What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-03-01 compared with 2021-03-12 · 639 added, 481 removed, 390 unchanged (74% of the section changed)

6 unchanged sentences

We operate theatres in 12 countries, including the U.S., Europe and Saudi Arabia.

In the United States, as of December 31, 2019, prior to the COVID-19 pandemic, AMC has the #1 market share in the top two markets, New York and Los Angeles.

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

1 unchanged sentence

As of December 31, 2021, we owned, operated or had interests in 946 theatres and 10,562 screens.

Temporarily Suspended or Limited Operations

Throughout the first quarter of 2020, we temporarily suspended theatre operations in our U.S.

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

As of March 17, 2020, all of our U.S.

and International theatre operations were temporarily suspended.

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

markets in late August 2020.

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

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

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

As of September 30, 2021 and December 31, 2021, the Company operated 596 and 593 domestic theatres, respectively, representing essentially 100% of its domestic theatres.

Total revenues for the U.S.

markets increased $1,049.1 million for the year ended December 31, 2021, compared to the year ended December 31, 2020.

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

As of June 30, 2021, we operated 335 international theatres with limited seating capacities, representing approximately 95% of our international theatres.

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

At September 30, 2021 and December 31, 2021, the Company operated 351 and 337 international theatres, respectively, representing approximately 99% and 95%, respectively, of its international theatres.

Total revenues for the International markets increased $236.4 million for the year ended December 31.

2021, compared to the year ended December 31, 2020.

Box Office Admissions and Film Content

Box office admissions are our largest source of revenue.

We predominantly license “first-run” films from distributors owned by major film production companies and from independent distributors on a film-by-film and theatre-by-theatre basis.

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

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

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

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

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

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

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

The North American industry box office has been significantly impacted by the COVID-19 pandemic during the year ended December 31, 2020.

Although certain states authorized the reopening of theatres as early as June 2020, with limited seating capacities and social distancing guidelines, some states, including California and New York, remain partially or entirely closed for theatrical exhibition as of December 31, 2020.

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

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

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

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

The combination of theatre closures, reopening restrictions and limited new film distribution has resulted in a significantly lower industry box office for the year ended December 31, 2020 compared to the year ended December 31, 2019.

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

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

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

This multi-year agreement preserves exclusivity for theatrical viewing for at least the first three weekends of a film’s release,

during which time a considerable majority of a movie’s theatrical box office revenue typically is generated.

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

During the 2020 calendar year, films licensed from our six largest distributors based on revenues accounted for approximately 80% of our U.S.

We predominantly license theatrical films from distributors owned by major film production companies and from independent distributors on a film-by-film and theatre-by-theatre basis.

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

These licenses typically state that rental fees are based on the box office performance of each film, though in certain circumstances and less frequently, our rental fees are based on a

mutually agreed settlement rate that is fixed.

In some European territories, film rental fees are established on a weekly basis and some licenses use a per capita agreement instead of a revenue share, paying a flat amount per ticket.

The North American and International industry box office have been significantly impacted by the COVID-19 pandemic.

As a result, film distributors have postponed new film theatrical releases and/or shortened the period of theatrical exclusivity (the “window”).

Theatrical releases may continue to be postponed and windows shortened while the box office suffers from COVID-19 impacts.

As a result of the reduction in theatrical film releases, we have licensed and exhibited a larger number of previously released films that have lower film rental terms.

We have made adjustments to theatre operating hours to align screen availability and associated theatre operating costs with attendance levels for each theatre.

As we continue our recovery from the impacts of the COVID-19 pandemic on our business, our aggregate attendance levels remain significantly behind pre-pandemic levels.

However, for the first time since 2019, substantially all of our worldwide theatres were open for the entirety of the third and fourth quarters of 2021.

During the year ended December 31, 2021, films licensed from our six largest movie studio distributors based on revenues accounted for approximately 87% of our U.S.

admissions revenues, which consisted of Sony, Disney, Universal, Warner Bros., Paramount, and Lionsgate.

In Europe, approximately 75% of our box office revenue came from films attributed to our three largest distributor groups;

which consisted of Warner Bros., Disney, and various independent distributors as a whole (with each independent distributor representing 10% or less).

In Europe, approximately 77% of our box office revenue came from films attributed to our four largest distributor groups;

which consisted of Universal, Disney, Sony, and Warner Bros.

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

Movie Screens

The following table provides detail with respect to digital delivery, 3D enabled projection, large screen formats, such as IMAX ® and our proprietary Dolby Cinema™, other Premium Large Format (“PLF”) screens, enhanced food and beverage offerings and our premium seating as deployed throughout our circuit on December 31, 2020.

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

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

International Markets

11 unchanged sentences

Premium seating

As of December 31, 2019, prior to the COVID-19 pandemic, AMC was the largest IMAX ® exhibitor in the U.S.

As of December 31, 2021, AMC was the largest IMAX ® exhibitor in the U.S.

with a 57% market share.

4 unchanged sentences

and a leading IMAX ® exhibitor in the United Kingdom and Europe.

During the year ended December 31, 2020, we closed four IMAX screens related to U.S.

theatres that were permanently closed and opened one new IMAX screen.

During the year ended December 31, 2021, we opened two new IMAX screens in the U.S.

theatres, closed one IMAX screen related to U.S.

theatres that was permanently closed and opened two new IMAX screens related to theatres in Saudi Arabia.

As of December 31, 2021, we operated 154 Dolby Cinema™ at AMC auditoriums in the U.S.

In December 2018, we introduced the first United Kingdom Dolby Cinema Auditorium in our iconic Leicester Square theatre in the heart of London, ending 2020 with six Dolby Cinema™ Auditoriums in Europe.

In December 2018, we introduced the first United Kingdom Dolby Cinema Auditorium in our iconic Leicester Square theatre in the heart of London, ending 2021 with eight Dolby Cinema™ Auditoriums in the International markets.

We expect to expand the deployment of our innovative Dolby Cinema™ auditoriums in both our U.S.

3 unchanged sentences

Therefore, it may be especially relevant in smaller or more price-sensitive markets.

As of December 31, 2020, we operated 54 screens under proprietary PLF brand names in the U.S.

of December 31, 2021, we operated 56 screens under proprietary PLF brand names in the U.S.

markets and 77 in the International markets.

1 unchanged sentence

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

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

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

Our capital allocation strategy will be driven by the cash generation of our business and will be contingent on a required return threshold.

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

13 unchanged sentences

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

For the year ended December 31, 2020, approximately 53.0% of our tickets were purchased online in the U.S., with approximately 76.0% of total online tickets being purchased through AMC.

For the year ended December 31, 2021, approximately 67% of our tickets were purchased online in the U.S., with approximately 80% of total online tickets being purchased through AMC’s website or mobile app.

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

Our deployment initiatives also apply to food and beverage enhancements.

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

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

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

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

We offer enhanced food and beverage products that include meals, healthy snacks, premium liquor, beer and wine options, and other gourmet products.

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

As a result of the COVID-19 pandemic, we have streamlined our concession menus to focus on our best-selling products and expanded cashless transactions technology through the deployment of mobile ordering across all brands, all in an effort to reduce the number of touchpoints between guests and employees.

We have also upgraded our Coca-Cola Freestyle beverage software to allow guests to dispense drinks without the need to utilize the machine’s touch screen using the Coca-Cola Freestyle app.

We currently operate 51 Dine-In Theatres in the U.S.

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

Our recent Dine-In Theatre concepts are designed to capitalize on the latest food service trend, the fast and casual eating experience.

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

2 unchanged sentences

Loyalty Programs and Other Marketing

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

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

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

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

4 unchanged sentences

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

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

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

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

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

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

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

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

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

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

7 unchanged sentences

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

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

We currently have more than 12,800,000 members in our various International loyalty programs.

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

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

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

We upgraded our mobile applications across the U.S.

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

4 unchanged sentences

Significant Transactions

Equity Distribution Agreements.

On September 24, 2020, we entered into an equity distribution agreement with Citigroup Global Markets Inc.

First Lien Senior Secured Notes due 2029.

On February 14, 2022, we issued $950.0 million aggregate principal amount of our 7.5% First Lien Senior Secured Notes due 2029 (“First Lien Notes due 2029”).

We used the net proceeds from the sale of the notes, and cash on hand, to fund the full redemption of the $500 million aggregate principal amount of the First Lien Notes due 2025, the $300 million aggregate principal amount of the First Lien Notes due 2026, and $73.5 million aggregate principal amount of the First Lien Toggle notes due 2026 and to pay related accrued interest, fees, costs, premiums and expenses.

We estimate we will record a loss on debt extinguishment related to this transaction of approximately $135 million in other expense in 2022.

See Note 16—Subsequent Events in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof for further information.

Common Stock issuance.

We entered into equity distribution agreements with sales agents to sell approximately 241.6 million and 90.9 million shares of our Class A common stock (“Common Stock”), par value $0.01

per share, through “at-the-market” offering programs during the years ended December 31, 2021 and December 31, 2020, respectively.

During the year ended December 31, 2021, the Company raised gross proceeds of approximately $1,611.8 million related to the “at-the-market” offering programs and paid fees to the sales agents of approximately $40.3 million and other fees of $0.8 million.

During the year ended December 31, 2020, the Company raised gross proceeds of approximately $272.8 million related to the “at-the-market” offering programs and paid fees to the sales agents of approximately $8.1 million.

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

The gross proceeds raised from the “at-the-market” sale of Common Stock during the years ended December 31, 2021 and December 31, 2020, are summarized in the table below:

"At-the-market"

Equity Distribution Agreement Dates

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

Gross Proceeds (in millions)

September 24, 2020

Citigroup Global Markets Inc.

and Goldman Sachs & Co.

LLC, as sales agents to sell 15 million shares, and also on October 20, 2020 to sell an additional 15 million shares, of our Class A common stock, par value $0.01 per share, through an “at-the-market” offering program.

On November 10, 2020 and December 11, 2020, we entered into an equity distribution agreement with Goldman Sachs & Co.

Riley Securities, Inc., as sales agents to sell up to 20 million and 178.0 million shares, respectively, of Class A common stock, par value $0.01 per share, through an “at-the-market” offering program.

We raised gross proceeds of approximately $272.8 million for the year ended December 31, 2020, through our at-the-market offering of approximately 90,955,685 shares of its Class A common stock and paid fees to the sales agents of approximately $6.8 million.

We have used and continue 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 17 — Subsequent Events of the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof for further information regarding additional at-the-market offerings.

October 20, 2020

Citigroup Global Markets Inc.

and Goldman Sachs & Co.

November 10, 2020

Goldman Sachs & Co.

Riley Securities, Inc.

December 11, 2020

Goldman Sachs & Co.

Riley Securities, Inc.

Total year ended December 31, 2020

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.

Total year ended December 31, 2021

(1) 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 Common Stock, of which approximately 40.93 million shares of Common Stock were sold and settled during December 2020 and approximately 137.07 million shares of Common Stock were sold and settled during the year ended December 31, 2021.

(2) Included in the 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 during the year ended December 31, 2021.

Common Stock issuance to Mudrick.

On June 1, 2021, we issued to Mudrick 8.5 million shares of our Common Stock and raised gross proceeds of $230.5 million and paid fees of approximately $0.1 million related to this transaction.

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

We intend 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 our theatres.

In addition, with these funds, we intend to continue exploring deleveraging opportunities.

Baltics theatre sale agreement.

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

This transaction was undertaken by us 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.

$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).

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 year ended December 31, 2020 and will be recognized in earnings when the remaining 51% interests in Lithuania and Estonia are disposed.

At December 31, 2020, the carrying amounts of the major classes of assets and liabilities included as part of the disposal group that were previously included in the International markets reportable segment were;

goodwill of $41.8 million, property, net, of $13.0 million, operating lease right-of-use assets, net of $15.7 million, and current and long-term operating lease liabilities of $2.4 million and $13.7 million, respectively.

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

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

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

We received $37.5 million (€31.53 million) cash consideration upon entering into the sale agreement on August 28, 2020 and paid $0.5 million in transaction costs during the year ended December 31, 2020.

We 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).

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 year ended December 31, 2020 and were recorded in earnings during the year ended December 31, 2021 when the remaining 51% interests in Lithuania and Estonia were disposed.

Also, during the year ended December 31, 2020, we received cash consideration of $6.2 million (€5.3 million), net of cash of $0.2 million for the remaining 51% equity interest in Latvia.

At December 31, 2020, our noncontrolling interest of 49% in Lithuania and Estonia was $26.9 million.

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

During the year ended December 31, 2021, we received cash consideration of $34.2 million (€29.4 million), net of cash disposed of $0.4 million and transaction costs of $1.3 million, for the remaining 51% equity interest in Estonia, 51% equity interest in Lithuania and eliminated our noncontrolling interest in Forum Cinemas OU.

We recorded the net gain from the sale of our equity interest in Forum Cinemas OU of $5.5 million (net of transaction costs of $2.6 million) in investment expense (income), during the year ended December 31, 2021.

Exchange Offers.

1 unchanged sentence

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

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

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

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

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

See Note 8—Corporate Borrowings and Finance Lease Obligations of the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof for further information.

See Note 8—Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof for further information.

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

2 unchanged sentences

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

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

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

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

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

Critical Accounting Policies and Estimates

The TDR and modification did not result in a gain recognition and we established new effective interest rates based on the carrying value of the Existing Subordinated Notes and recorded the new fees paid to third parties of approximately $39.3 million in other expense, during the year ended December 31, 2020.

We realized $1.2 billion of cancellation of debt income (“CODI”) in connection with our 2020 debt restructuring.

As a result, $1.2 billion of our federal net operating losses were eliminated due to tax attribute reduction to offset the CODI.

The loss of these attributes may adversely affect our cash flows and therefore our ability to service our indebtedness.

Selected Financial Data

(In millions, except operating data)

Statement of Operations Data:

Food and beverage

Other revenue

Total revenues

Operating Costs and Expenses:

Film exhibition costs

Food and beverage costs

Operating expense, excluding depreciation and amortization below

General and administrative:

Merger, acquisition and other costs(1)

Other, excluding depreciation and amortization below

Depreciation and amortization

Impairment of long-lived assets, definite and indefinite-lived intangible assets and goodwill(2)

Operating costs and expenses

Operating income (loss)

Other expense (income)(3)

Interest expense:

Corporate borrowings

Capital and financing lease obligations

Non-cash NCM exhibitor services agreement(4)

Equity in (earnings) losses of non-consolidated entities(5)

Investment expense (income)(6)

Earnings (loss) before income taxes

Income tax provision (benefit)(7)

Net earnings (loss)

Net loss attributable to noncontrolling interests

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

Earnings (loss) per share attributable to AMC Entertainment Holdings, Inc.'s common stockholders:

Average shares outstanding

Basic (in thousands)

Diluted (in thousands)

Dividends declared per basic and diluted common share

(In millions, except operating data)

Balance Sheet Data (at period end):

Cash and cash equivalents

Corporate borrowings

Other long-term liabilities(8)

Capital and financing lease obligations

AMC Entertainment Holdings, Inc.'s stockholder’s equity (deficit)

Net cash provided by (used in) operating activities

Capital expenditures

Screen additions

Screen acquisitions

Screen dispositions

Construction openings (closures), net

Average screens—continuing operations(9)

Number of screens operated

Number of theatres operated

Total number of circuit screens

Total number of circuit theatres

Screens per theatre

Attendance (in thousands)—continuing operations(9)

(1) During the year ended December 31, 2021, expenses were primarily related to bonus expense and stock-based compensation expense.

