What changed in this filing

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Item 1. Financial Statements

2022-05-09 compared with 2021-11-08 · 206 added, 275 removed, 497 unchanged (49% of the section changed)

4 unchanged sentences

(In millions, except share and per share data)

September 30, 2021 December 31, 2020

March 31, 2022 December 30, 2021

CURRENT ASSETS:

8 unchanged sentences

Deferred tax assets, net of valuation allowance of $ 225.5 and $ 223.8 , respectively

Other investments 0.8 0.8

Long-term marketable securities 1.0 1.0

6 unchanged sentences

Amounts due to founding members, net $ 11.2 $ 11.8

Payable to founding members under tax receivable agreement (including payables to related

parties of $ 0.0 and $ 0.6 , respectively)

Accrued expenses 13.0 13.4

33 unchanged sentences

(In millions, except share and per share data)

Three Months Ended Nine Months Ended

September 30, 2021 September 24, 2020 September 30, 2021 September 24, 2020

REVENUE (including revenue from related parties of $ 2.7 , $ 0.2 , $ 4.7 and $ 4.5 ,

respectively)

$ 31.7 $ 6.0 $ 51.1 $ 74.7

Three Months Ended

March 31, 2022 April 1, 2021

REVENUE (including revenue from related parties of $ 2.8 and $ 0.4 , respectively)

OPERATING EXPENSES:

1 unchanged sentence

Network costs 2.0 1.8

Theater access fees and revenue share to founding members (including fees to

related parties of $ 11.4 , $ 1.0 , $ 19.8 and $ 13.6 , respectively)

16.7 1.8 31.0 19.5

Theater access fees and revenue share to founding members (including fees to related parties of $ 12.8 and $ 1.3 ,

respectively)

Selling and marketing costs 10.2 7.7

5 unchanged sentences

OPERATING LOSS ( 22.5 ) ( 28.3 )

NON-OPERATING EXPENSES:

NON-OPERATING EXPENSES (INCOME):

Interest on borrowings 17.2 14.7

Interest income — ( 0.1 ) ( 0.1 ) ( 0.6 )

Loss on modification and retirement of debt, net — 0.4

Gain on re-measurement of the payable to founding members under the tax

receivable agreement ( 1.8 ) ( 1.0 ) ( 3.2 ) ( 0.7 )

Other non-operating expense — 0.1 0.1 0.1

Loss (gain) on re-measurement of the payable to founding members under the tax receivable agreement 6.4 ( 1.5 )

Other non-operating expense (income) ( 0.1 ) 0.1

Total 23.5 13.7

LOSS BEFORE INCOME TAXES ( 46.0 ) ( 42.0 )

Income tax benefit — ( 3.1 ) — ( 7.7 )

Income tax expense — —

CONSOLIDATED NET LOSS ( 46.0 ) ( 42.0 )

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(In millions) (UNAUDITED)

Nine Months Ended

September 30, 2021 September 24, 2020

Three Months Ended

March 31, 2022 April 1, 2021

CASH FLOWS FROM OPERATING ACTIVITIES:

Consolidated net loss $ ( 46.0 ) $ ( 42.0 )

Adjustments to reconcile consolidated net loss to net cash (used in) provided by

operating activities:

Deferred income tax benefit — ( 7.7 )

Adjustments to reconcile consolidated net loss to net cash used in operating activities:

Depreciation expense 2.0 3.3

4 unchanged sentences

Loss on modification and retirement of debt, net — 0.4

Non-cash gain on re-measurement of the payable to founding members under

Non-cash loss (gain) on re-measurement of the payable to founding members under

the tax receivable agreement 6.4 ( 1.5 )

Founding member integration and other encumbered theater payments (including

payments from related parties of $ 0.0 and $ 0.1 , respectively)

Other ( 0.1 ) —

Founding member integration and other encumbered theater payments 1.2 —

Payment to the founding members under tax receivable agreement (including

payments to related parties of $ 0.0 and $ 0.6 , respectively)

( 0.9 ) ( 12.8 )

Other cash flows from operating activities ( 0.2 ) 0.1

1 unchanged sentence

Receivables, net 10.0 8.8

Accounts payable and accrued expenses (including payments to related parties of $ 0.6

and $ 0.0 , respectively)

Accounts payable and accrued expenses ( 4.1 ) ( 0.2 )

Amounts due to/from founding members, net ( 1.6 ) ( 1.1 )

1 unchanged sentence

Other, net ( 1.5 ) ( 1.2 )

Net cash (used in) provided by operating activities ( 92.5 ) 85.9

Net cash used in operating activities ( 23.6 ) ( 25.0 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment ( 0.7 ) ( 2.0 )

Purchases of marketable securities — ( 8.2 )

Proceeds from sale and maturities of marketable securities 0.3 30.3

Net cash (used in) provided by investing activities ( 3.6 ) 15.5

Net cash used in investing activities ( 0.7 ) ( 2.0 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of dividends ( 4.5 ) ( 4.8 )

Proceeds from revolving credit facility — 210.0

Repayments of revolving credit facility — ( 82.0 )

Issuance of revolving credit facility 50.0 —

Issuance of term loans — 50.0

1 unchanged sentence

Payment of debt issuance costs ( 6.8 ) ( 6.0 )

Distributions to founding members — ( 36.8 )

Repurchase of stock for restricted stock tax withholding ( 0.2 ) ( 1.1 )

1 unchanged sentence

CHANGE IN CASH AND CASH EQUIVALENTS:

( 70.2 ) 161.8

Cash and cash equivalents at beginning of period 101.2 180.3

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(In millions)

Nine Months Ended

September 30, 2021 September 24, 2020

Three Months Ended

March 31, 2022 April 1, 2021

Supplemental disclosure of non-cash financing and investing activity:

2 unchanged sentences

equity $ — $ 6.6

Increase (decrease) in dividend equivalent accrual not requiring cash in the period $ 1.0 $ ( 0.2 )

Increase in dividend equivalent accrual not requiring cash in the period $ 0.1 $ 0.5

Supplemental disclosure of cash flow information:

Cash paid for interest $ 15.6 $ 10.9

Cash (refunds) payments for income taxes $ ( 0.1 ) $ 0.5

Cash refunds for income taxes $ — $ ( 0.1 )

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

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Consolidated Shares Amount

Balance—June 25, 2020 $ ( 175.0 ) 78,000,338 $ 0.8 $ ( 209.1 ) $ ( 207.4 ) $ 240.7

Comprehensive loss, net of tax ( 30.9 ) — — — ( 12.7 ) ( 18.2 )

Share-based compensation issued — 37,273 — — — —

Share-based compensation expensed/capitalized 1.0 — — 0.7 — 0.3

Cash dividends declared $ 0.07 per share

( 5.5 ) — — — ( 5.5 ) —

Balance—September 24, 2020 $ ( 210.4 ) 78,037,611 $ 0.8 $ ( 208.4 ) $ ( 225.6 ) $ 222.8

Balance—July 1, 2021 $ ( 349.0 ) 80,238,751 $ 0.8 $ ( 197.6 ) $ ( 317.4 ) $ 165.2

Income tax and other impacts of NCM LLC ownership

changes 0.1 — — 0.3 — ( 0.2 )

Comprehensive loss, net of tax ( 33.5 ) — — — ( 15.2 ) ( 18.3 )

Share-based compensation issued ( 0.4 ) 178,759 — ( 0.4 ) — —

Share-based compensation expensed/capitalized 1.7 — — 1.1 — 0.6

Cash dividends declared $ 0.05 per share

( 4.1 ) — — — ( 4.1 ) —

Balance—September 30, 2021 $ ( 385.2 ) 80,417,510 $ 0.8 $ ( 196.6 ) $ ( 336.7 ) $ 147.3

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

Paid in Capital (Deficit) Retained

(Distribution in Excess of Earnings) Noncontrolling Interest

Consolidated Shares Amount

Balance—December 31, 2020 $ ( 268.6 ) 78,040,818 $ 0.8 $ ( 207.5 ) $ ( 266.4 ) $ 204.5

Cumulative-effect adjustment for adoption of ASU 2016-13,

net of tax 2.9 — — — 1.2 1.7

Distributions to founding members ( 4.4 ) — — — — ( 4.4 )

NCM LLC equity issued for purchase of intangible asset 14.1 — — 6.8 — 7.3

1 unchanged sentence

changes ( 0.1 ) — — 0.7 — ( 0.8 )

Issuance of shares 6.6 1,390,567 — 6.6 — —

NCM LLC common membership redemption ( 6.6 ) — — ( 6.6 ) — —

Comprehensive loss, net of tax ( 42.0 ) — — — ( 19.4 ) ( 22.6 )

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( 4.5 ) — — — ( 4.5 ) —

Balance—September 24, 2020 $ ( 210.4 ) 78,037,611 $ 0.8 $ ( 208.4 ) $ ( 225.6 ) $ 222.8

