What changed in this filing

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Item 1. Financial Statements

2021-08-09 compared with 2021-05-06 · 344 added, 287 removed, 695 unchanged (48% of the section changed)

3 unchanged sentences

Three Months Ended

Six Months Ended

(In millions, except share and per share amounts)

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Food and beverage

32 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended

Six Months Ended

(In millions)

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Other comprehensive income (loss):

Unrealized foreign currency translation adjustments, net of tax

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

Pension adjustments:

Net gain arising during the period

Other comprehensive loss

Other comprehensive income (loss)

Total comprehensive loss

5 unchanged sentences

(In millions, except share data)

March 31, 2021

June 30, 2021

December 31, 2020

30 unchanged sentences

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

454,012,865 shares issued and 450,280,240 outstanding as of March 31, 2021;

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

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

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

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

Additional paid-in capital

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

Accumulated other comprehensive income (loss)

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

Accumulated other comprehensive income

Accumulated deficit

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(In millions)

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

Cash flows from operating activities:

7 unchanged sentences

Non-cash portion of stock-based compensation

Gain on disposition of Baltics

Gain on dispositions

2 unchanged sentences

Landlord contributions

Other non-cash rent expense (benefit)

Other non-cash rent benefit

Deferred rent

Net periodic benefit cost

Net periodic benefit cost (income)

Change in assets and liabilities:

4 unchanged sentences

Capital expenditures

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

Proceeds from disposition of long-term assets

4 unchanged sentences

Proceeds from First Lien Toggle Notes due 2026

Proceeds from issuance of First Lien Notes due 2025

Borrowings (repayments) under revolving credit facilities

Scheduled principal payments under Term Loan due 2026

Proceeds from Class A common stock issuance

Net proceeds from Class A common stock issuance

Net proceeds from Class A common stock issuance to Mudrick

Payments related to sale of noncontrolling interest

10 unchanged sentences

Cash paid during the period for:

Interest (including amounts capitalized of $ 0.2 million and $ 0.3 million)

Interest (including amounts capitalized of $ 0.2 million and $ 0.5 million, respectively)

Income taxes (received) paid, net

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

June 30, 2021

NOTE 1—BASIS OF PRESENTATION

3 unchanged sentences

Temporarily suspended or limited operations.

As of or before March 17, 2020, the Company temporarily suspended all theatre operations in its U.S.

Throughout the first quarter of 2020, the Company temporarily suspended theatre operations in its U.S.

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

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

and International theatre operations were temporarily suspended.

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

1 unchanged sentence

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

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

As a result of these temporarily suspended or limited operations, the Company’s revenues and expenses for the six months ended June 30, 2021 were significantly lower than the revenues and expenses for the six months ended June 30, 2020, with significantly lower revenues and expenses during the first quarter of 2021 compared to the first quarter of 2020, partially offset by increased revenues and expenses during the second quarter of 2021 compared to the second quarter of 2020.

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

1 unchanged sentence

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

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

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

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

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

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

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

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

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

cancellation of pending annual merit pay increases;

and elimination or reduction of non-healthcare benefits.

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

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

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

Similar efforts to reduce theatre-level and corporate employment costs were undertaken internationally consistent with applicable laws across the jurisdictions in which the Company operates.

As the Company resumed limited operations,

employment costs increased.

● Working with the Company’s landlords, vendors, and other business partners to manage, defer, and/or abate the related rent expenses and operating expenses.

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

● Since April 24, 2020, the Company has been prohibited from making dividend payments in accordance with the covenant suspension conditions in its Credit Agreement (as defined below).

The Company had also previously elected to decrease the dividend paid in the first quarter of 2020 by $ 0.17 per share.

The cash savings as a result of the prior decrease and current prohibition on making dividend payments was $ 4.3 million during the three months ended March 31, 2021 in comparison to the three months ended March 31, 2020.

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

The Company intends to seek any available potential benefits, including loans, investments or guarantees, under future government programs for which the Company qualifies domestically and internationally.

The Company has taken advantage of many forms of governmental assistance in the U.S.

and internationally including but not limited to revenue and fixed cost reimbursements, payroll subsidies, rent support programs, direct grants, and property tax holidays.

The Company cannot predict the manner in which such benefits will be allocated or administered, and the Company cannot assure it will be able to access such benefits in a timely manner or at all.

In addition to preserving cash, the Company enhanced liquidity through debt issuances, debt exchanges and equity sales as follows.

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

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

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

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

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

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

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

● The April 2020 issuance of $ 500 million of 10.5 % first lien notes due 2025 (the “First Lien Notes due 2025”).

● The July 2020 completion of a debt exchange offer in which the Company issued approximately $ 1.46 billion aggregate principal amount of 10 % / 12 % Cash/PIK toggle second lien subordinated notes due 2026 (the “Second Lien Notes due 2026”) in exchange for approximately $ 2.02 billion principal amount of the Company’s senior subordinated notes, reducing the principal amounts of the Company’s debt by approximately $ 555 million and extending maturities on approximately $ 1.7 billion of debt to 2026, most of which was maturing in 2024 and 2025 previously.

