What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-08 compared with 2022-05-09 · 205 added, 93 removed, 226 unchanged (57% of the section changed)

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We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

The following discussion and analysis a supplement to and should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto included herein and the audited financial statements and other disclosure included in our annual report on Form 10-K for the Company’s fiscal year ended December 30, 2021.

The following discussion and analysis is a supplement to and should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto included herein and the audited financial statements and other disclosure included in our annual report on Form 10-K for the Company’s fiscal year ended December 30, 2021.

In the following discussion and analysis, the term net income refers to net income attributable to NCM, Inc.

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As the largest cinema advertising network in the U.S., we unite brands with young, diverse audiences through the power of movies and popular culture.

We currently derive revenue principally from the sale of advertising to national, regional and local businesses in our Noovie® pre-show, our cinema advertising and entertainment pre-show seen on movie screens across the U.S.

We currently derive revenue principally from the sale of advertising to national, local and regional businesses in our Noovie® pre-show, our cinema advertising and entertainment pre-show seen on movie screens across the U.S.

We present two different formats of our Noovie pre-show depending on the theater circuit in which it runs.

In Regal and Cinemark and a portion of our network affiliates’ theaters, the Noovie pre-show now includes Post-Showtime advertising inventory after the advertised showtime consisting of (1) the lights down segment that runs for five minutes after the advertised showtime with trailer lighting and (2) the 30- or 60-second Platinum Spot.

As of March 31, 2022, theaters presenting the new Noovie pre-show format with Post-Showtime Inventory made up approximately 57% of our network.

As of June 30, 2022, theaters presenting the new Noovie pre-show format with Post-Showtime Inventory made up approximately 58% of our network.

All other NCM network theater circuits, which make up the remaining 42% of our network, present the Classic Noovie pre-show, which ends approximately at the advertised movie showtime when the movie trailers begin.

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We also sell advertising on our 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, we sell online and mobile advertising through our Noovie Audience Accelerator , across our suite of Noovie digital properties, including Noovie Shuffle, Name That Movie® and Noovie ARcade , as well as a variety of complementary out of home venues, including restaurants and convenience stores, in order to reach entertainment audiences beyond the theater.

As of March 31, 2022, over 6.9 million moviegoers have downloaded our mobile apps.

These downloads and the acquisition of second- and third-party data have resulted in data sets of approximately 297 million as of March 31, 2022.

We have long-term ESAs (approximately 17.5 weighted average years remaining) with the founding members and multi-year agreements with our network affiliates, which expire at various dates between July 2022 and December 2037.

The weighted average remaining term of the ESAs and the network affiliate agreements is 15.2 years as of March 31, 2022.

In addition, we sell online and mobile advertising through our Noovie Audience Accelerator , across our suite of Noovie digital properties, including Noovie Trivia, Noovie Shuffle, Name That Movie® and Noovie ARcade , as well as a variety of complementary out of home venues, including restaurants and convenience stores, in order to reach entertainment audiences beyond the theater.

As of June 30, 2022, over 7.1 million moviegoers have downloaded our mobile apps.

These downloads and the acquisition of second- and third-party data have resulted in data sets of approximately 328.7 million as of June 30, 2022.

We have long-term ESAs (approximately 17.2 weighted average years remaining) with the founding members and multi-year agreements with our network affiliates, which expire at various dates between August 2022 and December 2037.

The weighted average remaining term of the ESAs and the network affiliate agreements is 15.0 years as of June 30, 2022.

The ESAs and network affiliate agreements grant NCM LLC exclusive rights in their theaters to sell advertising, subject to limited exceptions.

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COVID-19 Impact and Outlook —The COVID-19 Pandemic has had and continues to have a significant impact on the world and our business.

All of the theaters within the Company’s network and the release of major motion pictures have resumed since the third quarter of 2021 resulting in the highest attendance numbers within our network 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.

The movie slate for 2022 remains packed due to the addition of the major motion pictures originally scheduled for 2020 and 2021 and major motion pictures studios committing to theatrical-only releases.

However, variants of the COVID-19 virus continue to circulate throughout the United States and may lead to increased health and safety regulations and restrictions (such as restrictions on travel, public gatherings and other events, mask requirements and social distancing guidelines) or impact consumer behavior.

