily due to $126.6 million of expense related to a proposed settlement of the Shareholder Litigation comprised of $10 million of estimated legal fees and $116.6 million of non-cash expense for the estimated fair value as of March 31, 2023 of settlement shares proposed to be issued to holders of AMC Class A Common Stock, partially offset by a gain on extinguishment of debt of $62.8 million related to the redemption of $99.4 million aggregate principal amount of the Second Lien Notes due 2026, a gain on extinguishment of debt of $2.3 million related to the redemption of $4.1 million aggregate principal amount of our Senior Subordinated Notes due 2026, a receipt of $14.0 million in settlement of the Lao Action and $8.7 million in foreign currency transaction gains.

Other expense of $136.3 million during the three months ended March 31, 2022 was primarily due to a loss on extinguishment of debt of $135.0 million related to the full redemption of the $500 million aggregate principal amount of the First Lien Notes due 2025, the $300 million aggregate principal amount of the First Lien Notes due 2026, and the $73.5 million aggregate principal amount of the First Lien Toggle Notes due 2026.

Other expense of $8.1 million during the six months ended June 30, 2023 was primarily due to $125.4 million of expense related to a proposed settlement of the Shareholder Litigation comprised of $10.0 million of estimated legal fees and $115.4 million of non-cash expense for the estimated fair value as of June 30, 2023 of settlement shares proposed to be issued to holders of AMC Class A Common Stock, partially offset by a gain on extinguishment of debt of $84.4 million related to the redemption of $141.4 million aggregate principal amount of the Second Lien Notes due 2026, a gain on extinguishment of debt of $2.3 million related to the redemption of $4.1 million aggregate principal amount of our Senior Subordinated Notes due 2026, a receipt of $14.0 million in settlement of the Lao Action and $16.2 million in foreign currency transaction gains.

Other expense of $92.6 million during the six months ended June 30, 2022 was primarily due to a loss on extinguishment of debt of $135.0 million related to the full redemption of the $500 million aggregate principal amount of the First Lien Notes due 2025, the $300 million aggregate principal amount of the First Lien Notes due 2026, and the $73.5 million aggregate principal amount of the First Lien Toggle Notes due 2026 and $8.4 million of foreign currency transaction losses, partially offset by a gain on extinguishment of debt of $38.6 million related to the redemption of $72.5 million of aggregate principal amount of the Second Lien Notes due 2026 and $10.8 million in government assistance related to COVID-19.

Interest expense.

Interest expense increased $8.7 million to $101.1 million for the three months ended March 31, 2023 compared to $92.4 million during the three months ended March 31, 2022 primarily due to:

Interest expense increased $21.0 million to $203.7 million for the six months ended June 30, 2023 compared to $182.7 million during the six months ended June 30, 2022 primarily due to:

● the issuance of $950.0 million of 7.5% First Lien Senior Secured Notes due 2029 on February 14, 2022;

2 unchanged sentences

partially offset by:

● the extinguishment of $317.6 million of 10%/12% Cash/PIK/Toggle Second Lien Notes due 2026 from May 2022 to March 2023;

● the extinguishment of $359.6 million of 10%/12% Cash/PIK/Toggle Second Lien Notes due 2026 from May 2022 to June 2023;

● the extinguishment of $500.0 million of 10.5% First Lien Notes due 2025 on February 14, 2022;

4 unchanged sentences

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

Equity in earnings of non-consolidated entities was ($1.4) million for the three months ended March 31, 2023, compared to a loss of $5.1 million for the three months ended March 31, 2022.

Equity in (earnings) loss of non-consolidated entities was ($2.2) million for the six months ended June 30, 2023, compared to a loss of $6.1 million for the six months ended June 30, 2022.

The decrease in equity losses from the prior year is primarily related to our 10.0% interest in Saudi Cinema Company, LLC that was sold on January 24, 2023.

Investment income.

Investment income was $13.5 million for the three months ended March 31, 2023, compared to $63.4 million for the three months ended March 31, 2022.

Investment income in the current year includes a gain on sale of our 10.0% interest in Saudi Cinema Company, LLC of $15.5 million and interest income of $2.3 million, partially offset by $2.3 million of decline in estimated fair value of our investment in common shares of Hycroft Mining Holding Corporation and $2.3 million of decline in estimated fair value of our investment in warrants to purchase common shares of Hycroft Mining Holding Corporation.

Investment income of $63.4 million in the prior year includes $28.8 million of appreciation in estimated fair value of our investment in common shares of Hycroft Mining Holding Corporation and $35.1 million of appreciation in estimated fair value of our investment in warrants to purchase common shares of Hycroft Mining Holding Corporation.

Investment income was $8.4 million for the six months ended June 30, 2023, compared to $6.1 million for the six months ended June 30, 2022.