During the year ended December 31, 2020, expenses were primarily due to legal and professional costs related to strategic contingent planning.

During the year ended December 31, 2019, expenses were primarily due to organizational design including one-time severance and outplacement costs of $9.8 million and acquisitions and divestitures including entity simplification costs of $4.0 million.

The year ended December 31, 2018 includes the write-off of $8.0 million of deferred costs related to an Odeon proposed public offering and $6.3 million of expense related to an arbitration ruling on a pre-acquisition date rent dispute for Odeon.

During the year ended December 31, 2017, merger, acquisition and other costs includes $22.6 million of expense for NCM common units surrendered as a part of the exclusivity waiver with NCM in connection with the Department of Justice (“DOJ”) Final Judgment (“Final Judgment”) and merger, acquisition and other costs related to expenses incurred in connection with the Carmike (acquired December 2016), Odeon (acquired November 2016) and Nordic (acquired March 2017) acquisitions.

(2) During the year ended December 31, 2021, we recorded non-cash impairment charges related to our long-lived assets of $61.3 million on 77 theatres in the U.S.

markets with 805 screens which were related to property, net, operating lease right-of-use assets, net and other long-term assets and $15.9 million on 14 theatres in the International markets with 118 screens which were related to property, net and operating lease right-of-use assets, net.

During the year ended December 31, 2020, we recorded goodwill non-cash impairment of $1,276.1 million and $1,030.3 million related to the enterprise fair values of the Domestic Theatres and International Theatres reporting units, respectively.

During the year ended December 31, 2020, we recorded non-cash impairment charges related to our long-lived assets of $152.5 million on 101 theatres in the U.S.

markets with 1,139 screens and $25.4 million on 37 theatres in the International markets with 340 screens and recorded impairment charges related to indefinite-lived intangible assets of $12.5 million and $2.7 million related to the Odeon and Nordic trade names, respectively, in the International markets.

We also recorded non-cash impairment charges of $14.4 million for our definite-lived intangible assets in the Domestic Theatres reporting unit during the year ended December 31, 2020.

During the year ended December 31, 2019, we recorded non-cash impairment of long-lived assets of $84.3 million on 40 theatres in the U.S.

markets with 512 screens, 14 theatres in the International markets with 148 screens, and a U.S.

property held and not used.

During the fourth quarter of 2018, we recorded non-cash impairment losses of $13.8 million on 13 theatres in the U.S.

markets with 150 screens and on 15 theatres in the International markets with 118 screens.

During calendar 2017, we recorded an impairment of long-lived assets loss of $43.6 million on 12 theatres in the U.S.

markets with 179 screens which was related to property held and used.

(3) Other income for the year ended December 31, 2021 was primarily due to $87.1 million in government assistance related to COVID-19.

Other expense (income) for the year ended December 31, 2020 included a loss of $109.0 million related to the fair value adjustments of the derivative liability and derivative asset for our Convertible Notes, financing fees related to the Exchange Offer of $39.3 million, and credit losses related to contingent lease guarantees of $15.0 million, partially offset by a gain on extinguishment of the Second Lien Notes due 2026 of $93.6 million and financing related foreign currency transaction losses.

Other expense of $13.4 million during the year ended December 31, 2019 was primarily due to $16.6 million of expense related to the repayment of indebtedness, foreign currency transaction losses of $1.5 million, non-operating net periodic benefit cost of $1.2 million, and the decrease in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $17.7 million, partially offset by decrease in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes of $23.5 million.

During the year ended December 31, 2018, other income of $108.1 million is primarily due to $66.4 million of income for the decrease in the fair value of the derivative liability related to the embedded conversion feature for the Convertible Notes and $45.0 million of income for the increase in fair value of the derivative asset related to the contingent call option for the cancellation of additional shares of Class B common stock in the Stock Purchase and Cancellation Agreement with Wanda.

See Note 8 — Corporate Borrowings and Finance Lease Obligations in the Notes to Consolidated Financial Statements under Part II, Item 8 thereof, for further information regarding the derivative liability related to the embedded conversion feature, the call option for the cancellation of additional shares of Class B common stock.

(4) Non-cash NCM exhibitor services agreement includes a significant financing component due to the significant length of time between receiving the non-cash consideration and fulfilling the performance obligation.

We received the non-cash consideration in the form of common membership units from NCM, in exchange for rights to exclusive access to our theatre screens and attendees through February 2037.

Upon adoption of ASC 606 in year 2018, our advertising revenues have significantly increased with a similar offsetting increase in non-cash interest expense.

(5) Equity in (earnings) loss of non-consolidated entities was primarily due to equity in earnings from DCIP for the year ended December 31, 2021.

Equity in (earnings) loss of non-consolidated entities includes impairment losses in the International markets related to equity method investments of $8.6 million during the year ended December 31, 2020.

Equity in earnings for the year ended December 31, 2018 includes a $28.9 million gain on the sale of all of our remaining interest in NCM and a $30.1 million gain related to the Screenvision merger.

During the year ended December 31, 2017, we recorded non-consolidated entity impairment losses and losses on dispositions of our NCM ownership interests of approximately $230.7 million.

(6) Investment income during the year ended December 31, 2021 includes a gain on sale of the Baltics theatres of $5.5 million.

Investment expense (income) during the year ended December 31, 2020 includes impairment losses of $15.9 million related to equity interest investments without a readily determinable fair value accounted for under the cost method in the U.S.

Investment expense (income) during the year ended December 31, 2019 includes a gain on the sale of our Austria theatres of $12.9 million and a loss on impairment of an investment of $3.6 million.

During the year ended December 31, 2017, investment expense (income) includes a gain on sale of Open Road of $17.2 million.

(7) During the year ended December 31, 2020, income tax expense was primarily due to the recording of international valuation allowances against deferred tax assets held in Spain of $40.1 million and Germany of $33.1 million, partially offset by income tax benefit from net losses incurred in International markets.

During the year ended December 31, 2019, an international valuation allowance previously established against deferred tax assets held in Spain was released in the fourth quarter of 2019 resulted in a $41.5 million benefit to income tax expense.

During the year ended December 31, 2017, we recorded the impact of the change in enacted Federal tax rates in our U.S.

jurisdictions of $88.6 million and the impact of a full valuation allowance on our deferred income taxes in U.S.

jurisdictions of $221.6 million, for an aggregate charge of approximately $310.0 million in the fourth quarter of 2017.

We estimate that we will have no liability for deemed repatriation of foreign earnings.

(8) Other long-term liabilities exclude operating lease liabilities, which were recorded to operating lease liabilities in the consolidated balance sheets effective in year 2019 upon adoption of ASC 842, Leases.

(9) Includes consolidated theatres only.

Critical Accounting Estimates

Our Consolidated Financial Statements are prepared in accordance with U.S.

3 unchanged sentences

However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

We have identified several policies as being critical because they require management to make particularly

difficult, subjective and complex judgments about matters that are inherently uncertain, and there is a likelihood that materially different amounts would be reported under different conditions or using different assumptions.

All of our significant accounting policies are discussed in Note 1 — The Company and Significant Accounting Policies to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

We have identified several policies as being critical because they require management to make particularly difficult, subjective and complex judgments about matters that are inherently uncertain, and there is a likelihood that materially different amounts would be reported under different conditions or using different assumptions.

All of our significant accounting policies are discussed in Note 1 — The Company and Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof.

Long-lived Assets Impairments.

We evaluate indefinite-lived intangible assets for impairment annually or more frequently as specific events or circumstances dictate.

We operate in a very competitive business environment and our revenues are highly dependent on movie content supplied by film producers.

In addition, it is common for us to closely monitor certain locations where operating performance may not meet our expectations.

We review long-lived assets, including definite-lived intangible assets and theatre assets (including operating lease right-of-use assets) whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be fully recoverable.

We identify impairments related to internal use software when management determines that the remaining carrying value of the software will not be realized through future use.

We evaluate events or circumstances, including competition in the markets where we operate that would indicate the carrying value of theatre assets may not be fully recoverable.

We evaluate theatres using historical and projected data of theatre level cash flow as our primary indicator of potential impairment and consider the seasonality of our business when making these evaluations.

If an event or circumstance is identified indicating carrying value may not be recoverable, the sum of future undiscounted cash flows is compared to the carrying value.

If carrying value exceeds the future undiscounted cash flows, the carrying value of the asset is reduced to fair value.

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

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

We recorded impairment charges related to definite-lived intangible assets of $14.4 million in U.S.

markets and indefinite-lived intangible assets of $15.2 million in International markets during the year ended December 31, 2020.

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

We review long-lived assets, indefinite-lived intangible assets and other intangible assets and theatre assets (including operating lease right-of-use lease assets) whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable.

Critical estimates.

There are a number of estimates and significant judgments that are made by management in performing impairment evaluations of long-lived assets.

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

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

We believe we have used reasonable and appropriate business judgments.

There is considerable management judgment with respect to cash flow estimates and appropriate discount rates to be used in determining fair value, and, accordingly, actual results could vary significantly from such estimates, which fall under Level 3 within the fair value measurement hierarchy.

These estimates determine whether impairments have been incurred and quantify the amount of any related impairment charge.

Assumptions and judgment.

Our valuation methodology for assessing impairment requires management to make judgments and assumptions based on historical experience and projections of future operating performance.

Our projections assume that attendance will continue to gradually improve from 2021 levels to the point of approaching historical levels.

Our projections have considered the risks of a shortened theatrical window and direct to consumer releases although on a more limited basis.

These assumptions, among others, inform the considerable amount of management judgment with respect to cash flow estimates and appropriate discount rates to be used in determining the fair value of long-lived assets.

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

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

Impact if actual results differ from assumptions .

Although we believe that our estimates and judgments are reasonable, actual results may differ from these estimates, many of which fall under Level 3 within the fair value measurement hierarchy.

Factors that could lead to impairment of long-lived assets include adverse industry or economic trends that would result in declines in the operating performance of our Domestic and International Theatres.

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

(ii) an adverse change in macroeconomic conditions;

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

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

If we are required to record an impairment charge it may substantially reduce the carrying value of our assets and reduce our income in the year in which it is recorded.

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

During the year ended December 31, 2020, we recorded non-cash impairment of long-lived assets of $152.5 million on 101 theatres in the U.S.

markets with 1,139 screens (in Alabama, Arizona, Arkansas, California, Colorado, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming) and $25.4 million on 37 theatres in the International markets with 340 screens (in Finland, Germany, Ireland, Italy, Norway, Portugal, Spain, Sweden, and UK), which were related to property, net and operating lease right-of-use assets, net.

During the year ended December 31, 2020, we recorded impairment losses related to equity method investments in International markets of $8.6 million in equity in (earnings) loss of non-consolidated entities.

In addition, we recorded impairment losses of $15.9 million in U.S.

markets within investment expense (income), related to equity interest investments without a readily determinable fair value accounted for under the cost method during the year ended December 31, 2020.

At December 31, 2020, September 30, 2020 and March 31, 2020, we performed a quantitative impairment evaluation of our indefinite-lived intangible assets related to the AMC, Odeon and Nordic trade names and recorded impairment charges of $12.5 million related to Odeon trade name and $2.7 million related to Nordic for the year ended December 31, 2020.

Our Current Long-lived Asset Impairment related Estimates and Changes in those Estimates .

During the year ended December 31, 2021, we recorded non-cash impairment charges related to our long-lived assets of $61.3 million on 77 theatres in the U.S.

markets with 805 screens which were related to property, net, operating lease right-of-use assets,

net and other long-term assets and $15.9 million on 14 theatres in the International markets with 118 screens which were related to property, net and operating lease right-of-use assets, net.

During the year ended December 31, 2020, we recorded non-cash impairment charges related to our long-lived assets of $152.5 million on 101 theatres in the U.S.

markets with 1,139 screens which were related to property, net, operating lease right-of-use assets, net and other long-term assets and $25.4 million on 37 theatres in the International markets with 340 screens which were related to property, net and operating lease right-of-use assets, net.

At December 31, 2021, related cash flows were discounted at 10.0% for the Domestic Theatres and 11.5% for the International Theatres, at December 31, 2020, related cash flows were discounted at 11.0% for Domestic Theatres and 12.5% for International Theatres, at September 30, 2020, related cash flows were discounted at 12.0% for Domestic Theatres and 13.0% for International Theatres, and at March 31, 2020, related cash flows were discounted at 11.5% for Domestic Theatres and 13.0% for International Theatres.

There were no intangible asset impairment charges incurred during the year ended December 31, 2021.

During the year ended December 31, 2020, we recorded impairment charges related to definite-lived intangible assets of $14.4 million in U.S.

markets and indefinite-lived intangible assets of $15.2 million in International markets.

At December 31, 2020, September 30, 2020 and March 31, 2020, we performed quantitative impairment evaluations of our indefinite-lived intangible assets related to the AMC, Odeon and Nordic trade names and recorded impairment charges of $12.5 million related to Odeon trade name and $2.7 million related to Nordic for the year ended December 31, 2020.

No impairment charges were recorded related to the AMC trade name for the year ended December 31, 2020.

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

The Royalty Savings Method values an intangible asset by estimating the

royalties saved through ownership of the asset.

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

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

At December 31, 2020, related cash flows were discounted at 12.0% for AMC and 13.5% for Odeon and Nordic, at September 30, 2020, related cash flows were discounted at 13.0% for AMC and 14.0% for Odeon and Nordic, and at March 31, 2020, related cash flows were discounted at 12.5% for AMC and 14.0% for Odeon and Nordic.

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

Our market enterprise value fell below carrying value on May 24, 2019 and since that time we have recorded impairment charges as of March 31, 2020, September 30, 2020 and December 31, 2020 to more closely align our carrying value with our market enterprise value.

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

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

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

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

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

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

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

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

We believe that using 100% income approach provided a more reasonable measurement of the enterprise value basis at December 31, 2020.

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

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

Critical estimates .

Calculating the fair value of our Domestic Theatres and International Theatres reporting units by use of the income approach for enterprise valuation methodology which utilizes estimated future discounted cash flows.

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

1 unchanged sentence

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

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

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

The discount rates are determined using weighted average cost of capital for the risk of achieving the projected cash flows.

We did not weigh any of the enterprise valuation methodology on the market approach in 2020.

We believe that using 100% income approach provided a more reasonable measurement of the enterprise value basis at December 31, 2020.

Assumptions and judgment .

Our projections assume that attendance will continue to gradually improve from 2021 levels to the point of approaching historical levels.