Interest on the Second Lien Notes due 2026 for the first three six-month interest periods after the issue date is expected to be paid all or in part on an in-kind basis pursuant to the terms of the Second Lien Notes due 2026.

● The July 2020 issuance of the 10.5 % first lien secured notes due 2026 (the “First Lien Notes due 2026”) in which the Company received proceeds of $ 270.0 million, net of discounts and deferred charges.

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

During the year ended December 31, 2020, the Company sold 91.0 million shares, generating $ 272.8 million in gross proceeds and paid fees to sales agents of $ 6.8 million.

In January 2021, the Company sold 187.1 million shares, generating $ 596.9 million in gross proceeds and paid fees to sales agents of $ 14.9 million and other fees of $ 0.4 million.

See Note 13 — Subsequent Event for information regarding the additional at-the-market offerings of 43 million shares related to the Company’s remaining authorized shares of Class A common stock.

● The December 2020 issuance of 21,978,022 shares of Class A common stock to Mudrick Capital Management, LP (“Mudrick”) in exchange for $ 104.5 million aggregate principal amount of the Second Lien Notes due 2026 and a commitment from Mudrick to purchase $ 100 million aggregate principal amount of 15 % / 17 % Cash/PIK toggle first lien secured notes due 2026 (“First Lien Toggle Notes due 2026”) which the Company issued to Mudrick in January 2021 for cash.

● The January 2021 conversion by holders of all $ 600 million of the Company’s 2.95 % Convertible Senior Secured Notes due 2026 into shares of the Company’s Class A common stock at a conversion price of $ 13.51 which resulted in the issuance of 44,422,860 shares of its Class A Common Stock and reduced annual cash interest expense by $ 17.7 million.

● The February 2021 entry into a new £ 140.0 million and € 296.0 million term loan facility agreement (the “Odeon Term Loan Facility”) by Odeon Cinemas Group Limited (“Odeon”).

Approximately £ 89.7 million and € 12.8 million of the net proceeds from the Odeon Term Loan Facility were used to repay in full Odeon’s

obligations (including principal, interest, fees and cash collateralized letters of credit) under its existing revolving credit facility and the remaining net proceeds will be used for general corporate purposes .

If attendance levels increase consistent with the Company’s assumptions described below, it currently estimates that its existing cash and cash equivalents will be sufficient to comply with minimum liquidity requirements under its debt covenants, fund operations, and satisfy obligations including cash outflows for increased rent and planned capital expenditures currently and through early May of 2022.

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

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

As a result, the Company will be subject to the financial covenant beginning with the quarter ending June 30, 2022.

The Company is subject to minimum liquidity requirements of approximately $ 145 million of which $ 100 million is required under the conditions for the Extended Covenant Suspension Period under the Senior Secured Revolving Credit Facility during the Extended Covenant Suspension Period, as amended, and £ 32.5 million (approximately $ 45 million) required under the Odeon Term Loan Facility.

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

The Company continues to explore potential sources of additional liquidity, including:

● Additional equity financing.

On April 27, 2021, the Company’s Board of Directors (the “Board”) determined not to seek stockholder approval of the proposal to approve an amendment to the Company’s Third Amended and Restated Certificate of Incorporation to increase the total number of shares of Class A common stock (par value $ 0.01 per share) the Company shall have the authority to issue by 500,000,000 shares to a total of 1,024,173,073 shares of Class A common stock (“Proposal 1”), and has withdrawn Proposal 1 from the agenda for the 2021 annual meeting of stockholders (the “Annual Meeting”).

The Board reserves the right to propose an amendment of the Certificate of Incorporation to increase the authorized shares or for other items at any point in the future.

The Company plans to pursue equity issuances for its remaining authorized shares.

See Note 13 — Subsequent Event for information regarding the additional at-the-market offerings of 43 million shares related to the Company’s remaining authorized shares of Class A common stock.

The amount of liquidity the Company might generate will primarily depend on the market price of its Class A common stock, trading volumes, which impact the number of shares the Company is able to sell, and the available periods during which sales may be made.

Because the Company’s market price and trading volumes are volatile, there is no guarantee as to the amounts of liquidity it might generate or that its prior experience accurately predicts the results the Company will achieve.

● Landlord negotiations .

Commencing in 2021, the Company’s cash expenditures for rent are scheduled to increase significantly as a result of rent obligations that had been deferred to 2021 and future years that were approximately $ 473.0 million as of March 31, 2021.

In light of the Company’s liquidity challenges, and in order to establish its long-term viability, the Company believes it must continue to reach accommodations with its landlords to abate or defer a substantial portion of the Company’s rent obligations, in addition to generating sufficient amounts of liquidity through equity issuances and the other potential financing arrangements discussed below.

Accordingly, the Company entered into additional landlord negotiations to seek material reductions, abatements and deferrals in its rent obligations.

In connection with these negotiations, the Company has finalized agreements or agreements in principle with the landlords for a majority of leases where the Company has entered into negotiations.

To the extent the Company achieves substantial deferrals but not abatements, its cash requirements will increase substantially in the future.

● Other creditor discussions .

While the liquidity the Company has raised has substantially extended its liquidity runway, the new debt the Company has issued or that has been committed, together with the higher interest rate payments that will be required in the future but have largely been deferred, will substantially increase its leverage and future cash requirements.