Investment income in the current year includes a gain on sale of our 10.0% interest in Saudi Cinema Company, LLC of $15.5 million and interest income of $4.8 million, partially offset by $5.5 million of decline in estimated fair value of our investment in common shares of Hycroft Mining Holding Corporation and $4.6 million of decline in estimated fair value of our investment in warrants to purchase common shares of Hycroft Mining Holding Corporation and $1.8 million of expense for NCM common units.

Investment income of $6.1 million in the prior year includes $1.0 million of appreciation in estimated fair value of our investment in common shares of Hycroft Mining Holding Corporation and $15.1 million of appreciation in estimated fair value of our investment in warrants to purchase common shares of Hycroft Mining Holding Corporation, partially offset by a $9.5 million decline in estimated fair value for our investment in NCM common units.

Income tax provision.

The income tax provision was $1.9 million and $0.1 million for the three months ended March 31, 2023 and March 31, 2022, respectively.

The income tax provision was $2.3 million and $0.7 million for the six months ended June 30, 2023 and June 30, 2022, respectively.

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

Net loss was $235.5 million and $337.4 million during the three months ended March 31, 2023 and March 31, 2022, respectively.

Net loss during the three months ended March 31, 2023 compared to net loss for the three months ended March 31, 2022 was positively impacted by the increase in attendance as a result of the popularity of new film releases compared to the prior year, decreases in rent expense, decreases in depreciation and amortization expense, decreases in other expense, decreases in equity in losses and decreases in foreign currency translation rates, partially offset by increases in general and administrative expenses, increases in interest expense, decreases in investment income and an increase in income tax provision.

Net loss was $226.9 million and $459.0 million during the six months ended June 30, 2023 and June 30, 2022, respectively.

Net loss during the six months ended June 30, 2023 compared to net loss for the six months ended June 30, 2022 was positively impacted by the increase in attendance as a result of the popularity of new film releases compared to the prior year, decreases in rent expense, decreases in depreciation and amortization expense, decreases in other expense, decreases in equity in losses, increases in investment income and decreases in foreign currency translation rates, partially offset by increases in general and administrative expenses, increases in interest expense and an increase in income tax provision.

Theatrical Exhibition—U.S.

Total revenues increased $141.4 million or 25.1%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022.

Admissions revenues increased $73.2 million or 23.6%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to an increase in attendance of 25.5% from 25.8 million patrons to 32.4 million patrons partially offset by a 1.5% decrease in average ticket price.

Total revenues increased $320.9 million or 21.8%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

Admissions revenues increased $161.1 million or 19.8%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to an increase in attendance of 18.9% from 69.3 million patrons to 82.4 million patrons and a 0.8% increase in average ticket price.

The increase in attendance was primarily due to the popularity of film product compared to the prior year.

The decrease in average ticket price was primarily due to higher frequency on our A-List subscription program, a higher amount of discount-day ticket attendance, and increased attendance for non-adult tickets, which are typically discounted, partially offset by increased attendance for 3D content.

Food and beverage revenues increased $64.5 million or 33.2%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to the increase in attendance and an increase in food and beverage per patron.

Food and beverage per patron increased 6.3% from $7.52 to $7.99 due primarily to an increase in average prices and units purchased per transaction, partially offset by higher frequency from our AMC Stubs loyalty members.

Total other theatre revenues increased $3.7 million or 6.3%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to increases in ticket fees and screen and other

advertising due to the increase in attendance, partially offset by lower income from gift cards and package tickets.

The increase in average ticket price was primarily due to increased attendance for 3D content partially offset by higher frequency of use by subscribers to our A-List program.

Food and beverage revenues increased $148.3 million or 28.4%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to the increase in attendance and an increase in food and beverage per patron.

Food and beverage per patron increased 8.1% from $7.52 to $8.13 due primarily to an increase in average prices, the percentage of guests making transactions and units purchased per transaction, partially offset by higher frequency from our AMC Stubs loyalty members.

Total other theatre revenues increased $11.5 million or 8.4%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to increases in ticket fees due to the increase in attendance.

Operating costs and expenses.

Operating costs and expenses increased $104.3 million or 15.2%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022.

Film exhibition costs increased $49.8 million or 35.9%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to the increase in attendance.

As a percentage of admissions revenues, film exhibition costs were 49.1% for the three months ended March 31, 2023, compared to 44.6% for the three months ended March 31, 2022.

Operating costs and expenses increased $187.2 million or 11.8%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

Film exhibition costs increased $101.1 million or 24.8%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to the increase in attendance.

As a percentage of admissions revenues, film exhibition costs were 52.3% for the six months ended June 30, 2023, compared to 50.2% for the six months ended June 30, 2022.

Food and beverage costs increased $15.3 million or 53.3%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022.

Food and beverage costs increased $39.6 million or 51.8%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

The increase in food and beverage costs was primarily due to the increase in food and beverage revenues and increases in product costs and obsolescence.