Our projections have considered the risks of a shortened theatrical window and direct to consumer releases, although on a more limited basis.

Other factors that could lead to impairment of our goodwill include adverse industry or economic trends, declines in the market price of our Common Stock and our debt instruments, all of which we utilize in establishing the estimates underlying these values.

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

Declines in the operating performance of our Domestic and International Theatres, the fair value of our debt, and the trading price of our Common Stock, together with small changes in other key input assumptions, and/or other events or circumstances could occur and could have a significant impact on the estimated fair values of our reporting units.

(ii) an adverse change in macroeconomic conditions;

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

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

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

Impact if actual results differ from assumptions .

Although we believe that our estimates and judgments are reasonable, actual results may differ from these estimates many of which fall under Level 3 within the fair value measurement hierarchy.

If we are required to record an impairment charge to our goodwill it may substantially reduce the carrying value of goodwill on our balance sheet and reduce our income in the year in which it is recorded.

Our Current Goodwill Estimates and Changes in those Estimates .

As further described below, we recorded impairment charges as of March 31, 2020, September 30, 2020, and December 31, 2020 due to significant decreases in our market enterprise value.

Our enterprise market capitalization increased and there were no other triggering events during 2021.

At our goodwill impairment annual assessment date, October 1, 2021, we performed a qualitative impairment test to evaluate whether it is more likely than not that the fair value of its two reporting units was less than their respective carrying amounts as of its annual assessment date.

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

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

In performing those Step 1 quantitative goodwill impairment tests, we used an enterprise value approach to measure fair value of the reporting units.

Key rates used in the income approach were as follows:

December 31, 2020

International

1 unchanged sentence

Weighted average cost of capital/discount rate

December 31, 2020

Long-term growth rate

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

The enterprise fair values of the Domestic Theatres and

International Theatres reporting units were less than their carrying values and goodwill impairment charges of $151.2 million and $5.6 million, respectively, was recorded as of September 30, 2020 for our Domestic Theatres and International Theatres reporting units.

Key rates used in the income approach were as follows:

September 30, 2020

International

Income approach:

December 31, 2020

Weighted average cost of capital/discount rate

September 30, 2020

Long-term growth rate

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

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

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

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

March 31, 2020

International

Income approach:

September 30, 2020

Weighted average cost of capital/discount rate

March 31, 2020

Long-term growth rate

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

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

(ii) an adverse change in macroeconomic conditions;

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

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

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

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

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

March 31, 2020

Income and operating taxes.

3 unchanged sentences

Most of these examinations take place a few years after we have filed our tax returns.

Our tax audits in many instances raise questions regarding our tax filing positions, the timing and amount of deductions claimed and the allocation of income among various tax jurisdictions.

Our tax audits in many instances raise questions regarding our tax

filing positions, the timing and amount of deductions claimed and the allocation of income among various tax jurisdictions.

Critical estimates .

In calculating our effective income tax rate and other taxes applicable to our operations, we make judgments regarding certain tax positions, including the timing and amount of deductions and allocations of income among various tax jurisdictions with disparate tax laws.

Assumptions and judgment .

We have various tax filing positions with regard to the timing and amount of deductions and credits and the allocation of income among various tax jurisdictions, based on our interpretation of local tax laws.

We also inventory, evaluate and measure all uncertain tax positions taken or expected to be taken on tax returns and to record liabilities for the amount of such positions that may not be sustained, or may only be partially sustained, upon examination by the relevant taxing authorities.

Impact if actual results differ from assumptions .

Although we believe that our estimates and judgments are reasonable, actual results may differ from these estimates.

Some or all of these judgments are subject to review by the taxing authorities.

If one or more of the taxing authorities were to successfully challenge our right to realize some or all of the tax benefit we have recorded, and we were unable to realize this benefit, it could have a material adverse effect on our financial results and cash flows.

Our Current Tax Estimates and Changes in those Estimates .

At December 31, 2021, our federal income tax loss carryforwards were approximately $1,185.5 million, our state income tax loss carryforwards were approximately $1,678.6 million, and our foreign income tax loss carryforwards were approximately $898.4 million.

1 unchanged sentence

Future changes in conditions and in the tax code may change these strategies and thus change the amount of carry forward losses that we expect to realize and the amount of valuation allowances we have recorded.

As of December 31, 2021, we had a total valuation allowance of $1,114.1 million related to the above loss carryforward and other future tax benefits for which realization is not likely to occur.

Accordingly, future reported results could be materially impacted by changes in tax matters, positions, rules and estimates and these changes could be material.

See Note 10 — Income Taxes in the Notes to Consolidated Financial Statements under Part II, Item 8 thereof, for further information.

During the first quarter of 2020, the severe impact of the COVID-19 pandemic on operations in Germany and Spain caused the Company to conclude the realizability of deferred tax assets held in those jurisdictions does not meet the more likely than not standard.

During the first quarter of 2020, the severe impact of the COVID-19 pandemic on operations in Germany and Spain caused us to conclude the realizability of deferred tax assets held in those jurisdictions does not meet the more likely than not standard.

As such, a charge of $33.1 million and $40.1 million was recorded for Germany and Spain, respectively.

At December 31, 2020, the Company determined that it was appropriate to record a valuation allowance on the disallowed interest carryforward in Sweden as the realizability of this deferred tax asset in this jurisdiction does not meet the more likely than not standard.

At December 31, 2020, we determined that it was appropriate to record a valuation allowance on the disallowed interest carryforward in Sweden as the realizability of this deferred tax asset in this jurisdiction does not meet the more likely than not standard.

As such, the overall net tax benefit recorded on Sweden was reduced by a charge of $3.7 million.

In addition, several other international jurisdictions carried valuation allowances against their deferred tax assets at the end of 2020.

During 2021, we recorded a valuation allowance on all other deferred tax assets in Sweden, resulting in a charge of less than $1 million.

With the exception of Finland and Norway, all other international jurisdictions carried valuation allowances against their deferred tax assets at the end of 2021.

On July 31, 2020, we completed our private offers to exchange our Existing Subordinated Notes for newly issued Second Lien Notes due 2026.

Due to the terms of that exchange, we were required to recognize cancellation of debt income (CODI) for US tax purposes on the difference between the face value of debt exchanged and the fair market value of the new debt issued.

We determined that we should recognize an estimated $1.2 billion of CODI for tax purposes.

Further, we concluded that the level of our insolvency at July 31, 2020 exceeded the indicated amount of CODI resulting from the debt exchange, which may allow us to reduce our tax attributes rather than recognize current taxable income.

For purposes of determining the tax provision for the twelve months ended December 31, 2020, we concluded a significant portion of our net operating losses have been eliminated as a result of tax attribute reduction.

Due to the terms of that exchange, we were required to recognize CODI for US tax purposes on the difference between the face value of debt exchanged and the fair market value of the new debt issued.

We determined that we should recognize $1.2 billion of CODI for tax purposes.

Further, we concluded that the level of our insolvency at July 31, 2020 exceeded the indicated amount of CODI resulting from the debt exchange, which allowed us to reduce our tax attributes rather than recognize current taxable income.

As a result, $1.2 billion of our net operating losses have been eliminated due to tax attribute reduction.

See Note 8 — Corporate Borrowings and Finance Lease Obligations and Note 10 — Income Taxes in the Notes to Consolidated Financial Statements under Part II, Item 8 thereof, for further information.

We adopted ASC Topic 842 effective January 1, 2019 and as a result our lease accounting policy has been modified as discussed in Note 3 — Leases in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof.

Lessees are required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease).

We adopted ASC Topic 842 effective January 1, 2019.

Under ASC Topic 842, lessees are required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease).

The liability is equal to the present value of lease payments.

2 unchanged sentences

Operating leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting standard).

Critical estimates .

We used our incremental borrowing rate to calculate the present value of our future operating lease payments, which was determined using a portfolio approach based on the rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term since the leases do not provide a determinable implicit rate.

Assumptions and judgment .

Estimating the incremental borrowing rate for operating leases is subjective when reviewing the reasonableness of the inputs and rates applied to each lease.

Impact if actual results differ from assumptions.

A 100-basis point increase in the incremental borrowing rate would have decreased total operating lease liabilities by approximately $208.7 million and a 100-basis point decrease in weighted average discount rate would have increased total operating lease liabilities by approximately $223.2 million.

Operating Results

The following table sets forth our consolidated revenues, operating costs and expenses attributable to our theatrical exhibition operations and segment operating results.

Reference is made to Note 13 — Operating Segments to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information therein:

Reference is made to Note 13 — Operating Segments in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for additional information therein:

International Markets

13 unchanged sentences

Operating costs and expenses

Operating income (loss)

Operating loss

Other expense (income):

7 unchanged sentences

Total other expense (income), net

Net earnings (loss) before income taxes

Net loss before income taxes

Income tax provision (benefit)

Net earnings (loss)

Net loss attributable to noncontrolling interests

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

Net loss attributable to AMC Entertainment Holdings, Inc.

* Percentage change in excess of 100%.

20 unchanged sentences

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

Adjusted EBITDA decreased $1,770.6 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019.

Adjusted EBITDA in U.S.

markets decreased $1,343.8 million, primarily due to the decrease in attendance largely attributable to the temporary suspension of operations as a consequence of the COVID-19 pandemic, partially offset by a decrease in operating expenses due to the decrease in attendance and a decrease in rent.

Adjusted EBITDA in International markets decreased $426.8 million, primarily due to the decreases in attendance, partially offset by decreases in operating expenses due to the decrease in attendance, decreases in rent, and increases in governmental assistance for COVID-19.

During the year ended December 31, 2021, Adjusted EBITDA in the U.S.

markets was $(250.6) million compared to $(768.2) million during the year ended December 31, 2020.

The year-over-year improvement was primarily due to the decreased net loss driven by an increase in attendance as a result of the reopening of theatres that had been temporarily closed due to the COVID-19 pandemic, lifting of seating restrictions, increases in governmental assistance for COVID-19, and decreases in rent expense, partially offset by increases in operating expenses due to the increase in attendance, increases in general and administrative expense, and decreases in cash distributions from equity method investees.

During the year ended December 31, 2021, Adjusted EBITDA in the International markets was $(41.1) million compared to $(231.0) million during the year ended December 31, 2020.

The year-over-year improvement was primarily due to decreases in net losses due to the increase in attendance, increases in governmental assistance for COVID-19, and decreases in rent expense and increases in attributable EBITDA from equity method investees, partially offset by the increases in operating expenses due to the increase in attendance, increases in general and administrative expense and an increase in foreign currency translation rates.

During the year ended December 31, 2021, Adjusted EBITDA in the U.S.

markets and International markets was $(291.7) million compared to $(999.2) million during the year ended December 31, 2020, driven by the aforementioned factors impacting Adjusted EBITDA.

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

16 unchanged sentences

Investment expense (income)

Other expense (7)

Other non-cash rent (8)

Other expense (income) (7)

Other non-cash rent benefit (8)

General and administrative — unallocated:

3 unchanged sentences

(1) For information regarding the income tax provision (benefit), see Note 10 — Income Taxes to the Consolidated Financial Statements under Part II, Item 8 thereof.

(2) During the year ended December 31, 2021, we recorded non-cash impairment charges related to our long-lived assets of $61.3 million on 77 theatres in the U.S.

During the year ended December 31, 2020, we recorded goodwill non-cash impairment charges of $1,276.1 million and $1,030.3 million related to the enterprise fair values of the Domestic Theatres and International Theatres reporting units, respectively.

3 unchanged sentences

We also recorded non-cash impairment charges of $14.4 million related to our definite-lived intangible assets in the Domestic Theatres reporting unit during the year ended December 31, 2020.

During the year ended December 31, 2019, we recorded non-cash impairment of long-lived assets of $84.3 million on 40 theatres in the U.S.

markets with 512 screens, 14 theatres in the International markets with 148 screens, and a U.S.

property held and not used.

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

7 unchanged sentences

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

Because these equity investments are in theatre operators in regions where we

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

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

We also provide services to these theatre operators including information technology systems, certain on-screen advertising services and our gift card and package ticket program.

5 unchanged sentences

Equity in earnings (loss) of International theatre joint ventures

Income tax provision

Income tax expense

Investment income

3 unchanged sentences

Attributable EBITDA

(7) Other expense (income) for the year ended December 31, 2020 included a loss of $109.0 million related to the fair value adjustments of the derivative liability and derivative asset for our Convertible Notes, financing fees related to the Exchange Offer of $39.3 million, and credit losses related to contingent lease guarantees of $15.0 million, partially offset by a gain on extinguishment of the Second Lien Notes due 2026 of $93.6 million and financing related foreign currency transaction losses.

During the year ended December 31, 2019, we recorded a loss on repayment of indebtedness of $16.6 million and the financing related foreign currency transaction losses, partially offset by a gain of $5.8 million as a result of the decrease in fair value of the derivative liability and asset for our Convertible Notes.

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

(7) Other expense (income) during the year ended December 31, 2021, primarily consisted of a loss on debt extinguishment of $14.4 million and financing fees of $1.0 million, partially offset by income related to the foreign currency transaction gains of $(9.8) million and contingent lease guarantees of $(5.7) million.

Other expense (income) for the year ended December 31, 2020 included a loss of $109.0 million related to the fair value adjustments of the derivative liability and derivative asset for our Convertible Notes, financing fees related to the Exchange Offer of $39.3 million, and credit losses related to contingent lease guarantees of $15.0 million, partially offset due to a gain on extinguishment of the Second Lien Notes due 2026 of $(93.6) million.

(8) Reflects amortization of 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.

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

15 unchanged sentences

Consolidated Results of Operations

Total revenues decreased 77.3%, or $4,228.6 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019.

Admissions revenues decreased 78.4%, or $2,589.2 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to a 78.9% decrease in attendance, partially offset by a 2.3% increase in average ticket price.

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

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

As of October 1, 2020, we had resumed operations at 467 of our domestic theatres, or approximately 78% of our domestic circuit, after having suspended operations for approximately five months beginning on March 17, 2020.

During the fourth quarter ended December 31, 2020, in response to state and local government mandates related to domestic resurgence of COVID-19, many of our 467 reopened U.S.

theatres suspended operations.

As of December 31, 2020, we were operating at 394 domestic theatres with limited seating capacities, representing approximately 67% of our domestic theatres.

Similarly, as of October 1, 2020, we had resumed operations at 321 leased and partnership International theatres, or approximately 90% of our International circuit, after having suspended operations at all International theatres for approximately four months beginning in late February 2020.

During the fourth quarter ended December 31, 2020, in response to federal and local government mandates related to a global resurgence of COVID-19, nearly all of our International theatres suspended operations.

As of December 31, 2020, we were operating at 109 International leased and partnership theatres, with limited seating capacities, representing approximately 30% of our International theatres.

Our average screens operated during the year ended December 31, 2020 declined by 52.7% from the prior year.

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

Food and beverage revenues decreased 78.9%, or $1,357.2 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to the decrease in attendance.