These future cash requirements, like the Company’s deferred rent obligations, will present a challenge to its long-term viability if its operating income does not return to pre-COVID levels.

Even then, the Company believes it will need to engage in discussions with its creditors to substantially reduce its leverage.

The Company expects to continue to explore alternatives that include new-

money financing and may involve converting debt to equity, which would help manage its leverage but could be dilutive to holders of its common stock.

These discussions may not result in any agreement on commercially acceptable terms.

● Covenant suspension.

The Company entered into the Ninth Amendment, pursuant to which the requisite revolving lenders party thereto agreed to extend the suspension period for the financial covenant applicable to the Senior Secured Revolving Credit Facility from March 31, 2021 to March 31, 2022, as described, and on the terms and conditions specified, therein.

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

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

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

In June of 2021, the Company

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

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

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

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

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

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

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

The Company is currently subject to minimum liquidity requirements of approximately $ 145 million, of which $ 100 million is required under the conditions for the Extended Covenant Suspension Period, as amended, under the Senior Secured Revolving Credit Facility, and £ 32.5 million (approximately $ 45 million) of which is required under the Odeon Term Loan Facility.

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

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

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

● Joint-venture or other arrangements with existing business partners and minority investments in capital stock.

The Company continues to explore other potential arrangements, including equity investments, to generate additional liquidity.

It is very difficult to estimate the Company’s liquidity requirements, future cash burn rates and future attendance levels.

Depending on the Company’s assumptions regarding the timing and ability to achieve more normalized levels of operating revenue, the estimates of amounts of required liquidity vary significantly.

Similarly, it is very difficult to predict when theatre attendance levels will normalize, which the Company expects will depend on the widespread availability and use of effective vaccines for the coronavirus.

However, the Company’s current cash burn rates are not sustainable.

Further, the Company cannot accurately predict what future changes may occur to the supply or release date of movie titles available for theatrical exhibition once moviegoers are prepared to return in large numbers.

Nor can the Company know with certainty the impact on consumer movie-going behavior of Warner Bros.’s decision to release its entire 2021 slate of movies on HBO Max at the same time as the movies debut in theatres, or the potential attendance impact of other studio decisions to accelerate in home availability of their theatrical movies.

Studio negotiations regarding evolving theatrical release models and film licensing terms are ongoing.

There can be no assurance that the attendance levels and other assumptions used to estimate the Company’s liquidity requirements and future cash burn rates will be correct, and its ability to be predictive is uncertain due to the unknown magnitude and duration of the COVID-19 pandemic.

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

If the Company is unable to maintain or renegotiate its minimum liquidity covenant requirements, it could have a significant adverse effect on the Company’s business, financial condition and operating results.

The Company also realized significant cancellation of debt income (“CODI”) in connection with its debt restructuring.

As a result of such CODI, the Company estimates a significant portion of its net operating losses will be eliminated as a result of tax attribute reductions.

Any loss of tax attributes as a result of such CODI may adversely affect the Company’s cash flows and therefore its ability to service its indebtedness.

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

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

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

See Note 2—Leases for further information.

Use of Estimates.

6 unchanged sentences

Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America for complete consolidated financial statements.

In the opinion of management, these interim financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the Company’s financial position and results of operations.

In the opinion of management, these interim financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company’s financial position and results of operations.

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

Majority-owned subsidiaries that the Company has control of are consolidated in the Company’s consolidated subsidiaries;

consequently, a portion of its stockholders’ equity, net earnings (loss) and total comprehensive income (loss) for the periods presented are attributable to noncontrolling interests.

Due to the seasonal nature of the Company’s business and the suspension of operations at all the Company’s theatres due to the COVID-19 pandemic, results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected

for the year ending December 31, 2021.

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

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

markets and International markets.

Baltics’ theatre sale agreement.

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

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

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

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

During the three months ended March 31, 2021 and the three months ended December 31, 2020, the Company received cash consideration for the remaining interest in Estonia and Latvia of $ 4.1 million (€ 3.4 million) and $ 6.4 million (€ 5.4 million), respectively.

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

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

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

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

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

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

At March 31, 2021, the Company’s noncontrolling interest of 49 % in Lithuania was $ 22.4 million in net assets.

Baltics’ theatre sale.

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

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

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

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

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

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

Restricted Cash.

Restricted cash is cash held in the Company’s bank accounts in International markets as a guarantee for certain landlords.

Accumulated other comprehensive income (loss).

4 unchanged sentences

Other comprehensive income (loss)

Balance March 31, 2021

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

Balance June 30, 2021

Accumulated depreciation and amortization.

Accumulated depreciation was $ 2,330.0 million and $ 2,243.1 million at March 31, 2021 and December 31, 2020, respectively, related to property.

Accumulated amortization of intangible assets was $ 42.4 million and $ 42.0 million at March 31, 2021 and December 31, 2020, respectively.

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

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

Other expense (income).