As a percentage of food and beverage revenues, food and beverage costs were 17.0% for the three months ended March 31, 2023 and 14.8% for the three months ended March 31, 2022.

As a percentage of revenues, operating expense was 39.5% for the three months ended March 31, 2023, and 42.8% for the three months ended March 31, 2022.

Rent expense decreased 9.4%, or $15.6 million, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, due primarily to the early termination of one theatre lease for a benefit of $16.7 million, which included an early termination payment from the landlord for $13.0 million.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases and rent obligations of approximately $106.1 million that have been deferred to future years as of March 31, 2023.

As a percentage of food and beverage revenues, food and beverage costs were 17.3% for the six months ended June 30, 2023 and 14.7% for the six months ended June 30, 2022.

As a percentage of revenues, operating expense was 33.0% for the six months ended June 30, 2023, and 36.5% for the six months ended June 30, 2022.

Rent expense decreased 4.4%, or $14.8 million, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, due primarily to the early termination of one theatre lease for a benefit of $16.7 million, which included an early termination payment from the landlord for $13.0 million.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases and rent obligations of approximately $84.1 million that have been deferred to future years as of June 30, 2023.

Merger, acquisition, and other costs.

Merger, acquisition, and other costs were $0.2 million during the three months ended March 31, 2023, compared to $0.2 million during the three months ended March 31, 2022.

Other general and administrative expense increased 51.7%, or $18.2 million, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022 due primarily to stock-based compensation expense of $18.1 million related to the February 23, 2023 special award grant accounted for as a modification to the 2022 PSU awards discussed further in Condensed Consolidated Results of Operations.

Merger, acquisition, and other costs were $0.8 million during the six months ended June 30, 2023, compared to $0.6 million during the six months ended June 30, 2022.

Other general and administrative expense increased 10.6% or $9.0 million, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022 due primarily to stock-based compensation expense of $18.1 million related to a February 23, 2023 special award grant accounted for as a modification to the 2022 PSU awards discussed further in Condensed Consolidated Results of Operations.

The increase in stock-based compensation expense was partially offset by lower expectations of performance goals in the current year than in the prior year.

Depreciation and amortization.

Depreciation and amortization decreased $0.7 million or 0.9%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to lower depreciation expense on theatres impaired during years ended December 31, 2021 and December 31, 2022, partially offset by accelerated depreciation related to the replacement of digital projectors.

Depreciation and amortization decreased $2.4 million or 1.6%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to lower depreciation expense on theatres impaired during the year ended December 31, 2022, partially offset by accelerated depreciation related to the replacement of digital projectors and permanently closed theatres.

Other expense.

Other expense of $47.7 million during the three months ended March 31, 2023 was primarily due to $126.6 million of expense related to a proposed settlement of the Shareholder Litigation comprised of $10 million of estimated legal fees and $116.6 million of non-cash expense for the estimated fair value as of March 31, 2023 of settlement shares proposed to be issued to holders of AMC Class A Common Stock, partially offset by a gain on extinguishment of debt of $62.8 million related to the redemption of $99.4 million aggregate principal amount of the Second Lien Notes due 2026, a gain on extinguishment of debt of $2.3 million related to the redemption of $4.1 million aggregate principal amount of our Senior Subordinated Notes due 2026 and a receipt of $14.0 million in settlement of the Lao Action.

Other expense of $133.7 million during the three months ended March 31, 2022 was primarily due to a loss on extinguishment of debt of $135.0 million related to the full redemption of the $500 million aggregate principal amount of the First Lien Notes due 2025, the $300 million aggregate principal amount of the First Lien Notes due 2026, and the $73.5 million aggregate principal amount of the First Lien Toggle Notes due 2026.

See Note 1—Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about the components of other expense (income) and Note 11-Commitments and Contingencies for additional information about our legal contingencies and settlements.

Other expense of $24.0 million during the six months ended June 30, 2023 was primarily due to $125.4 million of expense related to a proposed settlement of the Shareholder Litigation comprised of $10 million of estimated legal fees and $115.4 million of non-cash expense for the estimated fair value as of June 30, 2023 of settlement shares proposed to be issued to holders of AMC Class A Common Stock, partially offset by a gain on extinguishment of debt of $84.4 million related to the redemption of $141.4 million aggregate principal amount of the Second Lien Notes due 2026, a gain on extinguishment of debt of $2.3 million related to the redemption of $4.1 million aggregate principal amount of our Senior Subordinated Notes due 2026 and a receipt of $14.0 million in settlement of the Lao Action.

