What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-01 compared with 2021-03-12 · 670 added, 833 removed, 1539 unchanged (49% of the section changed)

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The effectiveness of our internal control over financial reporting has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their attestation report that follows this report.

Chief Executive Officer, Director and President

Executive Vice President and Chief Financial Officer

Chairman of the Board, Chief Executive Officer and President

Executive Vice President, Chief Financial Officer and Treasurer

Report of Independent Registered Public Accounting Firm

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of AMC Entertainment Holdings, Inc.

and subsidiaries (the Company) as of December 31, 2020 the related consolidated statements of operations, comprehensive loss, stockholders’ equity (deficit) and cash flows for the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020, and the results of its operations and its cash flows for the period ended December 31, 2020, in conformity with U.S.

We have audited the accompanying consolidated balance sheets of AMC Entertainment Holdings, Inc.

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, shareholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill Impairment

Description of the Matter

The Company assigns goodwill acquired in business combinations to its reporting units as of each acquisition date.

At December 31, 2020, the Company’s goodwill balance related to the Domestic Theatres and International Theatres reporting units was approximately $1.797 billion and $751 million, respectively.

As discussed in Note 2 of the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level as of the beginning of the fourth quarter and any time an event occurs or circumstances change that would more likely than not reduce the fair value for a reporting unit below its carrying amount.

As a result of these assessments, the Company recognized impairments of $1.276 billion and $1.030 billion to the Domestic Theatre and International Theatre reporting units, respectively, during the year ended December 31, 2020.

Auditing management’s goodwill impairment assessments for the Company’s Domestic Theatres and International Theatres reporting units was complex and highly judgmental due to the significant estimation required in determining the fair value of the reporting units.

In particular, the fair value estimate was sensitive to significant assumptions such as the discount rate and projected future revenues which are affected by expectations about future market or economic conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process.

For example, we tested controls over management's review of the significant assumptions discussed above used to develop the prospective financial information (PFI) for the quantitative analysis.

We also tested management's controls to validate that the data used in the valuation was complete and accurate.

To test the estimated fair value of the Company’s reporting units, we performed audit procedures that included testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

We compared the significant assumptions used by the Company to current industry and economic trends, including the impact of COVID-19, while also considering changes to the Company’s business model, forecasts used in the Company’s annual operating plans and other relevant factors.

In addition, we evaluated the competency and objectivity of management's qualified persons and third-party specialists through consideration of their professional qualifications, experience, objectivity, and their use of accepted industry practices.

We also involved valuation specialists to assist in evaluating the Company’s significant assumptions used in the fair value estimates.

We reconciled the fair value of the reporting units to their carrying amount, testing the Company’s determination of the assets and liabilities used within the reporting units that are the basis for the carrying amount.

Liquidity – Impact of COVID-19

Description of the Matter

As described in Note 1 to the consolidated financial statements, in response to the global pandemic, the Company temporarily suspended all theatre operations in its U.S.

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

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

markets in late August 2020.

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

The North American and International industry box offices have also have been significantly impacted by COVID-19, and in response to the suspension of theatre operations by the Company and other theatre exhibitors and the COVID-19 related suspension of new movie production, studios have postponed new film releases beyond 2020 or moved them to the home video market.

As a result of these temporarily suspended operations and limited new film content, the Company’s revenues and expenses for the year ended December 31, 2020 are significantly lower than the revenues and expenses for the year ended December 31, 2019.

Management determined that the ongoing effects of COVID-19 on their operations will continue to have a material negative impact on their financial results and liquidity.

Management has taken

actions to improve the Company’s liquidity, including reductions to the Company’s fixed cost structure, negotiating deferrals and/or abatements of theatre rent, and the execution of capital market transactions including debt issuances, debt exchanges and equity sales.

Based on these actions and considering the Company’s available liquidity, including cash and cash equivalents of $308 million at December 31, 2020, management concluded there is sufficient liquidity to meet minimum liquidity requirements, fund operations, and satisfy the Company’s obligations for at least the next twelve months.

The principal assumptions used in management’s cash flow analyses used to estimate future liquidity requirements consisted of:

the continued vaccine rollout;

release and supply of Hollywood theatrical product;

the expected increase in attendance levels;

and the impacts of home video or streaming markets.

We determined the Company’s assessment of its ability to continue as a going concern is a critical audit matter due to the significant judgment by management when evaluating the uncertainty related to the effects of the COVID-19 pandemic on the Company’s financial results and liquidity.

In particular, there is a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s liquidity assessment to determine that the Company will be able to satisfy its obligations as they become due for 12 months from the date these financial statements were issued.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested controls over the Company’s going concern assessment process.

For example, we tested controls involving management’s review of significant assumptions in the liquidity analysis.

Further, we tested management’s process for forecasting financial results and liquidity for one year after the date the financial statements are issued and tested the completeness and accuracy of underlying data used in the forecast.

We independently assessed the sensitivity and impact of reasonably possible changes in the key assumptions and estimates included in management’s cash flow forecasts and liquidity position and compared those results to the sensitivity analyses performed by management.

We evaluated management’s disclosure in the consolidated financial statements that the Company has sufficient liquidity to satisfy its obligations for at least the next twelve months.

Valuation of operating lease liabilities

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of operating leases

Description of the Matter

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Since most of the leases do not provide a determinable implicit rate, the Company estimated its IBR used to calculate its right of use assets and lease liabilities.

Auditing the Company’s estimate of the IBR was especially challenging as it involved a high degree of subjective judgment when testing the reasonableness of the inputs and appropriateness of the rates applied to each lease.

In particular, the estimate of the IBR is sensitive to significant assumptions such as determination of current credit rating and selection of associated yield curve.

Auditing the Company’s estimate of the IBR was especially challenging as it involved a high degree of subjective judgment when testing the reasonableness of the inputs and appropriateness

of the rates applied to each lease.

In particular, the estimate of the IBR is sensitive to significant assumptions such as the determination of the current credit rating and selection of the associated yield curve.

How We Addressed the Matter in Our Audit

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and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of AMC Entertainment Holdings, Inc.

and subsidiaries (the Company) as of December 31, 2020 the related consolidated statements of operations, comprehensive loss, stockholders’ equity (deficit) and cash flows for the period ended December 31, 2020, and the related notes and our report dated March 12, 2021 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, shareholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2021 and our report dated March 1, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of AMC Entertainment Holdings, Inc.

and subsidiaries (the Company) as of December 31, 2019, the related consolidated statements of operations, comprehensive loss, cash flows, and stockholders’ equity for each of the years in the two-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019, in conformity with U.S.

We have audited the accompanying consolidated statements of operations, comprehensive loss, cash flows, and stockholders’ equity (deficit) of AMC Entertainment Holdings, Inc.

and subsidiaries (the Company) for the year ended December 31, 2019, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of the Company’s operations and its cash flows for the year ended December 31, 2019, in conformity with U.S.

generally accepted accounting principles.

Change in Accounting Principle

As discussed in Notes 1 and 3 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases .

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We served as the Company’s auditor from 2009 to 2020.

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Total other expense, 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 earnings (loss) per share attributable to AMC Entertainment Holdings, Inc.'s common stockholders:

Net loss attributable to AMC Entertainment Holdings, Inc.

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

Average shares outstanding:

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December 31, 2019

Net earnings (loss)

Other comprehensive income (loss):

Unrealized foreign currency translation adjustments, net of tax

Realized loss on foreign currency transactions reclassified into other expense

Unrealized foreign currency translation adjustments

Realized gain (loss) on foreign currency transactions reclassified into investment expense (income), net of tax

Pension adjustments:

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Equity method investee's cash flow hedge:

Unrealized net holding gain (loss) arising during the period

Realized net gain reclassified into equity in earnings of non-consolidated entities

Unrealized net holding loss arising during the period

Other comprehensive income (loss)

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Commitments and contingencies

Stockholders’ equity (deficit):

AMC Entertainment Holdings, Inc.'s stockholders' equity:

Stockholders’ deficit:

AMC Entertainment Holdings, Inc.'s stockholders' deficit:

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

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

Class B common stock ($ .01 par value, 51,769,784 shares authorized, issued and outstanding as of December 31, 2020 and December 31, 2019)

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

Additional paid-in capital

Treasury stock ( 3,732,625 shares as of December 31, 2020 and December 31, 2019, at cost)

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

Accumulated other comprehensive income (loss)

Accumulated deficit

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

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

Noncontrolling interests

Total equity (deficit)

Total liabilities and stockholders’ equity (deficit)

Total deficit

Total liabilities and stockholders’ deficit

See Notes to Consolidated Financial Statements.

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Cash flows from operating activities:

Net earnings (loss)

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

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

Depreciation and amortization

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

Gain on dispositions of Baltics

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

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Non-cash portion of stock-based compensation

Gain on dispositions

Gain on disposition of NCM

Loss (gain) on disposition of assets

Loss (gain) on derivative asset and derivative liability

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

NCM held-for-sale impairment loss

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

Landlord contributions

Other non-cash rent

Other non-cash rent expense (benefit)

Deferred rent

Net periodic benefit cost

Net periodic benefit cost (income)

Change in assets and liabilities:

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Capital expenditures

Proceeds from sale leaseback transactions

Proceeds from disposition of NCM

Proceeds from Screenvision merger

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

Acquisition of theatre assets

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Principal payment of Term Loans due 2022 and 2023

Proceeds from issuance of Odeon Term Loan due 2023

Proceeds from First Lien Toggle Notes due 2026

Principal payments under First Lien Toggle Notes due 2026

Premium paid to extinguish First Lien Toggle Notes due 2026

Principal payments under Second Lien Notes due 2026

Proceeds from issuance of First Lien Notes due 2025

Proceeds from issuance of First Lien Notes due 2026

Proceeds from issuance of Senior Unsecured Convertible Notes due 2024

Borrowings (repayments) under revolving credit facilities

Scheduled principal payments under Term Loans

Proceeds from Class A common stock issuance

Proceeds from sale of noncontrolling interest

Scheduled principal payments under Term Loan due 2026

Net proceeds from Class A common stock issuance

Net proceeds from Class A common stock issuance to Mudrick

(Payments) proceeds related to sale of noncontrolling interest

Principal payments under finance lease obligations

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Taxes paid for restricted unit withholdings

Retirement of Class B common stock

Purchase of treasury stock

Net cash provided by (used in) financing activities

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Cash paid during the period for:

Interest (including amounts capitalized of $ 1.1 million, $ 1.0 million and $ 0.5 million)

Income taxes (received) paid, net

Interest (including amounts capitalized of $ 0.2 million, $ 1.1 million and $ 1.0 million, respectively)

Income taxes received, net

Schedule of non-cash activities:

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Construction payables at period end

Convertible Notes due 2026 conversion, see Note 8-Corporate Borrowings and Finance Lease Obligations

Mudrick transaction, see Note 8-Corporate Borrowings and Finance Lease Obligations

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Balance December 31, 2018

Cumulative effect adjustment for the adoption of new accounting principles (ASC 606, ASU 2016-01 and ASU 2018-02)

Other comprehensive loss

Dividends declared:

Class A common stock, $ 0.20 /share

Class B common stock, $ 0.20 /share

Reversed dividend accrual for nonvested PSUs

Special dividend declared:

Class A common stock, $ 1.55 /share

Class B common stock, $ 1.55 /share

RSUs surrendered to pay for payroll taxes

Stock-based compensation

Shares repurchases

Reclassification from temporary equity

Class B common stock repurchase and cancellation

( 24,057,143 )

Balance December 31, 2018

Cumulative effect adjustments for the adoption of new accounting principle (ASC 842)

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RSUs surrendered to pay for payroll taxes

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Reclassification from temporary equity

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Derivative asset valuation allowance adjustment

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

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Balance December 31, 2020

Other comprehensive loss

Baltics noncontrolling capital contribution

100% liquidation of Baltics

Class A common stock, accrued dividend equivalent adjustment

Class A common stock issuance

( 3,732,625 )

Class A common stock issuance to Mudrick

Wanda conversion of Class B shares to Class A shares

( 46,103,784 )

Convertible Notes due 2026 stock conversion

Wanda forfeit and cancellation of Class B shares

( 5,666,000 )

Taxes paid for restricted unit withholdings

Stock-based compensation

Balance December 31, 2021

See Notes to Consolidated Financial Statements

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and its subsidiaries, (collectively with Holdings, unless the context otherwise requires, the “Company” or “AMC”), is principally involved in the theatrical exhibition business and owns, operates or has interests in theatres located in the United States and Europe.

As of December 31, 2020, Dalian Wanda Group Co., Ltd.

(“Wanda”), a Chinese private conglomerate, owned approximately 23.08 % of Holdings’ outstanding common stock and 47.37 % of the combined voting power of Holdings’ outstanding common stock and had significant influence over Holdings’ affairs and policies, including with respect to the election of directors (and, through the election of directors, the appointment of management), entering into mergers, sales of substantially all of the Company’s assets and other extraordinary transactions.

On February 1, 2021, Wanda exercised their right to convert all outstanding Class B common stock to Class A common stock resulting in ownership in Holdings’ outstanding common stock and voting power of Holdings’ outstanding common stock of approximately 9.8 % as of March 3, 2021.

Temporarily Suspended Operations.

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

Temporarily Suspended or Limited Operations.

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

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

and International theatre operations were temporarily suspended.

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

markets in late August 2020.

In response to the COVID-19 pandemic, the Company has taken and continues to take significant steps to preserve cash by eliminating non-essential costs, including reductions to the Company’s variable and elements of its 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, the Company 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, the Company has been prohibited from making dividend payments in accordance with the covenant suspension conditions in its Senior Secured Credit Facility Agreement.

The Company 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;

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

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

The Company has taken advantage of many forms of governmental assistance internationally including but not limited to revenue and fixed cost reimbursements, payroll subsidies, rent support programs, direct grants, and property tax holidays.

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

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

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

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

As of September 30, 2021 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, the Company operated at 97 international theatres, with limited seating capacities, representing approximately 27 % of its international theatres.

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

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

At September 30, 2021 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.

As of December 31, 2021, the Company has cash and cash equivalents of approximately $ 1.6 billion.

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

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

Additionally, the Company enhanced 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 for further information.

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

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

Interest on the Second Lien Notes due 2026 for the first three six-month interest periods after the issue date is expected to be paid all or in part on an in-kind basis pursuant to the terms of the 10 % / 12 % Cash/PIK Toggle Second Lien Subordinated Secured Notes due 2026.

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

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

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

In January 2021, the Company sold 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 the Company’s Class A common stock at a conversion price of $ 13.51 which resulted in the issuance of 44,422,860 shares of its Class A Common Stock and reduced annual cash interest expense by $ 17.7 million.

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

Approximately £ 89.7 million and € 12.8 million of the net proceeds from the Odeon Term Loan Facility 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, it currently estimates that its 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 the Company achieves 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 its theatres.

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

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

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

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

The Company continues to explore potential sources of additional liquidity, which is essential to its long-term viability, including:

● Additional equity financing.

The Company may continue to pursue equity issuances that include its remaining authorized shares.

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

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

● Landlord Negotiations .

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

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

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

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

The Company continues to renegotiate leases with landlords to attain additional concessions and address any instances of default.

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

● Other Creditor Discussions .

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

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

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

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

The Company expects it 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.

The Company 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 for further information.

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

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

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

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

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

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

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

Nor can the Company know with certainty the impact 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.

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

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

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

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

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

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

The 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

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

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

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

See Note 3 — Leases 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.

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

● $( 11.9 ) million of capital expenditures and $( 9.3 ) million of investments in non-consolidated entities, partially offset by proceeds from the disposition of the 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.

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

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

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

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

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

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

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

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

The Company believes 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.

The Company entered the Ninth Amendment (as defined in Note 8 — Corporate Borrowings and Finance Lease Obligations) 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) 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) from March 31, 2022 to March 31, 2023, as described, and on the terms and conditions specified, therein.

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

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

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

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

The Company’s 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.

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

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

As a result, deferred lease amounts were approximately $ 315.1 million as of December 31, 2021.

See Note 3 — Leases for a summary of the estimated future repayment terms for the deferred lease amounts due to COVID-19.

Use of Estimates.

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

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

consequently, a portion of its stockholders’ equity, net earnings (loss) and total comprehensive

income (loss) for the periods presented are attributable to noncontrolling interests.

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

markets and International markets.

Noncontrolling Interests.

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

Noncontrolling Interests and Baltic Theatre Sale.

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

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

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

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

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

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

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

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

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.

The Company 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.

The Company 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, the Company 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, 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.

At December 31, 2020, the Company’s noncontrolling interest of 49 % in Lithuania and Estonia was $ 26.9 million.

The Company estimates the sale of Forum Cinemas will be completed in 2021.

During the year ended December 31, 2021, the Company 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 the Company’s noncontrolling interest in Forum Cinemas OU.

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

The Company recognizes revenue, net of sales tax, when it satisfies a performance obligation by transferring control over a product or service to a customer.

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The Company recognizes income from non-redeemed or partially redeemed gift cards in proportion to the pattern of rights exercised by the customer (“proportional method”) where it applies an estimated non-redemption rate for its gift card sales channels, which range from 13 % to 18.5 % of the current month sales of gift cards, and the Company recognizes in other theatre revenues the total amount of expected income for non-redemption for that current month’s sales as income over the next 24 months in proportion to the pattern of actual redemptions.

The Company has determined its non-redeemed rates and redemption patterns using data accumulated over ten years.

Upon adoption of ASC 606 on January 1, 2018, the Company recognizes ticket fee revenues based on a gross transaction price.