1 unchanged sentence

Three Months Ended

Six Months Ended

(In millions)

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

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

1 unchanged sentence

Credit losses (income) related to contingent lease guarantees

Governmental assistance due to COVID-19

Governmental assistance due to COVID-19- International markets

Governmental assistance due to COVID-19 - Domestic markets

Foreign currency transaction (gains) losses

Non-operating components of net periodic benefit cost

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

Financing fees related to modification of debt agreements

2 unchanged sentences

Three Months Ended

Six Months Ended

(In millions)

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Impairment of long-lived assets

5 unchanged sentences

Total impairment loss

During the three months ended March 31, 2020, the enterprise fair values of the Domestic Theatres and International Theatres reporting units were less than their carrying values and goodwill impairment charges of $ 1,124.9 million and $ 619.4 million were recorded for the Company’s Domestic Theatres and International Theatres reporting units, respectively.

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

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

During the six months ended June 30, 2020, the enterprise fair values of the Domestic Theatres and International Theatres reporting units were less than their carrying values and goodwill impairment charges of $ 1,124.9 million and $ 619.4 million were recorded for the Company’s Domestic Theatres and International Theatres reporting units, respectively.

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

See Note 4—Goodwill for further information.

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

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

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

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

markets with 658 screens (in Alabama, Arkansas, California, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming) and $ 9.9 million on 23 theatres in the International markets with 213 screens (in Germany, Italy, Spain, UK and Sweden).

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

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

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

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

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

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

The Company first assessed the qualitative factors to determine whether the existence of events and circumstances indicated that it was more likely than not the fair value amounts of any indefinite-lived intangible assets were less than their carrying amounts and concluded it was not more likely than not that the fair value amounts were less than their carrying amounts at March 31, 2021.

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

During the six months ended June 30, 2020, the Company performed a quantitative impairment evaluation of its indefinite-lived intangible assets related to the AMC, Odeon and Nordic trade names and recorded impairment charges of $ 5.9 million related to Odeon trade names and $ 2.4 million related to Nordic trade names during the six months ended June 30, 2020.

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

Accounting Pronouncements Recently Adopted

Income Taxes.

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

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

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

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

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

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

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Equipment leases primarily consist of food and beverage equipment.

The Company received, or is in process of negotiating, rent concessions provided by the lessors that aided, or will aid, in mitigating the economic effects of COVID-19.

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

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

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

In instances where there were no substantive changes to the lease terms, i.e., modifications that resulted in total payments of the modified lease being substantially the same or less than the total payments of the existing lease, the Company elected the relief as provided by the FASB staff related to the accounting for certain lease concessions.

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

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

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

Increase (decrease)

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Total deferred lease amounts

(1) During the three months ended March 31, 2021, the increase in fixed operating lease deferred amounts is net of $ 19.1 million of decreases in the deferred balances as of December 31, 2020 related to payments and abatements.

(2) During the three months ended March 31, 2021, decreases in variable lease deferred amounts were primarily due to resolution of contingencies, therefore, variable amounts became fixed and were reclassified to fixed operating lease deferred amounts.

The following table reflects the lease costs for the three months ended March 31, 2021 and March 31, 2020:

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

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

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

Three Months Ended

Six Months Ended

Consolidated Statement

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Theatre properties

Operating expense

Operating expense (income)

Operating expense

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Theatre properties

Operating expense

Operating expense (income)

Total lease cost

Cash flow and supplemental information is presented below:

Three Months Ended

Six Months Ended

(In millions)

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(1) Includes lease extensions and option exercises.

The following table represents the weighted-average remaining lease term and discount rate as of March 31, 2021:

As of March 31, 2021

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

As of June 30, 2021

Weighted Average

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Finance leases

Minimum annual payments required under existing operating and finance leases and the net present value thereof as of March 31, 2021 are as follows:

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

Operating Lease

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(In millions)

Nine months ending December 31, 2021 (1)

Six months ending December 31, 2021 (1)

Total lease payments

Less imputed interest

(1) Does not include amounts recorded in accounts payable for deferred rent.

As of March 31, 2021, the Company had signed additional operating lease agreements for 6 theatres that have not yet commenced of approximately $ 150.0 million, which are expected to commence between 2021 and 2024, and carry lease terms of approximately 5 to 20 years .

Total operating and finance lease liabilities, respectively

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

Accounts Payable

(In millions)

Lease Payments

Three months ended September 30, 2021

Three months ended December 31, 2021

Three months ended March 31, 2022

Three months ended June 30, 2022

Total deferred lease amounts recorded in AP

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

Operating Lease

Financing Lease

(In millions)

Three months ended September 30, 2021

Three months ended December 31, 2021

Three months ended March 31, 2022

Three months ended June 30, 2022

Three months ended September 30, 2022

Three months ended December 31, 2022

Total deferred lease amounts

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

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

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Three Months Ended

Six Months Ended

(In millions)

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Major revenue types

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Three Months Ended

Six Months Ended

(In millions)

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Timing of revenue recognition

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(In millions)

March 31, 2021

June 30, 2021

December 31, 2020

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(In millions)

March 31, 2021

June 30, 2021

December 31, 2020

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Foreign currency translation adjustment

Balance March 31, 2021

Balance June 30, 2021

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

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

The Company resumed the recognition of deferred revenues related to certain loyalty programs, gift cards and exchange tickets.

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

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

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

Balance March 31, 2021

Balance June 30, 2021

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

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Gift cards and exchange tickets.