Balance—April 1, 2021 $ ( 299.3 ) 80,017,551 $ 0.8 $ ( 198.9 ) $ ( 290.3 ) $ 189.1

Balance—December 30, 2021 $ ( 383.5 ) 80,626,889 $ 0.8 $ ( 195.5 ) $ ( 332.0 ) $ 143.2

2 unchanged sentences

changes 0.6 — — ( 1.7 ) — 2.3

Issuance of shares 6.6 1,390,567 — 6.6 — —

NCM LLC common membership unit redemption ( 6.6 ) — — ( 6.6 ) — —

Comprehensive loss, net of tax ( 46.0 ) — — — ( 25.2 ) ( 20.8 )

3 unchanged sentences

( 4.2 ) — — — ( 4.2 ) —

Balance—September 30, 2021 $ ( 385.2 ) 80,417,510 $ 0.8 $ ( 196.6 ) $ ( 336.7 ) $ 147.3

Balance—March 31, 2022 $ ( 421.4 ) 81,403,872 $ 0.8 $ ( 191.5 ) $ ( 361.4 ) $ 130.7

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

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NCM LLC is currently owned by NCM, Inc., Regal Cinemas, Inc.

and Regal CineMedia Corporation, wholly owned subsidiaries of Cineworld Group plc and Regal Entertainment Group (“Regal”) and Cinemark Media, Inc.

and Regal CineMedia Corporation, wholly owned subsidiaries of Cineworld Group plc and Regal Entertainment Group (“Regal”), Cinemark Media, Inc.

and Cinemark USA, Inc., wholly owned subsidiaries of Cinemark Holdings, Inc.

(“Cinemark”).

(“Cinemark”), and American Multi-Cinema, Inc., a wholly owned subsidiary of AMC Entertainment, Inc.

The terms “NCM”, “the Company” or “we” shall, unless the context otherwise requires, be deemed to include the consolidated entity.

On March 23, 2021 American Multi-Cinema, Inc., a wholly owned subsidiary of AMC Entertainment, Inc.

(“AMC”) redeemed 1,390,567 membership units, which were issued to AMC in accordance with the terms of the common unit adjustment agreement with the founding members, in exchange for shares of NCM, Inc.

common stock, reducing AMC’s ownership to 0.0 % as of September 30, 2021.

AMC, Regal, Cinemark and their affiliates are referred to in this document as “founding members”.

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and sells advertising under long-term exhibitor service agreements (“ESAs”) with the founding members and with certain third-party network affiliates, under long-term network affiliate agreements.

As previously disclosed, the COVID-19 pandemic has had a significant impact on the world and the Company’s business beginning in March 2020 as the United States’ government and other state and local governments issued restrictions on travel, public gatherings and other events and issued social distancing guidelines.

These governmental restrictions resulted in the closure of most of the theaters within the Company’s network for approximately six months and thus the Company generated no in-theater advertising revenue during that time.

When theaters began to reopen late in the third quarter of 2020, in-theater advertising revenue continued to be adversely impacted as attendance at the reopened theaters was significantly less than prior comparative periods due primarily to the shift in motion picture release schedules and the local/state COVID-19 patron capacity limitations.

These and subsequent developments are referred to as the “COVID-19 Pandemic.” Beginning in 2021, the FDA approved multiple COVID-19 vaccines, which have been widely administered throughout the United States.

As a result, during the second quarter of 2021, government restrictions lessened allowing theaters in key larger markets to fully reopen and by the third quarter of 2021 all of the theaters within the Company’s network were open.

Multiple successful major motion pictures were released during the second and third quarters of 2021 resulting in the highest theater attendance since the start of the COVID-19 Pandemic.

Despite the increase in network attendance, the second and third quarter of 2021 in-theater advertising revenue remained significantly below historical levels.

During the third quarter of 2021 variants of the COVID-19 virus spread throughout the United States resulting in the reinstatement of mask mandates in certain areas with increased infection rates and concerning some advertisers about the impact on theater attendance.

As previously disclosed, the COVID-19 pandemic has had a significant impact on the world and the Company’s business as the United States’ government and other state and local governments issued restrictions on travel, public gatherings and other events and issued social distancing guidelines.

These and subsequent developments are referred to as the “COVID-19 Pandemic.” All of the theaters within the Company’s network have been open and the release of major motion pictures has resumed since the third quarter of 2021 resulting in the highest theater attendance since the start of the COVID-19 Pandemic.

Despite the increase in network attendance, in-theater advertising revenue for the year ended December 30, 2021 and the quarter ended March 31, 2022 remained below historical levels due to the lag between the recovery of attendees and advertisers.

On September 17, 2019, NCM LLC entered into amendments to the ESAs with Cinemark and Regal (collectively, the “2019 ESA Amendments”).

The 2019 ESA Amendments extended the contract life of the ESAs with Cinemark and Regal by four years resulting in a weighted average remaining term of the ESAs with the founding members (based upon pre-COVID-19 attendance levels) of approximately 18.0 years as of September 30, 2021.

The network affiliate agreements expire at various dates between December 2021 and December 2037.

The weighted average remaining term of the ESAs and the network affiliate agreements together is 15.7 years as of September 30, 2021 (based upon pre-COVID-19 attendance levels).

As of September 30, 2021, NCM LLC had 166,605,854 common membership units outstanding, of which 80,417,510 ( 48.3 %) were owned by NCM, Inc., 43,026,794 ( 25.8 %) were owned by Regal and 43,161,550 ( 25.9 %) were owned by Cinemark and 0 ( 0.0 %) were owned by AMC.

The 2019 ESA Amendments extended the contract life of the ESAs with Cinemark and Regal by four years resulting in a weighted average remaining term of the ESAs with the founding members (weighted based upon pre-COVID-19 attendance levels) of approximately 17.5 years as of March 31, 2022.

The network affiliate agreements expire at various dates between July 2022 and December 2037.

The weighted average remaining term of the ESAs and the network affiliate agreements together is 15.2 years as of March 31, 2022 (weighted based upon pre-COVID-19 attendance levels).

As of March 31, 2022, NCM LLC had 171,733,112 common membership units outstanding, of which 81,403,872 ( 47.4 %) were owned by NCM, Inc., 40,683,797 ( 23.7 %) were owned by Regal, 43,690,797 ( 25.4 %) were owned by Cinemark and 5,954,646 ( 3.5 %) were owned by AMC.

The membership units held by the founding members are exchangeable into NCM, Inc.

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In the opinion of management, all adjustments necessary to present fairly in all material respects the financial position, results of operations and cash flows for all periods presented have been made.

Historically, the Company’s business has been

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

seasonal and for this and other reasons operating results for interim periods have not been indicative of the Company’s full year results or future performance.

Given the impact of the COVID-19 Pandemic during 2021, management expects the Company's 2021 quarterly results to vary from historical trends.

Historically, the Company’s business has been seasonal and for this and other reasons operating results for interim periods have not been indicative of the Company’s full year results or future performance.

As a result of the various related party agreements discussed in Note 5— Related Party Transactions , the operating results as presented are not necessarily indicative of the results that might have occurred if all agreements were with non-related third parties.

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Actual results could differ from estimates.

Going Concern — The accompanying unaudited Condensed Consolidated Financial Statements are prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Based on the Company’s current financial position and liquidity sources, including current cash balances, and forecasted future cash flows, management believes the Company can meet its operating obligations as they become due, including all currently scheduled interest and debt service payments within one year following the date that these financial statements are issued.

Refer to Note 6— Borrowings for information on the Company’s debt obligations, including a current waiver of certain financial covenants.

However, the Company does not expect to meet its financial covenants within one year following the date that these financial statements are issued.

If these financial covenants are not met a majority of the lenders of the Senior Secured Credit Facility are permitted under the Credit Agreement to accelerate the debt which could also result in a cross-default under NCM LLC’s senior notes.

Considering current liquidity sources, the Company would not be able to repay the Company’s total outstanding debt balance.

These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.

In light of this, the Company is actively pursuing a number of options including amending its Senior Secured Credit Facility to extend a waiver of these financial covenants and obtaining additional financing either through a loan from third party lenders or NCM, Inc.

Management expects to conclude one of these alternatives in the very near term;

however, there can be no assurance that the Company will be successful in completing any of these options.

As a result, management’s plan cannot be considered probable and thus does not alleviate the substantial doubt about the Company’s ability to continue as a going concern.

The unaudited Condensed Consolidated Financial Statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

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Significant Accounting Policies

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The Company considers the terms of each arrangement to determine the appropriate accounting treatment.

The Company has changed the classification of the make good provision, retrospectively, to now be included within “Deferred Revenue” on the unaudited Consolidated Balance Sheet rather than “Accrued Expenses” as of March 31, 2022.

Concentration of Credit Risk and Significant Customers —The risk of credit loss related to the Company's trade receivables and unbilled receivables balances is accounted for through the allowance for doubtful accounts, a contra asset account which reduces the net receivables balance.

