What changed in this filing

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Item 1. Financial Statements

2022-08-08 compared with 2022-05-09 · 196 added, 137 removed, 566 unchanged (37% of the section changed)

4 unchanged sentences

(In millions, except share and per share data)

March 31, 2022 December 30, 2021

June 30, 2022 December 30, 2021

CURRENT ASSETS:

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Amounts due to founding members, net $ 12.4 $ 11.8

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

parties of $ 0.4 and $ 0.0 , respectively)

Accrued expenses 11.6 13.4

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Common stock, $ 0.01 par value;

175,000,000 shares authorized, 81,403,872 and 80,626,889 issued

and outstanding, respectively

260,000,000 and 175,000,000 shares authorized, 81,492,426 and 80,626,889

issued and outstanding, respectively

Additional paid in capital/(deficit) ( 190.5 ) ( 195.5 )

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(In millions, except share and per share data)

Three Months Ended

March 31, 2022 April 1, 2021

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

Three Months Ended Six Months Ended

June 30, 2022 July 1, 2021 June 30, 2022 July 1, 2021

REVENUE (including revenue from related parties of $ 4.6 , $ 1.6 , $ 7.4 and $ 2.0 ,

respectively)

$ 67.1 $ 14.0 $ 103.0 $ 19.4

OPERATING EXPENSES:

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Network costs 2.1 1.9 4.1 3.7

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

respectively)

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

related parties of $ 16.9 , $ 7.1 , $ 29.8 , and $ 8.4 , respectively)

23.2 11.2 41.1 14.3

Selling and marketing costs 10.4 8.9 20.6 16.6

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Total 61.5 43.6 119.9 77.3

OPERATING LOSS ( 22.5 ) ( 28.3 )

OPERATING INCOME (LOSS) 5.6 ( 29.6 ) ( 16.9 ) ( 57.9 )

NON-OPERATING EXPENSES (INCOME):

Interest on borrowings 20.4 16.9 37.6 31.6

Loss on modification and retirement of debt, net — 0.4

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

Interest income ( 0.1 ) ( 0.1 ) ( 0.1 ) ( 0.1 )

(Gain) loss on modification and retirement of debt, net ( 5.9 ) 0.4 ( 5.9 ) 0.8

(Gain) loss on re-measurement of the payable to founding members under the

tax receivable agreement ( 0.1 ) 0.1 6.3 ( 1.4 )

Other non-operating (income) expense ( 0.1 ) — ( 0.2 ) 0.1

Total 14.2 17.3 37.7 31.0

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(In millions) (UNAUDITED)

Three Months Ended

March 31, 2022 April 1, 2021

Six Months Ended

June 30, 2022 July 1, 2021

CASH FLOWS FROM OPERATING ACTIVITIES:

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Amortization of debt issuance costs 4.5 1.9

Loss on modification and retirement of debt, net — 0.4

(Gain) loss on modification and retirement of debt, net ( 5.9 ) 0.8

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

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Receivables, net ( 10.6 ) 4.4

Accounts payable and accrued expenses ( 4.1 ) ( 0.2 )

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

$ 0.0 and $ 0.6 , respectively)

Amounts due to/from founding members, net 0.4 2.3

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Issuance of term loans — 50.0

Repayment of Notes due 2028 ( 19.8 ) —

Repayment of term loan facility ( 2.4 ) ( 1.5 )

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CHANGE IN CASH AND CASH EQUIVALENTS:

( 28.1 ) ( 32.9 )

Cash and cash equivalents at beginning of period 101.2 180.3

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(In millions)

Three Months Ended

March 31, 2022 April 1, 2021

Six Months Ended

June 30, 2022 July 1, 2021

Supplemental disclosure of non-cash financing and investing activity:

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Cash paid for interest $ 35.0 $ 29.2

Cash refunds for income taxes $ — $ ( 0.1 )

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

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

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Consolidated Shares Amount

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

Income tax and other impacts of NCM LLC ownership

changes ( 0.2 ) — — 0.2 — ( 0.4 )

Comprehensive loss, net of tax ( 46.9 ) — — — ( 22.7 ) ( 24.2 )

Share-based compensation issued ( 0.3 ) 221,200 — ( 0.3 ) — —

Share-based compensation expensed/capitalized 2.1 — — 1.4 — 0.7

Cash dividends declared $ 0.05 per share

( 4.4 ) — — — ( 4.4 ) —

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

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

Comprehensive loss, net of tax ( 8.6 ) — — — ( 0.7 ) ( 7.9 )