Other expense of $94.9 million during the six months ended June 30, 2022 was primarily due to a loss on extinguishment of debt of $135.0 million related to the full redemption of the $500 million aggregate principal amount of the First Lien Notes due 2025, the $300 million aggregate principal amount of the First Lien Notes due 2026, and the $73.5 million aggregate principal amount of the First Lien Toggle Notes due 2026, partially offset by a gain on extinguishment of debt of $38.6 million related to the redemption of $72.5 million of aggregate principal amount of the Second Lien Notes due 2026.

Interest expense.

Interest expense increased $13.2 million to $85.7 million for the three months ended March 31, 2023 compared to $72.5 million during the three months ended March 31, 2022, primarily due to:

Interest expense increased $28.5 million to $172.6 million for the six months ended June 30, 2023 compared to $144.1 million during the six months ended June 30, 2022 primarily due to:

● the issuance of $950.0 million of 7.5% First Lien Senior Secured Notes due 2029 on February 14, 2022;

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partially offset by:

● the extinguishment of $317.6 million of 10%/12% Cash/PIK/Toggle Second Lien Notes due 2026 from May 2022 to March 2023;

● the extinguishment of $359.6 million of 10%/12% Cash/PIK/Toggle Second Lien Notes due 2026 from May 2022 to June 2023;

● the extinguishment of $500.0 million of 10.5% First Lien Notes due 2025 on February 14, 2022;

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

Equity in earnings of non-consolidated entities was $(0.9) million for the three months ended March 31, 2023, compared to a loss of $0.3 million for the three months ended March 31, 2022.

Equity in (earnings) loss of non-consolidated entities was ($2.2) million for the six months ended June 30, 2023, compared to a loss of $0.8 million for the six months ended June 30, 2022.

Investment (income) expense.

Investment expense was $2.0 million for the three months ended March 31, 2023, compared to $63.4 million for the three months ended March 31, 2022.

Investment expense in the current year includes $2.3 million of decline in estimated fair value of our investment in common shares of Hycroft Mining Holding Corporation and $2.3 million of decline in estimated fair value of our investment in warrants to purchase common shares of Hycroft Mining Holding Corporation, partially offset by $2.3 million of interest income.

Investment income of ($63.4) million in the prior year includes ($28.8) million of appreciation in estimated fair value of our investment in common shares of Hycroft Mining Holding Corporation and ($35.1) million of appreciation in estimated fair value of our investment in warrants to purchase common shares of Hycroft Mining Holding Corporation.

Investment (income) expense was $7.1 million for the six months ended June 30, 2023, compared to income of ($6.1) million for the six months ended June 30, 2022.

Investment expense in the current year includes $5.5 million of decline in estimated fair value of our investment in common shares of Hycroft Mining Holding Corporation and $4.6 million of decline in estimated fair value of our investment in warrants to purchase common shares of Hycroft Mining Holding Corporation and $1.8 million of expense for NCM common units, partially offset by interest income of $4.8 million.

Income tax provision.

The income tax provision was $0.4 million and $0.1 million for the three months ended March 31, 2023 and March 31, 2022, respectively.

The income tax provision was $1.0 million and $0.3 million for the six months ended June 30, 2023 and June 30, 2022, respectively.

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

Net loss was $220.4 million and $265.8 million during the three months ended March 31, 2023 and March 31, 2022, respectively.

Net loss during the three months ended March 31, 2023 compared to net loss for the three months ended March 31, 2022 was positively impacted by the increase in attendance as a result of the popularity of new film releases compared to the prior year, decreases in rent expense, decreases in depreciation and amortization expense, decreases in other expense and decreases in equity in losses, partially offset by increases in general and administrative expenses, increases in interest expense, decreases in investment income and an increase in income tax provision.

Net loss was $188.7 million and $353.9 million during the six months ended June 30, 2023 and June 30, 2022, respectively.

Net loss during the six months ended June 30, 2023 compared to net loss for the six months ended June 30, 2022 was positively impacted by the increase in attendance as a result of the popularity of new film releases compared to the prior year, decreases in rent expense, decreases in depreciation and amortization expense, decreases in other expense, decreases in equity in losses, partially offset by increases in general and administrative expenses, increases in interest expense, increases in investment expense and an increase in income tax provision.

Theatrical Exhibition—International Markets

Total revenues increased $27.3 million or 12.3%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022.

Admissions revenues increased $17.1 million or 12.9%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to an increase in attendance of 14.9% from 13.3 million patrons to 15.3 million patrons partially offset by a 1.7% decrease in average ticket price.

Total revenues increased $29.3 million or 6.1%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

Admissions revenues increased $22.3 million or 7.9%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to an increase in attendance of 9.3% from 28.9 million patrons to 31.6 million patrons and partially offset by a 1.3% decrease in average ticket price.

The increase in attendance was primarily due to the popularity of film product compared to the prior year.

The decrease in average ticket price was primarily due to a decrease in foreign currency translation rates, partially offset by strategic pricing initiatives put in place over the prior year.