The Company believes it is a principal (as opposed to agent) in the arrangement with third-party internet ticketing companies in regard to the sale of online tickets because the Company controls the online tickets before they are transferred to the customer.

The Company has determined its non-redeemed rates and redemption patterns using more than 10 years of accumulated data.

The Company also recognizes income from non-redeemed or partially redeemed exchange tickets using the proportional method.

In the International markets, certain exchange tickets are subject to expiration dates, which triggers recognition of non-redemption in other revenues.

The Company recognizes ticket fee revenues based on a gross transaction price.

The Company is a principal (as opposed to agent) in the arrangement with third-party internet ticketing companies in regard to the sale of online tickets because the Company controls the online tickets before they are transferred to the customer.

The online ticket fee revenues and the third-party commission or service fees are recorded in the line items other theatre revenues and operating expense, respectively, in the consolidated statements of operations.

The Company recognizes government grants once the grant requirements have been met.

Grants relating to specific costs are treated as a reduction of that cost in the consolidated statements of operations.

General grants are recorded within other expense (income).

Grants related to the construction of fixed assets are treated as reductions to the associated fixed asset cost.

Certain grants contain stipulations around the use of funds which could trigger claw backs if the stipulations are violated.

Film Exhibition Costs.

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The advertising contracts with customers generally consist of a series of distinct periods of service, satisfied over time, to provide rights to advertising services.

The Company’s Exhibitor Services Agreement (“ESA”) with NCM includes a significant financing component due to the significant length of time between receiving the non-cash consideration and fulfilling the performance obligation.

The Company’s Exhibitor Services Agreement (“ESA”) with National CineMedia, LLC (“NCM”) includes a significant financing component due to the significant length of time between receiving the non-cash consideration and fulfilling the performance obligation.

The Company receives the non-cash consideration in the form of common membership units from NCM, in exchange for rights to exclusive access to the Company’s theatre screens and attendees through February 2037.

Upon adoption of ASC 606, Revenue from Contracts with Customers (“ASC 606”) on January 1, 2018, the Company’s advertising revenues have significantly increased with a similar offsetting increase in non-cash interest expense, which is recorded to non-cash NCM exhibitor service agreement in the consolidated statements of operations.

Upon adoption of ASC 606 and pursuant to the calculation requirements for the time value of money, the amortization method reflects the front-end loading of the significant financing component where more interest expense is recognized earlier during the term of the agreement than the back-end recognition of the deferred revenue amortization where more revenue is recognized later in the term of the agreement.

See Note 6 — Investments for further information regarding the common unit adjustment and the fair value measurement of the non-cash consideration.

Upon recognition, the Company records an increase to advertising revenues with a similar offsetting increase in non-cash interest expense, which is recorded to non-cash NCM exhibitor service agreement in the consolidated statements of operations.

Pursuant to the calculation requirements for the time value of money, the amortization method reflects the front-end loading of the significant financing component where more interest expense is recognized earlier during the term of the agreement than the back-end recognition of the deferred revenue amortization where more revenue is recognized later in the term of the agreement.

See Note 6 — Investments for further information regarding the common unit adjustment (“CUA”) and the fair value measurement of the non-cash consideration.

The interest expense was calculated using discount rates that ranged from 6.5 % to 18.25 %, which are the rates at which the Company believes it could borrow in separate financing transactions.

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markets which allows members to earn rewards, receive discounts and participate in exclusive members-only offerings and services.

It features both a traditional paid tier called AMC Stubs Premiere TM , with a $ 15.00 annual membership fee, and a non-paid

tier called AMC Stubs ® Insider TM .

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

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

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AMC Stubs ® A-List is the Company’s monthly subscription-based tier of the 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 and $ 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 and $ 23.95 per month depending upon geographic market.

Revenue is recognized ratably over the enrollment period.

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

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

Starting in July of 2021, all A-List monthly subscriptions were automatically reactivated and the Company has

resumed a more normal recognition pattern for deferred revenues related to certain loyalty programs, gift cards and exchange tickets.

Advertising Costs.

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All highly liquid debt instruments and investments purchased with an original maturity of three months or less are classified as cash equivalents.

At December 31, 2021, cash and cash equivalents for the U.S.

markets and International markets were $ 1,311.4 million and $ 281.1 million, respectively, and at December 31, 2020, cash and cash equivalents were $ 222.9 million and $ 85.4 million, respectively.

Restricted Cash.

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

Derivative Asset and Liability.

The Company remeasured the derivative asset related to its contingent call option to acquire shares of its Class B common stock at no additional cost and the derivative liability related to the conversion feature in its Senior Unsecured Convertible Notes due 2024 at fair value each reporting period until the conversion price reset on September 14, 2020, with changes in fair value recorded in the consolidated statement of operations in other expense (income).

The Company has obtained independent third-party valuation studies to assist in determining fair value.

The Company’s valuation studies use a Monte Carlo simulation approach and are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy.

The Company’s common stock price at the end of each reporting period as well as the remaining amount of time until expiration for the contingent call option and conversion feature are key inputs for the estimation of fair value that are expected to change each reporting period.

The Company recorded other expense (income) related to derivative asset fair value adjustments of $ 19.6 million, $ 17.7 million and $( 45.0 ) million, during the years ended December 31, 2020, December 31, 2019 and December 31, 2018, respectively, and other expense (income) related to derivative liability fair value adjustments of $ 89.4 million, $( 23.5 ) million, and $( 66.4 ) million, during the years ended December 31, 2020, December 31, 2019 and December 31, 2018, respectively.

Prior to September 14, 2020, the Company remeasured the derivative asset related to its contingent call option to acquire shares of its Class B common stock at no additional cost and the derivative liability related to the conversion feature in its Convertible Notes due 2026 at fair value each reporting period until the conversion price reset on September 14, 2020, with changes in fair value recorded in the consolidated statements of operations in other expense (income).

The Company obtained independent third-party valuation studies to assist in determining fair value.

The Company’s valuation studies used a Monte Carlo simulation approach and were based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value measurement hierarchy.

The Company’s Common Stock price at the end of each reporting period as well as the remaining amount of time until expiration for the contingent call option and conversion feature were key inputs for the estimation of fair value that were expected to change each reporting period.

The Company recorded other expense (income) related to derivative asset fair value adjustments of $ 0 , $ 19.6 million and $ 17.7 million, during the years ended December 31, 2021, December 31, 2020 and December 31, 2019, respectively, and other expense (income) related to derivative liability fair value adjustments of $ 0 , $ 89.4 million, and $( 23.5 ) million, during the years ended December 31, 2021, December 31, 2020 and December 31, 2019, respectively.

See Note 8 — Corporate Borrowings and Finance Lease Obligations and Note 9 — Stockholders’ Equity for further discussions.

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Intangible assets were recorded at fair value for intangible assets resulting from the acquisition of Holdings by Wanda on August 30, 2012 and other theatre acquisitions.

Intangible assets are comprised of amounts assigned to management contracts, a contract with an equity method investee, and a non-compete agreement, each of which are being amortized on a straight-line basis over the estimated remaining useful lives of the assets.

Intangible assets are comprised of amounts assigned to management contracts, which are being amortized on a straight-line basis over the estimated remaining useful lives of the assets, and trademark and trade names.

The Company evaluates definite-lived intangible assets whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be fully recoverable.

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Gains and losses related to non-cash negative common unit adjustments are recorded using the weighted average cost of those units in NCM.

See Note 6 — Investments for further discussion of the Company’s investments in NCM.

See Note 6 — Investments for further discussion of

the Company’s investments in NCM.

As of December 31, 2021, the Company holds equity method investments comprised of a 18.3 % interest in SV Holdco LLC (“SV Holdco”), a joint venture that markets and sells cinema advertising and promotions through Screenvision;

a 50.0 % interest in Digital CineMedia Ltd.

a 50.0 % interest in Digital Cinema Media Ltd.

(“DCM”), a joint venture that provides advertising services in International markets;

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a 14.6 % interest in Digital Cinema Distribution Coalition, LLC (“DCDC”), a satellite distribution network for feature films and other digital cinema content;

a 10.0 % interest in SCC;

a 10.0 % interest in Saudi Cinema Company LLC (“SCC”);

a 50 % ownership interest in three U.S.

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Also, the Company evaluates goodwill and its indefinite-lived trademark and trade names for impairment annually as of the beginning of the fourth quarter and any time an event occurs or circumstances change that would more likely than not reduce the fair value for a reporting unit below its carrying amount.

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

In accordance with ASC 350-20-35-30, goodwill of a reporting unit shall be tested for impairment between annual tests by assessing the qualitative factors to determine if an event occurs or changes in circumstances that would warrant an interim ASC 350 impairment analysis.

If an impairment analysis is needed, the Company performs a quantitative impairment test for goodwill, which involves estimating the fair value of the reporting unit and comparing that value to its carrying value.

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

Qualitative impairment tests performed during 2021 .

The Company 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.

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

As a result, the Company concluded that there were no triggering events as of the annual assessment date, December 31, 2021.

Step 1 quantitative goodwill impairment tests performed during 2020.

In accordance with ASC 350-20-35-30, the Company performed an assessment to determine whether there were any events or changes in circumstances that would warrant an interim ASC 350 impairment analysis.

A decline in the Common Stock price and prices of the Company’s corporate borrowings and the resulting impact on market capitalization are two of several factors considered when making this evaluation.

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

Based on sustained declines during the first quarter of 2020 in the Company’s enterprise market capitalization and the temporary suspension of operations at all the Company’s theatres on or before March 17, 2020 due to the COVID-19 pandemic, the Company performed a Step 1 quantitative goodwill impairment test of the Domestic and International reporting units as of March 31, 2020.

In performing the Step 1 quantitative goodwill impairment test as of March 31, 2020, the Company 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, were recorded as of March 31, 2020 for the Company’s Domestic Theatres and International Theatres reporting units.

Due to the suspension of operations during the second and third quarters of 2020 and the further delay or cancellation of film releases, the Company performed a Step 1 quantitative impairment test of the Domestic and International reporting units as of September 30, 2020.

In performing the Step 1 quantitative goodwill impairment test as of September 30, 2020, the Company used an enterprise value approach to measure fair value of the reporting units.

See Note 12 — Fair Value Measurements for a discussion of the valuation methodology.

The enterprise fair value of the Domestic Theatres and International Theatres reporting units was less than their carrying values and goodwill impairment charges of $ 151.2 million and $ 5.6 million, respectively, were recorded as of September 30, 2020 for the Company’s Domestic Theatres and International Theatres reporting units.

Due to the further delay or cancellation of film releases and the further suspension of operations in the International markets, the Company performed a Step 1 quantitative impairment test of the Domestic and International

reporting units as of December 31, 2020.

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

See Note 12 — Fair Value Measurements for a discussion of the valuation methodology.

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Given the nature of the Company’s business and its recent history, future impairments are possible based upon business conditions, movie release dates, and attendance levels.

As of September 30, 2019 and based on recent sustained declines in the trading price of the Company’s Class A common stock, the Company performed a quantitative goodwill impairment test of the Domestic and International reporting units as of September 30, 2019.

In performing the quantitative goodwill impairment test as of September 30, 2019, the Company used an enterprise value approach to measure fair value of the reporting.

The enterprise fair values of the Domestic Theatres and International Theatres reporting units exceeded their carrying values by approximately 9.9 % and 11.8 %, respectively.

Accordingly, there was no goodwill impairment recorded as of September 30, 2019.

Given the further decline in the Company’s stock price during the fourth quarter of 2019, the Company performed a qualitative impairment test to evaluate whether it is more likely than not that the fair value of its two reporting units are less than their respective carrying amounts as of December 31, 2019.

The Company compared its projected financial information and assumptions utilized in the quantitative analysis as of September 30, 2019 to the fourth quarter results noting operating performance is consistent with the projections and there have been no other changes which would impact management’s conclusion that the fair values of its reporting units exceed their carrying values.

The Company also observed that its estimated fair value of its corporate borrowings and finance lease obligations remained relatively consistent from September 30, 2019 to December 31, 2019, which represents approximately 80 % of the Company’s market enterprise value.

The Company observed higher enterprise value control premiums for a recent acquisition agreement in its industry than those utilized for the market approach.

In considering the totality of the aforementioned factors together with the excess of fair value over carrying value calculated in both its reporting units in the previous impairment test, the Company has concluded that it is not more likely than not that the fair values of its two reporting units have been reduced below their respective carrying amounts.

As a result, the Company concluded that an interim quantitative impairment test as of December 31, 2019 was not required.

Other Long-term Assets.

Other long-term assets are comprised principally of investments in partnerships and joint ventures, costs incurred in connection with the Company’s line-of-credit revolving credit arrangement, which is being amortized to interest expense using the effective interest rate method over the respective life of the issuance, and capitalized computer software, which is amortized over the estimated useful life of the software.

Other long-term assets are comprised principally of investments in partnerships and joint ventures and capitalized computer software, which is amortized over the estimated useful life of the software.

See Note 7 — Supplemental Balance Sheet Information.

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The Company adopted ASC 842 on January 1, 2019 using the modified retrospective transition method.

and therefore, the comparative information has not been adjusted for the year ended December 31, 2018.

Upon transition to the new standard, the Company elected the package of practical expedients, which permitted the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs.

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The Company typically does not believe that exercise of the renewal options is reasonably assured at the inception of the lease agreements and, therefore, considers the initial base term as the lease term.

Lease terms vary but generally the

leases provide for fixed and escalating rentals, contingent escalating rentals based on the Consumer Price Index and other indexes not to exceed certain specified amounts and variable rentals based on a percentage of revenues.

Lease terms vary but generally, the leases provide for fixed and escalating rentals, contingent escalating rentals based on the Consumer Price Index and other indexes not to exceed certain specified amounts and variable rentals based on a percentage of revenues.

The Company often receives contributions from landlords for renovations at existing locations.

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Short-term leases and sublease arrangements are immaterial.

Equipment leases primarily consist of food and beverage equipment.

Sale Leaseback Transactions.

Prior to adopting ASC 842 on January 1, 2019, the Company deferred gains on sale leaseback transactions and amortized the gains over the remaining lease term.

Losses on sale leaseback transactions were recorded at the time of sale if the fair value of the property sold is less than the net book value of the property.

On June 18, 2018, the Company completed the sale leaseback of the real estate assets associated with one theatre for proceeds, net of closing costs, of $ 50.1 million and the deferred gain on the sale was approximately $ 27.3 million.

Upon adoption ASC 842 on January 1, 2019, the unamortized deferred gains related to sales leaseback transactions of $ 102.4 million were reclassified as a cumulative effect adjustment to accumulated deficit.

Equipment leases primarily consist of food and beverage and digital equipment.

Impairment of Long-lived Assets.

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

The Company evaluates events or circumstances, including competition in the markets where it operates, that would indicate the carrying value of theatre assets may not be fully recoverable.

The Company evaluates events or circumstances, including competition in the markets

where it operates, that would indicate the carrying value of theatre assets may not be fully recoverable.

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.

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During the year ended December 31, 2021, the Company recorded non-cash impairment of long-lived assets 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) 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, operating lease right-of-use assets, net, and other long-term assets.

During the year ended December 31, 2020, the Company 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.

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In addition, the Company recorded an impairment loss of $ 3.6 million within investment expense (income), related to an equity interest investment without a readily determinable fair value accounted for under the cost method.

During the year ended December 31, 2018, the Company recorded an impairment of long-lived assets loss of $ 13.8 million on 13 theatres in the U.S.

markets with 150 screens and 15 theatres with 118 screens in the International markets which was related to property held and used.

Foreign Currency Translation.

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Employee Benefit Plans.

The Company sponsors frozen non-contributory qualified and non-qualified defined benefit pension plans in the U.S., frozen defined benefit pension plans in the U.K., and a defined benefit pension plan in Sweden that is not frozen.

The Company also sponsors a postretirement deferred compensation plan and a defined contribution plan.

The Company sponsors frozen non-contributory qualified and non-qualified defined benefit pension plans in the U.S.

and frozen defined benefit pension plans in the U.K.

The Company also sponsors a postretirement deferred compensation plan, which was terminated on May 3, 2021 and will be liquidated in 2022, and also a defined contribution plan.

The following table sets forth the plans’ benefit obligations and plan assets and the accrued liability for benefit costs included in the consolidated balance sheets:

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Aggregated fair value of plan assets at end of period

Net liability for benefit cost - funded status

Net (liability) asset for benefit cost - funded status

(1) At December 31, 2021 and December 31, 2020, U.S.

aggregated accumulated benefit obligations were $ 111.5 million and $ 123.9 million, respectively, and International aggregated accumulated benefit obligations were $ 125.0 million and $ 129.5 million, respectively.

The Company expects to contribute $ 3.7 million to the U.S.

pension plans, during the calendar year 2021.

The Company does not expect to make a material contribution to the U.S.

pension plans during the year ended December 31, 2022.

The Company intends to make future cash contributions to the plans in an amount necessary to meet minimum funding requirements according to applicable benefit plan regulations.

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For further information, see Note 14—Accumulated Other Comprehensive Income (Loss) for pension amounts and activity recorded in accumulated other comprehensive income.

For the years ended December 31, 2020, December 31, 2019, and December 31, 2018, net periodic benefit costs were $ 1.8 million, $ 1.7 million, and $ 1.1 million, respectively.

The service cost component of net periodic benefit costs is recorded in general and administrative other and the non-operating component is recorded in other expense (income) in the consolidated statements of operations.

For the years ended December 31, 2021, December 31, 2020, and December 31, 2019, net periodic benefit costs (credits) were $( 0.9 ) million, $ 1.8 million, and $ 1.7 million, respectively.