Total other theatre revenues decreased 62.7%, or $282.2 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to decreases in ticket fees, income from gift cards and package tickets and screen advertising due to the decrease in attendance.

Total revenues increased 103.5%, or $1,285.5 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020.

Admissions revenues increased 95.8%, or $682.1 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to a 71.0% increase in attendance and a 14.5% increase in average ticket price.

The increase in attendance was primarily due to the COVID-19 pandemic impact on the prior year which resulted in the temporary suspension of operations at our theatres in U.S.

markets and International markets, deterred customers from attending our theatres when we resumed operations, and prompted film distributors to delay or alternatively distribute films.

The increase in average ticket price was primarily due to strategic pricing initiatives put in place over the prior year, increases in IMAX and Premium content and lower frequency on our A-List subscription program and an increase in foreign currency translation rates, partially offset by loyalty program discounts.

Food and beverage revenues increased 136.6%, or $494.9 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due the increase in attendance and the increase in food and beverage per patron.

Food and beverage per patron increased 38.4% from $4.82 to $6.67 due to several contributing factors including increases in units sold per transaction and increases in the percentage of patrons making purchases due to higher child percentages, private theatre rentals, an increase in dine-in percentages, mobile orders along with price increases and reduced loyalty program penetration, partially offset by an increase in foreign currency translation rates.

Total other theatre revenues increased 64.6%, or $108.5 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to increases in ticket fees, income from gift cards and package tickets and screen advertising due to the increase in attendance and the increase in foreign currency translation rates.

Operating costs and expenses.

Operating costs and expenses increased $10.1 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019 primarily due to the impairment of long-lived assets, partially offset by a decrease in operating expenses due to the decrease in attendance and a decrease in average screens operated.

Film exhibition costs decreased 81.0%, or $1,376.4 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to the decrease in admissions revenues.

Operating costs and expenses decreased $1,887.2 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to the $2,513.9 million impairment of long-lived assets charge recorded during the year ended December 31, 2020, and the increase in foreign currency translation rates.

Film exhibition costs increased 88.3%, or $285.0 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, due to the increase in attendance.

As a percentage of admissions revenues, film exhibition costs were 43.6% for the year ended December 31, 2021, and 45.3% for the year ended December 31, 2020.

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

Food and beverage costs decreased 68.1%, or $189.9 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019.

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

The decrease in film exhibition cost percentage is primarily due to the concentration of box office revenues in lower grossing films and library content in the current year, which typically results in lower film exhibition costs.

Additionally, lower film exhibition costs were paid on films with shorter exclusive theatrical windows.

Food and beverage costs increased 55.3%, or $49.1 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020.

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

As a percentage of food and beverage revenues, food and beverage costs were 16.1% for the year ended December 31, 2021, and 24.5% for the year ended December 31, 2020.

1 unchanged sentence

As a percentage of revenues, operating expense was 45.2% for the year ended December 31, 2021, and 68.9% for the year ended December 31, 2020.

Rent expense decreased 8.6%, or $83.7 million, during the year ended December

31, 2020 compared to the year ended December 31, 2019 due primarily to cash rent abatements from landlords, declines in deferred rent expense due to the impairment of right-of-use assets in calendar 2019 and 2020, theatre closures, declines in percentage rent due to the declines in revenues and declines in common area maintenance charges.

See Note 3—Leases in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof for further information on the impact of COVID-19 on leases and rent obligations of approximately $450.0 million that have been deferred to 2021 and future years as of December 31, 2020.

Rent expense decreased 6.3%, or $56.1 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, due primarily to cash rent abatements from landlords, declines in rent expense due to the impairment of right-of-use assets during the years ended December 31, 2019 and December 31, 2020 that reduce the amounts of right-of-use assets that are amortized to rent expense, and theatre closures, partially offset by the increase in foreign currency translation rates.

See Note 3—Leases in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for further information on the impact of COVID-19 on

leases and rent obligations of approximately $315.1 million that have been deferred to future years as of December 31, 2021.

Merger, acquisition, and other costs.

Merger, acquisition and other costs were $24.6 million during the year ended December 31, 2020 compared to $15.5 million during the year ended December 31, 2019, primarily due to increases in legal and professional costs related to strategic contingent planning.

Other general and administrative expense increased 2.4% or $3.7 million during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to increases in stock based compensation expense as a result of the modification and acceleration of vesting of awards during the current year, partially offset by decreases in bonus expense and decreases in salaries as a result of our furlough program that began in March of 2020 and ended in September of 2020.

Merger, acquisition, and other costs were $13.7 million during the year ended December 31, 2021, compared to $24.6 million during the year ended December 31, 2020, primarily due to higher legal and professional costs related to strategic contingent planning in the prior year.

Other general and administrative expense increased 44.6% or $69.9 million during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to increases in bonus expense and stock-based compensation expense as a result of improvements in expected annual performance compared to annual targets and the modification and acceleration of vesting of awards during the current and prior year and increases in insurance costs and professional expenses.

See Note 9—Stockholders’ Equity in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for additional information about stock-based compensation expense.

Depreciation and amortization.

Depreciation and amortization increased 10.7% or $48.3 million during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to recent capital expenditures, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and 2020.

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

Depreciation and amortization decreased 14.7% or $73.3 million during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to lower depreciation expense on theatres impaired during years ended December 31, 2019 and December 31, 2020, partially offset by the increase in foreign currency translation rates.

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

During the year ended December 31, 2021, we recognized non-cash impairment losses of $61.3 million on 77 theatres in the U.S.

markets with 805 screens (in Alabama, Arkansas, California, Colorado, Connecticut, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Minnesota, Mississippi, Missouri, Montana, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, West Virginia, and Wisconsin) which were related to property, net, operating lease right-of-use assets, net and other long-term assets and $15.9 million on 14 theatres in the International markets with 118 screens (in Italy, Norway, Spain, and the UK), which were related to property, net and operating lease right-of-use assets, net.

During the year ended December 31, 2020, we recognized non-cash impairment losses of $152.5 million on 101 theatres in the U.S.

markets with 1,139 screens (in Alabama, Arizona, Arkansas, California, Colorado, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming) which were related to property, net, operating lease right-of-use assets, net and other long-term assets and $25.4 million on 37 theatres in the International markets with 340 screens (in Finland, Germany, Ireland, Italy, Norway, Portugal, Spain, Sweden, and UK), which were related to property, net and operating lease right-of-use assets, net.

3 unchanged sentences

Other expense (income).

Other expense of $28.9 million during the year ended December 31, 2020 was primarily due to third party expenses of $39.3 million related to the restructuring of our debt, the increase in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026 of $89.4 million, the decrease in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $19.6 million, estimated credit losses related to contingent lease guarantees of $15.0 million, partially offset by government assistance related to COVID-19 of $38.6 million and a gain on the extinguishment of our second lien secured debt of $93.6 million.

During the year ended December 31, 2019, other expense of $13.4 million was primarily due to $17.7 million of expense related to the decrease in the fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement, $16.6 million expense related to the repayment of indebtedness and $1.5 million of foreign currency transaction losses offset by $23.5 million of income related to the decrease in the fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026.

See Note 1—The Company and Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof for additional information about the components of other expense.

Other income of $87.9 million during the year ended December 31, 2021 was primarily due to $87.1 million in government assistance related to COVID-19, foreign currency transaction gains of $9.8 million and estimated credit income of $5.7 million related to contingent lease guarantees, partially offset by a loss on extinguishment of $14.4 million related to the redemption of $35.0 million principal amount of 15%/17% Cash/PIK Toggle First Lien Secured Notes due 2026 and $1.0 million of financing fees related to the write-off of unamortized deferred charges on the Odeon Revolving Credit Facility.

lease guarantees of $15.0 million, partially offset by government assistance related to COVID-19 of $38.6 million and a gain on the extinguishment of our second lien secured debt of $93.6 million.

See Note 1—The Company and Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for additional information about the components of other expense (income).

Interest expense.

Interest expense increased $16.1 million to $356.9 million for the year ended December 31, 2020 compared to $340.8 million during the year ended December 31, 2019 primarily due to the issuance of $500 million of 10.5% First Lien Notes due 2025 on April 24, 2020, borrowings under revolving credit facilities of approximately $325.0 million during the three months ended March 31, 2020 that remained outstanding as of December 31, 2020 and the issuance of $300 million of 10.5% First Lien Notes due 2026 on July 31, 2020, partially offset by a reduction in the effective interest rate on $2,017.5 million aggregate principal amount of our senior subordinated notes exchanged for $1,462.3 million aggregate principal amount of second lien notes from 6.37% to 4.46% on July 31, 2020 and the extinguishment of $104.5 million of Second Lien Notes due 2026 in exchange for common shares.

See Note 8—Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 for additional information about our indebtedness.

Interest expense increased $101.2 million to $458.1 million for the year ended December 31, 2021 compared to $356.9 million during the year ended December 31, 2020 primarily due to:

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

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

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

● unamortized discount and deferred charges at the date of conversion of $600 million 2.95% Convertible Notes due 2026 to 44,422,860 common shares on January 27, 2021 following the guidance in ASC 815-15-40-1;

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

partially offset by:

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

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

● borrowings under revolving credit facilities of approximately $325.1 million during the year ended December 31, 2020;

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

● the conversion of $600 million 2.95% Convertible Notes due 2026 to 44,422,860 common shares on January 27, 2021;

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

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

See Note 8—Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for additional information about our indebtedness.

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

Equity in (earnings) loss of non-consolidated entities were $30.9 million for the year ended December 31, 2020 compared to $(30.6) million for the year ended December 31, 2019.

The decrease in equity in earnings of $61.5 million was primarily due to decreases in equity in earnings from DCIP of $39.9 million as a result of accelerated depreciation charges for digital projectors during the year ended December 31, 2020 and lower revenues due to the closure of theatres.

Equity in (earnings) loss of non-consolidated entities was $(11.0) million for the year ended December 31, 2021, compared to $30.9 million for the year ended December 31, 2020.

The decrease in equity in loss of $41.9 million was primarily due to decreases in equity in losses from DCIP of $26.8 million, decreases in impairment charges for equity method investments of $8.6 million and decreases in equity losses on other investments of $6.5 million.

Investment (income) expense.

Investment expense was $10.1 million for the year ended December 31, 2020 compared to investment income of $(16.0) million for the year ended December 31, 2019.

Investment expense includes impairment charges of $15.9 million related to investments, partially offset by a payment of $3.7 million under the NCM tax receivable agreement during the year ended December 31, 2020.

Investment income includes a gain on the sale of our Austria theatres of $12.9 million for the year ended December 31, 2019 and a payment of $4.3 million under the NCM tax receivable agreement for the year ended December 31, 2019.

Income tax provision.

Investment income was $(9.2) million for the year ended December 31, 2021, compared to investment expense of $10.1 million for the year ended December 31, 2020.

Investment income includes a gain on sale of the Baltics of $5.5 million during the year ended December 31, 2021.

Investment expense includes an impairment charge of $15.9 million related to investments, partially offset by a payment of $3.7 million under the NCM tax receivable agreement during the year ended December 31, 2020.

Income tax provision (benefit).

The income tax provision (benefit) was $(10.2) million and $59.9 million for the year ended December 31, 2021, and December 31, 2020, respectively.

The increase in income tax expense is primarily due to the recording of international valuation allowances against deferred tax assets held in Spain of $40.1 million and Germany of $33.1 million, partially offset by income tax benefit from net losses incurred in International markets during the year ended December 31, 2020 that are projected to offset previously unabsorbed deferred tax liabilities in International markets.

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

See Note 10 — Income Taxes in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for further information.

Net loss was $1,269.8 million and $4,589.4 million during the year ended December 31, 2021, and December 31, 2020, respectively.

Net loss during the year ended December 31, 2020 compared to net loss for the year ended December 31, 2019 was negatively impacted by the decrease in attendance as a result of the temporary suspension of operations at all our theatres on or before March 17, 2020, impairment charges related to long-lived assets, definite and indefinite-lived intangible assets and goodwill, increased depreciation expense, declines in investment income, declines in equity in earnings of non-consolidated entities, increases in income tax provision, increases in other expense and increases in general and administrative expenses, partially offset by reduced operating expenses and lower amounts of rent expense.

Net loss during the year ended December 31, 2021 compared to net loss for the year

ended December 31, 2020 was positively impacted by the increase in attendance as a result of an increase in new film releases in connection with the reopening of theatres in the current year that had been temporarily closed due to the COVID-19 pandemic and lifting of seating restrictions, decreases in impairment of long-lived assets, decreases in depreciation and amortization expense, decreases in rent expense, increases in other income, decreases in equity losses in non-consolidated entities, increases in investment income and decreases in income tax provision, partially offset by higher interest expense, higher general and administrative costs and an increase in foreign currency translation rates.

Theatrical Exhibition–U.S.

Total revenues decreased 79.5%, or $3,196.5 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019.

Admissions revenues decreased 80.9%, or $1,932.7 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to a 81.4% decrease in attendance, partially offset by a 2.8% increase in average ticket price.

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

markets on or before March 17, 2020.

During the fourth quarter ended December 31, 2020, in response to state and local government mandates related to domestic resurgence of COVID-19, many of our 467 reopened U.S.

theatres suspended operations.

As of December 31, 2020, we were operating at 394 domestic theatres with limited seating capacities, representing approximately 67% of our domestic theatres.

Our average screens operated during the year ended December 31, 2020 declined by 53.6% from the prior year.

Food and beverage revenues decreased 80.8%, or $1,089.5 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to the decrease in attendance.

Total other theatre revenues decreased 60.7%, or $174.3 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to decreases in ticket fees, income from gift cards and package tickets and screen advertising due to the decrease in attendance.

Total revenues increased 126.9%, or $1,049.1 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020.

Admissions revenues increased 123.2%, or $561.0 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to a 96.1% increase in attendance and a 13.8% increase in average ticket price.

The increase in attendance was primarily due to the COVID-19 pandemic impact on the prior year, which resulted in the temporary suspension of operations at our theatres in U.S.

markets, deterred customers from attending our theatres when we resumed operations, and prompted film distributors to delay or alternatively distribute films.

The increase in average ticket price was primarily due to strategic pricing initiatives put in place over the prior year and increases in IMAX and Premium content and lower frequency on our A-List subscription program.

Food and beverage revenues increased 161.9%, or $418.6 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to the increase in attendance and food and beverage per patron.

Food and beverage per patron increased 33.6% from $5.56 to $7.43 due to several contributing factors including increases in units sold per transaction and increases in the percentage of patrons making purchases due to higher child percentages, private theatre rentals, an increase in dine-in percentages, mobile orders along with price increases and reduced loyalty program penetration.

Total other theatre revenues increased 61.7%, or $69.5 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to increases in ticket fees, income from gift cards and package tickets and screen advertising due to the increase in attendance.

Operating costs and expenses.

Operating costs and expenses decreased $491.7 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019 primarily due to the impairment of long-lived assets, definite lived intangible assets and goodwill, partially offset by a decrease in operating expenses due to the decrease in attendance and a decrease in average screens operated.