Food and beverage revenues increased $11.7 million or 20.0%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to the increase in attendance and an increase in food and beverage per patron.

Food and beverage per patron increased 4.5% from $4.40 to $4.60 due primarily to the lifting of COVID-19 restrictions on the sale of food and beverage and strategic pricing initiatives put in place over the prior year, partially offset by a decrease in foreign currency translation rates.

Total other theatre revenues decreased $1.5 million or 4.8%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to the decrease in foreign currency translation rates and the decline of theatre rentals as traditional attendance increased.

The decrease in average ticket price was primarily due to a decrease in foreign currency translation rates.

Food and beverage revenues increased $19.4 million or 15.2%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to the increase in attendance and an increase in food and beverage per patron.

Food and beverage per patron increased 5.4% from $4.42 to $4.66 due primarily to the lifting of COVID-19 restrictions on the sale of food and beverage, strategic pricing initiatives put in place over the prior year and a decrease in foreign currency translation rates.

Total other theatre revenues decreased $12.4 million or 17.6%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to the decline in gift card and package ticket expirations, lower income from theatre meetings and the decrease in foreign currency translation rates.

Operating costs and expenses.

Operating costs and expenses increased $5.7 million or 2.1%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022.

Film exhibition costs increased $6.6 million or 12.9%, during the three months ended March 31, 2023, compared to the three months ended March 31,

2022, primarily due to the increase in attendance, partially offset by the decrease in foreign currency translation rates.

As a percentage of admissions revenues, film exhibition costs were 38.4% for the three months ended March 31, 2023 and March 31, 2022.

Food and beverage costs increased $3.5 million or 25.2%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022.

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

As a percentage of food and beverage revenues, food and beverage costs were 24.8% for the three months ended March 31, 2023 and 23.8% for the three months ended March 31, 2022.

As a percentage of revenues, operating expense was 42.0% for the three months ended March 31, 2023, and 46.6% for the three months ended March 31, 2022.

Rent expense decreased 3.3%, or $1.9 million, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to the decrease in foreign currency translation rates.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases and rent obligations of approximately $17.5 million that have been deferred to future years as of March 31, 2023.

Operating costs and expenses increased $3.4 million or 0.6%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

Film exhibition costs increased $9.7 million or 8.7%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to the increase in attendance.

As a percentage of admissions revenues, film exhibition costs were 39.6% for the six months ended June 30, 2023, compared to 39.3% for the six months ended June 30, 2022.

Food and beverage costs increased $6.3 million or 20.5%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.

The increase in food and beverage costs was primarily due to the increase in food and beverage revenues and increases in product costs.

As a percentage of food and beverage revenues, food and beverage costs were 25.1% for the six months ended June 30, 2023 and 24.0% for the six months ended June 30, 2022.

As a percentage of revenues, operating expense was 40.0% for the six months ended June 30, 2023, and 43.8% for the six months ended June 30, 2022.

Rent expense decreased 3.8%, or $4.3 million, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, due primarily to the decrease in foreign currency translation rates.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of COVID-19 on leases and rent obligations of approximately $12.4 million that have been deferred to future years as of June 30, 2023.

Merger, acquisition, and other costs.

Merger, acquisition, and other costs were $0.0 million during the three months ended March 31, 2023, compared to $0.2 million during the three months ended March 31, 2022.

Other general and administrative expense increased 5.6%, or $1.0 million, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022 due primarily to stock-based compensation expense of $2.1 million related to the February 23, 2023 special award grant accounted for as a modification to the 2022 PSU awards discussed further in Condensed Consolidated Results of Operations and partially offset by the decline in foreign currency translation rates.

Merger, acquisition, and other costs were $0.0 million during the six months ended June 30, 2023, compared to ($0.5) million during the six months ended June 30, 2022.

Other general and administrative expense increased 2.2% or $0.8 million, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, due primarily to stock-based compensation expense of $2.1 million related to a February 23, 2023 special award grant accounted for as a modification to the 2022 PSU awards discussed further in Condensed Consolidated Results of Operations.

The increase in stock-based compensation expense was partially offset by lower expectations of performance goals in the current year than in the prior year.

Depreciation and amortization.

Depreciation and amortization decreased $4.4 million or 19.0%, during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily due to lower depreciation expense on theatres impaired during years ended December 31, 2021 and December 31, 2022 and the decrease in foreign currency translation rates.

Other (income) expense.

Other income of $(8.5) million during the three months ended March 31, 2023 was primarily due to ($8.7) million in foreign currency transaction gains.

Other expense was $2.6 million during the three months ended March 31, 2022.

See Note 1—Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about the components of other expense (income) and Note 11-Commitments and Contingencies for additional information about our legal contingencies and settlements.

Depreciation and amortization decreased $3.3 million or 7.5%, during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to lower depreciation expense on theatres impaired during the year ended December 31, 2022 and the decrease in foreign currency translation rates.