The non-operating component of net periodic benefit costs is recorded in other expense (income) in the consolidated statements of operations.

During the years ended December 31, 2020 and December 31, 2019, before the Sweden pension benefit plan was frozen, the service cost component of net periodic benefit cost was recorded in general and administrative other.

The following table provides the benefits expected to be paid in each of the next five years, and in the aggregate for the five years thereafter:

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A weighted average targeted allocation percentage is assigned to each asset class as follows:

equity securities of 43 %, fixed including U.S.

treasury securities and bond market funds of 27 %, international equity securities of 23 %, and private real estate of 7 %.

equity securities of 49 %, debt securities of 45 %, and private real estate of 6 %.

The International pension benefit plans do not have an established asset target allocation.

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investment portfolio, 94 % were valued using the net asset value per share (or its equivalent) as a practical expedient and 6 % of the investment included pooled separate accounts valued using market prices for the underlying instruments that were observable in the market or could be derived by observable market data from independent external valuation information (Level 2 of the fair value hierarchy).

As of December 31, 2020, for the International investment portfolio 2 % consisting of cash and equivalents was valued using quoted market prices from actively traded markets (Level 1 of the fair value hierarchy), 37 % included pooled separate accounts and collective trust funds valued using market prices for the underlying instruments that were observable in the market or could be derived by observable market data from independent external valuation information (Level 2 of the fair value hierarchy), and 61 % were valued using the net asset value per share (or its equivalent) as a practical expedient.

As of December 31, 2021, for the International investment portfolio 37 % included mutual funds and collective trust funds valued using market prices for the underlying instruments that were observable in the market or could be derived by observable market data from independent external valuation information (Level 2 of the fair value hierarchy) and 63 % were valued using the net asset value per share (or its equivalent) as a practical expedient.

Under the defined contribution plan, the Company sponsors a voluntary 401(k) savings plan covering certain U.S.

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The actuarial method includes an allowance for adverse developments on known claims and an allowance for claims which have been incurred but which have not yet been reported.

As of December 31, 2020 and December 31, 2019, the Company recorded casualty insurance reserves of $ 32.7 million and $ 29.4 million.

As of December 31, 2021 and December 31, 2020, the Company recorded casualty insurance reserves of $ 34.6 million and $ 32.7 million, respectively.

The Company recorded expenses related to general liability and workers’ compensation claims of $ 37.1 million, $ 32.8 million, and $ 32.6 million for the years ended December 31, 2021, December 31, 2020, and December 31, 2019, respectively.

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

Business interruption insurance recoveries

Credit losses related to contingent lease guarantees

Governmental assistance due to COVID-19

Loss on Pound sterling forward contract

Foreign currency transactions losses

Non-operating components of net periodic benefit cost

Loss on repayment of indebtedness

Credit losses (income) related to contingent lease guarantees

Governmental assistance due to COVID-19 - International markets

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

Foreign currency transaction (gains) losses

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

Loss on debt extinguishment

Gain on extinguishment Second Lien Notes due 2026

Financing fees related to modification of debt

Loss on Pound sterling forward contract

Business interruption insurance recoveries

Other expense (income)

Accounting Pronouncements Recently Adopted

Financial Instruments.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which provides new guidance regarding the measurement and recognition of credit impairment for certain financial assets.

Such guidance impacts how the Company determines its allowance for estimated uncollectible receivables and also contingent lease guarantees, where the Company remains contingently liable for lease payments under certain leases of theatres that it previously divested, in the event that such assignees are unable to fulfill their future lease payment obligations.

ASU 2016-13 was effective for the Company in the first quarter of 2020.

The Company recorded the cumulative effect upon adoption of the new standard related to credit losses for contingent lease guarantees of $ 16.9 million.

See Note 11—Commitments and Contingencies for further information regarding contingent lease guarantees.

The adoption impact on the Company’s allowance for estimated uncollectible receivables was immaterial as of January 1, 2020 and December 31, 2020.

The cumulative effect of adoption was recorded to accumulated deficit under the modified retrospective adoption method.

Fair Value Measurement.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which eliminates, adds, and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project.

Entities are no longer required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy but are required to disclose the range and weighted average used to develop significant observable inputs for Level 3 fair value measurements.

The fair value measurement disclosure requirements of ASU 2018-13 were effective for the Company in the first quarter of 2020.

See Note 12—Fair Value Measurements for the required disclosures for Level 3 fair value measurements.

Cloud Computing Arrangement.

In August 2018, the FASB issued ASU 2018-15, Intangibles–Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”).

ASU 2018-15 requires a customer in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation, setup, and other upfront costs to capitalize as assets or expense as incurred.

ASU 2018-15 was effective for the Company in the first quarter of 2020.

Entities have the option to apply the guidance prospectively to all implementation costs incurred after the date of adoption or retrospectively in accordance with ASC 250-10-45.

The Company adopted ASU 2018-15 prospectively and the adoption of ASU 2018-15 did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Accounting Pronouncements Issued Not Yet Adopted

Income Taxes.

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

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

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

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

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

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

The Company is currently evaluating the effect that ASU 2019-12 will have on its consolidated financial statements and the applicable adoption method to be utilized.

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

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

Accounting Pronouncements Issued Not Yet Adopted

Government Assistance.

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

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

The annual government assistance disclosure requirements are effective for the Company during the year ended December 31, 2022.

NOTE 2—REVENUE RECOGNITION

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Admission revenues (2)

Food and beverage (2)

Other theatre (2)

Food and beverage revenues (2)

Other theatre revenues (2)

Reclassification to revenue as the result of performance obligations satisfied:

Admission revenues (3)

Food and beverage (3)

Other theatre (4)

Disposition of Austria theatres

Food and beverage revenues (3)

Other theatre revenues (4)

Foreign currency translation adjustment

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Admission revenues (2)

Food and beverage (2)

Food and beverage revenues (2)

Other theatre revenues (2)

Reclassification to revenue as the result of performance obligations satisfied:

Admission revenues (3)

Food and beverage (3)

Other theatre (4)

Food and beverage revenues (3)

Other theatre revenues (4)

Foreign currency translation adjustment

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

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

As the Company reopened theatres during the three months ended September 30, 2020, A-list members had the option to reactivate their subscription, which restarted the monthly charge for the program.

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

The significant changes to contract liabilities included in the exhibitor services agreement (“ESA”), classified as long-term liabilities in the consolidated balance sheets, are as follows:

The significant changes to contract liabilities included in the ESA in the consolidated balance sheets, are as follows:

Exhibitor Services

(In millions)

Agreement (1)

Balance December 31, 2019

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Balance December 31, 2020

Common Unit Adjustment–additions of common units (1)

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

Negative Common Unit Adjustment–reduction of common units

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

Balance December 31, 2021

(1) Represents the fair value amount of the NCM common units that were surrendered due to the annual Common Unit Adjustment.

Such amount will increase the deferred revenues that are being amortized to other theatre revenues over the remainder of the 30 -year term of the ESA ending in February 2037.

(1) Represents the carrying amount of the NCM common units that were previously received under the annual Common Unit Adjustment.

The deferred revenues are being amortized to other theatre revenues over the

remainder of the 30 -year term of the ESA ending in February 2037.

Transaction Price Allocated to the Remaining Performance Obligations.

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Loyalty Programs.

As of December 31, 2020, the amount of deferred revenue allocated to the loyalty programs included in deferred revenues and income was $ 67.0 million.

As of December 31, 2021, the amount of deferred revenues allocated to the loyalty programs included in deferred revenues and income was $ 65.5 million.

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

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NOTE 3—LEASES

The Company adopted ASC 842 on January 1, 2019 using the modified retrospective transition method;

and therefore, the comparative information has not been adjusted for the year ended December 31, 2018.

The Company leases theatres and equipment under operating and finance leases.

The Company typically does not believe that exercise of the renewal options is reasonably certain at the lease commencement and, therefore, considers the initial base term as the lease term.

Lease terms vary but generally the leases provide for fixed and escalating rentals, contingent escalating rentals based on the Consumer Price Index and other indexes not to exceed certain specified amounts and variable rentals based on a percentage of revenues.

The Company often receives contributions from landlords for renovations at existing locations.

The Company records the amounts received from

landlords as an adjustment to the right-of-use asset and amortizes the balance as a reduction to rent expense over the base term of the lease agreement.

Equipment leases primarily consist of digital projectors and food and beverage equipment.

The following is the impact of the adoption of ASC 842 on the Company’s consolidated statement of operations for the year ended December 31, 2019:

Year Ended December 31, 2019

Without Adoption of

International Markets

(In millions)

Operating costs and expenses

Rent (1)(2)(4)

Depreciation and amortization (2)(3)

Operating costs and expenses

Operating income

Other expense (income)

Interest expense:

Capital and financing lease obligations (1)

(1) Cash rent payments for build-to-suit failed sale leasebacks of $ 44.0 million and $ 39.6 million for U.S.

markets and International markets, respectively, are accounted for as operating leases under ASC 842 that were previously accounted for as financing leases under ASC 840.

(2) Non-cash amortization expense for favorable lease terms of $ 18.3 million and $ 7.4 million for U.S.

markets and International markets, respectively, reclassified to rent expense and amortized over the shorter base lease term under ASC 842.

(3) Depreciation on build-to-suit failed sale leaseback buildings that are eliminated upon adoption of ASC 842.

(4) Amortization of deferred gains on sale leaseback transactions of $ 7.2 million for U.S.

markets is eliminated upon adoption of ASC 842.

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

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

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

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

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

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Those leases that did not meet the criteria for treatment under the FASB relief were evaluated as lease modifications.

The deferred payment amounts included in accounts payable for contractual rent amounts due and not paid are reflected in the consolidated statements of cash flows as part of the change in accounts payable.

The deferred payment amounts included in accounts payable for contractual rent amounts due and not paid are reflected in accounts payable on the consolidated balance sheets and in the consolidated statements of cash flows as part of the change in accounts payable.

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

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

A summary of deferred payment amounts related to rent obligations for which payments were deferred to 2022 and future years are provided below:

(In millions)

Fixed operating lease deferred amounts included in:

Right-of-use assets as a result of lease remeasurements

Accounts payables-contractual rent payments due and not paid

Current maturities of operating lease liabilities

Long-term operating lease liabilities

Finance lease deferred amounts included in:

Property, net, as a result of lease remeasurements

Accounts payables-contractual rent payments due and not paid

Current maturities of finance lease liabilities-other

Long-term finance lease liabilities-other

Long-term finance lease liabilities

Variable lease deferred amounts included in:

Accounts payables-contractual rent payments due and not paid

Current maturities of operating lease liabilities-resolution of contingencies

Long-term operating lease liabilities-resolution of contingencies

in deferred amounts

Fixed operating lease deferred amounts (1) (2)

Finance lease deferred amounts

Variable lease deferred amounts (2)

Total deferred lease amounts

The following table reflects the lease costs for the year ended December 31, 2020 and December 31, 2019:

Consolidated Statement

(1) During the year ended December 31, 2021, the decrease in fixed operating lease deferred amounts includes $ 152.6 million of decreases in the deferred balances as of December 31, 2020 related to payments and abatements.

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

The following table reflects the lease costs for the years indicated below:

(In millions)

of Operations

Consolidated Statements of Operations

Operating lease cost

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Right-of-use assets obtained in exchange for new operating lease liabilities (1)

(1) Includes lease extensions and an option exercises.

(1) Includes lease extensions and option exercises.

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

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Less imputed interest

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

Total operating and finance lease liabilities, respectively

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

Accounts Payable

(In millions)

Lease Payments

Three months ended March 31, 2022

Three months ended June 30, 2022

Three months ended September 30, 2022

Three months ended December 31, 2022

Total deferred lease amounts recorded in AP

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

Operating Lease

Financing Lease

(In millions)

Three months ended March 31, 2022

Three months ended June 30, 2022

Three months ended September 30, 2022

Three months ended December 31, 2022

Total deferred lease amounts

As of December 31, 2021, the Company had signed additional operating lease agreements for 7 theatres that have not yet commenced of approximately $ 165.2 million, which are expected to commence between 2022 and 2024, and carry lease terms of approximately 5 to 20 years .

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Balance December 31, 2019

Currency translation adjustment

Balance December 31, 2019

Impairment adjustment March 31, 2020

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Balance December 31, 2020

Currency translation adjustment

Baltics disposition-Estonia (1)

Baltics disposition-Lithuania (1)

Balance December 31, 2021

(1) See Note 1 — The Company and Significant Accounting Policies for further information regarding the Baltic theatre sale.

Detail of other intangible assets is presented below:

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Management contracts and franchise rights

Non-compete agreement

Starplex trade name

Carmike trade name

NCM tax receivable agreement

Total, amortizable

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

Investments in non-consolidated affiliates as of December 31, 2020, include interests in DCIP of 29.0 %, DCDC of 14.6 %, AC JV, owner of Fathom Events, of 32.0 %, SV Holdco, owner of Screenvision, 18.3 %, DCM of 50.0 %, and SCC of 10.0 %.

Investments in non-consolidated affiliates as of December 31, 2021, include interests in DCIP of 29.0 %, DCDC of 14.6 %, AC JV, owner of Fathom Events, of 32.0 %, SV Holdco, owner of Screenvision, of 18.3 %, DCM of 50.0 %, and SCC of 10.0 %.

The Company also has partnership interests in three U.S.

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NCM Transactions

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

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

In the event that a common unit adjustment is determined to be a negative number, the Founding Member shall cause, at its election, either (a) the transfer and surrender to NCM of a number of common units equal to all or part of such Founding Member’s common unit adjustment or (b) pay to NCM an amount equal to such Founding Member’s common unit adjustment calculated in accordance with the Common Unit Adjustment Agreement.

In March 2018, the NCM Common Unit Adjustment ("CUA") resulted in a negative adjustment of 915,150 common units for the Company.

The Company elected to return the units and recorded the surrendered common units as a reduction to deferred revenues for the ESA at fair value of $ 5.2 million, based upon a price per share of NCM, Inc.

of $ 5.64 on March 15, 2018.

The Company’s investment in NCM was reduced by the carrying value of the common units of $ 6.3 million resulting in a loss from the surrender of the NCM common units of $ 1.1 million, which was recorded to equity in earnings (loss) of Non-Consolidated Entities in March 2018.

In June 18, 2018, the Company entered into two Unit Purchase Agreements (the “Agreements”) with each of Regal Cinemas, Inc.

(“Regal”) and Cinemark USA, Inc.

(“Cinemark”) pursuant to which Regal and Cinemark each separately agreed to purchase 10,738,740 common units of NCM at a sales price of $ 7.30 per unit and aggregate consideration of approximately $ 156.8 million (the “Sales”).

The Sales closed on July 5, 2018.

Following the closing of the Sales, it reduced the Company’s then ownership of common stock shares in NCM, Inc.

or common units in NCM to zero.

NCM consented to the Sales and waived its rights under the memorandum of understanding that provided the Company would not reduce its combined ownership of NCM and NCM, Inc.

The Company recorded a $ 28.9 million gain on the sale of its NCM investment during the year ended December 31, 2018.

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

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

In the event that a CUA is determined to be a negative number, the Founding Member shall cause, at its election, either (a) the transfer and surrender to NCM of a number of common units equal to all or part of such Founding Member’s CUA or (b) pay to NCM an amount equal to such Founding Member’s CUA calculated in accordance with the CUA Agreement.

In March 2019, the NCM CUA resulted in a positive adjustment of 197,118 common units for the Company.

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(“NCM, Inc.”) of $ 3.46 on March 12, 2020.

The Company does not have significant influence over this entity and the investment is recorded at fair value each period.

In March 2021, the NCM CUA resulted in a negative adjustment of 3,012,738 common units for the Company, and therefore, the Company paid NCM cash of $ 9.2 million and recorded the amount as a reduction to deferred revenues for the ESA.

During the year ended December 31, 2021, the Company sold its remaining approximately 1.4 million NCM shares and received net proceeds of $ 5.7 million, which were recorded in investment expense (income).

See Note 1 — The Company and Significant Accounting Policies and Note 2 — Revenue Recognition for further information regarding CUA and ESA.

DCIP Transactions

The Company received distributions from DCIP in in the fourth quarter of 2020 of digital projectors it had been leasing with an estimated fair value of $ 125.2 million, which the Company recorded as a reduction to its investment in DCIP.

During the year ended December 31, 2021, the Company received cash distribution of $ 12.2 million from DCIP, which the Company recorded as a reduction to its investment in DCIP.

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

During the year ended December 31, 2020, the Company received distributions from DCIP of digital projectors it had been leasing with an estimated fair value of $ 125.2 million, which the Company recorded as a reduction to its investment in DCIP.

The distribution reduced the Company’s recorded investment below $ 0 and therefore the Company recorded equity in earnings of $ 5.1 million to increase its investment to $ 0 as the Company has not guaranteed any of the liabilities of DCIP.

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

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These Digital ESAs were then assigned by NCM to AC JV as part of the Fathom spin-off.

(“Screenvision”)

SV Holdco (“Screenvision”)

The Company acquired its investment in SV Holdco on December 21, 2016, in connection with the acquisition of Carmike.

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federal income tax purposes.

On May 30, 2018, Screenvision entered into an Agreement and Plan of Merger which resulted in a change of control in Screenvision.

The Company received distributions and merger consideration of $ 45.8 million on July 2, 2018 upon consummation of the Screenvision merger and retains a 18.2 % common membership interest.

reduced the carrying value of its investment in Screenvision to $ 0 and recorded equity in earnings for the excess distribution of $ 30.1 million during the year ended December 31, 2018.