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National receivables are with large advertising agencies with strong reputations in the advertising industry and clients with stable financial positions and good credit ratings, represent larger receivables balances per customer and have significantly lower historical and expected credit loss patterns.

Local and regional receivables are with smaller companies sometimes with less credit history and represent smaller receivable balances per customer and higher historical and expected credit loss patterns.

The Company has smaller contracts with many local clients that are not individually

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Local and regional receivables are with smaller companies sometimes with less credit history, represent smaller receivable balances per customer and have higher historical and expected credit loss patterns.

The Company has smaller contracts with many local clients that are not individually significant.

The Company also considers current economic conditions and trends to determine whether adjustments to historical loss rates are necessary.

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Receivables are written off when management determines amounts are uncollectible.

The Company had one agency through which the Company sourced advertising revenue that accounted for 22.0 % and 10.1 % of the Company's gross outstanding receivable balance as of September 30, 2021 and December 31, 2020, respectively.

During the three months ended September 30, 2021 and September 24, 2020, the Company had one customer that accounted for 11.8 % and 28.8 % of the Company's revenue, respectively.

During the nine months ended September 30, 2021 and September 24, 2020, the Company had one customer that accounted for 11.6 % and 10.6 % of revenue, respectively.

The Company had one agency through which it sourced advertising revenue that accounted for 21.8 % and 15.7 % of the Company's gross outstanding receivable balance as of March 31, 2022 and December 30, 2021, respectively.

During the three months ended March 31, 2022 and April 1, 2021, the Company had one customer that accounted for 11.4 % and 14.0 % of the Company's revenue, respectively.

Long-lived Assets —The Company assesses impairment of long-lived assets pursuant to ASC 360 – Property, Plant and Equipment .

This includes determining whether certain triggering events have occurred that could affect the value of an asset.

The Company recorded losses of $ 0.0 million, $ 0.0 million, $ 0.0 million and $ 1.7 million related to the write-off of certain internally developed software during the three months ended September 30, 2021 and September 24, 2020 and the nine months ended September 30, 2021 and September 24, 2020, respectively.

The Company recorded losses of $ 5.8 million and $ 0.0 million related to the write-off of certain internally developed software during the three months ended March 31, 2022 and April 1, 2021, respectively.

Share-Based Compensation —The Company has issued stock options, restricted stock, and restricted stock units to certain employees and its independent directors.

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Dividends are accrued when declared on unvested restricted stock and restricted stock units that are expected to vest and are only paid with respect to shares that actually vest.

On February 28, 2021 and March 2, 2021, the Company’s Board of Directors approved certain modifications to equity awards awarded under the Company’s 2016 Equity Incentive Plan to adjust performance metrics, vesting amount and future performance goals in light of the COVID-19 Pandemic resulting in incremental share-based compensation expense of $ 0.2 million and $ 1.7 million for the three months and nine months ended September 30, 2021, respectively.

During the three months ended September 30, 2021 and September 24, 2020 and the nine months ended September 30, 2021 and September 24, 2020, 268,782 , 50,052 , 1,394,321 and 607,733 shares of restricted stock and restricted stock units vested, respectively.

On January 19, 2022, March 2, 2021 and February 28, 2021, the Company’s Board of Directors approved certain modifications to equity awards awarded under the Company’s 2016 Equity Incentive Plan and 2020 Omnibus Equity Incentive Plan to adjust performance metrics, vesting amount and future performance goals in light of the COVID-19 Pandemic resulting in incremental share-based compensation expense of $ 0.2 million and $ 1.3 million for the three months ended March 31, 2022 and April 1, 2021, respectively.

During the three months ended March 31, 2022 and April 1, 2021, 855,753 and 843,729 , shares of restricted stock and restricted stock units vested, respectively.

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Consolidation —NCM, Inc.

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and transfers to or from noncontrolling interests (in millions):

Three Months Ended Nine Months Ended

September 30, 2021 September 24, 2020 September 30, 2021 September 24, 2020

Three Months Ended

March 31, 2022 April 1, 2021

Net loss attributable to NCM, Inc.

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Change from net loss income attributable to NCM, Inc.

transfers from noncontrolling interests $ ( 14.9 ) $ ( 12.7 ) $ ( 49.3 ) $ ( 29.1 )

and transfers from noncontrolling

interests $ ( 22.0 ) $ ( 11.9 )

Recently Adopted Accounting Pronouncements

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The Company’s adoption of ASU 2019-12 did not have a material impact on the unaudited Condensed Consolidated Financial Statements or notes thereto.

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Recently Issued Accounting Pronouncements

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This guidance is effective upon issuance and expires on December 31, 2022.

The Company is currently assessing the impact of the LIBOR transition and ASU 2020-04 on the Company’s unaudited Condensed Consolidated Financial Statements.

The Company concluded the LIBOR transition did not have a material impact on the Company’s unaudited Condensed Consolidated Financial Statements.

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its unaudited Condensed Consolidated Financial Statements or notes thereto.

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The Company also sells advertising through the LEN, a series of strategically placed screens located in movie theater lobbies, as well as other forms of advertising and promotions in theater lobbies.

In addition, the Company sells online and mobile advertising, including through Noovie Audience Accelerator, through NCM's digital gaming products including Noovie Trivia , Noovie ARcade, Name That Movie and Noovie Shuffle, which can be played on the mobile apps or at Noovie.com and through partnerships with certain internet platforms .

Further the Company sells advertising in a variety of complementary out of home venues, including restaurants, retail locations, convenience stores, college campuses and office and residential buildings.

In addition, the Company sells online and mobile advertising, including through Noovie Audience Accelerator , through NCM's digital gaming products including Noovie Trivia, Noovie ARcade , Name That Movie and Noovie Shuffle , which can be played on the mobile apps and through partnerships with certain internet platforms .

Further the Company sells advertising in a variety of complementary out of home venues, including restaurants, convenience stores and college campuses.

The Company also has a long-term agreement to exhibit the advertising of the founding members’ beverage suppliers.

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The deferred portion of the revenue associated with undelivered impressions is referred to as a make-good provision.

The Company defers the revenue associated with the make-good until the advertising airs to the audience specified in the advertising contract.

The make-good provision is recorded within accrued expenses in the unaudited Condensed Consolidated Balance Sheet.

As of September 30, 2021 and December 31, 2020, the Company had a make-good provision of $ 2.9 million and $ 7.1 million, respectively.

The Company does not have any contracts with customers with terms in excess of one year that are noncancellable as of September 30, 2021.

The Company defers the revenue associated with the make-good until the advertising airs to the audience specified in the advertising contract or the make-good period expires.

The make-good provision is recorded within deferred revenue in the unaudited Condensed Consolidated Balance Sheet.

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The Company does not have any contracts with customers with terms in excess of one year that are noncancellable as of March 31, 2022.

Agreements with a duration less than one year are not included within this disclosure as the Company elected to use the practical expedient in ASC 606-10-50-14 for those contracts.

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This method of disaggregation is in alignment with how revenue is reviewed by management and discussed with, and historically disclosed to investors.

The following table summarizes revenue from contracts with customers for the three and nine months ended September 30, 2021 and September 24, 2020 (in millions):

Three Months Ended Nine Months Ended

September 30, 2021 September 24, 2020 September 30, 2021 September 24, 2020

National and regional advertising revenue $ 22.9 $ 3.5 $ 35.5 $ 55.0

Local advertising revenue 5.4 2.3 9.6 14.0

Founding member advertising revenue from beverage

concessionaire agreements 3.4 0.2 6.0 5.7

The following table summarizes revenue from contracts with customers for the three months ended March 31, 2022 and April 1, 2021 (in millions):

Three Months Ended

March 31, 2022 April 1, 2021

National advertising revenue $ 26.3 $ 3.2

Local and regional advertising revenue 6.1 1.7

Founding member advertising revenue from beverage concessionaire agreements 3.5 0.5

Total revenue $ 35.9 $ 5.4

Deferred Revenue and Unbilled Accounts Receivable

The changes in deferred revenue for the nine months ended September 30, 2021 were as follows (in millions):

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Nine Months Ended

September 30, 2021

Balance at beginning of period $ ( 5.1 )

New contract liabilities ( 7.7 )

Performance obligations satisfied 1.7

Balance at end of period $ ( 11.1 )

As of September 30, 2021 and December 31, 2020, the Company had $ 3.3 million and $ 2.5 million in unbilled accounts receivable, respectively.

Revenue recognized in the three months ended March 31, 2022 that was included within the Deferred Revenue balance as of December 30, 2021 was $ 4.5 million.

As of March 31, 2022 and December 30, 2021, the Company had $ 3.9 million and $ 4.4 million in unbilled accounts receivable, respectively.

Allowance for Doubtful Accounts

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The Company has determined that two pools, national customers and local/regional customers, is appropriate.