Other income.

Other income of $15.9 million during the six months ended June 30, 2023 was primarily due to $16.2 million in foreign currency transaction gains.

Other income of $2.3 million during the six months ended June 30, 2022 was primarily due to $10.8 million in government assistance related to COVID-19, partially offset by $8.4 million of foreign currency transaction losses.

Interest expense.

Interest expense decreased $4.5 million to $15.4 million for the three months ended March 31, 2023 compared to $19.9 million during the three months ended March 31, 2022, primarily due to:

Interest expense decreased $7.5 million to $31.1 million for the six months ended June 30, 2023 compared to $38.6 million during the six months ended June 30, 2022 primarily due to:

● the extinguishment of £147.6 million and €312.2 million ($476.6 million) 10.75%/11.25% Cash/PIK Term Loans due 2023 on October 20, 2022;

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● the issuance of $400.0 million 12.75% Odeon Senior Secured Notes due 2027 on October 20, 2022.

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

Equity in earnings of non-consolidated entities was ($0.5) million for the three months ended March 31, 2023, compared to a loss of $4.8 million for the three months ended March 31, 2022.

Equity in loss of non-consolidated entities.

Equity in loss of non-consolidated entities was $0.0 million for the six months ended June 30, 2023, compared to a loss of $5.3 million for the six months ended June 30, 2022.

The decrease in equity losses from the prior year is primarily related to our 10.0% interest in Saudi Cinema Company, LLC that was sold on January 24, 2023.

Investment income.

Investment income was $15.5 million for the three months ended March 31, 2023, compared to $0.0 million for the three months ended March 31, 2022.

Investment income was $15.5 million for the six months ended June 30, 2023, compared to $0.0 million for the six months ended June 30, 2022.

Investment income in the current year includes a gain on sale of our 10.0% interest in Saudi Cinema Company, LLC of $15.5 million.

Income tax provision.

The income tax provision was $1.5 million and $0.0 million for the three months ended

March 31, 2023 and March 31, 2022, respectively.

The income tax provision was $1.3 million and $0.4 million for the six months ended June 30, 2023 and June 30, 2022, respectively.

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

Net loss was $15.1 million and $71.6 million during the three months ended March 31, 2023 and March 31, 2022, respectively.

Net loss during the three months ended March 31, 2023 compared to net loss for the three months ended March 31, 2022 was positively impacted by the increase in attendance as a result of the popularity of new film releases compared to the prior year, decreases in rent expense, decreases in depreciation and amortization expense, decreases in other expense, decreases in interest expense, increases in investment income, decreases in equity in losses and decreases in foreign currency translation rates, partially offset by increases in general and administrative expenses and an increase in income tax provision.

Net loss was $38.2 million and $105.1 million during the six months ended June 30, 2023 and June 30, 2022, respectively.

Net loss during the six months ended June 30, 2023 compared to net loss for the six months ended June 30, 2022 was positively impacted by the increase in attendance as a result of the popularity of new film releases compared to the prior year, decreases in rent expense, decreases in depreciation and amortization expense, decreases in interest expense, increases in other income, decreases in equity in losses, increases in investment income and decreases in foreign currency translation rates, partially offset by increases in general and administrative expenses and an increase in income tax provision.

LIQUIDITY AND CAPITAL RESOURCES

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Consequently, we typically generate higher revenues during such periods and experience higher working capital requirements following such periods.

We had working capital surplus (deficit) (excluding restricted cash) as of March 31, 2023 and December 31, 2022 of $(994.9) million and $(811.1) million, respectively.

As of March 31, 2023 and December 31, 2022, working capital included operating lease liabilities of $546.5 million and $567.3 million, respectively, and deferred revenues of $391.7 million and $402.7 million, respectively.

As of March 31, 2023, we had $208.1 million unused borrowing capacity, net of letters of credit, under our $225.0 million Senior Secured Revolving Credit Facility.

We had working capital deficit (excluding restricted cash) as of June 30, 2023 and December 31, 2022 of $(869.5) million and $(811.1) million, respectively.

As of June 30, 2023 and December 31, 2022, working capital included operating lease liabilities of $528.5 million and $567.3 million, respectively, and deferred revenues of $385.3 million and $402.7 million, respectively.

As of June 30, 2023, we had $208.1 million unused borrowing capacity, net of letters of credit, under our $225.0 million Senior Secured Revolving Credit Facility.

As of December 31, 2022, we had $211.2 million unused borrowing capacity, net of letters of credit, under our $225.0 million Senior Secured Revolving Credit Facility.

See Note 6—Corporate Borrowings and Finance Lease Liabilities in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for a further discussion of our Financial Covenants.

As of March 31, 2023, we had cash and cash equivalents of $495.6 million.