To ensure sufficient liquidity to endure the impacts of the COVID-19 Pandemic, we continued to manage our liquidity position through various cost control methods discussed further within the “Financial Condition and Liquidity” section below.

Since the beginning of the COVID-19 Pandemic, the Company has significantly reduced payroll related costs through a combination of temporary measures as well as a headcount reduction of approximately 45% as of March 31, 2022, as compared to headcount levels prior to the COVID-19 Pandemic.

All of the theaters within the Company’s network have reopened and the release of major motion pictures has resumed since the third quarter of 2021 resulting in the highest attendance numbers within our network 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.

The movie slate for 2022 improved, while experiencing impacts from post-production delays, and attendance levels are approaching historical levels.

Variants of the COVID-19 virus continue to circulate throughout the United States and could impact consumer behavior.

To ensure sufficient liquidity during the recovery from the impacts of the COVID-19 Pandemic, we managed our liquidity position through various cost control methods discussed further within the “Financial Condition and Liquidity” section below.

Since the beginning of the COVID-19 Pandemic, the Company has significantly reduced payroll related costs through a combination of temporary measures as well as a headcount reduction of approximately 44% as of June 30, 2022, as compared to headcount levels prior to the COVID-19 Pandemic.

Our theater access fees, network affiliate payments and Platinum Spot revenue share payments are driven by attendance, active screens and/or in-theater advertising revenue, and therefore, were not incurred for the duration of time that the theaters were closed and attendance-based fees will continue to be reduced for the period of time that attendance is lower than historical levels.

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Our Operating Data —The following table presents operating data and Adjusted OIBDA (dollars in millions, except share and margin data):

Q1 2022 Q1 2021 Q1 2021 to Q1 2022

Q2 2022 Q2 2021 YTD 2022 YTD 2021 Q2 2021 to Q2 2022 YTD 2021 to YTD 2022

Revenue $ 67.1 $ 14.0 $ 103.0 $ 19.4 379.3 % 430.9 %

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Advertising 39.0 20.7 70.3 31.2 88.4 % 125.3 %

Network, administrative and unallocated costs 27.1 23.2 16.8 %

Network, administrative and unallocated

costs 22.5 22.9 49.6 46.1 (1.7) % 7.6 %

Total operating expenses 61.5 43.6 119.9 77.3 41.1 % 55.1 %

Operating loss (22.5) (28.3) (20.5) %

Operating income (loss) 5.6 (29.6) (16.9) (57.9) (118.9) % (70.8) %

Non-operating expenses 14.2 17.3 37.7 31.0 (17.9) % 21.6 %

Income tax expense — — — — — % — %

Net loss attributable to noncontrolling interests (20.8) (22.6) (8.0) %

Net loss attributable to noncontrolling

interests (7.9) (24.2) (28.7) (46.8) (67.4) % (38.7) %

Net loss attributable to NCM, Inc.

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The following table reconciles operating income to Adjusted OIBDA for the periods presented (dollars in millions):

Q1 2022 Q1 2021

Operating loss $ (22.5) $ (28.3)

Q2 2022 Q2 2021 YTD 2022 YTD 2021

Operating income (loss) $ 5.6 $ (29.6) $ (16.9) $ (57.9)

Depreciation expense 1.5 2.6 3.5 5.9

Amortization of intangibles recorded for network theater screen leases 6.1 6.1

Amortization of intangibles recorded for network theater screen

leases 6.3 6.2 12.4 12.3

Share-based compensation costs (1)

1.7 2.1 3.0 4.8

Impairment of long-lived assets (2)

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(3) Sales force reorganization costs represents redundancy costs associated with changes to the Company’s sales force implemented during the first quarter of 2022.

Our Network —The change in the number of screens in our network by the founding members and network affiliates during the three months ended March 31, 2022 was as follows.

Our Network —The change in the number of screens in our network by the founding members and network affiliates during the six months ended June 30, 2022 was as follows.

Number of screens

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(20) (86) (106)

Balance as of March 31, 2022 16,361 4,244 20,605

Balance as of June 30, 2022 16,416 4,218 20,634

______________________________________

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Basis of Presentation

The results of operations data for the three months ended March 31, 2022 (first quarter of 2022) and April 1, 2021 (first quarter of 2021) were derived from the unaudited Condensed Consolidated Financial Statements and accounting records of NCM, Inc.