Summary Financial Information

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motion picture theatres, and other immaterial investments.

Condensed financial information of the Company’s significant non-consolidated equity method investments is shown below with amounts presented under U.S.

Condensed financial information of the Company’s non-consolidated equity method investments is shown below with amounts presented under U.S.

(In millions)

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The Company’s recorded investment

(1) Certain differences in the Company’s recorded investments, and its proportional ownership share resulting from the acquisition of Holdings by Wanda on August 30, 2012, where the investments were recorded at fair value, are amortized to equity in (earnings) losses of non-consolidated entities over the estimated useful lives of the underlying assets and liabilities.

Other non-amortizing differences are considered to represent goodwill and are evaluated for impairment annually.

Condensed financial information of the Company’s significant non-consolidated equity method investments is shown below and amounts are presented under U.S.

Condensed financial information of the Company’s non-consolidated equity method investments is shown below and amounts are presented under U.S.

GAAP for the periods of ownership by the Company:

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The Company’s recorded equity in earnings (loss)

The Company recorded the following changes in the carrying amount of its investment in NCM LLC and equity in earnings of NCM LLC during the years ended December 31, 2020, December 31, 2019, and December 31, 2018:

Comprehensive

(In millions)

(Income)/Loss

Ending balance at December 31, 2017

ASC 606 revenue recognition change in amortization method

Surrender of common units for common unit adjustment

Receipt of excess cash distributions

Impairment loss - held for sale

Expenses on sale of NCM common units

Sale of NCM common units

Equity in earnings

Amortization of ESA

Ending balance at December 31, 2018

Receipt of NCM shares

Amortization of ESA

Ending balance at December 31, 2019

Receipt of NCM shares

Amortization of ESA

Ending balance at December 31, 2020

(1) Represents the unamortized portion of the ESA with NCM.

Such amounts are being amortized to other theatre revenues over the remainder of the 30 -year term of the ESA ending in 2037.

Related Party Transactions

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NOTE 7—SUPPLEMENTAL BALANCE SHEET INFORMATION

Assets held for sale, other assets and liabilities consist of the following:

Other assets and liabilities consist of the following:

(In millions)

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Pension asset

Derivative asset

Prepaid commitment fee and deferred charges (1)

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Accrued bonus

Accrued licensing and percentage rent

Accrued licensing and variable rent

Current portion of pension

Group insurance reserve

Accrued tax payable

Other long-term liabilities:

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Contingent lease liabilities

(1) See Note 1 — The Company and Significant Accounting Policies and Note 11—Commitments and Contingencies for information regarding contingent lease guarantees, as required by ASU 2016-13.

(2) See Note 8 — Corporate Borrowings and Finance Lease Obligations for information regarding the prepaid commitment fee and deferred charges related entry into the entry into a material definitive agreement and also Note 17 — Subsequent Events for information regarding the First Lien Toggle Notes due 2026 agreement.

(1) During the year ended December 31, 2021, the Company reclassified the prepaid commitment fee and deferred charges of $ 28.6 million to corporate borrowings from other long-term assets.

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

NOTE 8—CORPORATE BORROWINGS AND FINANCE LEASE OBLIGATIONS

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Senior Secured Credit Facility-Term Loan due 2026 ( 3.103 % as of December 31, 2021)

Senior Secured Credit Facility-Revolving Credit Facility Due 2024 (range of 2.65 % to 2.74 % as of December 31, 2020)

Odeon Revolving Credit Facility Due 2022 ( 2.5785 % as of December 31, 2020)

Odeon Revolving Credit Facility Due 2022 ( 2.6 % as of December 31, 2020)

Senior Secured Credit Facility-Revolving Credit Facility due 2024

10.75 % in Year 1, 11.25 % thereafter Cash/PIK Odeon Term Loan Facility due 2023 (£ 147.6 million and € 312.2 million par value as of December 31, 2021)

Odeon Revolving Credit Facility due 2022

10.5 % First Lien Notes due 2025

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10.5 % First Lien Notes due 2026

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

Second Lien Secured Debt:

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

2.95 % Senior Unsecured Convertible Notes due 2024

Subordinated Debt:

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Finance lease obligations

Paid-in-kind interest for 10 %/ 12 %/Cash/PIK/Toggle Second Lien Subordinated Notes due 2026

Paid-in-kind interest

Deferred financing costs

Net premium (discount) (1)

Derivative liability

Net premium (1)

Current maturities corporate borrowings

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2.95 % Senior Secured Convertible Notes due 2026

2.95 % Senior Unsecured Convertible Notes due 2024

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

10.5 % First Lien Notes due 2026

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Senior Secured Credit Facility-Term Loan due 2026

10.75 % in Year 1, 11.25 % thereafter Cash/PIK Odeon Term Loan Facility due 2023

6.375 % Senior Subordinated Notes due 2024

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(In millions)

Borrowings (1)

(1) See Note 17 — Subsequent Events for information regarding the new Odeon Term Loan Facility and the First Lien Toggle Notes due 2026.

Entry into Material Definitive Agreements

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.

See Note 17 — Subsequent Events for further information regarding the First Lien Toggle Notes due 2026.

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

Odeon Secured Debt

Odeon Term Loan Facility.

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

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

The Company recorded deferred financing costs of $ 1.0 million in other expense during the year ended December 31, 2021.

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

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

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

For the first interest period ending May 2021 and the second interest period ending August 2021, Odeon elected to pay in PIK interest.

Odeon paid cash interest with respect to the third interest period ending November 2021.

The principal amount of new funding is prior to deducting discounts of $ 19.4 million and deferred financing costs of $ 16.5 million related to the Odeon Term Loan Facility.

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

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

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

Odeon Revolving Credit Facility.

On December 7, 2017, the Company entered into a Revolving Credit Facility Agreement (“Odeon Revolving Credit Facility”) with Citigroup Global Markets Limited, Lloyds Bank PLC, Barclays Bank PLC and Bank of America Merrill Lynch International Limited as arrangers.

The lenders made available a multicurrency revolving credit facility in an aggregate amount of £ 100.0 million.

The interest rate on each loan when drawn down under the Odeon Revolving Credit Facility was 2.5 % plus IBOR (meaning LIBOR, EURIBOR, CIBOR or STIBOR as applicable) per annum.

The undrawn commitment fee was 0.5 % of the undrawn amount per annum.

All assets located in England and Wales were pledged as collateral.

On April 24, 2020, Odeon Cinemas Group Limited entered into an amendment to the Odeon Revolving Credit Facility with Lloyds Bank PLC as agent (the “Odeon Amendment”), pursuant to 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 which Odeon Cinemas Group Limited has delivered a Financial Covenant Election (as defined in the Odeon Amendment) to the agent (the “Odeon Covenant Suspension Period”).

During the Odeon Covenant Suspension Period, Odeon Cinemas Group Limited will not, and will not permit any of its subsidiaries to, make certain restricted payments including payment on shareholder loans, provided that cash payments of interest with respect to shareholder loans will be permitted.

Additionally, lenders granted a waiver such that certain events or circumstances resulting from COVID-19 virus occurring prior to the Odeon Amendment and continuing will be deemed not to constitute an event of default under the Odeon Revolving Credit Facility.

On February 15, 2021, Odeon used the net proceeds from the Odeon Term Loan Facility to repay in full its then-existing Odeon Revolving Credit Facility.

First Lien Toggle Notes Due 2026

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

The First Lien Toggle Notes due 2026 were issued pursuant to an indenture dated as of January 15, 2021 among the Company, the guarantors named therein and the U.S.

bank National Association, as trustee and collateral agent.

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

The total cost to exercise this repurchase option was $ 40.3 million, including principal, redemption price and accrued and unpaid interest.

As a result of this debt reduction, the Company’s annual cash interest cost will be reduced by $ 5.25 million.

During the year ended December 31, 2021, the Company recorded loss on debt extinguishment of $ 14.4 million in other expense.

See Note 16—Subsequent Events for additional information.

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.

For the first interest period ended July 15, 2021, the Company elected to pay in PIK interest.

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

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

On December 14, 2020, Mudrick received a total of 21,978,022 shares of the Company’s common stock (“Common Stock”);

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

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

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

At December 31, 2020, the Class A common shares issued were recorded by the Company in stockholders’ deficit with an offset in other long term assets 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.

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

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

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

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

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.

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

Odeon Term Loan Facility.

On February 15, 2021, Odeon entered into a new £ 140.0 million and € 296.0 million 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 for further information and minimum liquidity requirements.

Senior Subordinated Debt Exchange Offers

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The Company raised $ 300 million in additional cash from the issuance of the new 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, 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.

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, 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.

The closing of the Exchange Offers also allowed the Company 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 the Company of between approximately $ 120 million and $ 180 million.

The Company realized significant cancellation of debt income for tax purposes in connection with its debt restructuring.

As a result of such CODI, a significant portion of its net operating losses will be eliminated as a result of tax attribute reductions, see Note 10 — Income Taxes for further information.

The Company realized $ 1.2 billion of cancellation of debt income (“CODI”) for tax purposes in connection with its debt restructuring.

As a result of such CODI, $ 1.2 billion of its net operating losses were eliminated as a result of tax attribute reductions, see Note 10 — Income Taxes for further information.

In connection with the Exchange Offers, the Company 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.

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Second Lien Notes due 2026.

In connection with the Second Lien Exchange on December 14, 2020, Mudrick exchanged $ 104.5 million aggregate principal amount of the Company’s Second Lien Notes due 2026 held by Mudrick for 13,736,264 shares of the Company’s Class A common stock, see “Entry into Material Definitive Agreements — Mudrick Transaction” above for further information.

In connection with the Second Lien Exchange on December 14, 2020, Mudrick exchanged $ 104.5 million aggregate principal amount of the Company’s Second Lien Notes due 2026 held by Mudrick for 13,736,264 shares of the Company’s Common Stock, see “First Lien Toggle Notes Due 2026” above for further information.

In connection with the Exchange Offers on July 31, 2020, the Company issued $ 1,462.3 million aggregate principal amount of the new Second Lien Notes due 2026 in exchange for the Existing Subordinated Notes.

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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, the Company 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, the Company 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 five 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.

The equity issuance was recorded by the Company 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, the Company 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, the Company 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.

The Second Lien Notes due 2026 bear cash interest at a rate of 10 % per annum payable semi-annually in arrears on June 15 and December 15, beginning on December 15, 2020.

Subject to the limitation in the next succeeding sentence, 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 12 % per annum.

For the first interest period ending December 15, 2020, the Company elected to pay in PIK interest.

The Company’s ability to pay PIK interest with respect to the third interest period after the issue date is subject to certain liquidity thresholds.

For the first interest period ending December 15, 2020 and the second interest period ending June 15, 2021, the Company elected to pay in PIK interest.

For the third interest period ending December 15, 2021, the Company paid cash interest with respect to the third interest period.

For all interest periods after the first three interest periods, interest will be payable solely in cash at a rate of 10 % per annum.

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(ii) 103.0 % for the twelve-month period beginning on June 15, 2024 and (iii) 100.0 % at any time thereafter, plus accrued and unpaid interest.

If the Company or its restricted subsidiaries sell assets, under certain circumstances, the Company will be required to apply the net proceeds to redeem the new Second Lien Notes due 2026 at a price equal to 100 % of the issue price of the new Second Lien Notes due 2026, plus accrued and unpaid interest to, but excluding the redemption date.

If the Company or its restricted subsidiaries sell assets, under certain circumstances, the Company will be required to apply the net proceeds to redeem the Second Lien Notes due 2026 at a price equal to 100 % of the issue price of the Second Lien Notes due 2026, plus accrued and unpaid interest to, but excluding the redemption date.

Upon a Change of Control (as defined in the indenture governing the Second Lien Notes due 2026), the Company must offer to purchase the Second Lien Notes due 2026 at a purchase price equal to 101 % of the principal amount, plus accrued and unpaid interest.

The Second Lien Notes due 2026 have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and will mature on June 15, 2026.

The Second Lien Notes due 2026 are fully and unconditionally guaranteed on a joint and several basis by each of the Company’s subsidiaries that currently guarantee its obligations under the Company’s Senior Secured Credit Facility.

The Second Lien Notes due 2026 are secured on a second-priority basis by substantially all of the tangible and intangible assets owned by the Company and the guarantor subsidiaries that secure obligations under the Senior Secured Credit Facility (“Collateral”).

The Second Lien Notes due 2026 are subordinated in right of payment to all indebtedness of the Company that is secured by a first-priority lien on the Collateral.

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indenture, dated as of July 31, 2020, among the Company, the guarantors named therein and GLAS Trust Company LLC, as trustee and collateral agent.

See Note 16—Subsequent Events for additional information.

Separately, upon the closing of its private debt exchange, Silver Lake Alpine, L.P.

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The First Lien Notes due 2026 have not been registered under the Securities Act and will mature on April 24, 2026.

The First Lien Notes due 2026 are fully and unconditionally guaranteed on a joint and several basis by each of the Company’s subsidiaries that currently guarantee its obligations under the Company’s Senior Secured Credit Facility.

The First Lien Notes due 2026 are secured by a first-priority lien on the Collateral.

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Senior Secured Credit Facilities.

The Company is party to that certain Credit Agreement, dated as of April 30, 2013 (as amended by the First Amendment to Credit Agreement, dated as of December 11, 2015, that certain Second Amendment to Credit Agreement, dated as of November 8, 2016, that certain Third Amendment to Credit Agreement, dated as of May 9, 2017, that certain Fourth Amendment to Credit Agreement, dated as of June 13, 2017, that certain Fifth Amendment to Credit Agreement, dated as of August 14, 2018, the Sixth Amendment (as defined below), the Seventh Amendment (as defined below), the Eighth Amendment (as defined below), the Ninth Amendment (as defined below) and the Tenth Amendment (as defined below)), with the issuing banks and lenders from time to time party thereto and Wilmington Savings Fund Society, FSB, as administrative agent (as successor to Citicorp North America, Inc., the “Administrative Agent”), pursuant to which the lenders have agreed to provide the Term Loan Facility (as defined below) and the Revolving Credit Facility.

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

On March 8, 2021, the Company entered into the Ninth Amendment to the Credit Agreement (the “Ninth Amendment”) with the requisite revolving lenders party thereto and the Administrative Agent, pursuant to which such revolving lenders agreed to extend the Initial Covenant 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 for further information.

The Company is party to that certain Credit Agreement, dated as of April 30, 2013 (as amended by that certain First Amendment to Credit Agreement, dated as of December 11, 2015, that certain Second Amendment to Credit Agreement, dated as of November 8, 2016, that certain Third Amendment to Credit Agreement, dated as of May 9, 2017, that certain Fourth Amendment to Credit Agreement, dated as of June 13, 2017, that certain Fifth Amendment to Credit Agreement, dated as of August 14, 2018, that certain Sixth Amendment to Credit Agreement, dated as of April 22, 2019, that certain Seventh Amendment to Credit Agreement, dated as of April 23, 2020, that certain Eighth Amendment to Credit Agreement, dated as of July 31, 2020, that certain Ninth Amendment to Credit Agreement, dated as of March 8, 2021, that certain Tenth Amendment to Credit Agreement, also dated as of March 8, 2021, and that certain Eleventh Amendment to Credit Agreement, dated as of December 20, 2021, (the “Eleventh Amendment”), the “Credit Agreement”) with the issuing banks and lenders from time to time party thereto and Wilmington Savings Fund Society, FSB, as administrative agent (as successor to Citicorp North America, Inc., the “Administrative Agent”), pursuant to which the lenders have agreed to provide the Senior Secured Term Loan (as

defined below) and the Senior Secured Revolving Credit Facility (as defined below).

The Senior Secured Credit Facilities (as defined below) are provided by a syndicate of banks and other financial institutions.

On March 8, 2021, the Company entered into the Ninth Amendment to Credit Agreement (the “Ninth Amendment”), with the requisite revolving lenders party thereto and the Administrative Agent, pursuant to which the requisite revolving lenders party thereto agreed to extend the suspension period for the financial covenant under its Credit Agreement from a period ending March 31, 2021, to a period ending on March 31, 2022 (the “Extended Covenant Suspension Period ending March 31, 2022”), which was further extended by the Eleventh Amendment from a period ending March 31, 2021, to a period ending on March 31, 2023 (the “Extended Covenant Suspension Period ending March 31, 2023”).

During the Extended Covenant Suspension Period ending March 31, 2022 and the Extended Covenant Suspension Period ending March 31, 2023, the Company will not, and will not permit any of its restricted subsidiaries to, (i) make certain restricted payments, (ii) subject to certain exceptions, incur any indebtedness for borrowed money that is pari passu or senior in right of payment or security with the Revolving Loans (as defined in the Credit Agreement) or (iii) make any investment in or otherwise dispose of any assets to any subsidiary of the Company that is not a Loan Party (as defined in the Credit Agreement) to facilitate a new financing incurred by a subsidiary of the Company.

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

In addition, on March 8, 2021 the Company entered into the Tenth Amendment to the Credit Agreement (the “Tenth Amendment”), pursuant to which the Company agreed not to consent to certain modifications to the Credit Agreement described in the Tenth Amendment without the consent of the majority of the revolving lenders party to the Tenth Amendment.