Film exhibition costs decreased 83.0%, or $1,088.5 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to the decrease in admissions revenues.

Operating costs and expenses decreased $892.7 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to the $1,443.0 million impairment of long-lived assets, definite-lived intangible assets and goodwill charge recorded during the year ended December 31, 2020.

Film exhibition costs increased 106.5%, or $237.6 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, due to the increase in admissions revenues, partially offset by a decrease in film exhibition costs as a percentage of admissions revenues.

As a percentage of admissions revenues, film exhibition costs were 45.3% for the year ended December 31, 2021, and 49.0% for the year ended December 31, 2020.

Food and beverage costs decreased 69.5%, or $134.7 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019.

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

Additionally, lower film exhibition costs were paid on films with shorter exclusive theatrical windows.

Food and beverage costs increased 62.3%, or $36.8 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020.

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

As a percentage of food and beverage revenues, food and beverage costs were 14.2% for the year ended December 31, 2021, and 22.9% for the year ended December 31, 2020.

1 unchanged sentence

As a percentage of revenues, operating expense was 44.5% for the year ended December 31, 2021, and 71.2% for the year ended December 31, 2020.

Rent expense decreased 8.1%, or $57.5 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019 due primarily to cash rent abatements from landlords, declines in deferred rent expense due to the impairment of right of use assets in calendar 2019 and 2020, theatre closures, declines in percentage rentals due to the decline in revenues and declines in common area maintenance charges.

See Note 3—Leases to the Consolidated Financial Statements under Part II, Item 8 thereof for further information on the impact of COVID-19 on leases and rent obligations of approximately $356.7 million that have been deferred to 2021 and future years as of December 31, 2020.

Rent expense decreased 5.6%, or $36.5 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, due primarily to theatre closures, declines in rent expense due to the impairment of right-of-use assets during years ended December 31, 2019 and December 31, 2020 that reduce the amounts of right-of-use assets that are amortized to rent expense, and cash rent abatements from landlords.

See Note 3—Leases in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for further information on the impact of COVID-19 on leases and rent obligations of approximately $252.4 million that have been deferred to future years as of December 31, 2021.

Merger, acquisition, and other costs.

Merger, acquisition and other costs were $10.2 million during the year ended December 31, 2020 compared to $6.5 million during the year ended December 31, 2019, primarily due to increases in legal and professional costs related to strategic contingent planning.

Other general and administrative expense increased 13.2% or $11.4 million during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to increases in stock based compensation expense as a result of the modification and acceleration of vesting of awards during the current year, partially offset by decreases in bonus expense and decreases in salaries as a result of our furlough program that began in March of 2020 and ended in September of 2020.

Merger, acquisition, and other costs were $9.0 million during the year ended December 31, 2021, compared to $10.2 million during the year ended December 31, 2020.

Other general and administrative expense increased 62.0% or $60.6 million during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to increases in bonus expense and stock-based compensation expense as a result of improvements in expected annual performance compared to annual targets and the modification and acceleration of vesting of awards during the current and prior year and increases in insurance costs and professional expenses.

See Note 9—Stockholders’ Equity in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for additional information about stock-based compensation expense.

Depreciation and amortization.

Depreciation and amortization increased 10.0% or $34.1 million during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to recent capital expenditures, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and 2020.

Impairment of long-lived assets and goodwill.

Depreciation and amortization decreased 14.2% or $53.3 million during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to lower depreciation expense on theatres impaired during years ended December 31, 2019 and December 31, 2020.

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

During the year ended December 31, 2021, we recognized non-cash impairment losses of $61.3 million on 77 theatres in the U.S.

During the year ended December 31, 2020, we recognized non-cash impairment losses of $152.5 million on 101 theatres in the U.S.

2 unchanged sentences

Other expense.

Other expense of $61.3 million during the year ended December 31, 2020 was primarily due to third party expenses of $39.3 million related to the restructuring of our debt, the increase in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026 of $89.4 million, the decrease in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $19.6 million, estimated credit losses related to contingent lease guarantees of $9.2 million, partially offset by government assistance related to COVID-19 of $1.8 million and a gain on the extinguishment of our second lien secured debt of $93.6 million.

During the year ended December 31, 2019, other expense of $13.3 million was primarily due to $17.7 million of expense related to the decrease in the fair value our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement, $16.6 million expense related to the repayment of indebtedness and $0.9 million of foreign currency transaction losses offset by $23.5 million of income related to the decrease in the fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026.

See Note 1—The Company and Significant Accounting Policies to the Consolidated Financial Statements under Part II, Item 8 thereof for additional information about the components of other expense.

Other expense of $9.2 million during the year ended December 31, 2021, was primarily due to a loss on extinguishment of $14.4 million related to the redemption of $35.0 million principal amount of 15%/17% Cash/PIK Toggle First Lien Secured Notes due 2026, partially offset by $5.6 million in government assistance related to COVID-19.

Other expense of $61.3 million during the year ended December 31, 2020 was primarily due to third party expenses of $39.3 million related to the restructuring of our debt, the increase in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026 of $89.4 million, the decrease in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $19.6 million, and estimated credit losses related to contingent lease guarantees of $9.2 million, partially offset by government assistance related to COVID-19 of $1.8 million and a gain on the extinguishment of our second lien secured debt of $93.6 million.

Interest expense.

Interest expense increased $14.6 million to $347.2 million for the year ended December 31, 2020 compared to $332.6 million during the year ended December 31, 2019 primarily due to the issuance of $500 million of 10.5% First Lien Notes due 2025 on April 24, 2020, borrowings under revolving credit facilities of approximately $325.0 million during the three months ended March 31, 2020 that remained outstanding as of December 31, 2020 and the issuance of $300 million of 10.5% First Lien Notes due 2026 on July 31, 2020, partially offset by a reduction in the effective interest rate on $2,017.5 million aggregate principal amount of our senior subordinated notes exchanged for $1,462.3 million aggregate principal amount of second lien notes from 6.37% to 4.46% on July 31, 2020 and the extinguishment of $104.5 million of Second Lien Notes due 2026 in exchange for common shares.

See Note 8—Corporate Borrowings and Finance Lease Obligations to the Consolidated Financial Statements under Part II, Item 8 thereof for additional information about our indebtedness.

Interest expense increased $40.7 million to $387.9 million for the year ended December 31, 2021, compared to $347.2 million during the year ended December 31, 2020, primarily due to:

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

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

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

● the conversion of $600 million 2.95% Convertible Notes due 2026 to 44,422,860 common shares on January 27, 2021, that resulted in the write-off to interest expense of $70.0 million of unamortized discount and deferred charges at the date of conversion following the guidance in ASC 815-15-40-1,

partially offset by:

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

● borrowings under revolving credit facilities of approximately $212.2 million during the year ended March 31, 2020;

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

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

See Note 8—Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for additional information about our indebtedness.

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

Equity in (earnings) loss of non-consolidated entities were $17.6 million for the year ended December 31, 2020 compared to $(29.1) million for the year ended December 31, 2019.

The decrease in equity in earnings of $46.7 million was primarily due to decreases in equity in earnings from DCIP of $39.9 million as a result of accelerated depreciation charges for digital projectors during the year ended December 31, 2020 and lower revenues due to the closure of theatres.

Investment expense (income).

Investment expense was $10.2 million for the year ended December 31, 2020 compared to investment income of $(3.0) million for the year ended December 31, 2019.

Equity in (earnings) loss of non-consolidated entities was $(13.7) million for the year ended December 31, 2021, compared to $17.6 million for the year ended December 31, 2020.

The decrease in equity in loss of $31.3 million was primarily due to decreases in equity in losses from DCIP of $26.8 million and decreases in equity losses on other investments of $4.5 million.

Investment (income) expense.

Investment income was $(3.7) million for the year ended December 31, 2021, compared to investment expense of $10.2 million for the year ended December 31, 2020.

Investment income includes a payment of $4.3 million under the NCM tax receivable agreement for the year ended December 31, 2019.

Income tax provision.

The income tax provision was $2.4 million and $11.9 million for the year ended December 31, 2020 and December 31, 2019, respectively.

See Note 10 — Income Taxes to the Consolidated Financial Statements under Part II, Item 8 thereof for further information.

Income tax provision (benefit).

The income tax provision (benefit) was $(9.4) million and $2.4 million for the year ended December 31, 2021, and December 31, 2020, respectively.

See Note 10 — Income Taxes in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for further information.

Net loss was $1,049.0 million and $3,059.2 million during the year ended December 31, 2021, and December 31, 2020, respectively.

Net loss during the year ended December 31, 2020 compared to net loss for the year ended December 31, 2019 was negatively impacted by the decrease in attendance as a result of the temporary suspension of operations at all our theatres on or before March 17, 2020, impairment charges related to long-lived assets, definite-lived intangible assets and goodwill, increased depreciation expense, declines in investment income, declines in equity in earnings of non-consolidated entities, increases in other expense and increases in general and administrative expenses, partially offset by reduced operating expenses, lower amounts of rent expense and a decrease in income tax provision.

Net loss during the year ended December 31, 2021 compared to net loss for the year ended December 31, 2020 was positively impacted by the increase in attendance as a result of an increase in new film releases in connection with the reopening of theatres in the current year that had been temporarily closed due to the COVID-19 pandemic and lifting of seating restrictions, decreases in impairment of long-lived assets, decreases in depreciation and amortization expense, decreases in rent expense decreases in other expense, decreases in equity losses in non-consolidated entities, increases in investment income, decreases in income tax provision, partially offset by higher interest expense and higher general and administrative costs.

Theatrical Exhibition - International Markets

Total revenues decreased 71.3%, or $1,032.1 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019.

Admissions revenues decreased 71.9%, or $656.5 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to a 72.9% decrease in attendance offset by a 3.7% increase in average ticket price.

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

As of October 1, 2020, we had resumed operations at 321 leased and partnership International theatres, or approximately 90% of our International circuit, after having suspended operations at all International theatres for approximately four months beginning in late February 2020.

As of December 31, 2020, we were operating at 109 International leased and partnership theatres, with limited seating capacities, representing approximately 30% of our International theatres.

Our average screens operated during the year ended December 31, 2020 declined by 50.0% from the prior year.

Food and beverage revenues decreased 72.0%, or $267.7 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to the decrease in attendance.

Total other theatre revenues decreased 66.2%, or $107.9 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to decreases in ticket fees, income from gift cards and package tickets and screen advertising due to the decrease in attendance.

Total revenues increased 56.9%, or $236.4 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020.

Admissions revenues increased 47.2%, or $121.1 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to a 30.3% increase in attendance and a 13.0% increase in average ticket price.

The increase in attendance was primarily the result of an increase in new film releases in connection with the reopening of theatres in the current year that had been temporarily closed due to the COVID-19 pandemic and lifting of seating restrictions.

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

Food and beverage revenues increased 73.4% or $76.3 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to the increase in attendance and food and beverage per patron.

Food and beverage per patron increased 32.9% from $3.62 to $4.81 and includes the impact of the increase in foreign currency translation rates.

Total other theatre revenues increased 70.7%, or $39.0 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to increases in ticket fees, income from gift cards and package tickets, screen advertising and theatre rentals due to the increase in attendance and the increase in foreign currency translation rates.

Operating costs and expenses.

Operating costs and expenses increased $501.8 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019 primarily due to the impairment of long-lived assets, indefinite lived intangible assets and goodwill, partially offset by a decrease in operating costs due to the decrease in attendance and a decrease in average screens operated.

Film exhibition costs decreased 74.3%, or $287.9 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to the decrease in admissions revenues.

As a percentage of admissions revenues, film exhibition costs were 38.9% for the year ended December 31, 2020 and 42.4% for the year ended December 31, 2019.

Food and beverage costs decreased 65.0%, or $55.2 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019.

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

Operating costs and expenses decreased $994.5 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to a $1,070.9 million impairment of long-lived assets, indefinite-lived intangible assets and goodwill charge, recorded during the year ended December 31, 2020, and an increase in foreign currency translation rates.

Film exhibition costs increased 47.5%, or $47.4 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, due to the increase in admissions revenues.

As a percentage of admissions revenues, film exhibition costs were 38.9% for the years ended December 31, 2021 and 2020.

Food and beverage costs increased 41.4%, or $12.3 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020.

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

As a percentage of food and beverage revenues, food and beverage costs were 23.3% for the year ended December 31, 2021, and 28.6% for the year ended December 31, 2020.

1 unchanged sentence

As a percentage of revenues, operating expense was 47.2% for the year ended December 31, 2021, and 64.3% for the year ended December 31, 2020.

Rent expense decreased 10.1%, or $26.2 million, during the year ended December 31, 2020 compared to the year ended December 31, 2019 due primarily to cash rent abatements from landlords, declines in deferred rent expense due to the impairment of right of use assets in calendar 2019 and 2020, theatre closures, declines in percentage rentals due to the decline in revenues and declines in common area maintenance charges.

See Note 3—Leases to the Consolidated Financial Statements under Part II, Item 8 thereof for further information on the impact of COVID-19 on leases and rent obligations of approximately $93.3 million that have been deferred to 2021 and future years as of December 31, 2020.

Rent expense decreased 8.4%, or $19.6 million, during the year ended December 31, 2021, compared to the year ended December 31, 2020, due primarily to cash rent abatements from landlords, declines in rent expense due to the impairment of right-of-use assets during the years ended December 31, 2019 and December 31, 2020 that reduce the amounts of right-of-use assets that are amortized to rent expense, and theatre closures, partially offset by the increase in foreign currency translation rates.

See Note 3—Leases in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for further information on the impact of COVID-19 on leases and rent obligations of approximately $62.7 million that have been deferred to future years as of December 31, 2021.

Merger, acquisition, and other costs.

Merger, acquisition and other costs were $14.4 million during the year ended December 31, 2020 compared to $9.0 million during the year ended December 31, 2019, primarily due to increases in legal and professional costs related to strategic contingent planning.

Other general and administrative expense decreased 11.6% or $7.7 million during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to decreases in bonus expense and decreases in salaries as a result of our furlough program that began in March of 2020 and ended in September of 2020 partially offset by higher costs for abandoned projects.

Merger, acquisition, and other costs were $4.7 million during the year ended December 31, 2021, compared to $14.4 million during the year ended December 31, 2020, primarily due to legal and professional costs related to strategic planning in the prior year.

Other general and administrative expense increased 15.8% or $9.3 million during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to increases in bonus expense and stock-based compensation expense as a result of improvements in expected annual performance compared to annual targets and the modification and acceleration of vesting of awards during the current and prior year and increases in foreign currency translation rates.

See Note 9—Stockholders’ Equity in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for additional information about stock-based compensation expense.

Depreciation and amortization.

Depreciation and amortization increased 13.0% or $14.2 million during the year ended December 31, 2020 compared to the year ended December 31, 2019, primarily due to recent capital expenditures, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and 2020.