Additionally, we continued to lower our future interest expense in the first quarter of 2023 through purchases of debt below par value and debt exchanges for equity and enhanced liquidity through equity issuances.

As of June 30, 2023, we had cash and cash equivalents of $435.3 million.

Additionally, during the first and second quarters of 2023 we continued to lower our future interest expense through purchases of debt below par value and debt exchanges for equity and enhanced liquidity through equity issuances.

See Note 6 — Corporate Borrowings and Finance Lease Liabilities, Note 7—Stockholders’ Equity and Note 13—Subsequent Events in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information.

We believe our existing cash and cash equivalents, together with cash generated from operations, will be sufficient to fund our operations, satisfy our obligations, and comply with the minimum liquidity covenant requirement under our Senior Secured Revolving Credit Facility for at least the next twelve months.

Pursuant to the Twelfth Amendment to Credit Agreement, the requisite revolving lenders party thereto agreed to extend the suspension period for the financial covenant applicable to the Senior Secured Revolving Credit Facility under the Credit Agreement through March 31, 2024.

We believe our existing cash and cash equivalents, together with cash generated from operations, will be sufficient to fund our operations and satisfy our obligations.

We also believe we will comply with the minimum liquidity covenant requirement under our Senior Secured Revolving Credit Facility through the end of the covenant suspension period.

Pursuant to the Twelfth Amendment to Credit Agreement, the requisite revolving lenders party thereto agreed to extend the suspension period for the secured leverage ratio financial covenant applicable to the Senior Secured Revolving Credit Facility under the Credit Agreement through March 31, 2024.

The current maturity date of the Senior Secured Revolving Credit Facility is April 22, 2024.

Since the financial covenant applicable to the Senior Secured Revolving Credit Facility is tested as of the last day of any fiscal quarter for which financial statements have been (or were required to have been) delivered, the financial covenant has been effectively suspended through maturity of the Senior Secured Revolving Credit Facility.

As of March 31, 2023, we were subject to a minimum liquidity requirement of $100 million as a condition to the financial covenant suspension period under the Credit Agreement.

As of June 30, 2023, we were subject to a minimum liquidity requirement of $100 million as a condition to the financial covenant suspension period under the Credit Agreement.

Our current cash burn rates are not sustainable long-term.

In order to achieve net positive operating cash flows and long-term profitability, we believe that operating revenues will need to increase significantly to levels in line with pre-COVID-19 operating revenues.

In order to achieve net positive operating cash flows and long-term profitability, we believe that operating revenues will need to increase to levels in line with pre-COVID-19 operating revenues.

North American box office grosses were down approximately 21% for the six months ended June 30, 2023 compared to the six months ended June 30, 2019.

Until such time as we are able to achieve positive operating cash flow, it is difficult to estimate our liquidity requirements, future cash burn rates, future operating revenues and attendance levels.

Depending on our assumptions regarding the timing and ability to achieve significantly increased levels of operating revenue, the estimates of amounts of required liquidity vary significantly.

There can be no assurance that the operating revenues, attendance levels and other assumptions used to estimate our liquidity requirements and future cash burn rates will be correct, and our ability to be predictive is uncertain due to limited ability to predict studio film release dates, the overall production and theatrical release levels and success of individual titles.

Depending on our assumptions regarding the timing and ability to achieve increased levels of operating revenue, the estimates of amounts of required liquidity vary significantly.

uncertain due to limited ability to predict studio film release dates, the overall production and theatrical release levels and success of individual titles.

Additionally, the duration of labor stoppages, including but not limited to the Writers Guild of America strike that began on May 2, 2023, and the Screen Actors Guild – American Federation of Television and Radio Artists strike that began on July 14, 2023, cannot be reasonably estimated and may have a negative impact on the Company’s future liquidity and cash burn rates.

Further, there can be no assurances that we will be successful in generating the additional liquidity necessary to meet our obligations beyond twelve months from the issuance of these financial statements on terms acceptable to us or at all.

Cash Flows from Operating Activities

Cash flows used in operating activities, as reflected in the condensed consolidated statements of cash flows, were $189.9 million and $295.0 million during the three months ended March 31, 2023 and March 31, 2022, respectively.

The improvement in cash flows used in operating activities was primarily due to the increase in attendance and decrease in net loss, decreases in working capital used, increased lease incentive receipts, and reductions in rent repayments for rent that was deferred during the COVID-19 pandemic, partially offset by increases in cash interest paid during the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

Cash flows used in operating activities, as reflected in the condensed consolidated statements of cash flows, were $203.3 million and $371.6 million during the six months ended June 30, 2023 and June 30, 2022, respectively.

The improvement in cash flows used in operating activities was primarily due to the increase in attendance and decrease in net loss, decreases in working capital used, increased lease incentive receipts, and reductions in rent repayments for rent that was deferred during the COVID-19 pandemic, partially offset by increases in cash interest paid during the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I in this Form 10-Q for a summary of the estimated future repayment terms for the remaining $96.5 million of rentals that were deferred during the COVID-19 pandemic.