On July 31, 2020, the Company entered into the Eighth Amendment to the Credit Agreement (the “Eighth Amendment”) with Citicorp North America, Inc., as the administrative agent, pursuant to which certain restrictive provisions, including modifications to the covenants limiting indebtedness, liens, investments, asset sales and restricted payments, were added to the Credit Agreement to ensure that the terms and conditions of the First Lien Notes due 2026, the Convertible Notes due 2026 and the Second Lien Notes due 2026 (subject to certain exceptions) are not materially more favorable (when taken as a whole) to the noteholders than the terms and conditions of the Credit Agreement (when taken as a whole) are to the lenders thereunder.

On July 31, 2020, the Company entered into the Eighth Amendment to Credit Agreement (the “Eighth Amendment”) with Citicorp North America, Inc., as the administrative agent, pursuant to which certain restrictive provisions, including modifications to the covenants limiting indebtedness, liens, investments, asset sales and restricted payments, were added to the Credit Agreement to ensure that the terms and conditions of the First Lien Notes due 2026, the Convertible Notes due 2026 and the Second Lien Notes due 2026 (subject to certain exceptions) are not materially more favorable (when taken as a whole) to the noteholders than the terms and conditions of the Credit Agreement (when taken as a whole) are to the lenders thereunder.

The Company accounted for this transaction as a modification of debt.

On April 23, 2020, the Company entered into the Seventh Amendment to the Credit Agreement (the “Seventh Amendment”) with the requisite revolving lenders party thereto and Citicorp North America, Inc., as administrative agent, pursuant to which the requisite revolving lenders party thereto agreed to suspend the financial covenant applicable to the Revolving Credit Facility for the period from and after the effective date of the Seventh Amendment to and including the earlier of (a) March 31, 2021 and (b) the day immediately preceding the last day of the Test Period (as defined in the Credit Agreement) during which the Company has delivered a Financial Covenant Election (as defined in the Credit Agreement) to the Administrative Agent (such period, the “Initial Covenant Suspension Period”).

On April 23, 2020, the Company entered into the Seventh Amendment to Credit Agreement (the “Seventh Amendment”) with the requisite revolving lenders party thereto and Citicorp North America, Inc., as administrative agent, pursuant to which the requisite revolving lenders party thereto agreed to suspend the financial covenant applicable to the Senior Secured Revolving Credit Facility for the period from and after the effective date of the Seventh Amendment to and including the earlier of (a) March 31, 2021 and (b) the day immediately preceding the last day of the Test Period (as defined in the Credit Agreement) during which the Company has delivered a Financial Covenant Election (as defined in the Credit Agreement) to the Administrative Agent (such period, the “Initial Covenant Suspension Period”).

During the Initial Covenant Suspension Period, the Company will not, and will not permit any of its restricted subsidiaries to, make certain restricted payments, and such conditions were further amended by the Ninth Amendment.

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On April 22, 2019, the Company entered into the Sixth Amendment to Credit Agreement (the “Sixth Amendment”) with each lender party thereto and Citicorp North America, Inc., as administrative agent.

Pursuant to the Sixth Amendment, the lenders agreed to provide 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 the loans thereunder, the “Term Loans”) and (2) a $ 225.0 million senior secured revolving credit facility (which is also available for letters of credit and for swingline borrowings on same-day notice) maturing April 22, 2024 (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Senior Secured Credit Facilities”).

The proceeds of the Term Loan Facility were used to repay all of the Company’s existing term loans in an aggregate principal amount of approximately $ 1,338.5 million and to fund the redemptions of the 5.875 % Senior Subordinated Notes due 2022 and the 6.0 % Senior Secured Notes due 2023.

for letters of credit and for swingline borrowings on same-day notice) maturing April 22, 2024 (the “Senior Secured Revolving Credit Facility” and, together with the Senior Secured Term Loans, the “Senior Secured Credit Facilities”).

The proceeds of the Senior Secured Term Loans were used to repay all of the Company’s existing term loans in an aggregate principal amount of approximately $ 1,338.5 million and to fund the redemptions of the 5.875 % Senior Subordinated Notes due 2022 and the 6.0 % Senior Secured Notes due 2023.

The Company recorded a loss of $ 16.6 million during the year ended December 31, 2019 related to these transactions, comprised of $ 14.1 million of extinguishment losses and $ 2.5 million of third party costs related to the modification of the Term Loans.

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● 100 % of the net proceeds of any issuance or incurrence of debt by the Company or any of its restricted subsidiaries, other than certain debt permitted under the Credit Agreement.

The foregoing mandatory prepayments will be used to reduce the installments of principal payments on the Term Loan Facility.

The foregoing mandatory prepayments will be used to reduce the installments of principal payments on the Senior Secured Term Loans.

The Company may voluntarily repay outstanding loans under the Senior Secured Credit Facilities at any time without premium or penalty, except for customary “breakage” costs with respect to LIBOR loans under the Senior Secured Credit Facilities.

Borrowings under the Term Loan Facility bear interest at a rate per annum equal to, at the Company’s 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 from time to time and (c) LIBOR determined by reference to the cost of funds for U.S.

The Senior Secured Term Loans bear interest at a rate per annum equal to, at the Company’s 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 from time to time 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.

Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to an applicable margin based upon a leverage-based pricing grid, plus, at the Company’s option, either (1) 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 from time to time and (c) LIBOR determined by reference to the cost of funds for U.S.

Borrowings under the Senior Secured Revolving Credit Facility bear interest at a rate per annum equal to an applicable margin based upon a leverage-based pricing grid, plus, at the Company’s option, either (1) 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 from time to time 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) 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, 2020, the applicable margins for LIBOR borrowings under the Term Loan Facility and the Revolving Credit Facility were 3.00 % and 2.50 % , respectively.

As of December 31, 2021, the applicable margins for borrowings under the Senior Secured Term Loan and the Senior Secured Revolving Credit Facility were 3.00 % and 2.50 % , respectively.

The Credit Agreement contains other customary terms, including (1) representations, warranties and affirmative covenants, (2) negative covenants, including limitations on indebtedness, liens, mergers and acquisitions, asset sales, investments, distributions, prepayments of subordinated debt and transactions with affiliates, in each case subject to baskets, thresholds and other exceptions, and (3) customary events of default.

The availability of certain baskets and the ability to enter into certain transactions will also be subject to compliance with certain financial ratios.

In addition, the Revolving Credit Facility includes a financial covenant that requires, in certain circumstances, compliance with a certain secured leverage ratio.

In addition, the Senior Secured Revolving Credit Facility includes a financial covenant that requires, in certain circumstances, compliance with a certain secured leverage ratio.

As of December 31, 2021, the Company was in a covenant suspension period under the Senior Secured Revolving Credit Facility as described above.

Convertible Notes due 2026.

Concurrently with the Exchange Offers, to obtain the consent of the holders of the 2.95 % Convertible Notes due 2024 (the “Convertible Notes due 2024”) to the transactions contemplated by the Exchange Offers, the Company 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 was extended to May 1, 2026 (the “Convertible Notes due 2026”) (the “Convertible Notes” means the Convertible Notes due 2024 before July 31, 2020 and the Convertible Notes due 2026 after July 31, 2020), a first-priority lien on the Collateral was granted to secure indebtedness thereunder and certain covenants were modified.

The Convertible Notes due 2026 were issued pursuant to an amended and restated indenture, dated as of July 31, 2020, among the Company, the guarantors named therein and

The Convertible Notes due 2026 were issued pursuant to an amended and restated indenture, dated as of July 31, 2020, among the Company, the guarantors named therein and U.S.

Bank National Association, as trustee and collateral agent.

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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.

The Convertible Notes due 2026 are convertible at the option of the holders thereof on the same terms as the Convertible Notes due 2024.

Upon maturity, the $ 600.0 million principal amount of the Convertible Notes due 2026 will be payable in cash.

The Company will pay interest in cash on the Convertible Notes due 2026 at 2.95 % per annum, semi-annually in arrears on September 15 th and March 15 th , commencing on September 15, 2020.

On January 27, 2021, affiliates of Silver Lake and certain co-investors (collectively, the “Noteholders”) elected to convert (the “Conversion”) all $ 600.0 million principal amount of the Company’s Convertible Notes due 2026 into shares of the Company’s Common Stock at a conversion price of $ 13.51 per share.

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

The Company recorded approximately $ 71.0 million of non-cash interest expense during the year ended December 31, 2021 for unamortized discount and deferred charges at the date of conversion following the guidance in ASC 815-15-40-1.

The non-cash Conversion reduced the Company’s first-lien indebtedness by $ 600.0 million.

Pursuant to the Stock Repurchase and Cancellation Agreement with Dalian Wanda Group Co., Ltd.

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

The carrying value of the Convertible Notes is as follows:

Carrying Value

Reclassification

Carrying Value

at Issuance on

Carrying Value

to Additional

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December 31, 2019

Paid-in Capital

December 31, 2020

January 29, 2021

Principal balance

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Carrying value

On September 14, 2018, the Company issued $ 600.0 million aggregate principal amount of its 2.95 % Senior Unsecured Convertible Notes due 2024 to Silver Lake and others.

The Convertible Notes due 2024 would have matured on September 15, 2024, subject to earlier conversion by the holders thereof, repurchase by the Company at the option of the holders or redemption by the Company upon the occurrence of certain contingencies, as discussed below.

On April 24, 2020, the Company 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 the Company to issue the First Lien Notes due 2025, among other changes.

On July 31, 2020, concurrently with the Exchange Offers to obtain the consent of the holders of the Convertible Notes due 2024 to the transactions contemplated by the Exchange Offers, the Company restructured the $ 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 reset of the conversion price as discussed below was not extended ) and a first-priority lien on the Collateral was granted to secure indebtedness thereunder.

The Convertible Notes due 2026 are convertible at the option of the holders thereof on the same terms as the Convertible Notes due 2024.

Upon maturity, the $ 600.0 million principal amount of the Convertible Notes due 2026 will be payable in cash.

The Company will pay interest in cash on the Convertible Notes due 2026 at 2.95 % per annum, semi-annually in arrears on September 15th and March 15th, commencing on September 15, 2020.

On September 14, 2018, the Company bifurcated the conversion feature from the principal balance of the Convertible Notes due 2024 as a derivative liability because (1) a conversion feature is not clearly and closely related to the debt instrument and the reset of the conversion price discussed in the following paragraph causes the conversion feature to not be considered indexed to the Company’s equity, (2) the conversion feature standing alone meets the definition of a derivative, and (3) the Convertible Notes due 2024 are not remeasured at fair value each reporting period with changes in fair value recorded in the consolidated statement of operations.

The initial derivative liability of $ 90.4 million is offset by a discount to the principal balance and is amortized to interest expense resulting in an effective rate of 5.98 % over the extended term of the Convertible Notes due 2026.

On September 14, 2018, the Company issued $ 600.0 million aggregate principal amount of its 2.95 % Senior Unsecured Convertible Notes due 2024 to Silver Lake and others.

to the debt instrument and the reset of the conversion price caused the conversion feature to not be considered indexed to the Company’s equity, (2) the conversion feature standing alone met the definition of a derivative, and (3) the Convertible Notes due 2024 were not remeasured at fair value each reporting period with changes in fair value recorded in the consolidated statements of operations.

The initial derivative liability of $ 90.4 million is offset by a discount to the principal balance and was amortized to interest expense resulting in an effective rate of 5.98 % over the extended term of the Convertible Notes due 2024.

The Company also recorded deferred financing costs of approximately $ 13.6 million related to the issuance of the Convertible Notes due 2024 and will amortize those costs to interest expense under the effective interest method over the extended term of the Convertible Notes due 2024.

The Company recorded interest expense for the year ended December 31, 2020 of $ 31.8 million, for the year ended December 31, 2019 of $ 32.6 million and for the period from September 14, 2018 to December 31, 2018 of $ 9.7 million.

The Company recorded interest expense for the years ended December 31, 2021, December 31, 2020 and December 31, 2019 of $ 0 million, $ 31.8 million, and $ 32.6 million, respectively.

The derivative liability was remeasured at fair value each reporting period, a Level 3 fair value estimate, until the conversion price reset on September 14, 2020, with changes in fair value recorded in the consolidated statements of operations as other expense or income.

On September 14, 2020, the conversion price reset from $ 18.95 per share to $ 13.51 per share pursuant to the terms of the Indenture for the Convertible Notes due 2024 and the derivative liability as of September 14, 2020 was reclassified to permanent equity as the conversion feature is indexed to the Company’s equity.

For the years ended December 31, 2020, December 31, 2019 and December 31, 2018, the Company recorded in other expense (income) of $ 89.4 million, $( 23.5 ) million and $( 66.4 ) million, respectively, related to the derivative

liability fair value adjustments for embedded conversion feature in the Convertible Notes due 2024.

The if-converted value of the Convertible Notes due 2026 is less than the principal balance by approximately $ 505.8 million as of December 31, 2020 based on the closing price per share of the Company’s common stock of $ 2.12 per share.

In addition, as a result of the adjustment to the conversion price, any future conversion of the Convertible Notes due 2026 will result in 5,666,000 shares of the Company’s Class B common stock held by Wanda being subject to forfeiture and retirement by the Company at no additional cost pursuant to the Stock Repurchase and Cancellation Agreement (the “Stock Repurchase Agreement”) between the Company and Wanda discussed in Note 9 — Stockholders’ Equity.

This cancellation agreement is a contingent call option for the forfeiture shares, which is a freestanding derivative measured at fair value on a recurring basis, which was a Level 3 estimate of fair value.

The initial derivative asset of $ 10.7 million is offset by a credit to stockholders’ equity related to the Class B common stock purchase and cancellation.

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

On September 14, 2020, the conversion price reset from $ 18.95 per share to $ 13.51 per share pursuant to the terms of the Indenture for the Convertible Notes due 2026 and the derivative asset as of September 14, 2020 was reclassified to permanent equity as the number of shares that will be cancelled on conversion of the Convertible Notes due 2026 are known.

For the years ended December 31, 2020, December 31, 2019, and December 31, 2018, this resulted in other expense (income) of $ 19.6 million, $ 17.7 million, and $( 45.0 ) million, respectively, related to the derivative asset fair value adjustment for contingent call option related to the Class B common stock purchase and cancellation agreement.

Additionally, the conversion rate will be adjusted if any cash dividend or distribution is made to all or substantially all holders of the Company’s common stock (other than a regular, quarterly cash dividend that does not exceed $ 0.20 per share until September 14, 2020 and $ 0.10 per share thereafter).

Any Convertible Notes due 2026 that are converted in connection with a Make-Whole Fundamental Change (as defined in the indenture governing the Convertible Notes due 2026) are, under certain circumstances, entitled to an increase in the conversion rate.

For the years ended December 31, 2020 and December 31, 2019, the Company recorded in other expense (income) of $ 89.4 million and $( 23.5 ) million, respectively, related to the derivative liability fair value adjustments for embedded conversion feature in the Convertible Notes due 2024.

Pursuant to the Stock Repurchase and Cancellation Agreement between the Company and Wanda, the conversion feature of the Convertible Notes due 2024 would result in 5,666,000 shares of the Company’s Class B common stock held by Wanda being subject to forfeiture and retirement by the Company at no additional cost.

This cancellation agreement was a contingent call option for the forfeiture shares, which was a freestanding derivative measured at fair value on a recurring basis, which was a Level 3 estimate of fair value.

The initial derivative asset of $ 10.7 million was offset by a credit to stockholders’ equity related to the Class B common stock purchase and cancellation.

The forfeiture shares feature was not clearly and closely related to the Convertible Notes due 2024 host and it was bifurcated and accounted for as a derivative asset measured at fair value through earnings each reporting period until the conversion feature reset on September 14, 2020, with changes in fair value recorded in the consolidated statements of operations as other expense or income.

For the years ended December 31, 2020 and December 31, 2019, this resulted in other expense (income) of $ 19.6 million and $ 17.7 million, respectively, related to the derivative asset fair value adjustment for contingent call option related to the Class B common stock purchase and cancellation agreement.

On September 14, 2020, the conversion price reset from $ 18.95 per share to $ 13.51 per share pursuant to the terms of the Indenture for the Convertible Notes due 2024 and the derivative asset as of September 14, 2020 was reclassified to permanent equity as the number of shares that will be cancelled on conversion of the Convertible Notes due 2024 were known.

The Company recorded an immaterial non-cash correction of $ 26.2 million recorded in other expense during the year ended December 31, 2020.

The adjustment related to the Company correcting the valuation methodology applied to the derivative asset related to the cancellation agreement entered into on September 14, 2018, a Level 3 estimate of fair value for a complex instrument developed in consultation with a third party specialist.

Upon conversion by a holder of the Convertible Notes due 2026, the Company shall deliver, at its election, either cash, shares of the Company’s Class A common stock or a combination of cash and shares of the Company’s Class A common stock at an initial conversion rate of 52.7704 per $ 1,000 principal amount of the Convertible Notes due 2026 (which represented an initial conversion price of $ 18.95 ), in each case subject to customary anti-dilution adjustments.

In addition to typical anti-dilution adjustments, because the then-applicable conversion price was greater than 120 % of the average of the volume-weighted average price of the Company’s Class A common stock for the 10 days prior to the second anniversary of issuance on September 14, 2020 (the “Reset Conversion Price”), the conversion price for the Convertible Notes due 2026 was subject to a reset provision that adjusted the conversion price downward to such Reset Conversion Price.

However, this conversion price reset provision was subject to a conversion price floor such that the shares of the Company’s Class A common stock issuable upon conversion would not exceed 30 % of the Company’s then outstanding fully-diluted share capital after giving effect to the conversion.

The volume-weighted average price of the Company’s Class A common stock for the ten consecutive trading days ending on September 14, 2020 was $ 6.55 and, as a result, the conversion price reset provision was triggered.

Effective as of September 14, 2020, the conversion price for the Convertible Notes due 2026 was adjusted to $ 13.51 , which represents the conversion price that would result in 30 % of the Company’s then outstanding fully-diluted share capital being issued upon conversion in full of the Convertible Notes due 2026.

The conversion price reset provision was only applicable at September 14, 2020 and any future adjustments to the conversion price will be due to customary anti-dilution adjustments as set forth in the indenture governing the Convertible Notes due 2026.

The holders of the Convertible Notes due 2026 may elect to convert the Convertible Notes due 2026 at any time and from time to time until September 15, 2024.

As of December 31, 2020, the $ 600.0 million principal balance of the Convertible Notes due 2026 would be convertible into 44,422,860 , compared to 31,662,240 shares of Class A common stock before giving effect to the conversion price reset on September 14, 2020.

See Note 17 — -Subsequent Events 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.

Odeon Revolving Credit Facility

Merrill Lynch International Limited as arrangers.

The lenders made available a multicurrency revolving credit facility in an aggregate amount of £ 100.0 million.

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

At December 31, 2019, there were no borrowings outstanding under the Odeon Revolver.

The interest rate on each loan when drawn down under the Odeon Revolving Credit Facility was 2.5 % plus IBOR (meaning LIBOR, EURIBOR, CIBOR or STIBOR as applicable) per annum.

The undrawn commitment fee was 0.5 % of the undrawn amount per annum.

All assets located in England and Wales have been pledged as collateral.

See Note 17 — -Subsequent Events for information regarding the new £ 140.0 million and € 296.0 million Odeon Term Loan Facility entered into on February 15, 2021, the net proceeds used to repay its existing revolving credit facility, and the minimum liquidity requirements.

First Lien Notes Due 2025

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The Company recorded deferred financing costs of approximately $ 8.9 million related to the issuance of the First Lien Notes due 2025 and will amortize those costs to interest expense under the effective interest method over the term of the First Lien Notes due 2025.

The First Lien Notes due 2025 are general senior secured obligations of the Company and are fully and unconditionally guaranteed on a joint and several senior secured basis by all of the Company’s existing and future subsidiaries that guarantee the Company’s other indebtedness, including the Company’s Senior Secured Credit Facility.

The First Lien Notes due 2025 are secured, on a pari passu basis with the Senior Secured Credit Facility, on a first-priority basis by substantially all of the tangible and intangible assets owned by the Company and guarantors that secure obligations under the Senior Secured Credit Facility including pledges of capital stock of certain of the Company’s and the guarantor’s wholly-owned material subsidiaries (but limited to 65 % of the voting stock of any foreign subsidiary), subject to certain thresholds, exceptions and permitted liens.

See Note 16—Subsequent Events for additional information.

The First Lien Notes due 2025 are secured, on a pari passu basis with the Senior Secured Credit Facilities, on a first-

priority basis by substantially all of the tangible and intangible assets owned by the Company and guarantors that secure obligations under the Senior Secured Credit Facilities including pledges of capital stock of certain of the Company’s and the guarantor’s wholly-owned material subsidiaries (but limited to 65 % of the voting stock of any foreign subsidiary), subject to certain thresholds, exceptions and permitted liens.

The Company may redeem some or all of the First Lien Notes due 2025 at any time on or after April 15, 2022, at the redemption prices set forth in the First Lien Notes Indenture.

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

(ii) pay dividends on or make other distributions

in respect of its capital stock;

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

(iii) purchase or redeem capital stock or prepay subordinated debt or other junior securities;

23 unchanged sentences

On March 17, 2017, in connection with the issuance of the additional Sterling Notes due 2024, the Company entered into a registration rights agreement.

Subject to the terms of the registration rights agreement, the Company is required to (1) file one or more registration statements with the SEC not later than 270 days from November 8, 2016 with respect to the registered offer to exchange the notes for new notes of the Company having terms identical in all material respects to the notes and (2) use its commercially reasonable efforts to cause the exchange offer registration statement to be declared effective under the Securities Act within 365 days of November 8, 2016.

Subject to the terms of the registration rights agreement, the Company is

required to (1) file one or more registration statements with the SEC not later than 270 days from November 8, 2016 with respect to the registered offer to exchange the notes for new notes of the Company having terms identical in all material respects to the notes and (2) use its commercially reasonable efforts to cause the exchange offer registration statement to be declared effective under the Securities Act within 365 days of November 8, 2016.

The Company filed its Form S–4 registration statement related to the registration rights agreement with the Securities and Exchange Commission on April 19, 2017, and it was declared effective June 7, 2017.

5 unchanged sentences

The Notes due 2025 mature on June 15, 2025.

The Company will pay interest on the Notes due 2025 at 5.75 % per annum, semi-annually in arrears on

June 15th and December 15th, commencing on December 15, 2015.

The Company will pay interest on the Notes due 2025 at 5.75 % per annum, semi-annually in arrears on June 15th and December 15th, commencing on December 15, 2015.

The Company may redeem some or all of the Notes due 2025 at any time on or after June 15, 2020 at 102.875 % of the principal amount thereof, declining ratably to 100 % of the principal amount thereof on or after June 15, 2023, plus accrued and unpaid interest to the redemption date.

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Subject to the terms of the registration rights agreement, the Company is required to (1) file a registration statement with the SEC not later than 270 days from the issuance date with respect to the registered offer to exchange the notes for new notes of the Company having terms identical in all material respects to the notes and (2) use its commercially reasonable efforts to cause the exchange offer registration statement to be declared effective under the Securities Act within 365 days of the issuance date.

The Company filed its Form S–4 registration statement

related to the registration rights agreement with the Securities and Exchange Commission on April 19, 2017, and it was declared effective June 7, 2017.

All of the original notes were exchanged as of July 12, 2017.

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In addition, the Company may redeem up to 35 % of the aggregate principal amount of the Notes due 2027 using net proceeds from certain equity offerings completed on or prior to May 15, 2020, at a redemption price as set forth in the indenture governing the Notes due 2027.

The Company may redeem some or all of the Notes due 2027 at any time prior to May 15, 2022 at a

redemption price equal to 100 % of their aggregate principal amount and accrued and unpaid interest to, but not including, the date of redemption, plus an applicable make-whole premium.

The Company may redeem some or all of the Notes due 2027 at any time prior to May 15, 2022 at a redemption price equal to 100 % of their aggregate principal amount and accrued and unpaid interest to, but not including, the date of redemption, plus an applicable make-whole premium.

The Company used the net proceeds from the Notes due 2027 private offering to pay a portion of the consideration for the acquisition of Nordic plus related refinancing of Nordic debt assumed in the acquisition.

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Financial Covenants

As of December 31, 2020, the Company was in a covenant suspension period under the Senior Secured Credit Facility and the Odeon Revolving Credit Facility as described above.

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

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

The Company is 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, 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.

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

As of December 31, 2021, the Company was in a covenant suspension period under the Senior Secured Revolving Credit Facility and the Odeon Revolving Credit Facility as described above.

NOTE 9—STOCKHOLDERS’ EQUITY

Common Stock Rights and Privileges

The rights of the holders of Holdings’ Class A common stock and Holdings’ Class B common stock are identical, except with respect to voting and conversion applicable to the Class B common stock.

Holders of Holdings’ Class A common stock are entitled to one vote per share and holders of Holdings’ Class B common stock are entitled to three votes per share.

Holders of Class A common stock and Class B common stock will share ratably (based on the number of shares of common stock held) in any dividend declared by its board of directors, subject to any preferential rights of any outstanding preferred stock.

The Class A common stock is not convertible into any other shares of Holdings’ capital stock.

Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock.

In addition, each share of Class B common stock shall convert automatically into one share of Class A common stock upon any transfer, whether or not for value, except for certain transfers described in Holdings’ certificate of incorporation.

Equity Distribution Agreements

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

Holders of Holdings’ Common Stock are entitled to one vote per share.

Holders of Common Stock share ratably (based on the number of shares of Common Stock held) in any dividend declared by its board of directors, subject to any preferential rights of any outstanding preferred stock.

The Common Stock is not convertible into any other shares of Holdings’ capital stock.

Common Stock Issuances

The Company entered into equity distribution agreements with sales agents to sell approximately 241.6 million and 90.9 million shares of the Company’s 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 the Company’s 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, the Company 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.

The Company raised gross proceeds of approximately $ 272.8 million for the year ended December 31, 2020, through its at-the-market offering of approximately 90,955,685 shares of its Class A common stock and paid fees to the sales agents and other fees of approximately $ 8.1 million.

The Company has used and continues 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 for further information regarding additional at-the-market offerings of 50 million shares of Class A common stock and the sale of shares for net proceeds of approximately $ 582.0 million.

Exchange Offers

Certain backstop purchasers of the First Lien Notes due 2026 that participated in the Exchange Offer received five million Class A common shares.

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 Transaction Related to Exchange Offers

Certain backstop purchasers of the First Lien Notes due 2026 that participated in the Exchange Offer received five million common shares.

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

Mudrick Transaction

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

Common Stock Transactions with Mudrick

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

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

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

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

On December 14, 2020, Mudrick received a total of 21,978,022 shares of the Company’s Common Stock;

of which 8,241,758 shares relates to consideration received for a commitment fee and 13,736,264 shares as consideration received for (i) the commitment provided with respect to the First Lien Toggle Notes due 2026 and (ii) the Second Lien Exchange.

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

Since April 24, 2020, the Company has been prohibited from making dividend payments in accordance with the covenant suspension conditions in its Senior Secured Credit Facility Agreement.

Class B Common Stock

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

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

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

Since April 24, 2020, the Company has been prohibited from making dividend payments in accordance with the covenant suspension conditions in its Credit Agreement (as defined in Note 8 — Corporate Borrowings and Finance Lease Obligations).

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

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During the year ended December 31, 2020, the Company paid dividends and dividend equivalents of $ 6.5 million and accrued $ 0.4 million for the remaining unpaid dividends at December 31, 2020.

The aggregate dividends paid for Class A common stock, Class B common stock, and dividend equivalents were approximately $ 1.6 million, $ 1.6 million, and $ 3.3 million, respectively.

The aggregate dividends paid for Common Stock, Class B common stock, and dividend equivalents were approximately $ 1.6 million, $ 1.6 million, and $ 3.3 million, respectively.

The following is a summary of dividends and dividend equivalents declared to stockholders during the year ended December 31, 2019:

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During the year ended December 31, 2019, the Company paid dividends and dividend equivalents of $ 84.1 million and accrued $ 2.3 million for the remaining unpaid dividends at December 31, 2019.

The aggregate dividends paid for Class A common stock, Class B common stock, and dividend equivalents were approximately $ 41.7 million, $ 41.4 million, and $ 1.0 million, respectively.

The following is a summary of dividends and dividend equivalents declared to stockholders during the year ended December 31, 2018:

Declaration Date

(In millions)

February 28, 2018

March 12, 2018

March 26, 2018

June 11, 2018

June 25, 2018

July 24, 2018

September 10, 2018

September 24, 2018

September 14, 2018

September 25, 2018

September 28, 2018

November 1, 2018

December 10, 2018

December 26, 2018

During the year ended December 31, 2018, the Company paid dividends and dividend equivalents of $ 258.1 million and accrued $ 4.0 million for the remaining unpaid dividends at December 31, 2018.

The aggregate

dividends paid for Class A common stock, Class B common stock, and dividend equivalents were approximately $ 122.0 million, $ 136.1 million, and $ 0.1 million, respectively.

The aggregate dividends paid for Common Stock, Class B common stock, and dividend equivalents were approximately $ 41.7 million, $ 41.4 million, and $ 1.0 million, respectively.

Related Party Transactions

As of December 31, 2020 and December 31, 2019, the Company recorded a receivable due from Wanda of $ 0.7 million and $ 0.8 million, respectively for reimbursement of general administrative and other expense incurred on behalf of Wanda.

The Company recorded cost reductions for general and administrative services provided on behalf of Wanda of $ 0.3 million, $ 0.4 million and $ 0.0 million for the years ended December 31, 2020, December 31, 2019, and December 31, 2018, respectively.

Wanda owns Legendary Entertainment, a motion picture production company.

The Company will occasionally play Legendary’s films in its theatres as a result of transactions with independent film distributors.

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

The Company recorded cost reductions for general and administrative services provided on behalf of Wanda of $ 0 , $ 0.3 million and $ 0.4 million for the years ended December 31, 2021, December 31, 2020, and December 31, 2019, respectively.

By the end of the first quarter of 2021, Wanda was no longer a related party of the Company.

On September 14, 2018, the Company entered into the Investment Agreement with Silver Lake, relating to the issuance to Silver Lake (or its designated affiliates) of $ 600.0 million principal amount of the Convertible Notes due 2024 and entered into an amended and restated investment agreement with Silver Lake, relating to the issuance of the Convertible Notes due 2026 on August 31, 2020.

See Note 8 — Corporate Borrowings and Finance Lease Obligations - Convertible Notes and Note 17 — Subsequent Events for more information.

On September 14, 2018, the Company, Silver Lake and Wanda entered into a Right of First Refusal Agreement (the “ ROFR Agreement ”), which provides Silver Lake certain rights to purchase shares of the Company’s common stock that Wanda proposes to sell during a period of two years from the date of execution of the ROFR Agreement or, if earlier, until such time that Wanda and its affiliates cease to beneficially own at least 50.1 % of the total voting power of the Company’s voting stock.

The ROFR Agreement expired unexercised.

As of December 31, 2020, Wanda owns 23.08 % of AMC through its 51,769,784 shares of Class B common stock.

With the three-to-one voting ratio between the Company’s Class B and Class A common stock, Wanda had significant influence over of AMC with 47.37 % of the voting power of the Company’s common stock.

As discussed in Note 8 — Corporate Borrowings and Finance Lease Obligations and Note 17 — Subsequent Events, 5,666,000 shares of Class B common stock held by Wanda were forfeited and cancelled in connection with the Convertible Notes due 2026 conversion and Wanda converted all of its remaining and outstanding Class B common stock to Class A common stock on February 1, 2021.

See Note 8 — Corporate Borrowings and Finance Lease Obligations for information regarding the conversion of the $ 600.0 million principal amount of the Company’s Convertible Notes due 2026 into shares of the Company’s Common Stock in January 2021.

As a result of the conversion, Silver Lake was no longer a related party of the Company.

Treasury Stock

On February 27, 2020, the Company announced that its Board of Directors authorized a share repurchase program for an aggregate purchase of up to $ 200.0 million shares of Class A common stock.

As of April 24, 2020, the Company is prohibited from making purchases under its authorized stock repurchase program in accordance with the covenant suspension conditions in its Senior Secured Credit Facility Agreement.

On February 27, 2020, the Company announced that its Board of Directors authorized a share repurchase program for an aggregate purchase of up to $ 200.0 million shares of Common Stock.

As of December 31, 2021, $ 200.0 million remained available for repurchase under this plan.

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2013 Equity Incentive Plan

The 2013 Equity Incentive Plan provides for grants of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSU’s”), performance stock units (“PSU’s), stock awards, and cash performance awards.

The 2013 Equity Incentive Plan provides for grants of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), performance stock units (“PSUs), stock awards, and cash performance awards.

The maximum number of shares of Holdings’ Common Stock available for delivery pursuant to awards granted under the second amendment to the 2013 Equity Incentive Plan is 15 million shares.

At December 31, 2021, the aggregate number of shares of Holdings’ Common Stock available for grant was 4,650,723 shares.

The Company recorded stock-based compensation expense of $ 25.4 million, $ 4.4 million, and $ 14.9 million within general and administrative:

other during the years ended December 31, 2020, December 31, 2019, and December 31, 2018, respectively.

As of December 31, 2020, the remaining unrecognized compensation cost related to stock-based compensation arrangements was approximately $ 15.2 million.

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

(In millions)

Board of director stock award expense

Restricted stock unit expense

Performance stock unit expense

Special performance stock unit expense

Total stock-based compensation expense

As of December 31, 2021, the estimated remaining unrecognized compensation cost related to stock-based compensation arrangements was approximately $ 16.7 million.

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

Awards Granted in 2020, 2019, and 2018

AMC’s Board of Directors approved awards of stock, RSU’s, and PSU’s to certain of the Company’s employees and directors under the 2013 Equity Incentive Plan.

The Company accounts for forfeitures when they occur.

Awards Granted in 2021, 2020, and 2019 and Other Activity

AMC’s Board of Directors approved awards of stock, RSUs, and PSUs to certain of the Company’s employees and directors under the 2013 Equity Incentive Plan.

During years 2021, 2020, and 2019, the grant date fair value of these awards was based on the closing price of AMC’s stock on the date of grant, which ranged from $ 1.73 to $ 15.13 per share.

A dividend equivalent for restricted stock units and performance stock units equal to the amount paid in respect of one share of Class A common stock underlying the unit began to accrue with respect to the unit on the date of grant.

A dividend equivalent for restricted stock units and performance stock units equal to the amount paid in respect of

one share of Common Stock underlying the unit began to accrue with respect to the unit on the date of grant.

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

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

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

The award agreements generally had the following features:

● Stock Award Agreement:

The Company granted fully vested shares of Class A common stock to its independent members of AMC’s Board of Directors during the years ended December 31, 2020, Decembers 31, 2019, and December 31, 2018 of 77,090 , 32,464 , and 28,055 , respectively.

In connection with these share grants, the Company recorded approximately $ 0.5 million during each of the years ended December 31, 2020, December 31, 2019, and December 31, 2018 in general and administrative:

other expense.