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

Depreciation and amortization decreased 16.2% or $20.0 million during the year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to lower depreciation expense on theatres impaired in years ended December 31, 2019 and December 31, 2020, partially offset by the increase in foreign currency translation rates.

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

During the year ended December 31, 2021, we recognized non-cash impairment losses of $15.9 million on 14 theatres in the International markets with 118 screens (in Italy, Norway, Spain, and UK), which were related to property, net, and operating lease right-of-use assets, net.

During the year ended December 31, 2020, we recognized non-cash impairment losses of $25.4 million on 37 theatres in the International markets with 340 screens (in Finland, Germany, Ireland, Italy, Norway, Portugal, Spain, Sweden, and UK), which were related to property, net, and operating lease right-of-use assets, net.

1 unchanged sentence

We performed a quantitative impairment evaluation of our goodwill as of March 31, 2020, September 30, 2020 and December 31, 2020 and recorded impairment charges of $1,030.3 million for our International Theatres reporting unit during the year ended December 31, 2020.

Other expense (income).

Other income.

Other income of $97.1 million during the year ended December 31, 2021, was primarily due to $81.5 million in government assistance related to COVID-19, $9.8 million of foreign currency transaction gains and estimated credit income of $6.0 million related to contingent lease guarantees.

Other income of $32.4 million during the year ended December 31, 2020, was primarily due to the international government assistance related to COVID-19 of $36.8 million, partially offset by estimated credit losses related to contingent lease guarantees of $5.8 million.

See Note 1—The Company and Significant Accounting Policies to the Consolidated Financial Statements under Part II, Item 8 thereof for additional information about the components of other expense.

Interest expense.

Interest expense increased $1.5 million to $9.7 million for the year ended December 31, 2020 compared to $8.2 million during the year ended December 31, 2019 primarily due to borrowings under revolving credit facilities of approximately $110 million during the year ended December 31, 2020 that remained outstanding as of December 31, 2020.

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

Equity in loss of non-consolidated entities were $13.3 million for the year ended December 31, 2020 compared to earnings of $1.5 million for the year ended December 31, 2019.

During the year ended December 31, 2020, we recorded impairment charges of $8.6 million related to two international joint ventures.

Investment income.

Interest expense increased $60.5 million to $70.2 million for the year ended December 31, 2021 compared to $9.7 million during the year ended December 31, 2020, primarily due to:

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

partially offset by:

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

See Note 8—Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for additional information about our indebtedness.

Equity in loss of non-consolidated entities.

Equity in loss of non-consolidated entities was $2.7 million for the year ended December 31, 2021, compared to $13.3 million for the year ended December 31, 2020.

Investment (income) expense.

Investment income was $(5.5) million for the year ended December 31, 2021, compared to investment income of $(0.1) million for the year ended December 31, 2020.

Investment income includes a gain on the sale of our Austria theatres of $12.9 million for the year ended December 31, 2019.

Investment income includes a gain on sale of the Baltics of $5.5 million during the year ended December 31, 2021.

Income tax provision (benefit).

The income tax provision (benefit) was $(0.8) million and $57.5 million for the year ended December 31, 2021, and December 31, 2020, respectively.

The increase in income tax provision is primarily due to the recording of international valuation allowances against deferred tax assets held in Spain of $40.1 million and Germany of $33.1 million, partially offset by income tax benefit from net losses incurred in International markets during the year ended December 31, 2020 that are projected to offset previously unabsorbed deferred tax liabilities in International markets.

See Note 10 — Income Taxes to the Consolidated Financial Statements under Part II, Item 8 thereof for further information.

Net earnings (loss).

Net earnings (loss) was $(1,530.2) million and $92.3 million during the year ended December 31, 2020 and December 31, 2019, respectively.

Net loss during the year ended December 31, 2020 compared to net earnings for the year ended December 31, 2019 was negatively impacted by the decrease in attendance as a result of the temporary suspension of operations at all our theatres on or before March 17, 2020,impairment charges related to long-lived assets, indefinite-lived intangible assets and goodwill increased depreciation expense, increased income tax provision, declines in investment income, increases in general and administrative expenses and declines in equity in earnings of non-consolidated entities, partially offset by reduced operating expenses, lower amounts of rent expense, and increases in other income.

See Note 10 — Income Taxes in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for further information.

Net loss was $220.8 million and $1,530.2 million during the year ended December 31, 2021, and December 31, 2020, respectively.

Net loss during the year ended December 31, 2021 declined compared to net loss for the year ended December 31, 2020 due to increases in attendance as a result of an increase in new film releases in connection with the reopening of theatres in the current year that had been temporarily closed due to the COVID-19 pandemic and lifting of seating restrictions, decreases in impairment of long-lived assets, decreases in depreciation and amortization expense, increases in other income, increases in investment income, decreases in equity losses in non-consolidated entities, decreases in income tax provision, decreases in rent expense, partially offset by higher interest expense, higher general and administrative costs and an increase in foreign currency translation rates.

Results of Operations—For the Year Ended December 31, 2020, Compared to the Year Ended December 31, 2019

For a comparison of our results of operations for the year ended December 31, 2020, compared to the year ended December 31, 2019, see “Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2019 , filed with the Securities and Exchange Commission on February 28, 2020, which is incorporated herein by reference.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2020 , filed with the Securities and Exchange Commission on March 12, 2021, which is incorporated herein by reference.

Liquidity and Capital Resources—For the Year Ended December 31, 2021, Compared to the Year Ended December 31, 2020

2 unchanged sentences

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

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

As operations are beginning to resume, we are starting to see this float resume.

Film distributors generally release the films which they

anticipate will be the most successful during the summer and year-end holiday seasons.

Consequently, we typically generate higher revenues during such periods.

We had working capital deficits (excluding restricted cash) as of December 31, 2020 and December 31, 2019 of $1,104.6 million and $1,270.6 million, respectively.

We had working capital surplus (deficits) (excluding restricted cash) as of December 31, 2021 and December 31, 2020 of $54.6 million and $(1,104.6) million, respectively.

As of December 31, 2021 and December 31, 2020, working capital included $605.2 million and $583.6 million, respectively, of operating lease liabilities and $408.6 million and $405.4 million, respectively, of deferred revenues.

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

At December 31, 2021, we had $209.1 million unused borrowing capacity, net of letters of credit, under our $225.0 million Senior Secured Revolving Credit Facility.

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

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

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

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

Reference is made to Note 17 — Subsequent Events in the Notes to the Consolidated Statements under Part II.

Item 8, thereof for further information about the Odeon Term Loan Facility.

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

As of December 31, 2019, we had $215.0 million available for borrowing, net of standby letters of credit, under our Revolving Credit Facility.

As of December 31, 2019, we had issued £10.8 million ($14.2 million) standby letters of credit in the ordinary course of business related to our Odeon Revolver, leaving £89.2 million ($117.0 million) available for borrowing (subject to limitations on the incurrence of indebtedness in our various debt instruments).

Reference is made to Note 8 — Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Statements under Part II, Item 8 thereof, for further information about the Odeon Term Loan Facility.

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

Reference is made to Note 8 — Corporate Borrowings and Finance Lease Obligations in the Notes to Consolidated Financial Statements under Part II, Item 8 thereof, for further information about our outstanding indebtedness.

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

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

and where possible, utilities and reduced essential operating expenditures to minimum levels necessary while theatres are closed;

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

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

cancellation of pending annual merit pay increases;

and elimination or reduction of non-healthcare benefits.

With the resumption of operations, we eliminated the full and partial furloughs;

● 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, we have been prohibited from making dividend payments in accordance with the covenant suspension conditions in our Senior Secured Credit Facility Agreement.

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

The cash savings as a result of the prior decrease and current prohibition on making dividend payments was $77.6 million during the year ended December 31, 2020 in comparison to the year ended December 31, 2019;

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

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

We have taken advantage of many forms of governmental assistance in the U.S.

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

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

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

See Note 8 — Corporate Borrowings and Finance Lease Obligations, Note 9 — Stockholders’ Equity, and Note 17—Subsequent Events of the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof for further information.

● The April 2020 issuance of $500 million of First Lien Notes due 2025.

● The July 2020 completion of a debt exchange offer in which we issued approximately $1.46 billion aggregate principal amount of Second Lien Notes due 2026 in exchange for approximately $2.02 billion principal amount of our senior subordinated notes, reducing the principal amounts of our debt by approximately $555 million and extending maturities on approximately $1.7 billion of debt to 2026, most of which was maturing in 2024 and 2025 previously.

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

● The July 2020 issuance of the First Lien Notes due 2026 in which we received proceeds of $270.0 million, net of discounts and deferred charges.

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

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

In January 2021, we sold approximately 187.0 million shares, generating $596.9 million in gross proceeds and paid fees to sales agents of $14.9 million.

● 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 our Class A common stock at a conversion price of $13.51 which resulted in the issuance of 44,422,860 shares of our Class A Common Stock and reduced annual cash interest expense by $17.7 million.

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

Approximately £89.7.0 million and €12.8 million of the net proceeds from the Odeon Term Loan Facility was used to repay in full Odeon’s obligations (including principal, interest, fees and cash collateralized letters of credit) under its existing revolving credit facility and the remaining net proceeds will be used for general corporate purposes .

If attendance levels increase consistent with our assumptions described below, we currently estimate that our existing cash and cash equivalents, net proceeds from the completed issuances of debt and common stock in January 2021 and borrowings under the Odeon Term Loan Facility in February 2021 will be sufficient to comply with minimum liquidity requirements under our debt covenants, fund operations, and satisfy obligations including cash outflows for increased rent and planned capital expenditures currently and through at least March 31, 2022.

This requires that we achieve significant increases in attendance levels beginning in the third quarter of 2021 and ultimately reaching 90% of pre COVID-19 attendance levels by the fourth quarter of 2021 and through the first quarter of 2022 as the vaccine rollout continues and more Hollywood product is released in our theatres.

We 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 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, we will be subject to the financial covenant beginning with the quarter ending June 30, 2022.

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

Our liquidity needs thereafter will depend, among other things, on the timing of a full resumption of operations, the timing of movie releases and our ability to generate cash from operations.

We continue to explore potential sources of additional liquidity, which is essential to our long-term viability, including:

● Additional equity financing.

We may continue to pursue equity issuances that include our remaining authorized shares.

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

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

● Landlord Negotiations .

Commencing in 2021, our cash expenditures for rent are scheduled to increase significantly as a result of rent obligations that had been deferred to 2021 and future years that were approximately $450.0 million as of December 31, 2020.

In light of our liquidity challenges, and in order to establish our long-term viability, we believe the Company 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 has entered into additional landlord negotiations to seek material reductions, abatements and deferrals in our rent obligations.

In connection with these negotiations, we have ceased to make rent payments under a portion of our leases and have received notices of default, the result of which may permit landlords to threaten or seek a variety of remedies.

We continue to renegotiate leases with landlords to attain additional concessions and address any instances of default.

To the extent we achieve substantial deferrals but not abatements, our cash requirements will increase substantially in the future.

● Other Creditor Discussions .

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

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

Even then, we believe we will need to engage in discussions with our creditors to substantially reduce our leverage.

We expect to continue to explore alternatives that include new-money financing, potentially in connection with converting debt to equity, which would help manage our leverage but would be dilutive to holders of our common stock.

We expect we will continue to receive from and discuss proposals with all classes of creditors.

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

● Covenant Suspension.

We entered into 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 applicable to the Revolving Credit Facility from March 31, 2021 to March 31, 2022, as described, and on the terms and conditions specified, therein.

See Note 17 — Subsequent Events of the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof for further information.

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

We continue to explore other potential arrangements, including equity investments, to generate additional liquidity.

As of December 31, 2021, we had cash and cash equivalents of approximately $1.6 billion.

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

We are continuing to take significant measures to further strengthen our financial position and enhance our operations, by eliminating non-essential costs, including reductions to our variable costs and elements of our fixed cost structure, introducing new initiatives, and optimizing our theatrical footprint.

Additionally, we enhanced liquidity through debt issuances, debt exchanges and equity sales.

See Note 8 — Corporate Borrowings and Finance Lease Obligations, Note 9 — Stockholders’ Equity, and Note 16—Subsequent Events in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for further information.

The table below summarizes net increase (decrease) in cash equivalents and restricted cash by quarter for the year ended December 31, 2021:

Three Months Ended

September 30,

(In millions)

Cash flows from operating activities:

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Net cash provided by (used in) financing activities

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

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

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

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

This is primarily attributable to continued increases in attendance and industry box office revenues during the year ended December 31, 2021.

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

Note 3 — Leases in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for a summary of the estimated future repayment terms for the remaining $315.1 million of rentals that were deferred during the COVID-19 pandemic.

Our net cash provided by (used in) investing activities included:

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

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

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

● $(38.5) million of capital expenditures and $(2.4) million related to the acquisition of assets at two theatres, partially offset by $4.5 million of proceeds from disposition of long-term assets during the three months ended December 31, 2021.

Our net cash provided by (used in) financing activities included:

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

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

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

● Taxes paid for restricted stock withholdings of $(19.1) million during the three months ended December 31, 2021.

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

In order to achieve net positive operating cash flows and long-term profitability, we believe we will need to continue to increase attendance levels significantly compared to 2021 and achieve levels in line with pre COVID-19 attendance.

We believe the global re-opening of our 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.

We believe that the sequential increases in attendance experienced each quarter as 2021 progressed are positive signs of continued demand for the moviegoing experience.

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

We entered the Ninth Amendment (as defined in Note 8 — Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof) pursuant to which the requisite revolving lenders party thereto agreed to extend the fixed date for the termination of the suspension period for the financial covenant (the secured leverage ratio) applicable to the Senior Secured Revolving Credit Facility (as defined in Note 8 — Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof) from March 31, 2021 to March 31, 2022, which was further extended by the Eleventh Amendment (as defined in Note 8 — Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof) from March 31, 2022 to March 31, 2023, as described, and on the terms and conditions specified, therein.

We are currently subject to minimum liquidity requirements of approximately $144 million, of which $100 million is required under the conditions for the Extended Covenant

Suspension Period ending March 31, 2023, as amended, under the Senior Secured Revolving Credit Facility, and £32.5 million (approximately $44 million) of which is required under the Odeon Term Loan Facility.

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

We currently expect we will be able to comply with this financial covenant, however, we do not anticipate the need to borrow under the Senior Secured Revolving Credit Facility during the next twelve months.

See Note 8 — Corporate Borrowings and Finance Lease Obligations for further information.

Our liquidity needs thereafter will depend, among other things, on the timing of movie releases and our ability to generate cash from operations.

It is very difficult to estimate our liquidity requirements, future cash burn rates and future attendance levels.

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

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

However, our current cash burn rates are not sustainable.

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

Nor can we know with certainty the impact of Warner Bros.’s announcement that it is releasing its entire 2021 slate of movies on HBO Max at the same time as the movies debut in theatres or any similar announcements regarding the release of movie titles concurrently to the home video or streaming markets, as those arrangements will be subject to negotiations that have not yet taken place.