The total amount of non-redeemed gifts cards and exchange tickets included

in deferred revenues and income as of March 31, 2021 was $ 315.7 million.

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

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

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Loyalty programs.

As of March 31, 2021, the amount of deferred revenue allocated to the loyalty programs included in deferred revenues and income was $ 64.2 million.

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

included in deferred revenues and income was $ 65.8 million.

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

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NOTE 4—GOODWILL

The following table summarizes the changes in goodwill by reporting unit for the three months ended March 31, 2021:

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

(In millions)

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Baltics disposition-Estonia (1)

Balance March 31, 2021

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

Baltics disposition-Lithuania (1)

Balance June 30, 2021

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

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

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

Investments in non-consolidated affiliates as of March 31, 2021 include interests in Digital Cinema Implementation Partners, LLC (“DCIP”) of 29.0 %, Digital Cinema Distribution Coalition, LLC (“DCDC”) of 14.6 %, AC JV, LLC (“AC JV”) owner of Fathom Events, of 32.0 %, SV Holdco LLC (“SV Holdco”), owner of Screenvision, of 18.3 %, Digital Cinema Media Ltd.

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

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

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

During the three months ended March 31, 2021 and March 31, 2020, the Company recorded equity in loss of non-consolidated entities of $ 2.8 million and $ 2.9 million, respectively.

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

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

Related party transactions with equity method investees.

At March 31, 2021 and December 31, 2020, the Company recorded net receivable amounts due from equity method investees of $ 4.6 million and $ 6.9 million, respectively, primarily related to projector warranty expenditures and other transactions.

The Company recorded related party transactions with equity method investees in other revenues, film exhibition costs, and operating expenses of $ 0.6

million, $ 0.3 million, and $ 0.4 million, respectively, during the three months ended March 31, 2021 and $ 5.7 million, $ 2.4 million, and $ 1.3 million, respectively, during the three months ended March 31, 2020.

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

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

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

NOTE 6—CORPORATE BORROWINGS AND FINANCE LEASE OBLIGATIONS

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(In millions)

March 31, 2021

June 30, 2021

December 31, 2020

First Lien Secured Debt:

Senior Secured Credit Facility-Term Loan due 2026 ( 3.195 % as of March 31, 2021)

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

Senior Secured Credit Facility-Revolving Credit Facility due 2024

10.75 % in Year 1, 11.25 % thereafter Cash/PIK Odeon Term Loan Facility due 2023 (£ 140.0 million and € 296.0 million par value as of March 31, 2021)

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

Odeon Revolving Credit Facility due 2022

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Subordinated Debt:

6.375 % Senior Subordinated Notes due 2024 (£ 4.0 million par value as of March 31, 2021)

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

5.75 % Senior Subordinated Notes due 2025

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6.375 % Senior Subordinated Notes due 2024

The following table provides the principal payments required and maturities of corporate borrowings as of March 31, 2021:

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

(In millions)

Nine months ended December 31, 2021

Six months ended December 31, 2021

Senior Secured Credit Facilities

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

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

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

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

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

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

In addition, as an ongoing condition to the suspension of the financial covenant, the Company also agreed to (i) a minimum liquidity test of $ 100 million, (ii) an anti-cash hoarding test at any time Revolving Loans are outstanding and (iii) additional reporting obligations.

On March 8, 2021 the Company entered into the Tenth Amendment to Credit Agreement (the “Tenth Amendment”), with the requisite revolving lenders party thereto and the Administrative Agent, pursuant to which the Company agreed not to consent to certain modifications to the Credit Agreement described in the Tenth Amendment without the consent of the majority of the revolving lenders party to the Tenth Amendment.

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

Odeon Term Loan Facility

On February 15, 2021, Odeon Cinemas Group Limited (“Odeon”), a wholly-owned subsidiary of the Company, entered into a new £ 140.0 million and € 296.0 million term loan facility (the “Odeon Term Loan due 2023”) agreement (the “Odeon Term Loan Facility”), by and among Odeon, the subsidiaries of Odeon party thereto, the lenders and other loan parties thereto and Lucid Agency Services Limited as agent and Lucid Trustee Services Limited as security agent.

Approximately £ 89.7 million and € 12.8 million of the net proceeds from the Odeon Term Loan Facility were used to repay in full Odeon’s obligations (including principal, interest, fees, and cash collateralized letters of credit) under its existing revolving credit facility and the remaining net proceeds will be used for general corporate purposes.

Company recorded deferred financing cost write-off of $ 1.0 million in other expense during the three months ended March 31, 2021.

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

Borrowings under the Odeon Term Loan Facility bear interest at a rate equal to 10.75 % per annum during the first year and 11.25 % thereafter and each interest period shall be 3 months , or such other period agreed between the Company and the Agent.

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

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

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

Borrowings under the Odeon Term Loan Facility bear interest at a rate equal to 10.75 % per annum during the first year and 11.25 % thereafter and each interest period is 3 months , or such other period agreed between the Company and the Agent.

The interest is capitalized on the last day of each interest period and added to the outstanding principal amount, however Odeon has the option to elect to pay interest in cash.