Share-based compensation issued ( 0.1 ) 88,554 — ( 0.1 ) — —

Share-based compensation expensed/capitalized 1.6 — — 1.1 — 0.5

Cash dividends declared $ 0.03 per share

( 2.8 ) — — — ( 2.8 ) —

Balance—June 30, 2022 $ ( 431.3 ) 81,492,426 $ 0.8 $ ( 190.5 ) $ ( 364.9 ) $ 123.3

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

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

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

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

Comprehensive loss, net of tax ( 88.9 ) — — — ( 42.1 ) ( 46.8 )

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( 8.9 ) — — — ( 8.9 ) —

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

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

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

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( 7.0 ) — — — ( 7.0 ) —

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

Balance—June 30, 2022 $ ( 431.3 ) 81,492,426 $ 0.8 $ ( 190.5 ) $ ( 364.9 ) $ 123.3

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

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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.

These and subsequent developments are referred to as the “COVID-19 Pandemic.” All of the theaters within the Company’s network are 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 six months ended June 30, 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 (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 network affiliate agreements expire at various dates between August 2022 and December 2037.

The weighted average remaining term of the ESAs and the network affiliate agreements together is 15.0 years as of June 30, 2022 (weighted based upon pre-COVID-19 attendance levels).

As of June 30, 2022, NCM LLC had 171,821,666 common membership units outstanding, of which 81,492,426 ( 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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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

The Company has borrowings under two Revolving Credit Facilities with $217.0 million outstanding as of June 30, 2022, that mature on June 20, 2023 (see Note 6).

The Company does not have available liquidity to repay the full outstanding balance on the date of maturity.

Under the Credit Agreement, failure to repay borrowings under the Revolving Credit Facilities at maturity would result in an event of default for the term loans, which would allow a majority of the lenders under the Credit Agreement to accelerate the maturity of the principal amounts of outstanding term loans to become due and payable.

It would also result in an event of default for the senior notes, which would allow the indenture trustee or senior note holders of each tranche of senior notes to accelerate the maturity to become due and payable.

The Company does not have available liquidity to repay any accelerated principal of term loans or tranches of the outstanding senior notes upon an event of default within one year after the date that the financial statements are issued.

Additionally, 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 would also result in an event of default for the senior notes.

In this event, 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 response to these conditions, management’s plans include amending NCM LLC’s Revolving Credit Facilities to extend the maturity dates, amending its Senior Secured Credit Facility to extend a waiver of these financial covenants, or obtaining additional debt financing through a loan from third parties, and/or NCM, Inc.

Management expects to conclude one of these alternatives;

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.

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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Receivables are written off when management determines amounts are uncollectible.

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.

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company had no agencies through which it sourced advertising revenue that accounted for more than 10% of the Company’s gross outstanding receivable balance as of June 30, 2022.

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

During the three and six months ended June 30, 2022, the Company had one customer that accounted for more than 14.8 % and 15.3 % of the Company’s revenue, respectively.

During the three and six months ended July 1, 2021, the Company had one customer that accounted for 14.1 % and 11.3 % 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 $ 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.

The Company recorded losses of $ 0.0 million, $ 0.0 million, $ 5.8 million and $ 0.0 million related to the write-off of certain internally developed software during the three months ended June 30, 2022 and July 1, 2021 and six months ended June 30, 2022 and July 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 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.

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 $ 0.1 million, $ 0.2 million, $ 0.3 million and $ 1.5 million for the three months ended June 30, 2022 and July 1, 2021 and six months ended June 30, 2022 and July 1, 2021, respectively.

During the three months ended June 30, 2022 and July 1, 2021 and the six months ended June 30, 2022 and July 1, 2021, 89,375 , 281,810 , 925,128 and 1,125,539 shares of restricted stock and restricted stock units vested, respectively.

Consolidation —NCM, Inc.

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

Three Months Ended

March 31, 2022 April 1, 2021

Three Months Ended Six Months Ended

June 30, 2022 July 1, 2021 June 30, 2022 July 1, 2021

Net loss attributable to NCM, Inc.

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Change from net loss income attributable to NCM, Inc.

and transfers from noncontrolling

interests $ ( 22.0 ) $ ( 11.9 )

transfers from noncontrolling interests $ ( 0.7 ) $ ( 22.5 ) $ ( 22.7 ) $ ( 34.4 )

Recently Adopted Accounting Pronouncements

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Recently Issued Accounting Pronouncements

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In March 2020, the FASB issued Accounting Standards Update No.