We estimated future attendance levels and other assumptions to predict our liquidity requirements and future cash burn but our ability to accurately predict our liquidity and cash burn 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.

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

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

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

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

Similarly, it is very difficult to predict when theatre attendance levels will return to pre COVID-19 levels, which we expect will depend on the continued widespread availability and use of effective vaccines for the coronavirus, and eventual abatement of more virulent strains of the virus, related government mandates on social distancing and mask use, and the supply of movie titles for theatrical exhibition.

While our current cash burn rates have improved, these levels are not sustainable.

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

Nor can we know with certainty the impact on consumer movie-going behavior of studios who release movies to theatrical exhibition and their streaming platforms on the same date (“day and date”), or the potential attendance impact of other studio decisions to accelerate in-home availability of their theatrical movies.

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

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

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

If we are unable to maintain or renegotiate our minimum liquidity covenant requirements, it could have a significant adverse effect on our business, financial condition and operating results.

We realized $1.2 billion of CODI in connection with our 2020 debt restructuring.

As a result, $1.2 billion of our federal net operating losses were eliminated due to tax attribute reduction to offset the CODI.

The loss of these attributes may adversely affect our cash flows and therefore our ability to service our indebtedness.

Cash Flows from Operating Activities

Cash flows provided by (used in) operating activities, as reflected in the consolidated statements of cash flows, were $(1,129.5) million and $579.0 million during the years ended December 31, 2020 and December 31, 2019, respectively.

The decrease in cash flows provided by operating activities was primarily due to decreased attendance levels and temporary suspension of operations at all of our theatres on or before March 17, 2020, which resulted in lower operating results during the year ended December 31,2020 and higher payments for accounts payable primarily due to timing.

Net cash used in operating activities, as reflected in the consolidated statements of cash flows, were $614.1 million and $1,129.5 million during the years ended December 31, 2021 and December 31, 2020, respectively.

The decrease in cash flows used in operating activities was primarily due to increased attendance levels, which resulted in improved operating results during the year ended December 31, 2021.

Cash Flows from Investing Activities

Cash used in investing activities, as reflected in the consolidated statements of cash flows, were $154.6 million and $516.1 million during the years ended December 31, 2020 and December 31, 2019, respectively.

Net cash used in investing activities, as reflected in the consolidated statements of cash flows, were $68.2 million and $154.6 million during the years ended December 31, 2021 and December 31, 2020, respectively.

Cash outflows from investing activities for capital expenditures during the years ended December 31, 2021 and December 31, 2020 were $92.4 million and $173.8 million, respectively.

In 2020, as a result of the COVID-19 pandemic, we significantly reduced capital expenditures to maintenance levels and with the exception of prior commitments, have temporarily suspended growth capital expenditures at this time.

In 2019, our capital expenditures primarily consisted of strategic growth initiatives and remodels, maintaining our theatre circuit, and technology upgrades.

During the year ended December 31, 2020, cash flows used in investing activities included proceeds from the disposition of assets of $28.5 million, primarily related to ten properties and other asset sales of $19.8 million and the sale of our remaining interest in one of the Baltic theatres located in Latvia of $6.2 million, and the cash outflow for an additional investment in Saudi Cinema Company LLC (“SCC”) of $9.3 million.

During the year ended December 31, 2019, cash flows used in investing activities included cash outflows of $11.8 million for the acquisition of assets related to four theatres in the U.S.

markets, partially offset by proceeds from the disposition of long-term assets of $23.2 million, primarily from the sale of theatres located in Austria of $15.3 million.

During the year ended December 31, 2021, cash flows used in investing activities included proceeds from the disposition of Baltics of $34.2 million, primarily from the sale of our remaining equity interest in Estonia of $3.7 million and Lithuania of $30.5 million and proceeds received from the disposition of long-term assets of $7.9 million primarily related to four properties.

During the year ended December 31, 2021, we made an additional investment of $9.3 million in Saudi Cinema Company LLC and acquired theatre assets of $8.2 million related to two theatres.

During the year ended December 31, 2020, cash flows used in investing activities included proceeds from the disposition of assets of $28.5 million, primarily related to 10 properties and other asset sales of $19.8 million and the

sale of our remaining interest in one of the Baltic theatres located in Latvia of $6.2 million, and the cash outflow for an additional investment in Saudi Cinema Company LLC (“SCC”) of $9.3 million.

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

We generally lease our theatres pursuant to long-term, non-cancelable operating leases which may require the developer, who owns the property, to

reimburse us for the construction costs.

We generally lease our theatres pursuant to long-term, non-cancelable operating leases which may require the developer, who owns the property, to reimburse us for the construction costs.

We may decide to own the real estate assets of new theatres and following construction, sell and leaseback the real estate assets pursuant to long-term non-cancelable operating leases.

In addition, we estimate that our cash outflows for capital expenditures, net of landlord contributions, will be approximately $100 to $120 million for the year ending December 31, 2021 to maintain operations.

In addition, we estimate that our cash outflows for capital expenditures, net of landlord contributions, will be approximately $150 million to $200 million for the year ending December 31, 2022 to maintain and enhance operations.

Cash Flows from Financing Activities

Cash flows provided by (used in) financing activities, as reflected in the consolidated statements of cash flows, were $1,330.3 million and $(112.9) million, during the years ended December 31, 2020 and December 31, 2019, respectively.

The increase in cash flows from financing activities during the year ended December 31, 2020 compared to December 31, 2019 was primarily due to the issuance of our First Lien Notes due 2025, First Lien Notes due 2026, borrowings under our revolving credit facilities, proceeds from the sale of Class A common stock, proceeds from sale of the noncontrolling interest in Forum Cinemas OU and the reduction in cash dividends paid.

Borrowings, net of discounts, under our First Lien Notes due 2025, First Lien Notes due 2026, and revolving credit facilities were $490.0 million, $270.0 million, and $321.8 million, respectively, during the year ended December 31, 2020.

Proceeds from the sale of Class A common stock were $264.7 million.

On August 28, 2020, we entered into an agreement to sell our equity interest in Forum Cinemas OU, which consists of nine theatres located in the Baltic’s region (Latvia, Lithuania and Estonia) in several steps.

Net cash provided by financing activities, as reflected in the consolidated statements of cash flows, were $1,990.7 million and $1,330.3 million, during the years ended December 31, 2021 and December 31, 2020, respectively.

The increase in cash flows from financing activities during the year ended December 31, 2021 compared to December 31, 2020 was primarily due to borrowings under the Odeon Term Loan Facility of $534.3 million, borrowings under the issuance of First Lien Toggle Notes due 2026 of $100.0 million, net proceeds from the sale of Common Stock of $1,570.7 million, and net proceeds from Common Stock issuance to Mudrick of $230.4 million, partially offset by the repayments under the revolving credit facilities of $335.0 million, principal and redemption premium under the First Lien Toggle Notes due 2026 of $40.3 million, payment for deferred financing costs of $19.9 million, payment of $19.1 million of taxes for restricted unit withholdings, and principal payments under the Term Loan due 2026 of $20.0 million.

During the year ended December 31, 2020, borrowings, net of discounts, under our First Lien Notes due 2025, First Lien Notes due 2026, and revolving credit facilities were $490.0 million, $270.0 million, and $321.8 million, respectively.

Proceeds from the sale of Common Stock were $264.7 million during the year ended December 31, 2020.

On August 28, 2020, we entered into an agreement to sell our equity interest in Forum Cinemas OU, which consists of nine theatres located in the Baltic region (Latvia, Lithuania and Estonia) in several steps.

For further information, see Note 1 — The Company and Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof.

3 unchanged sentences

The amounts involved may be material.

Senior Secured Credit Facility Term Loan due 2026.

On April 22, 2019, we entered into the Sixth Amendment to Credit Agreement amending the Credit Agreement dated April 30, 2013.

After giving effect to the Sixth Amendment, the Credit Agreement provides for senior secured financing of $2,225.0 million in aggregate, consisting of (1) $2,000.0 million in aggregate principal amount of senior secured tranche B loans maturing April 22, 2026 (the “Term Loan Facility”) and (2) a $225.0 million senior secured revolving credit facility (which includes borrowing capacity available for letters of credit) maturing April 22, 2024 (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”).

The loans were used for the repayment of the Term Loan due 2022 of $849.8 million, repayment of the Term Loan due 2023 of $488.7 million, the redemption of the 5.875% Senior Subordinated Notes due 2022 of $375.0 million, and the redemption of the 6.0% Senior Secured Notes due 2023 of $230.0 million.

Call premiums paid related to the repayment of the 6.0% Senior Secured Notes due 2023 and the 5.875% Senior Subordinated Notes due 2022 were $15.9 million and debt financing costs paid were $11.7 million.

Borrowings under the Term Loan Facility bear interest at a rate per annum equal to, at our option, either (1) an applicable margin plus a base rate determined by reference to the highest of (a) 0.50% per annum plus the Federal Funds Effective Rate, (b) the prime rate of Citi and (c) LIBOR determined by reference to the cost of funds for U.S.

dollar deposits for an interest period of one month adjusted for certain additional costs, plus 1.00% or (2) an applicable margin plus LIBOR determined by reference to the costs of funds for U.S.

dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs.

We had no borrowing capacity available under our Senior Secured Revolving Credit Facility or under the Odeon Revolver as of December 31, 2020.

On February 15, 2021, Odeon entered into a new £140.0 million and €296.0 million term loan facility agreement (the “Odeon Term Loan Facility”).

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.

See Note 17 —Subsequent Events of the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof for additional information.

The following is a summary of dividends and dividend equivalents declared to stockholders:

4 unchanged sentences

March 23, 2020

October 24, 2019

December 2, 2019

December 16, 2019

August 2, 2019

September 9, 2019

September 23, 2019

June 10, 2019

June 24, 2019

February 15, 2019

March 11, 2019

March 25, 2019

During the years ended December 31, 2020 and December 31, 2019, we paid dividends and dividend equivalents of $6.5 million and $84.1 million, respectively.

As of December 31, 2020, we accrued $0.6 million for the remaining unpaid dividends.

Odeon Revolving Credit Facility.

On April 24, 2020, we entered into an amendment to the Odeon Revolving Credit Facility, pursuant to which the requisite lenders thereunder granted a waiver of the maintenance covenant thereunder for the period from and after the effective date of the Odeon Amendment to and including the earlier of (a) March 31, 2021 and (b) the day immediately preceding the last day of the Relevant Period (as defined in the Odeon Amendment).

During the year ended December 31, 2020, we paid dividends and dividend equivalents of $6.5 million.

As of December 31, 2021 and December 31, 2020, we accrued $0.7 million and $0.4 million, respectively, for the remaining unpaid dividends.

Future Contractual Obligations

Our estimated future obligations as of December 31, 2021 include both current and long term obligations.

Our expected material contractual cash requirements over the next twelve months, primarily consist of capital related betterments of $16.3 million, obligation for unrecognized tax benefits of $0.2 million, minimum operating lease obligations of $1,039.5 million, finance lease obligations of $13.9 million, contractual cash rent amounts that were due and not paid of $41.8 million recorded in accounts payable, and corporate borrowings principal and interest payments of $20.0 million and $385.0 million, respectively.

Capital related betterments.

At December 31, 2021, we have short-term committed capital expenditures, investments, and betterments to our circuit, which do not include planned, but non-committed capital expenditures of $16.3 million.

Pension funding.

Our U.S., U.K., and Sweden defined benefit plans are frozen.

We fund our U.S.

pension plans such that the plans are in compliance with Employee retirement Income security Act (“ERISA”) and the plans are not considered “at risk” as defined by ERISA guidelines.

We do not expect to make a material contribution to the defined pension plans during the year ended December 31, 2022.

Obligation for unrecognized tax benefits.

As of December 31, 2021, our recorded obligation for unrecognized tax benefits is $8.3 million.

There are currently unrecognized tax benefits of $0.2 million, which we anticipate will be resolved in the next twelve months.

See Note 10 — Income Taxes in the Notes to Consolidated Financial Statements under Part II, Item 8 thereof for further information.

Minimum operating lease and finance lease payments.

We have current and long-term minimum cash requirements for operating lease payments of $1,039.5 million and $7,139.9 million, respectively.

We have current and long-term minimum cash requirements for finance lease payments of $13.9 million and $97.9 million, respectively.

The total amounts do not equal the carrying amount due to imputed interest.

We 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 and were included in the amounts above, except for contractual cash rent amounts recorded in accounts payable that were due and not paid of $41.8 million.

Our cash expenditures for rent increased significantly in the second, third, and fourth quarters of 2021 as previously deferred rent payments and landlord concessions started to become current obligations.

See Note 3 — Leases in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for a summary of the estimated future repayment terms for the minimum operating lease and finance lease amounts, including the deferred lease amounts due to COVID-19.

Corporate borrowings principal and interest payments.

We have current and long-term cash requirements for the payment of principal related to corporate borrowings of $20.0 million and $5,149.1 million, respectively.

The total amount does not equal the carrying amount due to unamortized discounts, premiums and deferred charges.

See Note 16—Subsequent Events in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for information regarding the new 7.5% First Lien Senior Secured Notes due 2029 and redemptions of First Lien Toggle Notes due 2026, First Lien Notes due 2025 and First Lien Notes due 2026.

We have current and long-term cash interest payment requirements related to our corporate borrowings of $385.0 million and $1,078.3 million, respectively.

The cash interest payment requirements for our Senior Secured Term Loans due 2026 was estimated at 3.1% based on the interest rate in effect as of December 31, 2021.

See Note 8—Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for further information, including a summary of principal payments required and maturities of corporate borrowings as of December 31, 2021.

Senior Secured Credit Facilities (Senior Secured Revolving Credit Facility and Senior Secured Term Loan due 2026).

On March 8, 2021, we entered the Ninth Amendment (as defined in Note 8—Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof), pursuant to which the requisite revolving lenders party thereto agreed to extend the suspension period for the financial covenant under our Credit Agreement (as defined in Note 8—Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof) from a period ending on March 31, 2021 to a period ending on March 31, 2022, which was further extended by the Eleventh Amendment (as defined in Note 8—Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof) from March 31, 2022 to March 31, 2023, as described, and on the terms and conditions specified, therein.

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

On March 8, 2021, we entered into the Tenth Amendment (as defined in Note 8—Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof), pursuant to which we 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.

Senior Secured Term Loans bear interest at a rate per annum equal to, at our option, either (1) an applicable margin plus a base rate determined by reference to the highest of (a) 0.50% per annum plus the Federal Funds Effective Rate, (b) the prime rate announced by the Administrative Agent and (c) LIBOR determined by reference to the cost of funds for U.S.

dollar deposits for an interest period of one month adjusted for certain additional costs, plus 1.00% or (2) an

applicable margin plus LIBOR determined by reference to the costs of funds for U.S.

dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs.

As of December 31, 2021, we had $209.1 million unused borrowing capacity, net of letters of credit, under our $225.0 million Senior Secured Revolving Credit Facility.

Odeon Term Loan Facility.

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

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 is 3 months, or such other period agreed between us 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.