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The Company is subject to minimum liquidity requirements of £ 32.5 million (approximately $ 45 million) required under the Odeon Term Loan Facility, measured at each quarter end date.

Financial Covenants

The Company currently estimates that its existing cash and cash equivalents will be sufficient to comply with minimum liquidity and financial covenant requirements under its debt covenants related to borrowings pursuant to the Senior Secured Revolving Credit Facility and Odeon Term Loan Facility, currently and through the next twelve months.

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

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

First Lien Toggle Notes due 2026

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The First Lien Toggle Notes due 2026 will mature on April 24, 2026.

The indenture provides that the First Lien Toggle Notes due 2026 are general senior secured obligations of the Company and are secured on a pari passu basis with the Senior Credit Facilities, the First Lien Notes due 2026, and the First Lien Notes due 2025.

The indenture provides that the First Lien Toggle Notes due 2026 are general senior secured obligations of the Company and are secured on a pari passu basis with the Senior Secured Credit Facilities, the First Lien Notes due 2026, and the First Lien Notes due 2025.

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

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

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

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

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

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

During the three months ended March 31, 2020, the Company recorded other expense (income) of $( 0.5 ) million related to the derivative liability fair value adjustment for the embedded conversion feature in the Convertible Notes due 2026.

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

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

to the debt instrument and the reset of the conversion price caused the conversion feature to not be considered indexed to the Company’s equity, (2) the conversion feature standing alone met the definition of a derivative, and (3) the Convertible Notes due 2026 were not remeasured at fair value each reporting period with changes in fair value recorded in the condensed consolidated statement of operations.

During the three months ended March 31, 2020, the Company recorded other expense of $ 20.1 million related to the derivative asset fair value adjustment for the contingent call option related to the Class B common stock purchase and cancellation agreement.

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

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

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

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NOTE 7—STOCKHOLDERS’ EQUITY

Equity Distribution Agreement.

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

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

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

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

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

Class A common stock issuance.

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

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

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

See Note 13 — Subsequent Event for information regarding the additional at-the-market offerings of 43 million shares of the Company’s Class A common stock.

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

"At-the-market"

Equity Distribution Agreement Dates

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

Gross Proceeds (in millions)

December 11, 2020

Goldman Sachs & Co.

Riley Securities, Inc.

January 25, 2021

Goldman Sachs & Co.

Riley Securities, Inc.

April 27, 2021

Goldman Sachs & Co.

Riley Securities, Inc.

and Citigroup Global Markets Inc.

Riley Securities, Inc.

and Citigroup Global Markets Inc.

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

approximately 3.7 million shares.

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

(2) On December 11, 2020, the Company entered into an equity distribution agreement with Goldman Sachs & Co.

Riley Securities, Inc., as sales agents to sell up to 178.0 million shares of the Company’s Class A common stock, of which approximately 40.93 million shares of Class A common stock were sold and settled during December 2020 and approximately 137.07 million shares of Class A common stock were sold and settled during the six months ended June, 2021.

Class A common stock issuance to Mudrick.

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

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

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

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

Class B common stock.

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

There were no dividends declared to stockholders during the three months ended March 31, 2021.

The following is a summary of dividends and dividend equivalents declared to stockholders during the three months ended March 31, 2020:

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

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

Declaration Date

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Related Party Transactions .

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

For the three months ended March 31, 2021 and March 31, 2020, the Company recorded approximately $ 0 million and $ 0.1 million, respectively, of cost reductions for general and administrative services provided on behalf of Wanda.

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

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

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

Stock-Based Compensation

The Company recorded stock-based compensation expense of $ 5.4 million and $ 2.7 million within general and administrative:

other during the three months ended March 31, 2021 and March 31, 2020, respectively.

As of March 31, 2021, the remaining unrecognized compensation cost related to stock-based compensation arrangements was approximately $ 43.1 million.

The weighted average period over which this remaining compensation expense will be recognized is approximately 1.5 years.

The following table presents the stock-based compensation expense recorded within general and administrative:

Three Months Ended

Six Months Ended

(In millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Board of director stock award expense

Restricted stock unit expense

Performance stock unit expense

Special performance stock unit expense

Total stock-based compensation expense

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

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

Awards Granted in 2021

During the three months ended March 31, 2021, AMC’s Board of Directors approved awards of stock, restricted stock units (“RSUs”), and performance stock units (“PSUs”) to certain of the Company’s employees and directors under the 2013 Equity Incentive Plan.

The grant date fair value of these awards during the three months ended March 31, 2021 was based on the closing price of AMC’s Class A common stock on February 23, 2021 of $ 7.70 per share.

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

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

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

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● Stock Award Agreement:

The Company granted awards of 124,054 fully vested shares of Class A common stock to its independent members of AMC’s Board of Directors during the three months ended March 31, 2021 with a grant date fair value of $ 0.9 million.

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

● Restricted Stock Unit Award Agreement:

The Company granted RSU awards of 2,687,813 to certain members of management during the three months ended March 31, 2021 with a grant date fair value of $ 20.7 million.

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

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

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● Performance Stock Unit Award Agreement:

During the three months ended March 31, 2021, total PSUs of 2,687,813 were awarded (“2021 PSU award”) to certain members of management and executive officers, with the total PSUs divided into three separate year tranches with each tranche allocated to a fiscal year within the performance period (“Tranche Year”).