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Revenue Recognition

The Company derives revenue principally from the sale of advertising to national, regional and local businesses in Noovie® , the Company’s cinema advertising and entertainment pre-show.

The Company derives revenue principally from the sale of advertising to national, regional and local businesses in the Noovie® pre-show, the Company’s cinema advertising and entertainment pre-show.

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.

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

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The Company does not have any contracts with customers with terms in excess of one year that are noncancellable as of June 30, 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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The Company disaggregates revenue based upon the type of customer:

national and regional, local and beverage concessionaire.

national, local and regional and beverage concessionaire.

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 months ended March 31, 2022 and April 1, 2021 (in millions):

Three Months Ended

March 31, 2022 April 1, 2021

The following table summarizes revenue from contracts with customers for the three months and six months ended June 30, 2022 and July 1, 2021 (in millions):

Three Months Ended Six Months Ended

June 30, 2022 July 1, 2021 June 30, 2022 July 1, 2021

National advertising revenue $ 50.7 $ 8.6 $ 77.0 $ 11.8

Local and regional advertising revenue 10.5 3.3 16.6 5.0

Founding member advertising revenue from beverage concessionaire agreements 3.5 0.5

Founding member advertising revenue from beverage

concessionaire agreements 5.9 2.1 9.4 2.6

Total revenue $ 67.1 $ 14.0 $ 103.0 $ 19.4

Deferred Revenue and Unbilled Accounts Receivable

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.

Revenue recognized in the six months ended June 30, 2022 that was included within the Deferred Revenue balance as of December 30, 2021 was $ 8.3 million.

As of June 30, 2022 and December 30, 2021, the Company had $ 8.0 million and $ 4.4 million in unbilled accounts receivable, respectively.

Allowance for Doubtful Accounts

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The allowance for doubtful accounts balance is determined separately for each pool of the Company's receivables with similar risk characteristics.

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 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

The changes within the allowance for doubtful accounts balances for the six months ended June 30, 2022 and July 1, 2021, respectively, were as follows (in millions):

Six Months Ended

June 30, 2022 July 1, 2021

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

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share are as follows:

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended

March 31, 2022 April 1, 2021

Three Months Ended Six Months Ended

June 30, 2022 July 1, 2021 June 30, 2022 July 1, 2021

Net loss attributable to NCM, Inc.

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Basic 81,467,651 80,115,377 81,254,152 79,298,366

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

Dilutive effect of stock options, restricted stock and

exchangeable membership units — — — —

Diluted 81,467,651 80,115,377 81,254,152 79,298,366

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Diluted $ ( 0.01 ) $ ( 0.28 ) $ ( 0.32 ) $ ( 0.53 )

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.

The effect of 90,374,744 , 86,084,305 , 88,281,544 and 85,307,817 weighted average exchangeable NCM LLC common units held by the founding members for the three months ended June 30, 2022 and July 1, 2021 and six months ended June 30, 2022 and July 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 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.

In addition, there were 6,442,164 , 4,376,000 , 6,442,164 and 4,376,000 stock options and non-vested (restricted) shares for the three months ended June 30, 2022 and July 1, 2021 and six months ended June 30, 2022 and July 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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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 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.

Management considered possible

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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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

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

During the first quarter of 2022, NCM LLC issued 4,140,896 ( 6,483,893 issued, net of 2,342,997 returned) common membership units to its 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.

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.

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

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.

During the three months ended June 30, 2022 and July 1, 2021 and six months ended June 30, 2022 and July 1, 2021, the Company recorded a reduction to net intangible assets of $ 1.1 million, $ 0.2 million, $ 1.3 million and $ 0.2 million, respectively, related to other encumbered theater payments.

During the three months ended June 30, 2022 and July 1, 2021 and six months ended June 30, 2022 and July 1, 2021, AMC and Cinemark paid a total of $ 0.3 million, $ 0.1 million, $ 1.5 million and $ 0.1 million, respectively, in integration and other encumbered theater payments (as payments are made one quarter and one month in arrears, respectively).

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 has owned less than 5% of NCM LLC since July 2018 and is no longer a related party.

AMC remains a party to the ESA, Common Unit Adjustment Agreement, Tax Receivable Agreement (“TRA”) and certain other original agreements and is a member under the terms of the NCM LLC operating agreement, subject to fulfilling the requirements of Section 3.1 of the NCM LLC operating agreement.

AMC remains a party to the ESA, Common Unit Adjustment Agreement, Tax Receivable Agreement (“TRA”) and

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

certain other original agreements and is a member under the terms of the NCM LLC operating agreement, subject to fulfilling the requirements of Section 3.1 of the NCM LLC operating agreement.

AMC will continue to participate in the annual Common Unit Adjustment and receive available cash distributions or allocation of earnings and losses in NCM LLC (as long as its ownership is greater than zero), TRA payments and theater access fees.

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

As of June 30, 2022, AMC’s ownership was 3.5 % on an as converted to NCM, Inc.’s common stock basis.

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

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended

Three Months Ended Six Months Ended

Included in the unaudited Condensed Consolidated Statements of Income:

March 31, 2022 April 1, 2021

June 30, 2022 July 1, 2021 June 30, 2022 July 1, 2021

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

$ 4.6 $ 1.6 $ 7.4 $ 2.0

Operating expenses:

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

$ 16.9 $ 7.1 $ 29.8 $ 8.4

Advertising operating costs (3)

$ — $ — $ — $ 0.1

(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.

________________________________________

(1) For the three and six months ended June 30, 2022 and July 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

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

seconds equivalent CPM rate specified by the ESA.

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

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Included in the unaudited Condensed Consolidated Balance Sheets:

March 31, 2022 December 30, 2021

June 30, 2022 December 30, 2021

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

$ 586.6 $ 589.6

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

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

$ 15.5 $ 11.9

________________________________________

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

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(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.

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

Due to the continued recovery from the COVID-19 Pandemic during the six months ended June 30, 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 June 30, 2022 were calculated as negative $ 6.0 million (including negative $ 1.6 million for Cinemark, negative $ 1.5 million for Regal and negative $ 2.9 million for NCM, Inc.).

The mandatory distributions of available cash by NCM LLC to its related party founding members and NCM, Inc.

for the six months ended June 30, 2022 were calculated as negative $ 32.2 million (including negative $ 8.5 million for Cinemark, negative $ 7.9 million for Regal and negative $ 15.8 million for NCM, Inc.).

Therefore, there will be no payment made for the second 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):

Amounts due to related party founding members, net, as of June 30, 2022 were comprised of the following (in millions):

Cinemark Regal Total

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encumbered theater payments $ 2.3 $ 2.8 $ 5.1

Cost and other reimbursement 4.9 — 4.9

Total amounts due to founding members, net $ 7.2 $ 2.8 $ 10.0

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AC JV, LLC Transactions —In December 2013, NCM LLC sold its Fathom Events business to a newly formed limited liability company, AC JV, LLC, owned 32 % by each of the founding members and 4 % by NCM LLC.

The Company accounts for its investment in AC JV, LLC under the equity method of accounting in accordance with ASC 323-30, Investments—Equity Method and Joint Ventures (“ASC 323-30”) because AC JV, LLC is a limited liability company with the characteristics of a limited partnership and ASC 323-30 requires the use of equity method accounting unless the Company’s interest is so minor that it would have virtually no influence over partnership operating and financial policies.

The Company accounts

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for its investment in AC JV, LLC under the equity method of accounting in accordance with ASC 323-30, Investments—Equity Method and Joint Ventures (“ASC 323-30”) because AC JV, LLC is a limited liability company with the characteristics of a limited partnership and ASC 323-30 requires the use of equity method accounting unless the Company’s interest is so minor that it would have virtually no influence over partnership operating and financial policies.

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 $ 0.8 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.

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

During the three months ended June 30, 2022 and July 1, 2021 and six months ended June 30, 2022 and July 1, 2021, NCM LLC received cash distributions from AC JV, LLC of $ 0.1 million, $ 0.0 million , $ 0.2 million and $ 0.0 million , respectively.

Equity in earnings (losses) from AC JV, LLC of $ 0.1 million, $ 0.0 million , $ 0.2 million and $( 0.1 ) million for the three months and six months ended June 30, 2022 and July 1, 2021, respectively, is included in “Other non-operating income” in the unaudited Condensed Consolidated Statements of Income.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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):

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

Outstanding Balance as of

Borrowings March 31, 2022 December 30, 2021 Maturity

Borrowings June 30, 2022 December 30, 2021 Maturity

Date Interest

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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 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).