The changes within the allowance for doubtful accounts balances for the nine months ended September 30, 2021 were as follows (in millions):

Nine Months Ended

September 30,

Allowance for National Customer Receivables Allowance for Local/ Regional Customer Receivables

The changes within the allowance for doubtful accounts balances for the three months ended March 31, 2022 and April 1, 2021, respectively, were as follows (in millions):

Three Months Ended

March 31, 2022 April 1, 2021

Allowance for National Customer Receivables Allowance for Local/ Regional Customer Receivables Allowance for National Customer Receivables Allowance for Local/ Regional Customer Receivables

Balance at beginning of period $ 0.3 $ 1.4 $ 0.2 $ 2.1

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share are as follows:

Three Months Ended Nine Months Ended

September 30, 2021 September 24, 2020 September 30, 2021 September 24, 2020

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Three Months Ended

March 31, 2022 April 1, 2021

Net loss attributable to NCM, Inc.

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Basic 81,040,652 78,481,355

Dilutive effect of stock options, restricted stock and

exchangeable membership units — — — —

Dilutive effect of stock options, restricted stock and exchangeable membership units — —

Diluted 81,040,652 78,481,355

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Diluted $ ( 0.31 ) $ ( 0.25 )

The effect of 86,188,344 , 84,531,328 , 85,601,326 and 83,678,699 weighted average exchangeable NCM LLC common units held by the founding members for the three months ended September 30, 2021 and September 24, 2020 and nine months ended September 30, 2021 and September 24, 2020, respectively, have been excluded from the calculation of diluted weighted average shares and loss per NCM, Inc.

The effect of 86,233,848 and 84,427,289 weighted average exchangeable NCM LLC common units held by the founding members for the three months ended March 31, 2022 and April 1, 2021, respectively, have been excluded from the calculation of diluted weighted average shares and loss per NCM, Inc.

share as they were anti-dilutive.

NCM LLC common units do not participate in dividends paid on NCM, Inc.’s common stock.

In addition, there were 4,797,243 , 4,484,702 , 4,797,243 and 4,484,702 , stock options and non-vested (restricted) shares for the three months ended September 30, 2021 and September 24, 2020 and nine months ended September 30, 2021 and September 24, 2020, respectively, excluded from the calculation as they were anti-dilutive.

In addition, there were 3,463,302 and 5,523,285 stock options and non-vested (restricted) shares for the three months ended March 31, 2022 and April 1, 2021, respectively, excluded from the calculation as they were anti-dilutive.

The Company’s non-vested (restricted) shares do not meet the definition of a participating security as the dividends will not be paid if the shares do not vest.

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INTANGIBLE ASSETS

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The Company’s intangible assets have a finite useful life and the Company amortizes the assets over the remaining useful life corresponding with the ESAs or the term of the network affiliate agreement.

During 2020, the Company determined that recent adverse changes in macroeconomic trends, reduced cash flows as a consequence of the temporary, and sometimes permanent, closure of the theaters within the Company's network in response to the COVID-19 Pandemic, a decline in the fair value of NCM LLC’s debt and the further sustained decline in the market price of NCM, Inc.'s common stock constituted a triggering event for its intangible assets under Accounting Standards Certification No.

During the fourth quarter of 2021, the Company determined that recent adverse changes in macroeconomic trends, reduced cash flows as a consequence of the temporary, and sometimes permanent, closure of the theaters within the Company's network in response to the COVID-19 Pandemic, a decline in the fair value of NCM LLC’s debt and the further sustained decline in the market price of NCM, Inc.'s common stock constituted a triggering event for certain of its intangible assets under Accounting Standards Certification No.

360, Impairment and Disposal of Long-Lived Assets.

Management considered possible scenarios in a probability-weighted estimated future undiscounted cash flow analysis, including the potential of further delays in major motion picture releases, a recurrence of the temporary theater closures and other potential adverse impacts to NCM LLC's founding members' and affiliates' financial liquidity related to the COVID-19 Pandemic.

The estimated future cash flows from the affiliate agreements and ESAs calculated within the probability-weighted analyses were in excess of the net book value of these intangible assets and no impairment charges were recorded in the year ended December 31, 2020.

Management considered possible scenarios in a probability-weighted estimated future undiscounted cash flow analysis, including the potential of further delays in major motion picture releases, a delay in audience return to the theaters and other potential adverse impacts to certain of NCM LLC's founding members' and affiliates' financial liquidity related to the COVID-19 Pandemic.

The estimated future cash flows from the ESAs calculated within the probability-weighted analyses were in excess of the net book value of these intangible assets and no impairment charges were recorded in the year ended December 30, 2021.

Such analysis required management to make estimates and assumptions based on historical data and consideration of future market conditions.

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In addition, NCM LLC’s Common Unit Adjustment Agreement requires that a Common Unit Adjustment occur for a specific founding member if its acquisition or disposition of theaters, in a single transaction or cumulatively since the most recent Common Unit Adjustment, results in an attendance increase or decrease in excess of two percent of the annual total attendance at the prior adjustment date.

During the first quarter of 2022, NCM LLC issued 6,483,893 common membership units to two founding members for the rights to exclusive access to the theater screens and attendees added, net of dispositions, to NCM LLC’s network during the 2021 fiscal year and calculated a negative common membership unit adjustment for one founding member resulting in a

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reduction of 2,342,997 to its common membership unit balance.

The net impact as a result of the Common Unit Adjustment to the intangible asset was $ 10.4 million during the first quarter of 2022.

During the first quarter of 2021, NCM LLC issued 3,047,582 common membership units to two founding members for the rights to exclusive access to the theater screens and attendees added, net of dispositions, to NCM LLC’s network during the 2020 fiscal year and calculated a negative common membership unit adjustment for one founding member resulting in a receivable included within “Other assets and prepaid expenses” on the unaudited Consolidated Balance Sheet.

The net impact as a result of the Common Unit Adjustment to the intangible asset was $ 4.8 million during the first quarter of 2021.

During the first quarter of 2020, NCM LLC issued 3,022,959 common membership units to its founding members for the rights to exclusive access to the theater screens and attendees added, net of dispositions by the founding members to NCM LLC’s network during the 2019 fiscal year and NCM LLC recorded a net intangible asset of $ 10.5 million during the first quarter of 2020 as a result of the Common Unit Adjustment.

Integration Payments and Other Encumbered Theater Payments —If an existing on-screen advertising agreement with an alternative provider is in place with respect to any acquired theaters (“encumbered theaters”), the founding members may elect to receive common membership units related to those encumbered theaters in connection with the Common Unit Adjustment.

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These payments are also accounted for as a reduction to the intangible assets.

During the three months ended September 30, 2021 and September 24, 2020 and nine months ended September 30, 2021 and September 24, 2020, the Company recorded a reduction to net intangible assets of $ 0.2 million, $ 0.0 million , $ 0.3 million and $ 1.4 million, respectively,

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related to integration and other encumbered theater payments.

No integrations payments were earned for the three months ended September 30, 2021 because the Company generated negative Adjusted Operating Income Before Depreciation and Amortization (“Adjusted OIBDA”) during this period.

During the three months ended September 30, 2021 and September 24, 2020 and nine months ended September 30, 2021 and September 24, 2020, AMC and Cinemark paid a total of $ 0.2 million, $ 0.0 million , $ 0.3 million and $ 9.7 million, respectively, in integration and other encumbered theater payments (as payments are made one quarter and one month in arrears, respectively).

The payments received during the three months ended September 24, 2020 primarily relate to AMC's acquisition of theaters from Carmike.

During the three months ended March 31, 2022 and April 1, 2021, the Company recorded a reduction to net intangible assets of $ 0.2 million and $ 0.0 million , respectively, related to other encumbered theater payments.

No integration payments were earned for the three months ended March 31, 2022 because the Company generated negative Adjusted Operating Income Before Depreciation and Amortization (“Adjusted OIBDA”) during this period.

During the three months ended March 31, 2022 and April 1, 2021, AMC and Cinemark paid a total of $ 1.2 million and $ 0.0 million , respectively, in integration and other encumbered theater payments (as payments are made one quarter and one month in arrears, respectively).

The payments received during the three months ended April 1, 2021 primarily relate to AMC's acquisition of theaters from Carmike.

If common membership units are issued to a founding member for newly acquired theaters that are subject to an existing on-screen advertising agreement with an alternative provider, the amortization of the intangible asset commences after the existing agreement expires and NCM LLC can utilize the theaters for all of its services.

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AMC's ownership percentage does not impact future integration payments and other encumbered theater payments owed to NCM LLC by AMC.

As of September 30, 2021, AMC’s ownership was 0.0 %.

As of March 31, 2022, AMC’s ownership was 3.5 %.

The material agreements with the founding members are as follows:

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In consideration for access to the founding members’ theaters, theater patrons, the network equipment required to display on-screen and LEN video advertising and the use of theaters for lobby promotions, the founding members receive a monthly theater access fee.

In conjunction with the 2019 ESA Amendments, NCM LLC agreed to pay Cinemark and Regal incremental monthly theater access fees and, subject to NCM LLC's use of specified inventory, a revenue share in consideration for NCM LLC's access to certain on-screen advertising inventory after the advertised showtime of a feature film beginning November 1, 2019, and the underlying term of the ESAs were extended until 2041.

In conjunction with the 2019 ESA Amendments, NCM LLC agreed to pay Cinemark and Regal incremental monthly theater access

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fees and, subject to NCM LLC's use of specified inventory, a revenue share in consideration for NCM LLC's access to certain on-screen advertising inventory after the advertised showtime of a feature film beginning November 1, 2019, and the underlying term of the ESAs were extended until 2041.

The ESAs and 2019 ESA Amendments with Cinemark and Regal are considered leases with related parties under ASC 842.

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NCM LLC has made improvements to this software since the IPO date and NCM LLC owns those improvements, except for improvements that were developed jointly by NCM LLC and NCM LLC’s founding members, if any.

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The following tables provide summaries of the transactions between the Company and the related party founding members (in millions):

Three Months Ended Nine Months Ended

Three Months Ended

Included in the unaudited Condensed Consolidated Statements of Income:

September 30, 2021 September 24, 2020 September 30, 2021 September 24, 2020

March 31, 2022 April 1, 2021

Beverage concessionaire revenue (included in advertising revenue) (1)

$ 2.7 $ 0.2 $ 4.7 $ 4.5

Operating expenses:

Theater access fee and revenue share to founding members (2)

$ 11.4 $ 1.0 $ 19.8 $ 13.6

Selling and marketing costs (3)

$ — $ — $ — $ 0.1

Advertising operating costs (3)

________________________________________

(1) For the three and nine months ended September 30, 2021 and September 24, 2020, Cinemark and Regal purchased 60 seconds of on-screen advertising time from NCM LLC to satisfy their obligations under their beverage concessionaire agreements at a 30 seconds equivalent CPM rate specified by the ESA.

No beverage revenue was generated for the period of time that the theaters within NCM LLC's network were temporarily closed as there were no attendees upon which beverage revenue is generated and beverage revenue was limited for periods of reduced attendance due to the COVID-19 Pandemic.

(1) For the three months ended March 31, 2022 and April 1, 2021, Cinemark and Regal purchased 60 seconds of on-screen advertising time from NCM LLC to satisfy their obligations under their beverage concessionaire agreements at a 30 seconds equivalent CPM rate specified by the ESA.

Beverage revenue was limited for periods of reduced attendance due to the COVID-19 Pandemic.

(2) Comprised of payments per theater attendee, payments per digital screen with respect to the founding member theaters included in the Company’s network and payments for access to higher quality digital cinema equipment.

Following the 2019 ESA Amendments this also includes payments to Cinemark and Regal for their share of the revenue from the sale of an additional single unit that is either 30 or 60 seconds of the Noovie pre-show in the trailer position directly prior to the “attached” trailers preceding the feature film (the “Platinum Spot”).

There was no theater access fee or revenue share expense for the period of time that the theaters within NCM LLC's network were temporarily closed and reduced fees for periods of reduced attendance due to the COVID-19 Pandemic.

Theater access fees and revenue share expenses were reduced for periods of reduced attendance due to the COVID-19 Pandemic.

(3) Includes purchase of movie tickets, concession products, rental of theater space primarily for marketing to NCM LLC’s advertising clients and other payments made to the founding members in the ordinary course of business.

Included in the unaudited Condensed Consolidated Balance Sheets:

September 30, 2021 December 31, 2020

March 31, 2022 December 30, 2021

Common unit adjustments and ESA extension costs, net of amortization and integration payments (included in intangible assets) (1)

$ 593.3 $ 589.6

Current payable to founding members under tax receivable agreement (2)

Long-term payable to founding members under tax receivable agreement (2)

$ 11.9 $ 11.9

Other payables to founding members (3)

(1) Refer to Note 4— Intangible Assets for further information on common unit adjustments and integration payments.

This balance includes common unit adjustments issued to all of the founding members (including AMC) as the Company's intangible balance is considered one asset inclusive of all common unit adjustment activity.

(2) The Company paid Cinemark and Regal $ 0.2 million and $ 0.4 million during 2021 and $ 3.2 million and $ 5.8 million during 2020, respectively, in payments pursuant to the TRA which were for the 2019 tax year.

(3) Includes other payments made to the founding members in the ordinary course of business.

Pursuant to the terms of the NCM LLC operating agreement in place since the completion of the Company’s IPO, NCM LLC is required to make mandatory distributions on a proportionate basis to its members of available cash, as defined in the NCM LLC operating agreement, on a quarterly basis in arrears.

Mandatory distributions of available cash for the three and nine months ended September 30, 2021 and September 24, 2020 were as follows (in millions):

(2) The Company paid Cinemark and Regal $ 0.2 million and $ 0.4 million during 2021, respectively, in payments pursuant to the TRA which were for the 2019 tax year.

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Three Months Ended Nine Months Ended

September 30, 2021 September 24, 2020 September 30, 2021 September 24, 2020

Cinemark $ — $ — $ — $ 2.1

Regal — — — 2.2

Total distributions to related parties — — — 4.3

Total $ — $ — $ — $ 8.4

Due to the temporary closure of the theaters within NCM LLC's network during a portion of the nine months ended September 30, 2021 and decrease in 2021 in-theater advertising revenue, the mandatory distributions of available cash by NCM LLC to its related party founding members and NCM, Inc.

for the three months ended September 30, 2021 were calculated as negative $ 23.2 million (including negative $ 6.0 million for Cinemark, negative $ 6.0 million for Regal and negative $ 11.2 million for NCM, Inc.).

Therefore, there will be no payment made for the third quarter of 2021.

The mandatory distributions of available cash by NCM LLC for the nine months ended September 30, 2021 were calculated as negative $ 93.3 million (including negative $ 24.2 million for Cinemark, negative $ 24.1 million for Regal and negative $ 45.0 million for NCM, Inc.).

Under the terms of the NCM LLC operating agreement, these negative amounts will be netted against future positive available cash distributions after the extended covenant waiver holiday, contingent upon the Company's compliance with the covenants outlined within the Credit Agreement Second Amendment defined within Note 6— Borrowings and in accordance with the NCM LLC operating agreement.

Amounts due to related party founding members, net, as of September 30, 2021 were comprised of the following (in millions):

Due to the continued recovery from the COVID-19 Pandemic during the three months ended March 31, 2022 and decrease in 2021 in-theater advertising revenue, the mandatory distributions of available cash by NCM LLC to its related party founding members and NCM, Inc.

for the three months ended March 31, 2022 were calculated as negative $ 26.3 million (including negative $ 6.9 million for Cinemark, negative $ 6.5 million for Regal and negative $ 12.9 million for NCM, Inc.).

Therefore, there will be no payment made for the first quarter of 2022.

Under the terms of the NCM LLC operating agreement, these negative amounts will be netted against future positive available cash distributions after the extended covenant waiver holiday, contingent upon the Company's compliance with the covenants outlined within the Credit Agreement Third Amendment defined within Note 6— Borrowings and in accordance with the NCM LLC operating agreement.

Amounts due to related party founding members, net, as of March 31, 2022 were comprised of the following (in millions):

Cinemark Regal Total

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encumbered theater payments $ 5.1 $ 6.3 $ 11.4

Integration payments due from founding members ( 0.1 ) ( 0.1 ) ( 0.2 )

Total amounts due to founding members, net $ 5.1 $ 6.3 $ 11.4

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Although NCM LLC does not have a representative on AC JV, LLC’s Board of Directors or any voting, consent or blocking rights with respect to the governance or operations of AC JV, LLC, the Company concluded that its interest was more than minor under the accounting guidance.

The Company’s investment in AC JV, LLC was $ 0.6 million and $ 0.7 million as of September 30, 2021 and December 31, 2020, respectively.

Equity in (losses) earnings from AC JV, LLC of $ 0.0 million , $( 0.1 ) million, $( 0.1 ) million and $( 0.1 ) million for the three months ended September 30, 2021 and September 24, 2020 and nine months ended September 30, 2021 and September 24, 2020, respectively, is included in “Other non-operating income” in the unaudited Condensed Consolidated Statements of Income.

The Company’s investment in AC JV, LLC was $ 0.8 million and $ 0.7 million as of March 31, 2022 and December 30, 2021, respectively.

During the three months ended March 31, 2022 and April 1, 2021, NCM LLC received cash distributions from AC JV, LLC of $ 0.1 million and $ 0.0 million, respectively.

Equity in earnings (losses) from AC JV, LLC of $ 0.1 million and $( 0.1 ) million for the three months ended March 31, 2022 and April 1, 2021, respectively, is included in “Other non-operating income” in the unaudited Condensed Consolidated Statements of Income.

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The following table summarizes NCM LLC’s total outstanding debt as of September 30, 2021 and December 31, 2020 and the significant terms of its borrowing arrangements (in millions):

The following table summarizes NCM LLC’s total outstanding debt as of March 31, 2022 and December 30, 2021 and the significant terms of its borrowing arrangements (in millions):

Outstanding Balance as of

Borrowings September 30, 2021 December 31, 2020 Maturity

Borrowings March 31, 2022 December 30, 2021 Maturity

Date Interest

Revolving credit facility 2018 $ 167.0 $ 167.0 June 20, 2023 (1)

Revolving credit facility 2022 50.0 — June 20, 2023 (1)

Term loans - first tranche 259.9 261.2 June 20, 2025 (1)

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(1) The interest rates on the revolving credit facility and term loans are described below.

(1) The interest rates on the revolving credit facilities and term loans are described below.

Senior Secured Credit Facility —NCM LLC’s credit agreement, as amended, (the “Credit Agreement”) consists of a term loan facility and a revolving credit facility.

As of September 30, 2021, NCM LLC’s senior secured credit facility consisted of a $ 175.0 million revolving credit facility, a $ 261.2 million term loan (first tranche) and a $ 49.8 million term loan (second tranche).

As of March 31, 2022, NCM LLC’s senior secured credit facility consisted of a $ 175.0 million revolving credit facility, a $ 49.5 million term loan (first tranche) and a $ 259.9 million term loan (second tranche).

The obligations under the senior secured credit facility are secured by a lien on substantially all of the assets of NCM LLC.

On March 8, 2021, NCM LLC entered into a second amendment to its Credit Agreement (“Credit Agreement Second Amendment”).

Among other things, the Credit Agreement Second Amendment provides for certain modifications to the negative covenants, with respect to NCM LLC’s audited financial statements for the fiscal year ended December 31, 2020, a waiver of the requirement to deliver such financial statements without a “going concern” or like qualification or exception, additional waivers and term changes outlined below and grants security interests in certain assets of NCM LLC and other potential loan parties that are not currently pledged to the lenders.

Among other things, the Credit Agreement Second Amendment provides for certain modifications to the negative covenants, additional waivers and term changes outlined below and grants security interests in certain assets of NCM LLC and other potential loan parties that are not currently pledged to the lenders.

In addition, pursuant to the Credit Agreement Second Amendment, NCM LLC incurred a second tranche of the term loans in an aggregate principal amount of $ 50.0 million, the net proceeds of $ 43.0 million to be used for general corporate purposes.

Upon execution of the Credit Agreement Second Amendment, the Company recorded $ 2.3 million as a discount, $ 3.9 million as debt issuance costs and $ 0.8 million within “Loss on modification and retirement of debt, net”.

Revolving Credit Facility —The revolving credit facility portion of NCM LLC’s total borrowings is available, subject to certain conditions, for general corporate purposes of NCM LLC in the ordinary course of business and for other transactions permitted under the senior secured credit facility, and a portion is available for letters of credit.

During March 2020, NCM LLC drew down an additional $ 110.0 million on the revolving credit facility to fund operations during the period of expected disrupted cash flows due to the temporary closure of the theaters within NCM LLC's network due to the COVID-19 Pandemic.

As of September 30, 2021, NCM LLC’s total availability under the $ 175.0 million revolving credit facility was $ 6.8 million, net of $ 167.0 million outstanding and $ 1.2 million in letters of credit.

The unused line fee is 0.50 % per annum which is consistent with the previous facility.

Following the Credit Agreement Second Amendment effective March 8, 2021, the applicable margin for the LIBOR index increased from a range of 1.75 % to 2.25 % to a range of 2.75 % to 3.25 % and the applicable margin for the base rate increased from a range of 0.75 % to 1.25 % to a range of 1.75 % to 2.25 %.

The applicable margin for the revolving credit facility is determined quarterly and is subject to adjustment based upon a consolidated net senior secured leverage ratio for NCM LLC (the ratio of secured funded debt less unrestricted cash and cash equivalents of up to $ 100.0 million, divided by Adjusted EBITDA for debt purposes, defined as NCM LLC's net income before depreciation and amortization expense adjusted to also exclude non-cash share based compensation costs for NCM LLC plus integration payments received).

The weighted-average interest rate on the revolving credit facility as of September 30, 2021 was 4.50 %.

Term Loans — First Tranche —The interest rate on the initial tranche of term loans was originally a rate chosen at NCM LLC’s option of either the LIBOR index plus 3.00 % or the base rate plus 2.00 %.

Following the Credit Agreement Second Amendment effective March 8, 2021, the rate is either the LIBOR index plus 4.00 % or the base rate plus 3.00 %.

On January 5, 2022, NCM LLC entered into a third amendment to its Credit Agreement (“Credit Agreement Third Amendment”).

Among other things, the Credit Agreement Third Amendment provides for:

(i) certain modifications to and extensions to modifications of the affirmative and negative covenants therein;

(ii) the suspension of the consolidated net total leverage and consolidated net senior secured leverage financial covenants through the fiscal quarter ending December 29, 2022;

(iii) the consolidated net total leverage ratio and consolidated net senior secured leverage ratio financial covenants to be set to 9.25 to 1.00 and 7.25 to 1.00 , respectively, for the fiscal quarter ending on or about March 30, 2023, 8.50 to 1.00 and 6.50 to 1.00 , respectively, for the fiscal quarter ending on or about June 29, 2023, 8.00 to 1.00 and 6.00 to 1.00 , respectively, for the fiscal quarter ending on or about September 28, 2023, and 6.25 to 1.00 and 4.50 to 1.00 , respectively, for the fiscal quarter ending on or about December 28, 2023 and each fiscal quarter thereafter.

Upon execution of the Credit Agreement Third Amendment, $ 6.4 million was recorded as debt issuance costs and $ 0.4 million was recorded as a loss on the modification of debt during the year ended December 30, 2021.

The senior secured credit facility contains a number of covenants and various financial ratio requirements including, (i) a consolidated net total leverage ratio covenant of 6.25 times for each quarterly period and (ii) with respect to the revolving credit facility, maintaining a consolidated net senior secured leverage ratio of equal to or less than 4.50 times on a quarterly basis for each quarterly period in which a balance is outstanding on the revolving credit facility, each of which has been modified by the Credit Agreement Third Amendment.

Pursuant to the terms of the Credit Agreement Third Amendment, NCM LLC is restricted from making available cash distributions until after NCM LLC delivers a compliance certificate for the

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rate on the term loans as of September 30, 2021 was 5.00 %.

quarter ending on or about December 28, 2023, and, thereafter, NCM LLC may only make available cash distributions if:

(i) no default or event of default under the Credit Agreement has occurred and is continuing;

(ii) the consolidated net senior secured leverage ratio is equal to or less than 4.00 to 1.00 ;

and (iii) the aggregate principal amount of all outstanding revolving loans under the Credit Agreement is $ 39.0 million or less.

As of March 31, 2022, NCM LLC was in compliance with the requirements of the Credit Agreement Third Amendment described above and the noncompliance with the financial covenants was automatically waived.

The rate increased from LIBOR index plus 2.75 % or the base rate plus 1.75 %.

The interest rate on the term loans as of March 31, 2022 was 5.00 %.

The term loans amortize at a rate equal to 1.00 % annually, to be paid in equal quarterly installments.

As of September 30, 2021, NCM LLC has paid principal of $ 8.8 million, reducing the outstanding balance to $ 261.2 million.

As of March 31, 2022, NCM LLC has paid principal of $ 10.1 million, reducing the outstanding balance to $ 259.9 million.

Term Loans — Second Tranche —The interest rate on the second tranche of term loans is the LIBOR index plus 8.00 %.

The interest rate on the term loans as of September 30, 2021 was 9.00 %.

The interest rate on the term loans as of March 31, 2022 was 9.00 %.

The term loans amortize at a rate equal to 1.00 % annually, to be paid in equal quarterly installments.

Following the Credit Agreement Second Amendment, the Company has a waiver of non-compliance with the consolidated net total leverage and consolidated net senior secured leverage financial covenants through the quarter ending June 30, 2022 (“Extended Covenant Waiver Holiday”) and the consolidated net total leverage ratio and consolidated net senior secured leverage ratio financial covenants to be set to 6.75 to 1.00 and 5.50 to 1.00, respectively, for the quarter ending on or about September 29, 2022.

Under the Credit Agreement, for the period beginning in the second quarter of 2020 through the date that NCM LLC delivers a compliance certificate for the third quarter of 2022, NCM LLC must maintain a minimum liquidity balance of $ 55.0 million consisting of a combination of unrestricted cash on hand and availability under NCM LLC's revolving credit facility.

NCM LLC is permitted to make quarterly dividend payments and other restricted payments with its available cash as long as NCM LLC’s consolidated net senior secured leverage ratio (after giving effect to any such payment) is below 5.50 times and no default or event of default has occurred and continues to occur under the senior secured credit facility.