Cash Flows from Investing Activities

Cash flows used in investing activities, as reflected in the condensed consolidated statements of cash flows, were $16.6 million and $54.9 million during the three months ended March 31, 2023 and March 31, 2022, respectively.

Cash outflows from investing activities include capital expenditures of $47.4 million and $34.8 million during the three months ended March 31, 2023 and March 31, 2022, respectively.

During the three months ended March 31, 2023, cash flows used in investing activities also included proceeds from the sale of our investment in Saudi Cinema Company, LLC of $30.0 million and proceeds from the disposition of long-term assets of $0.8 million.

During the three months ended March 31, 2022, cash flows used in investing activities included investment in Hycroft common stock for $25.0 million, investment in Hycroft warrants for $2.9 million, and proceeds from the disposition of long-term assets of $7.2 million related to one property and other assets.

Cash flows used in investing activities, as reflected in the condensed consolidated statements of cash flows, were $57.4 million and $102.9 million during the six months ended June 30, 2023 and June 30, 2022, respectively.

Cash outflows from investing activities include capital expenditures of $96.0 million and $75.2 million during the six months ended June 30, 2023 and June 30, 2022, respectively.

During the six months ended June 30, 2023, cash flows used in investing activities also included proceeds from the sale of our investment in Saudi Cinema Company, LLC of $30.0 million and proceeds from the disposition of long-term assets of $6.0 million.

During the six months ended June 30, 2022, cash flows used in investing activities included investment in Hycroft common stock for $25.0 million, investment in Hycroft warrants for $2.9 million, acquisition of theatre assets for $17.8 million and proceeds from the disposition of long-term assets of $7.2 million related to one property and other assets as well as proceeds of $11.4 million from the sale of securities in conjunction with the liquidation of a non-qualified deferred compensation plan.

We fund the costs of constructing, maintaining, and remodeling our theatres through existing cash balances, cash generated from operations, landlord contributions, or borrowed funds, as necessary.

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Cash Flows from Financing Activities

Cash flows provided by (used in) financing activities, as reflected in the condensed consolidated statements of cash flows, were $68.9 million and $(76.3) million during the three months ended March 31, 2023 and March 31, 2022, respectively.

Cash flows from financing activities during the three months ended March 31, 2023 were primarily due to AMC Preferred Equity Unit issuances of $146.6 million, net of issuance costs, partially offset by the repurchase of Second Lien Notes due 2026 for $54.8 million, and taxes paid for restricted unit withholdings of $13.1 million.

See Note 6—Corporate Borrowings and Finance Lease Liabilities and Note 7 — Stockholders’ Equity in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information, including a summary of principal payments required and maturities of corporate borrowings as of March 31, 2023.

We or our affiliates actively seek and expect, at any time and from time to time, to continue to seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity (including AMC Preferred Equity Units) or debt, in open-market purchases, privately negotiated transactions or otherwise.

Cash flows provided by (used in) financing activities, as reflected in the condensed consolidated statements of cash flows, were $62.4 million and $(136.0) million during the six months ended June 30, 2023 and June 30, 2022, respectively.

Cash flows from financing activities during the six months ended June 30, 2023 were primarily due to AMC Preferred Equity Unit issuances of $175.7 million, net of issuance costs, partially offset by the repurchase of Second Lien Notes due 2026 for $82.4 million, and taxes paid for restricted unit withholdings of $14.2 million.

Cash flows provided by financing activities during the six months ended June 30, 2022 was primarily due to principal and premium payments under the First Lien Notes due 2025 of $534.5 million, principal and premium payments under the First Lien Notes due 2026 of $325.6 million, principal and premium payments under the First Lien Toggle Notes due 2026 of $88.1 million, taxes paid for restricted unit withholdings of $52.2 million, repurchase of Second Lien Notes due 2026 of $50.0 million, and cash used to pay for deferred financing costs of $19.5 million, partially offset by the issuance of the First Lien Notes due 2029 of $950.0 million.

We or our affiliates actively seek and expect, at any time and from time to time, to continue to seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity (to the extent it is available for issuance) or debt, in open-market purchases, privately negotiated transactions or otherwise.

Such repurchases or exchanges, if any will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

The amounts involved may be material and to the extent equity is used, dilutive.

Cash flows provided by financing activities during the three months ended March 31, 2022 was primarily due to principal and premium payments under the First Lien Notes due 2025 of $534.5 million, principal and premium payments under the First Lien Notes due 2026 of $325.6 million, principal and premium payments under the First Lien Toggle Notes due 2026 of $88.1 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 the issuance of the First Lien Notes due 2029 of $950.0 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis