National CineMedia, Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures. The Company maintains disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed in the Company’s reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), as appropriate, to allow timely decisions regarding required disclosure. Management, with the participation of the Chief Executive Officer (CEO), performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) of the Exchange Act as of 90 NATIONAL CINEMEDIA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, the CEO concluded that the Company’s disclosure controls and procedures were effective. Management’s Annual Report on Internal Control over Financial Reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Management evaluated the design and operating effectiveness of the Company’s internal control over financial reporting based on the framework in Internal Control- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, the Company's management concluded that the Company's internal control over financial reporting as of December 31, 2020 was effective. In designing and evaluating our disclosure controls and procedures, management recognizes that any control, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. Attestation Report of the Registered Public Accounting Firm. The effectiveness of our internal control over financial reporting as of December 31, 2020 has been attested by the Company’s registered independent public accounting firm, Deloitte & Touche LLP, as stated in its report, which appears herein. Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 91 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of National CineMedia, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of National CineMedia, Inc. and subsidiary (the “Company”) as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated March 8, 2021, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting . Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the 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 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Denver, Colorado March 8, 2021 92 Item 9B. Other Information None. PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item with respect to our directors is incorporated herein by reference from the Company's 2021 Proxy Statement under the heading “Proposal 1- Election of Directors.” The information required by this item regarding our executive officers is set forth in Part I of this Annual Report on Form 10-K under the heading “Information about our Executive Officers” and is incorporated herein by this reference. Our Board adopted a Code of Business Conduct and Ethics that applies to all of our employees, including our Board of Directors, Chief Executive Officer and principal financial officer. The Code of Business Conduct and Ethics sets forth the Company’s conflict of interest policy, records retention policy, insider trading policy and policies for protection of the Company’s property, business opportunities and proprietary information. Our Code of Business Conduct and Ethics is available free of charge on our website at ncm.com under the tab “Investor Relations– Corporate Governance.” We intend to post on our website any amendments to, or waivers from our Code of Business Conduct and Ethics applicable to senior financial executives. Item 11. Executive Compensation The information required by this item regarding compensation of executive officers and directors is incorporated herein by reference from the Proxy Statement under the headings “Compensation of Executive Officers,” “Compensation Committee Report”. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters For information with respect to the security ownership of directors, executive officers and holders of more than 5% of a class of our voting securities, refer to the Proxy Statement under the heading “Beneficial Ownership,” which information is incorporated herein by reference. For Equity Incentive Plan information, refer to the Proxy Statement under the heading “Equity Compensation Plan”, which information is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence For information with respect to certain relationships and related transactions, refer to the Proxy Statement under the heading “Certain Relationships and Related Party Transactions,” which information is incorporated herein by reference. For information with respect to director independence, refer to the Proxy Statement under the heading “Proposal 1- Election of Directors,” which information is incorporated herein by reference. Item 14. Principal Accounting Fees and Services The information required by this item with respect to principal accounting fees and services is incorporated herein by reference from the Proxy Statement under the heading “Fees Paid to Independent Auditors.” 93 PART IV Item 15. Exhibits, Financial Statement Schedules (a) (1) and (a) (2) Financial statements and financial statement schedules Refer to Index to Financial Statements on page 56. (b) Exhibits Refer to Exhibit Index, beginning on page 96. (c) Financial Statement Schedules Financial Statement Schedules not included herein have been omitted because they are either not required, not applicable, or the information is otherwise included herein. 94 INDEX TO EXHIBITS Incorporation by Reference Exhibit Ref. Description Form SEC File No. Exhibit Filing Date 3.1 Second Amended and Restated Certificate of Incorporation. 8-K 001-33296 3.1 7/6/2018 3.2 The Bylaws, as amended August 1, 2019. 10-Q 001-33296 3.1 11/4/2019 4.1 Indenture, dated as of August 19, 2016, by and between National CineMedia, LLC and Wells Fargo Bank, National Association, as trustee. 8-K 001-33296 4.1 8/19/2016 4.2 Form of 5.750% Senior Unsecured Notes due 2026 (included in Exhibit 4.1). 8-K 001-33296 4.1 8/19/2016 4.3 Indenture, dated as of October 8, 2019, by and between NCM LLC and Wells Fargo Bank, National Association, as trustee. 8-K 001-33296 4.1 10/8/2019 4.4 Form of 5.875% Senior Secured Notes due 2028 (included in Exhibit 4.3). 8-K 001-33296 4.1 10/8/2019 4.5 Description of the Registrant's Securities 10-K 001-33296 4.5 2/20/2020 10.1 National CineMedia, LLC Third Amended and Restated Limited Liability Company Operating Agreement dated as of February 13, 2007, by and among American Multi-Cinema, Inc., Cinemark Media, Inc., Regal CineMedia Holdings, LLC and National CineMedia, Inc. 8-K 001-33296 10.1 2/16/2007 10.1.1 First Amendment to Third Amended and Restated Limited Liability Company Operating Agreement of National CineMedia, LLC dated as of March 16, 2009, by and among American Multi-Cinema, Inc., Cinemark Media, Inc., Regal CineMedia Holdings, LLC and National CineMedia, Inc. 10-Q 001-33296 10.1.1 8/7/2009 10.1.2 Second Amendment to Third Amended and Restated Limited Liability Company Operating Agreement of National CineMedia, LLC dated as of August 6, 2010, by and among American Multi-Cinema, Inc., Cinemark Media, Inc., Regal CineMedia Holdings, LLC and National CineMedia, Inc. 8-K 001-33296 10.1 8/10/2010 10.1.3 Third Amendment to the Third Amended and Restated Limited Liability Company Operating Agreement of National CineMedia, LLC dated September 3, 2013, by and among American Multi-Cinema, Inc., AMC ShowPlace Theatres, Inc., Cinemark Media, Inc., Regal CineMedia Holdings, LLC, Regal Cinemas, Inc. and National CineMedia, Inc. 8-K 001-33296 10.1.3 9/9/2013 10.1.4 Fourth Amendment to the Third Amended and Restated Limited Liability Company Operating Agreement of National CineMedia, LLC dated January 23, 2019, by and among Cinemark Media, Inc., Cinemark USA, Inc., Regal Cinemedia Holdings, LLC, Regal Cinemas, Inc., and National CineMedia, Inc. 10-K 001-33296 10.1.4 2/21/2019 10.2 Amended and Restated Exhibitor Services Agreement dated as of December 26, 2013, by and between National CineMedia, LLC and American Multi-Cinema, Inc. (Portions omitted pursuant to request for confidential treatment and filed separately with the Commission.) 10-K 001-33296 10.2.4 2/21/2014 95 Incorporation by Reference Exhibit Ref. Description Form SEC File No. Exhibit Filing Date 10.2.1 First Amendment to Amended and Restated Exhibitor Services Agreement dated as of March 9, 2017, by and between National CineMedia, LLC and American Multi-Cinema, Inc. 8-K 001-33296 10.1 3/15/2017 10.3 Amended and Restated Exhibitor Services Agreement dated as of December 26, 2013, by and between National CineMedia, LLC and Cinemark USA, Inc. (Portions omitted pursuant to request for confidential treatment and filed separately with the Commission.) 10-K 001-33296 10.3.4 2/21/2014 10.3.1 Waiver of Section 12.06 of the Exhibitor Services Agreement dated as of March 14, 2017, by and between National CineMedia, LLC and Cinemark USA, Inc. 8-K 001-33296 10.3 3/15/2017 10.3.2 First Amendment to Amended and Restated Exhibitor Services Agreement dated as of September 17, 2019, by and between National CineMedia, LLC and Cinemark USA, Inc. 8-K 001-33296 10.2 9/17/2019 10.4 Amended and Restated Exhibitor Services Agreement dated as of December 26, 2013, by and between National CineMedia, LLC and Regal Cinemas, Inc. (Portions omitted pursuant to request for confidential treatment and filed separately with the Commission.) 10-K 001-33296 10.4.4 2/21/2014 10.4.1 First Amendment to Amended and Restated Exhibitor Services Agreement dated as of March 9, 2017, by and between National CineMedia, LLC and Regal Cinemas, Inc. 8-K 001-33296 10.2 3/15/2017 10.4.2 Second Amendment to the Amended and Restated Exhibitor Services Agreement dated as of September 17, 2019, by and between National CineMedia, LLC and Regal Cinemas, Inc. 8-K 001-33296 10.2 9/17/2019 10.5 Common Unit Adjustment Agreement dated as of February 13, 2007, by and among National CineMedia, Inc., National CineMedia, LLC, Regal CineMedia Holdings, LLC, American Multi-Cinema, Inc., Cinemark Media, Inc., Regal Cinemas, Inc. and Cinemark USA, Inc. (Confidential treatment granted as to certain portions, which portions were omitted and filed separately with the Commission.) 8-K 001-33296 10.6 2/16/2007 10.6 Tax Receivable Agreement dated as of February 13, 2007, by and among National CineMedia, Inc., National CineMedia, LLC, Regal CineMedia Holdings, LLC, Cinemark Media, Inc., Regal Cinemas, Inc., American Multi-Cinema, Inc. and Cinemark USA, Inc. 8-K 001-33296 10.7 2/16/2007 10.6.1 Second Amendment to Tax Receivable Agreement effective as of April 29, 2008, by and by and among NCM, Inc. and National CineMedia, LLC and the Founding Members and the ESA Parties, amending the Tax Receivable Agreement dated as of February 13, 2007 and as first amended by the First Amendment to the Tax Receivable Agreement effective as of August 7, 2007. 8-K 001-33296 10.1 5/5/2008 96 Incorporation by Reference Exhibit Ref. Description Form SEC File No. Exhibit Filing Date 10.7 Second Amended and Restated Software License Agreement dated as of February 13, 2007, by and among American Multi-Cinema, Inc., Regal CineMedia Corporation, Cinemark USA, Inc., Digital Cinema Implementation Partners, LLC and National CineMedia, LLC. 8-K 001-33296 10.9 2/16/2007 10.8 Director Designation Agreement dated as of February 13, 2007, by and among National CineMedia, Inc., American Multi-Cinema, Inc., Cinemark Media, Inc. and Regal CineMedia Holdings, LLC. 8-K 001-33296 10.1 2/16/2007 10.9 Registration Rights Agreement dated as of February 13, 2007, by and among National CineMedia, Inc., American Multi-Cinema, Inc., Regal CineMedia Holdings, LLC and Cinemark Media, Inc. 8-K 001-33296 10.11 2/16/2007 10.10 Management Services Agreement dated as of February 13, 2007, by and among National CineMedia, Inc. and National CineMedia, LLC. 8-K 001-33296 10.12 2/16/2007 10.11 Credit Agreement dated as of June 20, 2018 among National CineMedia LLC, certain lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. 8-K 001-33296 10.1 6/25/2018 10.11.1 Amendment No. 1 to the Credit Agreement, dated as of April 30, 2020, by and among National CineMedia, LLC, each lender party thereto, and JPMorgan Chase Bank, N.A., as administrative agent. 8-K 001-33296 10.1 5/5/2020 10.11.2 Amendment No. 2 to the Credit Agreement, dated as of March 8, 2021, by and among National CineMedia, LLC, each lender party thereto, and JPMorgan Chase Bank, N.A., as administrative agent 8-K 001-33296 10.1 3/8/2021 10.12 Letter agreement, dated June 1, 2018, between National CineMedia, Inc. and Standard General L.P. 8-K 001-33296 10.1 6/1/2018 10.13 Employment Agreement dated as of August 1, 2019, by and between National CineMedia, Inc. and Thomas F. Lesinski. + 10-Q 001-33296 10.3 11/4/2019 10.14 Employment Agreement dated as of May 8, 2015, by and among National CineMedia, Inc., National CineMedia LLC and Clifford E. Marks. + 10-Q 001-33296 10.1 5/12/2015 10.15 Employment Agreement dated as of April 3, 2017, by and among National CineMedia, Inc. and Scott D. Felenstein. + 10-K 001-33296 10.21 2/21/2019 10.16 Amendment No. 1 to Employment Agreement dated as of April 30, 2020 by and among National CineMedia, Inc. and Scott D. Felenstein.+ 8-K 001-33296 10.1 5/1/2020 10.17 Form of Indemnification Agreement. + 8-K 001-33296 10.1 2/13/2007 10.18 Form of Indemnification Agreement (August 2018)+ 10-Q 001-33296 10.3 8/7/2018 97 Incorporation by Reference Exhibit Ref. Description Form SEC File No. Exhibit Filing Date 10.19 National CineMedia, Inc. 2007 Equity Incentive Plan. + 8-K 001-33296 10.2 5/2/2013 10.20 National CineMedia, Inc. 2016 Equity Incentive Plan. + S-8 001-33296 4.1 4/29/2016 10.21 National CineMedia, Inc. 2020 Omnibus Incentive Plan . + 8-K 001-33296 10.2 5/1/2020 10.22 Form of Option Substitution Award. + S-8 001-33296 4.4 2/13/2007 10.23 Form of Stock Option Agreement. + S-8 001-33296 4.6 2/13/2007 10.23.1 Form of 2009 Stock Option Agreement. + 10-K 001-33296 10.22.1 3/6/2009 10.23.2 Form of 2010 Stock Option Agreement. + 10-K 001-33296 10.22.2 3/9/2010 10.23.3 Form of 2011 Stock Option Agreement. + 10-K 001-33296 10.22.3 2/25/2011 10.23.4 Form of 2012 Stock Option Agreement. + 10-K 001-33296 10.22.4 2/24/2012 10.23.5 Form of 2019 Stock Option Agreement. + 10-Q 001-33296 10.4 11/4/2019 10.23.6 Form of 2020 Stock Option Agreement. + 10-Q 001-33296 10.5 8/3/2020 10.24.1 (1) Form of 2018 Restricted Stock Agreement (Time Based). + 10-K 333-176056 10.24.9 3/14/2018 10.24.2 (1) Form of 2018 Restricted Stock Agreement (Performance Based). + 10-K 333-176056 10.24.10 3/14/2018 10.24.3 Form of 2019 Restricted Stock Agreement (Time Based). + 10-K 001-33296 10.28.9 2/21/2019 10.24.4 Form of 2019 Restricted Stock Agreement (Performance Based). + 10-K 001-33296 10.28.10 2/21/2019 10.24.5 Form of 2020 Restricted Stock Agreement (Time Based). + 10-K 001-33296 10.26.8 2/20/2020 10.24.6 Form of 2020 Restricted Stock Agreement (Performance Based). + 10-K 001-33296 10.26.9 2/20/2020 10.24.7 Form of 2020 Restricted Stock Unit Agreement ( Time Based). + 10-Q 001-33296 10.6 8/3/2020 10.24.8 Form of 2020 Restricted Stock Unit Agreement (Performance Based). + 10-Q 001-33296 10.1 11/2/2020 10.28 10.25 Form of Restricted Stock Unit Agreement. + 10-K 001-33296 10.34 3/6/2009 10.25.1 Form of Restricted Stock Unit Agreement under the National CineMedia, Inc. 2016 Equity Plan. S-8 001-33296 4.4 4/29/2016 10.25.2 Form of Restricted Stock Unit Agreement under the National CineMedia, Inc. 2016 Equity Plan, amended. 10-K 001-33296 10.27.2 2/24/2017 10.25.3 Form of Restricted Stock Unit Agreement under the National CineMedia, Inc. 2020 Omnibus Incentive Plan - Director 10-Q 001-33296 10.7 8/3/2020 21.1 * List of Subsidiaries. 23.1 * Consent of Deloitte & Touche LLP. 24.1 * Powers of Attorney of National CineMedia, Inc. 98 Incorporation by Reference Exhibit Ref. Description Form SEC File No. Exhibit Filing Date 31.1 * Rule 13a-14(a) Certification of Chief Executive Officer and Interim PFO. 32.1 ** Certification of Chief Executive Officer and Interim PFO Pursuant to 18 U.S.C. Section 1350. 101.SCH * Inline XBRL Taxonomy Extension Schema Document. 101.CAL * Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF * Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB * Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE * Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 * Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * Filed herewith. ** Furnished herewith. + Management contract. Item 16. Form 10-K Summary Not applicable. 99 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NATIONAL CINEMEDIA, INC. (Registrant) Date: March 8, 2021 /s/ Thomas F. Lesinski Thomas F. Lesinski Chief Executive Officer and Director (Principal Executive Officer and Interim Principal Financial Officer) Date: March 8, 2021 /s/ Julie L. Patterson Julie L. Patterson SVP, Controller (Interim Principal Accounting Officer) 100 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 8th day of March, 2021. Signature Title /s/ Thomas F. Lesinski Chief Executive Officer Thomas F. Lesinski (Principal Executive Officer and Interim Principal Financial Officer) /s/ Julie L. Patterson SVP, Controller Julie L. Patterson (Interim Principal Accounting Officer) * Chairman Mark B. Segall * Director David E. Glazek * Director Lawrence A. Goodman * Director Kurt C. Hall * Director Juliana F. Hill * Director Lee Roy Mitchell * Director Donna Reisman * Director Renana Teperberg *By: /s/ Sarah Kinnick Hilty Attorney-in-fact Sarah Kinnick Hilty 101