Pursuant to the terms of the Credit Agreement Second Amendment, NCM LLC is restricted from making available cash distributions until after NCM LLC delivers a compliance certificate for the quarter ending on or about September 29, 2022, and, thereafter, NCM LLC may only make available cash distributions if:

(i) no default or event of default under the Credit Agreement has occurred and is continuing;

(ii) the senior secured financial covenant leverage ratio is equal to or less than 4.00 to 1.00;

and (iii) the aggregate principal amount of all outstanding revolving loans under the Credit Agreement is $ 39.0 million or less.

As of September 30, 2021, NCM LLC was in compliance with the requirements of the Credit Agreement Second Amendment described above and the noncompliance with the financial covenants was automatically waived.

As of March 31, 2022, NCM LLC has paid principal of $ 0.5 million, reducing the outstanding balance to $ 49.5 million.

Revolving Credit Facility 2018 —The revolving credit facility portion of NCM LLC’s total borrowings is available, subject to certain conditions, for general corporate purposes of NCM LLC in the ordinary course of business and for other transactions permitted under the senior secured credit facility, and a portion is available for letters of credit.

As of March 31, 2022, NCM LLC’s total availability under the $ 175.0 million revolving credit facility was $ 6.8 million, net of $ 167.0 million outstanding and $ 1.2 million in letters of credit.

The unused line fee is 0.50 % per annum which is consistent with the previous facility.

Borrowings under the revolving credit facility bear interest at NCM LLC’s option of either the LIBOR index plus an applicable margin ranging from 1.75 % to 2.25 % or the base rate plus an applicable margin ranging from 0.75 % to 1.25 %.

The margin changed to the aforementioned range from a fixed margin of LIBOR index plus 2.00 % or the base rate plus 1.00 %.

The weighted-average interest rate on the revolving credit facility as of March 31, 2022 was 4.50 %.

Revolving Credit Facility 2022 —On January 5, 2022, NCM LLC also entered into a new revolving credit agreement (the “Revolving Credit Agreement 2022”).

The Revolving Credit Agreement 2022 provides for revolving loan commitments of $ 50.0 million of secured revolving loans, the entire amount of which was funded on January 5, 2022.

The Revolving Credit Agreement 2022 provides for (i) a cash interest rate of term Secured Overnight Financing Rate (SOFR) plus 8.00 %, with a 1.00 % floor, (ii) a maturity date of June 20, 2023 and (iii) a termination premium if NCM LLC terminates the commitments under the Revolving Credit Agreement 2022 at any time before maturity.

The Revolving Credit Agreement 2022 also contains covenants, representations and warranties and events of default that are substantially similar to the Credit Agreement.

As of March 31, 2022, NCM LLC’s total availability under the $ 50.0 million revolving credit facility was $ 0.0 million.

The weighted-average interest rate on the revolving credit facility as of March 31, 2022 was 9.11 %.

Senior Unsecured Notes due 2026 —On August 19, 2016, NCM LLC completed a private placement of $ 250.0 million in aggregate principal amount of 5.750 % Senior Unsecured Notes (the “Notes due 2026”) for which the registered exchange offering was completed on November 8, 2016.

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The Notes due 2026 were issued at 100 % of the face amount thereof and are the senior unsecured obligations of NCM LLC.

NCM LLC repurchased and canceled a total of $ 20.0 million of the Notes due 2026 during 2019 and 2018, respectively, reducing the principal amount to $ 230.0 million as of September 30, 2021.

NCM LLC repurchased and canceled a total of $ 20.0 million of the Notes due 2026 during 2019 and 2018, respectively, reducing the principal amount to $ 230.0 million as of March 31, 2022.

Senior Secured Notes due 2028 —On October 8, 2019, NCM LLC completed a private offering of $ 400.0 million aggregate principal amount of 5.875 % Senior Secured Notes due 2028 (the “Notes due 2028”) to eligible purchasers.

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The Notes due 2028 were issued at 100 % of the face amount thereof and share in the same collateral that secures NCM LLC's obligations under the senior secured credit facility.

Due to the future market uncertainties discussed within Note 1 - The Company , the Board of Directors of NCM, Inc.

and required NCM LLC founding members approved the material terms of a revolving loan agreement between NCM Inc.

Borrowings by NCM LLC will be available through December 31, 2022.

The final definitive loan agreement will be approved by the Audit Committee of NCM, Inc., if needed.

If entered into, this revolving loan facility will provide NCM LLC with short-term working capital loans as NCM LLC rebuilds its advertising revenue base and collects related accounts receivable and will provide additional flexibility with respect to the NCM LLC minimum liquidity covenant.

Changes in the Company’s Effective Tax Rate —The Company recorded income tax expense of $ 0.0 million for the nine months ended September 30, 2021 compared to an income tax benefit of $ 7.7 million for the nine months ended September 24, 2020 resulting in an effective tax rate of 0.0 % for the nine months ended September 30, 2021 as compared to 20.4 % for the nine months ended September 24, 2020.

The Company recorded a full valuation allowance on its net deferred tax assets as of December 31, 2020 following the determination it was more-likely-than-not that the Company will not be able to

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

realize the benefit of those assets.

The Company maintained a full valuation allowance as of September 30, 2021, reducing deferred tax expense to $ 0.0 million for the nine months ended September 30, 2021 and the Company’s effective tax rate to 0.0 %.

Changes in the Company’s Effective Tax Rate —The Company recorded income tax expense of $ 0.0 million for the three months ended March 31, 2022 and for the three months ended April 1, 2021 resulting in an effective tax rate of 0.0 % for both periods.

The Company recorded a full valuation allowance on its net deferred tax assets as of April 1, 2021 following the determination it was more-likely-than-not that the Company will not be able to realize the benefit of those assets.

The Company maintained a full valuation allowance as of March 31, 2022, resulting in deferred tax expense of $ 0.0 million for the three months ended March 31, 2022 and the Company’s effective tax rate of 0.0 %.

COMMITMENTS AND CONTINGENCIES

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Operating Commitments - Facilities —The Company has entered into operating lease agreements for its corporate headquarters and other regional offices.

The Company has right-of-use (“ROU”) assets of $ 19.2 million and short-term and long-term lease liabilities of $ 2.0 million and $ 21.0 million, respectively, on the balance sheet as of September 30, 2021 for all material leases with terms longer than twelve months.

The Company has right-of-use (“ROU”) assets of $ 18.3 million and short-term and long-term lease liabilities of $ 2.2 million and $ 19.8 million, respectively, on the balance sheet as of March 31, 2022 for all material leases with terms longer than twelve months.

These balances are included within “Other assets”, “Other current liabilities” and “Other liabilities”, respectively, on the unaudited Condensed Consolidated Balance Sheets.

As of September 30, 2021, the Company had a weighted average remaining lease term of 8.4 years on these leases.

As of March 31, 2022, the Company had a weighted average remaining lease term of 7.3 years on these leases.

When measuring the ROU assets and lease liabilities recorded, the Company utilized its incremental borrowing rate in order to determine the present value of the lease payments as the leases do not provide an implicit rate.

The Company used the rate of interest that it would have paid to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment.

As of September 30, 2021, the Company’s weighted average annual discount rate used to establish the ROU assets and lease liabilities was 7.36 %.

During the three and nine months ended September 30, 2021 and September 24, 2020, the Company recognized the following components of total lease cost (in millions).

As of March 31, 2022, the Company’s weighted average annual discount rate used to establish the ROU assets and lease liabilities was 7.4 %.

During the three months ended March 31, 2022 and April 1, 2021, the Company recognized the following components of total lease cost (in millions).

These costs are presented within “Selling and marketing costs” and “Administrative and other costs” within the unaudited Condensed Consolidated Statements of Income depending upon the nature of the use of the facility.

Three Months Ended Nine Months Ended

September 30, 2021 September 24, 2020 September 30, 2021 September 24, 2020

Three Months Ended

March 31, 2022 April 1, 2021

Operating lease cost $ 0.8 $ 0.9

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Total lease cost $ 1.0 $ 1.0

The Company made total lease payments of $ 0.9 million, $ 0.9 million, $ 2.9 million and $ 2.7 million during the three months ended September 30, 2021 and September 24, 2020 and nine months ended September 30, 2021 and September 24, 2020, respectively.

The Company made total lease payments of $ 0.9 million and $ 0.9 million during the three months ended March 31, 2022 and April 1, 2021, respectively.

These payments are included within cash flows from operating activities within the unaudited Condensed Consolidated Statement of Cash Flows.

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In consideration for NCM LLC’s access to the founding members’ theater attendees for on-screen advertising and use of lobbies and other space within the founding members’ theaters for the LEN and lobby promotions, the founding members receive a monthly theater access fee under the ESAs.

The theater access fee is composed of a fixed payment per patron, a fixed payment per digital screen (connected to the DCN) and a fee for access to higher quality digital cinema equipment.

The payment per theater patron increases by 8 % every five years , with this next increase occurring in fiscal year 2022, and the

The theater access fee is composed of a fixed payment per patron, a fixed

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payment per digital screen and for digital cinema equipment increases annually by 5 %.

payment per digital screen (connected to the DCN) and a fee for access to higher quality digital cinema equipment.