As of June 30, 2022, NCM LLC’s senior secured credit facility consisted of a $ 175.0 million revolving credit facility, a $ 259.2 million term loan (first tranche) and a $ 49.4 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.

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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.

As of June 30, 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.

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 %.

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 interest rate on the term loans as of June 30, 2022 was 5.69 %.

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

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

As of June 30, 2022, NCM LLC has paid principal of $ 10.8 million, reducing the outstanding balance to $ 259.2 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 March 31, 2022 was 9.00 %.

The interest rate on the term loans as of June 30, 2022 was 9.69 %.

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

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

As of June 30, 2022, NCM LLC has paid principal of $ 0.6 million, reducing the outstanding balance to $ 49.4 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.

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 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.

As of June 30, 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.

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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 March 31, 2022 was 4.50 %.

The weighted-average interest rate on the revolving credit facility as of June 30, 2022 was 5.10 %.

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

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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 %.

As of June 30, 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 June 30, 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 March 31, 2022.

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

In the quarter ended June 30, 2022, NCM Inc.

purchased $ 25.8 million of the Notes due 2028 on

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 %.

the open market, reducing the principal amount owed by NCM LLC to third parties to $ 374.2 million as of June 30, 2022 and resulting in a $ 6.0 million gain on extinguishment of debt in the second quarter.

Changes in the Company’s Effective Tax Rate —The Company recorded income tax expense of $ 0.0 million for the six months ended June 30, 2022 and for the six months ended July 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 December 30, 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 June 30, 2022, resulting in deferred tax expense of $ 0.0 million for the six months ended June 30, 2022 and the Company’s effective tax rate of 0.0 %.

COMMITMENTS AND CONTINGENCIES

Legal Actions —The Company is subject to claims and legal actions in the ordinary course of business.

The Company believes such claims will not have a material effect individually or in the aggregate on its financial position, results of operations or cash flows.

The Company believes such claims will not have a material adverse effect individually or in the aggregate on its financial position, results of operations or cash flows.

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 $ 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.

The Company has right-of-use (“ROU”) assets of $ 17.8 million and short-term and long-term lease liabilities of $ 2.2 million and $ 19.3 million, respectively, on the balance sheet as of June 30, 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 March 31, 2022, the Company had a weighted average remaining lease term of 7.3 years on these leases.

As of June 30, 2022, the Company had a weighted average remaining lease term of 7.1 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 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).

As of June 30, 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 June 30, 2022 and July 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

March 31, 2022 April 1, 2021

Three Months Ended Six Months Ended

June 30, 2022 July 1, 2021 June 30, 2022 July 1, 2021

Operating lease cost $ 0.9 $ 0.9 $ 1.7 $ 1.8

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Total lease cost $ 1.0 $ 1.0 $ 2.0 $ 2.0

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.

The Company made total lease payments of $ 1.0 million, $ 1.1 million, $ 1.9 million and $ 2.0 million during the three months ended June 30, 2022 and July 1, 2021 and six months ended June 30, 2022 and July 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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However, the amortization of these intangible assets is considered lease expense and is presented within “Amortization of intangibles recorded for network theater screen leases” within the unaudited Condensed Consolidated Statement of Income.

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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 .

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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 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.

As of June 30, 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.

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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 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.

As of June 30, 2022, the maximum potential amount of future payments the Company could be required to make pursuant to the minimum revenue guarantees is $ 113.2 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 $ 0.1 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.

The Company accrued $ 0.5 million and $ 0.4 million related to affiliate agreements with guaranteed minimums in excess of the revenue share agreement as of June 30, 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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Other investments consisted of the following (in millions):

March 31, 2022 December 30, 2021

June 30, 2022 December 30, 2021

Investment in AC JV, LLC (1)

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This investment is accounted for utilizing the equity method.

(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.

During the three months ended June 30, 2022 and July 1, 2021 and six months ended June 30, 2022 and July 1, 2021, the Company recorded impairment charges of $ 0.0 million, $ 0.0 million, $ 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 $ 0.1 million as of June 30, 2022.

As of June 30, 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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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

As of June 30, 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 March 31, 2022 Quoted Prices in Active Markets for Identical Assets

Fair Value as of June 30, 2022 Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Other

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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 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.

As of June 30, 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 June 30, 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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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

As of June 30, 2022

Amortized Cost

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SUBSEQUENT EVENT

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.

On August 8, 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 August 22, 2022 to be paid on September 6, 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