● Board of Director Stock Award Agreement:

The Company granted fully vested shares of Common Stock to its independent members of AMC’s Board of Directors during the years ended December 31, 2021, Decembers 31, 2020, and December 31, 2019 of 124,054 , 77,090 , and 32,464 , respectively.

● Restricted Stock Unit Award Agreement:

The Company granted RSU awards of 1,511,297 , 730,167 , 656,576 to certain members of management during the years ended December 31, 2020, December 31, 2019, and December 31, 2018.

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

The Company granted RSU awards of 2,687,813 , 1,511,297 , 730,167 to certain members of management during the years ended December 31, 2021, December 31, 2020, and December 31, 2019, respectively.

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

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

The RSUs granted during 2021, 2020, and 2019 vest over three years with 1/3 vesting in each year.

These RSUs will be settled within 30 days of vesting.

The Company recorded approximately $ 8.7 million, $ 8.2 million and $ 6.2 million, respectively, in connection with these awards.

● Restricted Stock Unit Award Executive Agreement:

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These RSUs will be settled within 30 days of vesting.

The Company recorded approximately $ 1.0 million and $ 0.1 million of expense in general and administrative:

other expense during the years ended December 31, 2020 and December 31, 2019, respectively.

● Restricted Stock Unit Named Executive Officer Award Agreement:

During the years ended December 31, 2017 and December 31, 2016, RSU awards of 129,214 and 135,981 units, respectively, were granted to certain executive officers covered by Section 162(m) of the Internal Revenue Code.

During the year ended December 31, 2017, RSU awards of 129,214 units were granted to certain executive officers covered by Section 162(m) of the Internal Revenue Code.

The RSUs vest over three years with 1/3 vesting each year if the cash flow from operating activities target was met.

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The RSUs will be forfeited if AMC does not achieve a specified cash flow from operating activities target.

The Company recorded expense for these awards of $ 1.4 million and $ 2.4 million in general and administrative:

other expense, during the years ended December 31, 2019 and December 31, 2018, respectively, based on achievement of the performance condition for 2019, and 2018.

● Performance Stock Unit Award Agreement:

During the year ended December 31, 2020, PSU awards of 1,436,297 were granted to certain members of management and executive officers, with three-year cumulative Adjusted EBITDA and free cash flow target conditions and service conditions, covering a performance period beginning January 1, 2020 and ending on December 31, 2022.

The PSUs will vest based on achieving 80 % to 120 % of the performance targets with the corresponding vested unit amount ranging from 50 % to 200 % (or 30 % to 200 % for PSU awards granted prior to year 2020).

If the performance target is met at 100%, the PSU awards granted during the year ended December 31, 2020 will vest at 1,436,297 units in the aggregate.

No PSUs will vest if Holdings does not achieve 80% of the three-year cumulative Adjusted EBITDA and free cash flow target.

Additionally, unvested PSU’s shall be ratably forfeited upon termination of service prior to December 31, 2022.

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

During the year ended December 31, 2019, PSU awards of 730,167 were granted to certain members of

management and executive officers, with three-year cumulative Adjusted EBITDA, diluted earnings per share, and net profit performance target conditions and service conditions, covering a performance period beginning January 1, 2019 and ending on December 31, 2021.

During the year ended December 31, 2018, PSU awards of 653,669 were granted to certain members of management and executive officers with three-year cumulative net profit, Adjusted EBITDA, and diluted earnings per share performance target conditions and service conditions, covering a performance period beginning January 1, 2018 and ending on December 31, 2020.

During the year ended December 31, 2017, PSU awards were granted to certain members of management and executive officers with three-year cumulative net profit, Adjusted EBITDA, and diluted earnings per share performance target conditions and service conditions, covering a performance period beginning January 1, 2017 and ending on December 31, 2019.

The performance conditions were not met as of December 31, 2019 and 100 % of the awards were forfeited.

2021 PSU Awards.

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

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

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

The 2021 PSU awards will vest based on achieving 80 % to 120 % of the performance targets, with the corresponding vested unit amount ranging from 50 % to 200 % (or 30 % to 200 % for PSU awards granted prior to year 2020).

If the performance targets are met at 100%, the 2021 PSU awards will vest at 2,687,813 units in the aggregate.

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

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

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

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

At December 31, 2021, the 2021 Tranche Year target performance conditions for both the annual Adjusted EBITDA and free cash flow were achieved at 200 %.

November 3, 2021 modification.

On November 3, 2021, based upon the recommendation of the Compensation Committee, the Board of Directors of the Company approved a modification to the PSUs for the awards granted in 2021 and 2020.

The service condition modification included separating the vesting period subject to the participant’s continued employment through the end of the three-year cumulative period into three separate year service periods applicable to each tranche year.

The Company accounted for the modification in accordance with ASC 718-20, Compensation-Stock Compensation, as a Type I modification (probable-to-probable) with no change to the fair value measurement of the awards.

2020 PSU Awards:

During the year ended December 31, 2020, PSU awards of 1,436,297 were granted to certain members of management and executive officers, with three-year cumulative Adjusted EBITDA and

free cash flow target conditions and service conditions, covering a performance period beginning January 1, 2020 and ending on December 31, 2022, prior to the service condition and performance condition modifications on November 3, 2021 and October 30, 2020, respectively.

2019 PSU Awards:

During the year ended December 31, 2019, PSU awards of 730,167 were granted to certain members of management and executive officers, with three-year cumulative Adjusted EBITDA and diluted earnings per share performance target conditions and service conditions, covering a performance period beginning January 1, 2019 and ending on December 31, 2021, prior to the service condition and performance condition modifications on November 3, 2021 and October 30, 2020, respectively.

2018 PSU Awards:

October 30, 2020 modification.

On October 30, 2020, based upon the recommendation of the Compensation Committee, the Board of Directors of the Company approved a modification to the PSUs for the awards granted in 2018, 2019, and 2020.

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The Company measured the fair value of the new award on the modification date, October 30, 2020, because the Company determined that achieving performance thresholds were probable for certain tranche awards.

The Company recorded approximately $ 1.2 million, $( 5.8 ) million, and $ 5.8 million of expense (credit) related to PSUs in general and administrative:

other expense during the years ended December 31, 2020, December 31, 2019 and December 31, 2018, respectively.

At December 31, 2019, the Company determined that achieving the PSU performance thresholds was improbable and reversed previously recorded expense of $ 5.8 million on these units during the year ended December 31, 2019.

● Performance Stock Unit Executive Award Agreement:

During the year ended December 31, 2019, a PSU market condition award of 300,000 was granted to an executive officer of the Company that would vest based upon achieving target prices for the Company’s Class A common stock.

2017 PSU Awards:

The performance conditions were not met as of December 31, 2019 and the Company reversed previously recorded expense of $ 5.8 million on these units during the year ended December 31, 2019.

● Special Performance Stock Unit Executive Award Agreement:

This award was subsequently cancelled and replaced with the PSU market condition award granted on February 26, 2020.

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As a result of the SPSU modification of market conditions, the incremental fair value amount assigned to the grant date fair value was approximately $ 7.3 million in accordance with ASC 718-20, Compensation-Stock Compensation.

During the year ended December 31, 2020, the Company recorded a total of $ 14.0 million related to SPSUs in general and administrative:

other expense.

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

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

The following table represents the nonvested RSU and PSU activity for the years ended December 31, 2021, December 31, 2020 and December 31, 2019:

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Beginning balance at January 1, 2019

Cancelled (1)

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( 2,135,929 )

Beginning balance at January 1, 2021 (2)

Cancelled (1)

Nonvested at December 31, 2021 (3)

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

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

Total Nonvested at December 31, 2021

(1) Represents vested RSUs, PSUs, and SPSUs surrendered in lieu of taxes and cancelled awards returned to the 2013 Equity Incentive Plan.

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

(3) During January and February of 2022, participants vested in RSUs and PSUs, net of units surrendered in lieu of taxes, of 2,799,845 units.

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

NOTE 10—INCOME TAXES

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Valuation allowances are recorded as appropriate to reduce deferred tax assets to the amount considered likely to be realized.

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets.

A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2020 for domestic operations.

Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s projections for future taxable income.

For the year ended December 31, 2020, the Company remained in a cumulative loss over the past three-year period.

The Company evaluates its deferred tax assets each period to determine if a valuation allowance is required based on whether it is “more likely than not” that some portion of the deferred tax assets would not be realized.

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motion picture and broader economy, among others.

A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2021 for each taxing jurisdiction.

Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s projections of future taxable income.

For the year ended December 31, 2021, the Company remained in a cumulative loss over the past three-year period for the U.S.

and international jurisdictions, with the exception of Norway and Finland.

The Company maintains a valuation allowance against U.S.

deferred tax assets as well as international jurisdictions in which it operates, with the exception of Finland and Norway.

During the first quarter of 2020, the severe impact of COVID-19 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.

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

During the fourth quarter of 2017, the Company determined that it was appropriate to record a valuation allowance against U.S.

deferred tax assets.

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

Cancellation of Debt Income.

On July 31, 2020, the Company consummated its previously announced private offers to exchange its Existing Subordinated Notes for newly issued Second Lien Notes due 2026.

On July 31, 2020, the Company consummated previously announced private offers to exchange its Existing Subordinated Notes for newly issued Second Lien Notes due 2026.

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

For US tax purposes the Company is required to recognize CODI on the difference between the face value of debt exchanged and the fair market value of the new debt issued.

The Company has determined that it should recognize an estimated $ 1.2 billion of CODI for tax purposes.

IRS §108 provides relief from recognizing the CODI as current taxable income to the extent that the tax paying legal entity is insolvent as defined by the US Tax Code.

The Company currently estimates that the level of its insolvency at July 31, 2020 exceeds the indicated amount of CODI resulting from the debt exchange.

To the extent that the entity is insolvent, rather than recognize current taxable income, the entity may reduce its tax attributes including net operating losses, capital losses, tax credits, depreciable assets, investment in subsidiaries and other investments in the amount of the excluded CODI.

For purposes of determining the current and deferred tax provision, and uncertain tax positions for the year ended December 31, 2020, the Company estimated approximately $ 1.2 billion of its net operating losses have been eliminated as a result of tax attribute reduction.

For US tax purposes the Company was required to recognize CODI on the difference between the face value of debt exchanged and the fair market value of the new debt issued.

The Company recognized $ 1.2 billion of CODI for tax purposes for the year ended December 31, 2020.

IRS §108 provides relief from recognizing CODI as current taxable income to the extent that the tax paying legal entity is insolvent as defined by the US Tax Code.

The Company determined that the level of its insolvency at July 31, 2020 exceeded the indicated amount of CODI resulting from the debt exchange.

To the extent that an entity is insolvent, rather than recognize current taxable income, the entity may reduce its tax attributes including net operating losses, capital losses, tax credits, depreciable assets, investment in subsidiaries and other investments in the amount of the excluded CODI.

The Company determined that $ 1.2 billion of its federal net operating losses would be eliminated as a result of the tax attribute reduction.

The actual effective rate for the year ended December 31, 2021 was 0.8 %.

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

and foreign jurisdictions, foreign tax rate differences, federal and state tax credits, partially offset by state income taxes, permanent differences related to goodwill impairments, interest, compensation, and other discrete items.

and foreign jurisdictions, foreign tax rate differences, and federal and state tax credits, partially offset by state income taxes and permanent differences related to interest, compensation, and other discrete items.

No tax impact was recorded on the $ 2,306.4 million goodwill impairment charge incurred during the year ended December 31, 2020, as the portion impaired was permanently non-deductible.

At December 31, 2020 and December 31, 2019, the Company has recorded net deferred tax liabilities of $ 40.2 million and net deferred tax assets of $ 24.1 million, respectively.

At December 31, 2021 and December 31, 2020, the Company has recorded net deferred tax liabilities of $ 30.7 million and of $ 40.2 million, respectively.

On March 27, 2020, the U.S.

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The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property, as well as loans to certain qualifying businesses.

The Company continues to examine the impacts that the CARES Act may have on its business.

While the Company may take advantage of certain CARES Act’s cash deferral provisions, many of the provisions are not applicable to the Company.

Additionally, as of the date of this filing, the Company has not participated in CARES Act loans.

As of the date of this filing, the Company has not participated in CARES Act loans.

The income tax provision (benefit) reflected in the consolidated statements of operations consists of the following components:

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Total provision (benefit)

Pre-tax income (losses) consisted of the following:

Pre-tax losses consisted of the following:

(In millions)

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December 31, 2019

The difference between the effective tax rate on earnings (loss) from continuing operations before income taxes and the U.S.

The difference between the effective tax rate on net loss from continuing operations before income taxes and the U.S.

federal income tax statutory rate is as follows:

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Foreign rate differential

Impact of UK tax rate change

Valuation allowance

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A rollforward of the Company’s valuation allowance for deferred tax assets is as follows:

(Credited) to

(In millions)

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Valuation allowance-deferred income tax assets

(1) The 2020 valuation allowance primarily relates to the Company’s increase in the current year’s federal, state and international net operating losses, for which no benefit has been recognized, and the establishment of a valuation allowance to reduce the previously recognized benefit of deferred tax assets in Germany and Spain, which an expense of $ 73.2 million has been recognized.

(1) The 2021 valuation allowance primarily relates to the Company’s increase in the current year’s federal, state and international net operating losses, for which no benefit has been recognized.

(2) Primarily relates to amounts resulting from the Company’s changes in deferred tax assets and associated valuation allowance that are not related to income statement activity as well as amounts charged to other comprehensive income.

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Gross decreases—prior period tax positions

Gross decreases—settlements with authorities

Gross decreases—expiration of statute of limitations

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No interest expense or penalties related to federal uncertain tax positions have been recognized for the years ended December 31, 2021, December 31, 2020, and December 31, 2019.

The Company analyzed and reviewed the remaining state uncertain tax positions to determine the necessity of accruing interest and penalties.

The Company analyzed and reviewed state uncertain tax positions to determine the necessity of accruing interest and penalties.

For the year ended December 31, 2021, the Company recognized $ 0.6 million of interest expense and $ 0.4 million of penalties.

For the year ended December 31, 2019, the Company recognized no interest expense or penalties.

The total amount of accrued interest and penalties for state uncertain tax positions at December 31, 2020 and December 31, 2019 was $ 1.6 million and $ 0.1 million, respectively.

For the year ended December 31, 2020, the Company recognized $ 1.1 million of interest expense and $ 0.5 million of penalties.

The total amount of accrued interest and penalties for state uncertain tax positions at December 31, 2021 and December 31, 2020 was $ 0 and $ 1.6 million, respectively.

The total amount of net unrecognized tax benefits at December 31, 2021 and December 31, 2020 that would impact the effective tax rate, if recognized, would be $ 0.3 million and $ 6.9 million, respectively.

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federal jurisdiction, and various state and foreign jurisdictions.

An IRS examination of the tax year March 29, 2012 is currently ongoing.

An IRS examination of the tax year March 29, 2012 was settled in 2021 resulting in additional federal and state net operating losses (“NOLs”).

Generally, tax years beginning after December 31, 2001 are still open to examination by various taxing authorities.

Additionally, as discussed above, the Company has net operating loss (“NOL”) carryforwards for tax years ended December 31, 2001 through December 31, 2020, in the U.S.

Additionally, as discussed above, the Company has NOL

carryforwards for tax years ended December 31, 2002 through December 31, 2021, in the U.S.

and various state jurisdictions which have carryforwards of varying lengths of time.

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Utilization of the Company’s net operating loss carryforwards, disallowed business interest carryforward and other tax attributes became subject to the Section 382 ownership change limitation due to changes in our stock ownership on January 29, 2021.

Accordingly, our ability to utilize any net operating loss carryforwards and other tax attributes may be significantly limited.

See Note 17 — Subsequent Events for further information regarding change in stock ownership.

Management believes the Company’s ability to utilize these tax attributes has not been significantly limited by this event.

NOTE 11—COMMITMENTS AND CONTINGENCIES

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AMC Entertainment Holdings, Inc., et al.

1:18-cv-00299-AJN

(the “Hawaii Action”), and Nichols v.

1:18-cv-00299-AJN (the “Hawaii Action”), and Nichols v.

AMC Entertainment Holdings, Inc., et al.

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On March 2, 2020, plaintiffs moved to certify the purported class.

The motion was fully briefed on September 21, 2020.

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

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

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

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

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

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

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

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

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

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

The action remains stayed.

The stay was lifted as of February 9, 2022.

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

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

On January 11, 2022, the court lifted the stay.

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

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

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

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

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

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

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

On January 8, 2021,

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

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

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

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

During the year ended December 31, 2020, the Company recorded $ 15.0 million, in estimated credit losses related to contingent lease guarantees in other expense.

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

The Company a contingent lease liability of $ 30.2 million recorded in other long term liabilities.

See Note 1 — The Company and Significant Accounting Policies for further information regarding the adoption of ASU 2016-13.

NOTE 12—FAIR VALUE MEASUREMENTS

Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts business.

The inputs used to develop these fair value measurements are established in a hierarchy, which ranks the quality and reliability of the information used to determine the fair values.

The inputs used to develop these fair value measurements are established in a hierarchy, which ranks the quality and reliability of the information

used to determine the fair values.

The fair value classification is based on levels of inputs.

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Recurring Fair Value Measurements.

The following table summarizes the fair value hierarchy of the Company’s financial assets carried at fair value on a recurring basis:

The following tables summarize the fair value hierarchy of the Company’s financial assets carried at fair value on a recurring basis:

Fair Value Measurements at December 31, 2021 Using

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Investments measured at net asset value (1)

Marketable equity securities:

Investment in NCM

Total assets at fair value

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Money market mutual funds

Derivative asset

Investments measured at net asset value (1)

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Total assets at fair value

Corporate Borrowings:

Derivative liability

Total liabilities at fair value

(1) The investments relate to non-qualified deferred compensation arrangements on behalf of certain members of management.