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

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

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

The Compensation Committee establishes the annual performance targets at the beginning of each year, therefore, the grant date (and fair value measurement date) for each Tranche Year is the date at the beginning of each year when a mutual understanding of the key terms and conditions are reached per ASC 718-10-55-95.

The 2021 PSU award grant date fair value on February 23, 2021 for the 2021 Tranche Year award of 895,951 units was approximately $ 6.9 million.

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

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

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

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

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

The following table represents the nonvested RSU, PSU and SPSU activity for the three months ended March 31, 2021:

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

Shares of RSU

Beginning balance at January 1, 2021 (1)

Nonvested at March 31, 2021

Nonvested at June 30, 2021

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

Total Nonvested at June 30, 2021

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

(2) Excludes Tranche Years 2022 and 2023 awarded under the 2021 PSU award.

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

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

Condensed Consolidated Statements of Stockholders’ Deficit

For the Three Months Ended March 31, 2021

For the Six Months Ended June 30, 2021

Class A Voting

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Balances March 31, 2021

Other comprehensive income

100% liquidation of Baltics

Class A common stock, accrued dividend equivalent adjustment

Class A common stock issuance

( 3,732,625 )

Class A common stock issuance to Mudrick

Stock-based compensation

Balances June 30, 2021

Condensed Consolidated Statements of Stockholders’ Deficit

For the Three Months Ended March 31, 2020

For the Six Months Ended June 30, 2020

Class A Voting

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Balances March 31, 2020

Other comprehensive income

Class A common stock, accrued dividend equivalent adjustment

Stock-based compensation

Balances June 30, 2020

NOTE 8—INCOME TAXES

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

The Company is using a discrete income tax calculation for the three months ended March 31, 2021 due to the inability to determine reliable annual estimates of taxable income (loss) due to COVID-19.

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

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

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

For purposes of determining the current and deferred tax provision, and uncertain tax positions for the three months ended March 31, 2021, the Company estimated a significant portion of its net operating losses and tax credits have been eliminated as a result of tax attribute reduction related to the debt exchange transaction that occurred in July 2020.

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

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

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

The effective tax rate for the three months ended March 31, 2021 reflects the impact of these valuation allowances against U.S.

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

The actual effective rate for the three months ended March 31, 2021 was 1.2 %.

The Company’s consolidated tax rate for the three months ended March 31, 2021 differs from the U.S.

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

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

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

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

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

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

At March 31, 2021 and December 31, 2020, the Company has recorded net deferred tax liabilities of $ 32.7 million and net deferred tax assets of $ 40.2 million, respectively.

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

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

Accordingly, the Company’s ability to utilize any net operating loss carryforwards and other tax attributes may be significantly limited.

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

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Recurring Fair Value Measurements.

The following table summarizes the fair value hierarchy of the Company’s financial assets and liabilities carried at fair value on a recurring basis as of March 31, 2021:

Fair Value Measurements at March 31, 2021 Using

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

Fair Value Measurements at June 30, 2021 Using

Total Carrying

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(In millions)

March 31, 2021

June 30, 2021

Other long-term assets:

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Investments measured at net asset value (1)

Marketable equity securities:

Investment in NCM

Total assets at fair value

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

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

Valuation Techniques.

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

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

Other Fair Value Measurement Disclosures.

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

Fair Value Measurements at March 31, 2021 Using

Fair Value Measurements at June 30, 2021 Using

Significant other

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(In millions)

March 31, 2021

June 30, 2021

Current maturities of corporate borrowings

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

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

The Company has identified two

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

markets and International markets.

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

On August 28, 2020, the Company divested of 49 % of its interest in Estonia, Latvia, and Lithuania operations.

The Company completed the 100% divestiture of Latvia during the three months ended December 31, 2020 and Estonia during the three months ended March 31, 2021.

See Note 1 — Basis of Presentation for further information on the Baltics theatre sale agreement.

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

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

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Three Months Ended

Six Months Ended

Revenues (In millions)

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

International markets

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Three Months Ended

Six Months Ended

Adjusted EBITDA (In millions)

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

International markets

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Three Months Ended

Six Months Ended

Capital Expenditures (In millions)

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

International markets

1 unchanged sentence

Long-term assets, net (In millions)

March 31, 2021

June 30, 2021

December 31, 2020

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Three Months Ended

Six Months Ended

(In millions)

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Income tax provision (benefit)

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

Certain operating expense (2)

Certain operating expense (income) (2)

Equity in loss of non-consolidated entities

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Other expense (income) (5)

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

Other non-cash rent benefit (6)

General and administrative — unallocated:

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Adjusted EBITDA

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

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

markets with 658 screens which were related to property, net, operating lease right-of-use assets, net and other long-term assets and $ 9.9 million on 23 theatres in the International markets with 213 screens which were related to property, net and operating lease right-of-use assets, net, during the three months ended March 31, 2020.

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

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

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

markets with 658 screens, which were related to property, net, operating lease right-of-use assets, net and other long-term assets and $ 9.9 million on 23 theatres in the International markets with 213 screens, which were related to property, net and operating lease right-of-use assets, net.