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

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

First Lien Toggle Notes due 2026.

On January 15, 2021, we issued $100.0 million aggregate principal amount of our First Lien Toggle Notes due 2026 as contemplated by the previously disclosed commitment letter with Mudrick Capital Management, LP (“Mudrick”), dated as of December 10, 2020.

The First Lien Toggle Notes due 2026 were issued pursuant to an indenture dated as of January 15, 2021 among us, the guarantors named therein and the U.S.

Bank National Association, as trustee and collateral agent.

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

The total cost to exercise this repurchase option was $40.3 million, including principal, redemption premium and accrued and unpaid interest.

During the year ended December 31, 2021, we recorded loss on debt extinguishment of $14.4 million in other expense.

As a result of this debt reduction, our annual interest cost has been reduced by $5.25 million.

The First Lien Toggle Notes due 2026 bear cash interest at a rate of 15% per annum payable semi-annually in arrears on January 15 and July 15, beginning on July 15, 2021.

Interest for the first three interest periods after the issue date may, at our option, be paid in PIK interest at a rate of 17% per annum, and thereafter interest shall be payable solely in cash.

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

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

On December 14, 2020, Mudrick received a total of 21,978,022 shares of our Common Stock;

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

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

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

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

During the year ended December 31, 2020, we recorded a gain on extinguishment of the Second Lien Notes due 2026 of $93.6 million based on the fair value of the Exchange Shares of $43.8 million and the carrying value of the $104.5 million principal amount of the Second Lien Notes exchanged of $137.4 million.

See Note 16 — Subsequent Events in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for further information.

Convertible Notes.

On January 27, 2021, affiliates of Silver Lake and certain co-investors (collectively, the “Noteholders”) elected to convert (the “Conversion”) all $600.0 million principal amount of our Convertible Notes due 2026 into shares of our Common Stock at a conversion price of $13.51 per share.

The Conversion settled on January 29, 2021 and resulted in the issuance of 44,422,860 shares of our Common Stock to the Noteholders.

The Conversion reduced our first-lien indebtedness by $600.0 million.

Pursuant to the Stock Repurchase and cancellation agreement with Dalian Wanda Group Co., Ltd.

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

First Lien Notes due 2025.

On April 24, 2020, we issued $500.0 million aggregate principal amount of our 10.5% First Lien Notes due 2025, with an original issue discount of $10.0 million.

The First Lien Notes due 2025 bear interest at a rate of 10.5% per annum, payable semi-annually on April 15 and October 15 each year, commencing October 15, 2020 and are secured, on a pari passu basis with the Senior Secured Credit Facility.

The First Lien Notes due 2025 bear interest at a rate of 10.5% per annum, payable semi-annually on April 15 and October 15 each year, commencing October 15, 2020 and are secured on a pari passu basis with the Senior Secured Credit Facilities.

The First Lien Notes due 2025 will mature on April 15, 2025.

See Note 16 — Subsequent Events in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for further information.

Senior Subordinated Debt Exchange Offers .

11 unchanged sentences

We raised $300 million in additional cash from the issuance of the incremental First Lien Notes due 2026, prior to deducting $36 million related to discounts and deferred financing costs paid to the lenders.

Additionally, certain holders of the Existing Subordinated Notes that agreed to backstop the rights offering for $200 million of the First Lien Notes due 2026 received five million Class A common shares.

Additionally, certain holders of the Existing Subordinated Notes that agreed to backstop the rights offering for $200 million of the First Lien Notes due 2026 received five million common shares.

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

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

In connection with the Exchange Offers, we also received consents from eligible holders of the Existing Subordinated Notes to amend the indentures governing the Existing Subordinated Notes to among other things, (i) release the existing subsidiary guarantees of the Existing Subordinated Notes, (ii) eliminate substantially all of the restrictive covenants, certain affirmative covenants and certain events of default contained in the indentures governing

the Existing Subordinated Notes, and (iii) make other conforming changes to internally conform to certain proposed amendments.

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

5 unchanged sentences

On April 24, 2020, we entered into a supplemental indenture (the “Supplemental Indenture”) to the Convertible Notes due 2024 indenture, dated as of September 14, 2018.

The Supplemental Indenture amended the debt covenant under the Convertible Notes due 2024 Indenture to permit us to issue the First Lien Notes due 2025, among other changes.

The Supplemental Indenture

amended the debt covenant under the Convertible Notes due 2024 Indenture to permit us to issue the First Lien Notes due 2025, among other changes.

Concurrently with the Exchange Offers, to obtain the consent of the holders of the Convertible Notes due 2024, we restructured $600 million of Convertible Notes due 2024 issued in 2018 to Silver Lake and others pursuant to which the maturity of the Convertible Notes due 2024 were extended to May 1, 2026 (the “Convertible Notes due 2026”) and a first-priority lien on the collateral securing our Credit Facilities was granted to secure indebtedness thereunder.

We accounted for this transaction as a modification of debt as the lenders did not grant a concession and the difference between the present value of the old and new cash flows was less than 10%.

The modification did not result in the recognition of any gain or loss and the Company established new effective interest rates based on the carrying value of the Convertible Notes due 2024.

The modification did not result in the recognition of any gain or loss and we established new effective interest rates based on the carrying value of the Convertible Notes due 2024.

Third party costs related to the transaction were expensed as incurred and amounts paid to lenders were capitalized and amortized through maturity of the debt.

See Note 17 — Subsequent Events of the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof regarding the election to convert all $600.0 million of the Convertible Notes due 2026 into shares of the Company’s Class A common stock.

As noted above, on January 27, 2021, affiliates of Silver Lake and certain co-investors elected to convert all $600.0 million principal amount of our Convertible Notes due 2026 into shares of our Common Stock at a conversion price of $13.51 per share.

Second Lien Notes due 2026.

2 unchanged sentences

The premium will be amortized to interest expense over the term of the Second Lien Notes due 2026 using the effective interest method.

In connection with the Exchange Offers and the First Lien Notes due 2026, we issued five million shares of Class A common stock to certain holders of subordinated notes as consideration for their commitment to backstop the issuance of $200 million of the First Lien Notes due 2026.

In connection with the Exchange Offers and the First Lien Notes due 2026, we issued five million shares of Common Stock to certain holders of subordinated notes as consideration for their commitment to backstop the issuance of $200 million of the First Lien Notes due 2026.

Pursuant to the Backstop Commitment Agreement dated July 10, 2020, certain of the actual or beneficial holders of Existing Subordinated Notes agreed to purchase 100% of the First Lien Notes due 2026 that were not subscribed for in connection with the $200 million rights offering to holders of the existing Subordinated Notes participating in the Exchange Offers.

Those providing a backstop commitment pursuant to the Backstop Commitment Agreement received their pro-rata share of 5 million shares of the Class A common stock, or 4.6% of AMC’s outstanding shares as of July 31, 2020, worth $20.2 million at the market closing price on July 31, 2020.

Those providing a backstop commitment pursuant to the Backstop Commitment Agreement received their pro-rata share of five million shares of the Common Stock, or 4.6% of AMC’s outstanding shares as of July 31, 2020, worth $20.2 million at the market closing price on July 31, 2020.

T he equity issuance was recorded by us in stockholders’ deficit with an offset in corporate borrowings as a discount.

The discount will be amortized to interest expense over the term of the Second Lien Notes due 2026 using the effective interest method.

As part of the registration rights agreement related to the issuance of the Class A common stock, we filed a shelf registration statement in August 2020 providing for the resale of the shares of Class A common stock issued as consideration for the backstop commitment described above.

As part of the registration rights agreement related to the issuance of the Common Stock, we filed a shelf registration statement in August 2020 providing for the resale of the shares of Common Stock issued as consideration for the backstop commitment described above.

First Lien Notes due 2026.

In connection with the Exchange Offers, certain holders of the Existing Subordinated Notes purchased 10.5% First Lien Notes due 2026 in an aggregate principal amount of $200 million.

The 10.5% First Lien Notes due 2026 issued to certain holders of the Existing Subordinated Notes were issued pursuant to an

indenture, dated as of July 31, 2020, among the Company, the guarantors named therein and GLAS Trust Company LLC, as trustee and collateral agent.

The 10.5% First Lien Notes due 2026 issued to certain holders of the Existing Subordinated Notes were issued pursuant to an indenture, dated as of July 31, 2020, among the Company, the guarantors named therein and GLAS Trust Company LLC, as trustee and collateral agent.

Separately, upon the closing of its private debt exchange, Silver Lake Alpine, L.P.

6 unchanged sentences

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

Mudrick Transaction.

On December 10, 2020, the Company entered into a commitment letter with Mudrick Capital Management, LP (“Mudrick”), pursuant to which Mudrick committed, subject to the satisfaction of certain conditions precedent, including the payment of the Commitment Shares (as defined below) and consummation of the Second Lien Exchange (as defined below), to purchase $100 million in aggregate principal amount of First Lien Toggle Notes due 2026 to be issued by the Company.

On December 14, 2020, the Company issued a total of 21,978,022 shares of its Class A common stock to Mudrick;

8,241,758 shares (“Commitment Shares”) of which were issued as consideration for a commitment provided by Mudrick to purchase the First Lien Toggle Notes due 2026 and 13,736,264 shares (“Exchange Shares”) were issued as consideration received for the Second Lien Exchange.

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

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

The Class A common shares issued were recorded in stockholders’ deficit with an offset in corporate borrowings as a discount of $26.3 million for the Commitment Shares and as consideration of $43.8 million for the Second Lien Exchange.

The discount will be amortized to interest expense over the term of the First Lien Toggle Notes due 2026 using the effective interest method.

During the year ended December 31, 2020, the Company recorded a gain on extinguishment of the Second Lien Notes due 2026 of $93.6 million based on the fair value of the Exchange Shares of $43.8 million and the carrying value of the $104.5 million principal amount of the Second Lien Notes exchanged of $137.4 million.

First Lien Toggle Notes due 2026.

On January 15, 2021, the Company issued $100.0 million aggregate principal amount of its First Lien Toggle Notes due 2026 as contemplated by the commitment letter with Mudrick Capital Management, LP described above.

The First Lien Toggle Notes due 2026 were issued pursuant to an indenture dated as of January 15, 2021 among the Company, the guarantors named therein and the U.S.

Bank National Association, as trustee and collateral agent.

The First Lien Toggle Notes due 2026 bear cash interest at a rate of 15% per annum payable semi-annually in arrears on January 15 and July 15, beginning on July 15, 2021.

Interest for the first three interest periods after the issue date may, at the Company’s option, be paid in PIK interest at a rate of 17% per annum, and thereafter interest shall be payable solely in cash.

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

Odeon Term Loan Facility.

The Odeon Term Loan Facility will have a maturity of 2.5 years from the date on which it is first drawn.

Borrowings under the Odeon Term Loan Facility bear interest at a rate equal to 10.75% per annum during the first year and 11.25% thereafter.

Odeon will have the ability to elect to pay interest in cash or in PIK interest for each interest period.

See Note 8—Corporate Borrowings and Finance Lease Obligations and Note 17 — Subsequent Events of the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof for further information regarding the above.

Liquidity and Capital Resources—For the Year Ended December 31, 2019, Compared to the Year Ended December 31, 2018

For a comparison of our liquidity and capital resources for the year ended December 31, 2019, compared to the year ended December 31, 2018, see “Part II, Item 7.

Commitments and Contingencies

Minimum annual cash payments required under existing finance lease obligations, maturities of corporate borrowings, future minimum rental payments under existing operating leases, committed capital expenditures, investments and betterments, including furniture, fixtures, equipment and leasehold betterments and pension funding that have initial or remaining non-cancelable terms in excess of one year as of December 31, 2020 are as follows:

(In millions)

Calendar Year

Borrowings(2)

Borrowings(3)

And Not Paid(4)

Betterments(5)

(1) Represents cash requirements for lease payments.

Total amount does not equal carrying amount due to imputed interest.

Includes deferred payment amounts on rent obligations recorded in operating and finance lease liabilities for which payments have been deferred to 2021 and future years.

See Note 3 — Leases to the Consolidated Financial Statements under Part II, Item 8 thereof for further information regarding deferred rent obligations.

(2) Represents cash requirements for the payment of principal on corporate borrowings.

Total amount does not equal carrying amount due to unamortized discounts, premiums and deferred charges.

See Note 17 —Subsequent Events for information regarding the new Odeon Term Loan Facility and the First Lien Toggle Notes due 2026.

(3) Interest expense on our Senior Secured Credit Facility Term Loans due 2026 was estimated at 3.23% based on the interest rate in effect as of December 31, 2020.

This column includes PIK interest of $176.0 million related to the Second Lien Notes due 2026 expected to be paid at maturity.

(4) Represents contractual rent payments due and not paid recorded in accounts payables.

See Note 3 — Leases to the Consolidated Financial Statements under Part II, Item 8 thereof for further information regarding deferred rent obligations.

(5) Includes committed capital expenditures, investments, and betterments to our circuit.

Does not include planned, but non-committed capital expenditures.

(6) We fund our U.S.

pension plans such that the plans are in compliance with Employee Retirement Income Security Act (“ERISA”) and the plans are not considered “at risk” as defined by ERISA guidelines.

plans have been frozen effective December 31, 2006.

As of December 31, 2020, our recorded obligation for unrecognized tax benefits is $33.5 million.

There are currently unrecognized tax benefits of $7.2 million, which we anticipate will be resolved in the next 12 months.

See Note 10 — Income Taxes in the Notes to Consolidated Financial Statements under Part II, Item 8 thereof for further information.

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

During the year ended December 31, 2020, we recorded $15.0 million, respectively, in estimated credit losses related to contingent lease

guarantees in other expense.

See Note 11 — Commitments and Contingencies in the Notes to Consolidated Financial Statements under Part II, Item 8 thereof for further information.

Impact of Inflation

Historically, the principal impact of inflation and changing prices upon us has been to increase the costs of the construction of new theatres, the purchase of theatre equipment, rent and the utility and labor costs incurred in connection with continuing theatre operations.

Film exhibition costs, our largest cost of operations, are customarily paid as a percentage of admissions revenues and hence, while the film exhibition costs may increase on an absolute basis, the percentage of admissions revenues represented by such expense is not directly affected by inflation.

Except as set forth above, inflation and changing prices have not had a significant impact on our total revenues and results of operations during the last three years.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

See Note 16 — Subsequent Events in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for further information.

See Note 8—Corporate Borrowings and Finance Lease Obligations and Note 16 — Subsequent Events in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for further information regarding the above.

New Accounting Pronouncements

See Note 1 — The Company and Significant Accounting Policies in Notes to the Consolidated Financial Statements under Part II, Item 8 thereof for information regarding recently issued accounting standards.

Liquidity and Capital Resources—For the Year Ended December 31, 2020, Compared to the Year Ended December 31, 2019

For a comparison of our liquidity and capital resources for the year ended December 31, 2020, compared to the year ended December 31, 2019, see “Part II, Item 7.

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-K

Item 7. Management’s Discussion and Analysis