The payment per theater patron increases by 8 % every five years .

The payment per theater patron increased in 2022 and will again in fiscal year 2027, and the payment per digital screen and for digital cinema equipment increases annually by 5 %.

The theater access fee paid in the aggregate to all founding members cannot be less than 12 % of NCM LLC’s aggregate advertising revenue (as defined in the ESA), or it will be adjusted upward to reach this minimum payment.

As of September 30, 2021 and December 31, 2020, the Company had no liabilities recorded for the minimum payment, as the theater access fee was in excess of the minimum.

As of March 31, 2022 and December 30, 2021, the Company had no liabilities recorded for the minimum payment, as the theater access fee was in excess of the minimum.

Following the 2019 ESA Amendments, Cinemark and Regal receive an additional monthly theater access fee that began on November 1, 2019 in consideration for NCM LLC's access to certain on-screen advertising inventory after the advertised showtime of a feature film.

These fees are also based upon a fixed payment per patron:

(i) beginning at $ 0.025 per patron on November 1, 2019, (ii) $ 0.0375 per patron beginning on November 1, 2020, (iii) $ 0.05 per patron beginning on November 1, 2021, (iv) $ 0.052 per patron beginning on November 1, 2022 and (v) increase 8 % every five years beginning November 1, 2027.

(i) $ 0.0375 per patron beginning on November 1, 2020, (ii) $ 0.05 per patron beginning on November 1, 2021, (iii) $ 0.052 per patron beginning on November 1, 2022 and (iv) increase 8 % every five years beginning November 1, 2027.

Additionally, following the 2019 ESA Amendments, beginning on November 1, 2019, NCM LLC is entitled to display the Platinum Spot, an additional single unit that is either 30 or 60 seconds of the Noovie® pre-show in the trailer position directly prior to the “attached” trailers preceding the feature film.

The “attached” trailers are those provided by studios to Cinemark and Regal that are with the feature film, which is at least one trailer, but sometimes two or more trailers.

In consideration for the utilization of the theaters for the Platinum Spots, Cinemark and Regal are entitled to receive 25 % of all revenue generated for the actual display of Platinum Spots in their applicable theaters, subject to a specified minimum.

In consideration for the utilization of the theaters for the Platinum Spots, Cinemark and Regal are entitled to receive a percentage of all revenue generated for the actual display of Platinum Spots in their applicable theaters, subject to a specified minimum.

If NCM LLC runs advertising in more than one concurrent advertisers’ Platinum Spot for any portion of the network over a period of time, then NCM LLC will be required to satisfy a minimum average CPM for that period of time.

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The digital screen fee is calculated based upon average screens in use during each month.

No digital screen fees were incurred for the period of time the founding member's theaters were temporarily closed due to the COVID-19 Pandemic and future fees may be reduced for months where screens are in use for only part of the month.

The network affiliates compensation is considered variable lease expense and varies by circuit depending upon the agreed upon terms of the network affiliate agreement.

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If a network affiliate achieves the attendance set forth in their respective agreement, the Company has guaranteed minimum revenue for the network affiliate per attendee if such amount paid under the revenue share arrangement is less than its guaranteed amount.

As of September 30, 2021, the maximum potential amount of future payments the Company could be required to make pursuant to the minimum revenue guarantees is $ 105.4 million over the remaining terms of the network affiliate agreements.

As of March 31, 2022, the maximum potential amount of future payments the Company could be required to make pursuant to the minimum revenue guarantees is $ 121.5 million over the remaining terms of the network affiliate agreements.

These minimum guarantees relate to various affiliate agreements ranging in term from three years to twenty years , prior to any renewal periods of which some are at the option of the Company.

The Company accrued $ 0.2 million and $ 0.0 million related to affiliate agreements with guaranteed minimums in excess of the revenue share agreement as of September 30, 2021 and December 31, 2020, respectively.

As the guaranteed minimums are based upon agreed upon minimum attendance or affiliate revenue levels, the Company did not incur minimum revenue share fees during the period of time the respective affiliate's theaters were temporarily closed due to the COVID-19 Pandemic and will not so long as an affiliate's minimum theater attendance or revenue levels are not met by the affiliate.

The Company accrued $ 0.1 million and $ 0.4 million related to affiliate agreements with guaranteed minimums in excess of the revenue share agreement as of March 31, 2022 and December 30, 2021, respectively.

As the guaranteed minimums are based upon agreed upon minimum attendance or affiliate revenue levels, the Company will not incur minimum revenue share fees during a period of time the minimum theater attendance or revenue levels are not met by the affiliate.

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FAIR VALUE MEASUREMENTS

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Level 3 —Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

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Non-Recurring Measurements —Certain assets are measured at fair value on a non-recurring basis.

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Other investments consisted of the following (in millions):

September 30, 2021 December 31, 2020

March 31, 2022 December 30, 2021

Investment in AC JV, LLC (1)

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This investment is accounted for utilizing the equity method.

As of September 30, 2021, no observable price changes or impairments have been recorded as a result of the Company’s qualitative assessment of identified events or changes in the circumstances of the remaining investments.

(2) The Company continues to hold other investments with negligible balances.

During the three months ended March 31, 2022 and April 1, 2021, the Company recorded impairment charges of $ 0.1 million and $ 0.0 million, respectively, on certain of its investments due to new information regarding the fair value of the investee, which brought the total remaining value of the respective impaired investments to $ 0.0 million as of March 31, 2022.

As of March 31, 2022, no other observable price changes or impairments have been recorded as a result of the Company’s qualitative assessment of identified events or changes in the circumstances of the remaining investments.

The investment in AC JV, LLC was initially valued using comparative market multiples.

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As the inputs to the determination of fair value are based upon non-identical assets and use significant unobservable inputs, they have been classified as Level 3 in the fair value hierarchy.

Borrowings —The carrying amount of the revolving credit facility is considered a reasonable estimate of fair value due to its floating-rate terms.

Borrowings —The carrying amount of the revolving credit facilities are considered a reasonable estimate of fair value due to its floating-rate terms.

The estimated fair values of the Company’s financial instruments where carrying values do not approximate fair value were as follows (in millions):

As of September 30, 2021 As of December 31, 2020

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As of March 31, 2022 As of December 30, 2021

Carrying Value Fair Value (1)

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Fair Value Measurements at Reporting Date Using

Fair Value as of September 30, 2021 Quoted Prices in Active Markets for Identical Assets

Fair Value as of March 31, 2022 Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Other

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$ 33.1 $ 33.1 $ — $ —

Short-term marketable securities (2)

Long-term marketable securities (2)

Total assets $ 34.4 $ 33.1 $ 1.3 $ —

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Fair Value Measurements at Reporting Date Using

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The inputs to the valuation pricing models are observable in the market, and as such are generally classified as Level 2 in the fair value hierarchy.

As of September 30, 2021 and December 31, 2020, there were $ 1.0 million and $ 1.3 million, respectively, of available-for-sale debt securities in unrealized loss positions without an allowance for credit losses.

The Company has not recorded an allowance for credit losses for the marketable securities balance as of September 30, 2021 or December 31, 2020 given the immaterial difference between the amortized cost basis and the aggregate fair value of the Company's securities.

The amortized cost basis, aggregate fair value and maturities of the marketable securities the Company held as of September 30, 2021 and December 31, 2020 were as follows:

As of September 30, 2021

As of March 31, 2022 and December 30, 2021, there were $ 1.0 million and $ 1.0 million, respectively, of available-for-sale debt securities in unrealized loss positions without an allowance for credit losses.

The Company has not recorded an allowance for credit losses for the marketable securities balance as of March 31, 2022 or December 30, 2021 given the immaterial difference between the amortized cost basis and the aggregate fair value of the Company's securities.

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The amortized cost basis, aggregate fair value and maturities of the marketable securities the Company held as of March 31, 2022 and December 30, 2021 were as follows:

As of March 31, 2022

Amortized Cost

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MARKETABLE SECURITIES:

Short-term certificates of deposit $ 0.3 $ 0.3 0.7

Total short-term marketable securities 0.3 0.3

Long-term certificates of deposit $ 1.0 $ 1.0 1.8

Total long-term marketable securities 1.0 1.0

Total marketable securities $ 1.3 $ 1.3

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SUBSEQUENT EVENT

On November 8, 2021, the Company declared a cash dividend of $ 0.05 per share (approximately $ 4.0 million) on each share of the Company’s common stock (not including outstanding restricted stock which will accrue dividends until the shares vest) to stockholders of record on November 22, 2021 to be paid on December 7, 2021.

On May 9, 2022, the Company declared a cash dividend of $ 0.03 per share (approximately $ 2.4 million) on each share of the Company’s common stock (not including outstanding restricted stock which will accrue dividends until the shares vest) to stockholders of record on May 23, 2022 to be paid on June 7, 2022.

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

What changed 10-Q

Item 1. Financial Statements