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

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Three Months Ended

Six Months Ended

(In millions)

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Equity in loss of non-consolidated entities

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Equity in loss of International theatre joint ventures

Income tax benefit

Income tax provision (benefit)

Investment income

Interest expense

Depreciation and amortization

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Attributable EBITDA

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

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

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

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

During the six months ended June 30, 2021, other expense (income) primarily consisted of income related to contingent lease guarantees of $( 5.7 ) million and foreign currency transaction gains of $( 0.4 ) million, partially offset by financing fees of $ 1.0 million primarily related to deferred financing cost write-off for the Odeon revolving credit facility.

During the six months ended June 30, 2020, other expense (income) primarily related to a loss of $ 13.7 million for the fair value adjustment of the derivative asset related to the contingent call option related to the Class B common stock purchase and cancellation agreement, credit losses related to contingent lease guarantees of $ 9.2 million, and financing fees of $ 2.8 million related to debt modification, partially offset by a gain of $( 0.5 ) million for the fair value adjustment of the derivative liability related to the Convertible Notes due 2026 and foreign currency transaction losses of approximately $( 0.1 ) million.

(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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AMC Entertainment Holdings, Inc., et al.

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

1:18-cv-00510-AJN (the

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

District Court for the Southern District of New York.

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

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

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

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

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

The Company remains contingently liable for lease payments under certain leases of theatres that it previously divested, in the event that such assignees are unable to fulfill their future lease payment obligations.

During the three months ended March 31, 2021 and March 31, 2020, the Company recorded estimated credit losses (income) related to the contingent lease guarantees of $( 2.0 ) million and $ 5.3 million, respectively, in other expense (income).

The Company applied a probability weighted approach for the estimation of credit loss reserve for contingent lease guarantees expected to be funded over the lease term using the discounted cash flow method.

At March 31, 2021 and December 31, 2020, the contingent lease liabilities recorded in other long-term liabilities was $ 11.2 million and $ 30.2 million, respectively.

NOTE 12—LOSS PER SHARE

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Three Months Ended

Six Months Ended

(In millions)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

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

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

For the three months ended March 31, 2021 and March 31, 2020, unvested RSUs of 3,812,964 and 2,210,736 , respectively, were not included in the computation of diluted loss per share because they would be anti-dilutive.

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

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

Unvested PSUs of 2,161,337 and 793,932 at 100 % performance targets for the three months ended March 31, 2021 and March 31, 2020, respectively, and unvested SPSUs of 1,156,656 and 595,003 at the minimum market condition for three months ended March 31, 2021 and March 31, 2020, respectively, were not included in the computation of diluted loss per share because they would not be issuable if the end of the reporting period were the end of the contingency period or they would be anti-dilutive.

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

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

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

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

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

For the three months ended March 31, 2020, the Company used the if-converted method for calculating any potential dilutive effect of the Convertible Notes due 2026.

For the three months ended March 31, 2020, the Company has not adjusted net loss to eliminate the interest expense of $ 8.3 million and the other expense for the derivative liability related to the Convertible Notes due 2026 of $( 0.5 ) million in the computation of diluted loss per share because the effects would be anti-dilutive.

For the three months ended March 31, 2020, the Company has not included in diluted weighted average shares approximately 31.7 million shares issuable upon conversion as the effects would be anti-dilutive.

NOTE 13—SUBSEQUENT EVENT

Additional equity financing.

On April 27, 2021, the Company’s Board determined not to seek stockholder approval of the proposal to approve an amendment to the Company’s Third Amended and Restated Certificate of Incorporation to increase the total number of shares of Class A common stock (par value $ 0.01 per share) the Company shall have the authority to issue by 500,000,000 shares to a total of 1,024,173,073 shares of Class A common stock, and has withdrawn Proposal 1 from the agenda for the Annual Meeting.

The Board reserves the right to propose an amendment of the Certificate of Incorporation to increase the authorized shares or for other items at any point in the future.

The Company plans to pursue equity issuances for its remaining authorized shares

On April 27, 2021, the Company entered into an equity distribution agreement with Goldman Sachs & Co.

Riley Securities, Inc.

and Citigroup Global Markets Inc.

as sales agents, to sell up to 43 million shares of Class

A common stock, par value $ 0.01 per share, through an “at-the-market” offering program for its remaining authorized shares.

The Company intends to use the net proceeds from the sale of the Class A common stock for general corporate purposes, which may include working capital, the repayment, refinancing, redemption or repurchase of existing indebtedness, capital expenditures and other investments.

The Class A common stock is offered and sold pursuant to the Company’s shelf registration statement on Form S-3 filed on April 27, 2021 with the Securities and Exchange Commission (the “SEC”).

The Company filed a prospectus supplement, dated April 27, 2021, to the prospectus, dated April 27, 2021, with the SEC in connection with the offer and sale of the Class A common stock.

As of the trade date of May 5, 2021, the Company raised gross proceeds related to this equity distribution agreement of approximately $ 153 million through its at-the-market offering of approximately 15.5 million shares of its Class A common stock and paid fees to the sales agents and other fees of approximately $ 3.8 million.

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

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

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

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

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

What changed 10-Q

Item 1. Financial Statements