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

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

Valuation Techniques.

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

On September 14, 2018, the Company issued Convertible Notes due 2024 with a conversion feature that gave rise to an embedded derivative instrument and a stock purchase and cancellation agreement that gave rise to a derivative asset (See Note 8 — Corporate Borrowings and Finance Lease Obligations).

The derivative features have been valued using a Monte Carlo simulation approach.

The Monte Carlo simulation approach consists of simulated common stock prices from the valuation date to the maturity of the Convertible Notes and to September 14, 2020 for the contingent call option for forfeiture shares.

Increases or decreases in the Company’s share price, the volatility of the share price, the passage of time, risk-free interest rate, discount yield, and dividend yield will all impact the value of the derivative instruments.

The Company re-values the derivative instruments at the end of each reporting period and any changes are recorded in other expense (income) in the consolidated statements of operations.

Nonrecurring Fair Value Measurements.

The following fair value hierarchy tables summarize the Company’s assets that were written down to their fair value on a nonrecurring basis:

Fair Value Measurements at December 31, 2021 Using

Significant other

Total Carrying

Quoted prices in

active market

(In millions)

December 31, 2021

Property, net:

Operating lease right-of-use assets, net

Operating lease right-of-use assets, et

Other long-term assets

Property owned, net

Fair Value Measurements Using

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December 31, 2020

Fair Value Measurements at December 31, 2019 Using

Significant other

Total Carrying

Quoted prices in

active market

(In millions)

December 31, 2019

Property, net:

Operating lease right-of-use assets

Other long-term assets

Property owned, net

Equity interest investment

Valuation Techniques.

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

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

Attendance is expected to be below historical levels following the full reopening of our circuit and studios have shifted new film releases or moved them to the home video market, and movie release dates may continue to move in the future.

The Company believes it used reasonable and appropriate business judgments.

At December 31, 2020, the Company used weighted average cost of capital (discount rate) input for the Domestic Theatres and International Theatres reporting units of 11.0 % and 12.5 %, respectively, and a long-term growth rate input of 1.0 % for both of the reporting units.

At September 30, 2020, the Company used weighted average cost of capital (discount rate) input for the Domestic Theatres and International Theatres reporting units of 12.0 % and 13.0 %, respectively, and a long-term growth rate input of 1.0 % for both of the reporting units.

At March 31, 2020, the Company used weighted average cost of capital (discount rate) input for the Domestic Theatres and International Theatres reporting units of 11.5 % and 13.0 %, respectively, and a long-term growth rate input of 2.0 % for both of the reporting units.

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, 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.

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.

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

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.

The Company used a long-term growth rate input of 1.0 %, except for the March 31, 2020 measurement date, which the Company used a long-term growth rate input of 2.0 %.

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

See Note 1 — The Company and Significant Accounting Policies for further information.

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

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

The Company 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.

The Company performed the Step 1 quantitative goodwill impairment test as of March 31, 2020, September 30, 2020, and December 31, 2020.

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

In calculating the fair value of our Domestic Theatres and International Theatres reporting units by use the income approach for enterprise valuation methodology, which utilizes 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.

The present value of the cash flows is then added to the present value equivalent of the residual value of the business to arrive at an estimated fair value of the reporting unit.

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.

The Company used a long-term growth rate input of 1.0 %, except for the March 31, 2020 measurement date, which the Company used a long-term growth rate input of 2.0 %.

Other Fair Value Measurement Disclosures.

The following table summarizes the fair value of financial instruments that are not recognized at fair value in the statement of financial position for which it is practicable to estimate that value:

The following tables summarize the fair value of financial instruments that are not recognized at fair value in the statement of financial position for which it is practicable to estimate that value:

Fair Value Measurements at December 31, 2021 Using

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Quoted market prices and observable market based inputs were used to estimate fair value for Level 2 inputs.

The Level 3 fair value measurement represents the transaction price of the corporate borrowings under market conditions.

On September 14, 2018, the Company issued $ 600.0 million of Convertible Notes due 2024.

These notes were issued by private placement, as such there is no observable market for these convertible notes (now the Convertible Notes due 2026).

The Company valued these notes at principal value less a discount reflecting a market yield to maturity.

The Level 3 fair value measurement represents the transaction price of the corporate borrowings under estimated market conditions.

The Company valued these notes at principal value less an estimated discount reflecting a market yield to maturity.

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

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markets and International markets.

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

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

The Company completed the 100% divestiture of Latvia during the year ended December 31, 2020, see Note 1 — The Company and Significant Accounting Policies for further information on the Baltics theatre sale agreement.

The Company divested of its interest in Estonia, Latvia, and Lithuania operations, see Note 1 — The Company and Significant Accounting Policies for further information on the Baltics theatre sale.

Operations located in Austria were sold during the first quarter of 2019.

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

Each segment’s revenue is derived from admissions, food and beverage sales and other ancillary

revenues, primarily screen advertising, AMC Stubs ® membership fees and other loyalty programs, ticket sales, gift card income and exchange ticket income.

The measure of segment profit and loss the Company uses to evaluate performance and allocate its resources is Adjusted EBITDA, as defined in the reconciliation table below.

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

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

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

(In millions)

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December 31, 2019

Net earnings (loss)

Income tax provision (benefit) (1)

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Other expense (income) (7)

Other non-cash rent (8)

Other non-cash rent expense (benefit) (8)

General and administrative — unallocated:

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(1) For information regarding the income tax provision (benefit), see Note 10 — Income Taxes.

(2) During the year ended December 31, 2021, the Company recorded non-cash impairment charges related to its 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, the Company 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.

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property held and not used.

During the year ended December 31, 2018, the Company 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.

(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.

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

(4) During the year ended December 31, 2020, December 31, 2019 and December 31, 2018, the Company recorded $( 14.5 ) million, $ 25.4 million and $ 29.1 million, respectively, in equity in earnings (loss) from DCIP.

(4) Equity in (earnings) loss of non-consolidated entities primarily consisted of equity in earnings (loss) from DCIP of $ 12.2 million, $( 14.5 ) million and $ 25.4 million, during the year ended December 31, 2021, December 31, 2020, and December 31, 2019, respectively.

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

During the year ended December 31, 2018, the Company recorded equity in earnings related to AMC’s sale of all remaining NCM units of $ 28.9 million and a gain of $ 30.1 million related to the Screenvision merger.

Equity in earnings of non-consolidated entities also includes loss on the surrender (disposition) of a portion of AMC’s investment in NCM of $ 1.1 million and a lower of carrying value or fair value impairment loss of the held-for sale portion of the Company’s investment in NCM of $ 16.0 million for the year ended December 31 , 2018.

(5) Includes U.S.

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Equity in earnings (loss) of International theatre joint ventures

Income tax provision

Income tax expense

Investment income

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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 Company’s derivative liability and derivative asset for the 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.

(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 Company’s derivative liability and derivative asset for the 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.

During the year ended December 31, 2019, the Company 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 its derivative liability and asset for the Convertible Notes.

During the year ended December 31, 2018, the Company recorded a gain of $ 111.4 million as a result of the decrease in fair value of its derivative liability and the increase in fair value of the derivative asset for the Convertible Notes, partially offset by financing losses and financing related foreign currency transaction losses.

(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.

(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.

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NOTE 14—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables present the change in accumulated other comprehensive income (loss) by component:

Unrealized Net

Method Investees’

The following table presents the change in accumulated other comprehensive income (loss) by component:

(In millions)

Pension Benefits

Cash Flow Hedge

Balance December 31, 2019

Other comprehensive loss before reclassifications

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive loss

Balance December 31, 2020

Other comprehensive (gain) loss before reclassifications

Amounts reclassified from accumulated other comprehensive loss

Other comprehensive income (loss)

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

Balance December 31, 2021

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Unrealized foreign currency translation adjustment

Realized loss on foreign currency transactions

Realized gain (loss) on foreign currency transactions, net of tax

Pension and other benefit adjustments:

Net gain (loss) arising during the period

Net gain (loss) arising during the period, net of tax

Equity method investee's cash flow hedge:

Unrealized net holding gain (loss) arising during the period

Realized net (gain) loss reclassified into equity in earnings of non-consolidated entities

Unrealized net holding loss arising during the period

Other comprehensive income (loss)

NOTE 15—EARNINGS (LOSS) PER SHARE

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

Diluted earnings per share includes the effects of unvested RSU’s with a service condition only and unvested contingently issuable RSUs and PSUs that have service and performance conditions, if dilutive, as well as potential dilutive shares from the conversion feature of the Convertible Notes due 2026, if dilutive.

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

NOTE 15—LOSS PER SHARE

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

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

Diluted loss per share for the years ended December 31, 2020 and December 31, 2019 also includes potential dilutive shares from the conversion feature of the Convertible Notes due 2026, if dilutive.

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

(In millions)

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December 31, 2019

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

for basic earnings (loss) per share

Calculation of net earnings for diluted earnings (loss) per share:

Marked-to-market gain on derivative liability

Interest expense for Convertible Notes due 2026

Net earnings (loss) available for diluted earnings

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

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

Denominator (shares in thousands):

Weighted average shares for basic earnings per common share

Common equivalent shares for RSUs and PSUs

Common equivalent shares if converted:

Convertible Notes 2026

Weighted average shares for diluted earnings per common share

Basic earnings (loss) per common share:

Diluted earnings (loss) per common share:

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

Weighted average shares for basic loss per common share

Weighted average shares for diluted loss per common share

Basic loss per common share:

Diluted loss per common share:

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

For the year ended December 31, 2021, December 31, 2020, and December 31, 2019, unvested RSUs of 2,247,625 , 1,131,333 , and 1,377,992 , respectively, were not included in the computation of diluted earnings (loss) per share because they would be anti-dilutive.

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

Unvested PSUs of 649,209 , 477,630 and 364,269 at the minimum performance targets for the years ended December 31, 2020, December 31, 2019, and December 31, 2018, respectively, and unvested SPSUs of 578,328 at the minimum market condition for the year ended December 31, 2020, were not included in the computation of diluted earnings (loss) per share because they would not be issuable if the end of the reporting period were the end of the contingency period or they would be anti-dilutive.

The Company uses the if-converted method for calculating any potential dilutive effect of the Convertible Notes that were issued on September 14, 2018.

Unvested PSUs of 0 , 649,209 and 477,630 for the years ended December 31, 2021, December 31, 2020, and December 31, 2019, respectively, and unvested SPSUs of 578,328 at the minimum market condition for the year ended December 31, 2020, were not included in the computation of diluted loss per share because they would not be issuable if the end of the reporting period were the end of the contingency period or they would be anti-dilutive.

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

For both the years ended December 31, 2020 and December 31, 2019, the Company used the if-converted method for calculating any potential dilutive effect of the Convertible Notes that were issued on September 14, 2018.

The Company has not adjusted net loss for the year ended December 31, 2020 and December 31, 2019 to eliminate the interest expense of $ 31.8 million and $ 32.6 million, respectively, and the loss (gain) for the derivative liability related to the Convertible Notes of $ 89.4 million and $( 23.5 ) million, respectively, in the computation of diluted loss per share because the effects would be anti-dilutive.

The Company has not included in diluted weighted average shares approximately 35.5 million and 31.7 million shares issuable upon conversion for the year ended December 31, 2020 and December 31, 2019, respectively, as the effects would be anti-dilutive.

For the year ended December 31, 2018, the Company adjusted net earnings to eliminate the interest expense and the (gain) for the derivative liability related to the Convertible Notes due 2026 of $ 9.7 million and $( 66.4 ) million, respectively, in the computation of diluted earnings per share.

The Company has included in diluted weighted average shares approximately 9.5 million shares issuable upon conversion for the year ended December 31, 2018, as the effects were dilutive.

Based on the current conversion price of $ 13.51 per share, the Convertible Notes are convertible into 44,422,860 Class A common shares.

NOTE 16—SUPPLEMENTAL FINANCIAL INFORMATION BY QUARTER (UNAUDITED)

September 30,

(In millions, except per share data)

Total revenues (1)

Operating loss

Net loss attributable to AMC Entertainment Holdings, Inc.

Basic loss per share:

Diluted loss per share:

Weighted average shares outstanding:

(in thousands)

(1) On March 17, 2020, the Company temporarily suspended all theatre operations to prevent the spread of COVID-19.

In early June 2020, the Company resumed limited operations in the International markets and in late August 2020, the Company resumed limited operations in the U.S.

(2) In the first, second, third, and fourth quarters of calendar 2020, the Company recorded $ 19.6 million, $( 6.4 ) million, $ 95.8 million, and $ 0 , respectively, of other expense (income) related to derivative assets and liabilities.

See Note 8 — Corporate Borrowings and Finance Lease Obligations for a discussion of the derivative asset and derivative liability gains.

Other expense (income) includes financing fees related to the modification of debt of $ 36.3 million and $ 3.0 million in the third and fourth quarter, respectively, and a gain on extinguishment of Second Lien Notes due 2026 of $ 93.6 million in the fourth quarter of calendar 2020.

(3) During the first, second, third, and fourth quarter of 2020, the Company recorded non-cash expense in impairment of long-lived assets, definite and indefinite-lived intangible assets, and goodwill of $ 1,851.9 million, $ 0 , $ 195.9 million, and $ 466.1 million, respectively.

September 30,

(In millions, except per share data)

Total revenues

Operating income (loss)

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

Basic earnings (loss) per share:

Diluted earnings (loss) per share:

Weighted average shares outstanding:

(in thousands)

(1) In the first, second, third, and fourth quarters of calendar 2019, the Company recorded $ 28.4 million, $( 41.0 ) million, $( 2.8 ) million, and $ 9.6 million, respectively, of other expense (income) related to derivative assets and liabilities.

See Note 8 — Corporate Borrowings and Finance Lease Obligations for a discussion of the derivative asset and derivative liability gains.

(2) During the fourth quarter of 2019, the Company recorded non-cash impairment of long-lived assets of $ 84.3 million on 40 theatres in the U.S.

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

property held and not used.

The Company has not included in diluted weighted average shares approximately 35.5 million and 31.7 million shares issuable upon conversion for the years ended December 31, 2020 and December 31, 2019, respectively, as the effects would be anti-dilutive.

NOTE 16— SUBSEQUENT EVENTS

Equity Distribution Agreements.

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

Riley Securities, Inc., as sales agents, to sell up to 50 million shares of Class A common stock, par value $ 0.01 per share, through an “at-the-market” offering program.

The Company raised gross proceeds related to this equity distribution agreement, including the remaining amounts from the prior equity distribution agreement as described in Note 9 — Stockholders’ Equity, of approximately $ 596.9 million in January 2021 through its at-the-market offering of 187,066,293 of its Class A common stock and paid fees to the sales agents of approximately $ 14.9 million.

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

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 previously disclosed commitment letter with Mudrick Capital Management, LP, dated as of December 10, 2020.

The First Lien Toggle Notes due 2026 were issued pursuant to an indenture dated as of January 15, 2021 among the Company, the guarantors named therein and the U.S.

Bank National Association, as trustee and collateral agent.

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.

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.

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.

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.

The Odeon Term Loan Facility has 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.

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

The Company is subject to minimum liquidity requirements of £ 32.5 million (approximately $ 45 million) required under the Odeon Term Loan Facility.

Convertible Notes due 2026.

On January 27, 2021, affiliates of Silver Lake and certain co-investors (collectively, the “Noteholders”) elected to convert (the “Conversion”) all $ 600.0 million principal amount of the Company’s Convertible Notes due 2026 into shares of the Company’s Class A 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 the Company’s Class A common stock to the Noteholders.

The Company will recognize $ 70 million of interest expense in the first quarter of 2021 for unamortized discount and deferred charges at the date of conversion following the guidance in ASC 815-15-40-1.

The Conversion reduced the Company’s first-lien indebtedness by $ 600.0 million.

Pursuant to the Stock Repurchase and Cancellation Agreement with Wanda dated as of September 14, 2018, 5,666,000 shares of the Company’s Class B common stock held by Wanda were forfeited and cancelled in connection with the Conversion.

Class B common stock.

On February 1, 2021, Wanda exercised their right to convert all outstanding Class B common stock to Class A common stock resulting in ownership in Holdings’ outstanding common stock and voting power of the Company’s outstanding common stock of approximately 9.8 % as of March 3, 2021.

Senior Secured Credit Facility.

On March 8, 2021, the Company entered into the Ninth Amendment, pursuant to which the requisite revolving lenders party thereto agreed to extend the suspension period for the financial covenant

under its Credit Agreement from a period ending on March 31, 2021 to a period ending on March 31, 2022 (the “Extended Covenant Suspension Period”).

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

On March 8, 2021 the Company entered into the Tenth Amendment to Credit Agreement, pursuant to which the Company agreed not to consent to certain modifications to the Credit Agreement described in the Tenth Amendment without the consent of the majority of the revolving lenders party to the Tenth Amendment.

First Lien Senior Secured Notes due 2029.

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

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

The First Lien Notes due 2029 are guaranteed on a senior secured basis by each of the Company’s subsidiaries that guarantees indebtedness under the Company’s Senior Secured Credit

Facilities and existing secured notes.

The Company 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.

The Company estimates it will record a loss on debt extinguishment related to this transaction of approximately $ 135 million in other expense in 2022.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure .

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What changed 10-K

Item 8. Financial Statements and Supplementary Data