The results of operations data for the three months ended June 30, 2022 (second quarter of 2022) and July 1, 2021 (second quarter of 2021) and the six months ended June 30, 2022 and July 1, 2021 was derived from the unaudited Condensed Consolidated Financial Statements and accounting records of NCM, Inc.

and should be read in conjunction with the accompanying notes.

Results of Operations

First Quarter of 2022 and First Quarter of 2021

Total revenue increased 564.8%, from $5.4 million for the first quarter of 2021 to $35.9 million for the first quarter of 2022.

Second Quarter of 2022 and Second Quarter of 2021

Total revenue increased 379.3%, from $14.0 million for the second quarter of 2021 to $67.1 million for the second quarter of 2022.

The following is a summary of revenue by category (in millions):

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Total revenue $ 67.1 $ 14.0 $ 53.1 379.3 %

The following table shows data on theater attendance and revenue per attendee for the three months ended March 31, 2022 and April 1, 2021:

The following table shows data on theater attendance and revenue per attendee for the three months ended June 30, 2022 and July 1, 2021:

Q2 2022 Q2 2021 Q2 2021 to Q2 2022

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National advertising revenue.

National advertising revenue (excluding beverage revenue from founding members) increased to $23.1 million, or 721.9%, from $3.2 million for the first quarter of 2021.

The increase was due to a significant increase in impressions sold driven by an increase in network attendance related to our network being fully open in the first quarter of 2022, whereas approximately 40% of our network remained closed in response to the COVID-19 Pandemic during the first quarter of 2021.

National advertising revenue increased by $42.1 million, or 489.5%, from $8.6 million for the second quarter of 2021 to $50.7 million for the second quarter of 2022.

The increase was due to a significant increase in impressions sold and a 48.1% increase in national advertising CPMs (excluding beverage) in the second quarter of 2022, compared to the second quarter of 2021.

The increase in impressions sold was primarily due to an increase in network attendance and an increase in national advertising utilization due to the increased movie slate and return of advertisers to the network in the second quarter of 2022.

Local and regional advertising revenue.

Local and regional advertising revenue increased to $4.4 million, or 258.8%, from $1.7 million for the first quarter of 2021.

The increase was due primarily to our network being fully open in the first quarter of 2022, whereas approximately 40% of our network remained closed in response to the COVID-19 Pandemic during the first quarter of 2021.

Local and regional advertising revenue increased by $7.2 million, or 218.2%, from $3.3 million for the second quarter of 2021.

The increase in local and regional advertising revenue was driven by a significant increase in network attendance primarily due to an increase in movie slate in the second quarter of 2022, compared to the second quarter of 2021.

Founding member beverage revenue.

National advertising revenue from the founding members’ beverage concessionaire agreement increased $3.0 million, or 600%, from $0.5 million for the first quarter of 2021.

The increase was due to a 496.6% increase in founding member attendance for the first quarter of 2022, compared to the first quarter of 2021 as approximately 40% of our network remained closed in response to the COVID-19 Pandemic during the first quarter of 2021 and by an increase in beverage revenue CPMs in the first quarter of 2022, compared to the first quarter of 2021.

The 2022 beverage revenue CPM is based on a fixed annual increase for Cinemark and Regal following the 2019 ESA Amendments and the increase in the CPM during segment one from 2021 to 2022 for AMC.

National advertising revenue from the founding members’ beverage concessionaire agreement increased $3.8 million, or 181.0%, from $2.1 million for the second quarter of 2021 to $5.9 million for the second quarter of 2022.

The increase was due to a 160.2% increase in founding member attendance for the second quarter of 2022, compared to the second quarter of 2021 as the movie slate and box office remained dormant from COVID-19 related closures and restrictions.

Additionally, increases in beverage revenue CPMs in 2022, compared to 2021, contributed to the increase as well.

Operating expenses.

Total operating expenses increased $24.7 million, or 73.3%, from $33.7 million for the first quarter of 2021 to $58.4 million for the first quarter of 2022.

The following table shows the changes in operating expense for the first quarter of 2022 (in millions):

Total operating expenses increased $17.9 million, or 41.1%, from $43.6 million for the second quarter of 2021 to $61.5 million for the second quarter of 2022.

The following table shows the changes in operating expense for the second quarter of 2022 (in millions):

$ Change % Change

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Administrative and other costs 9.7 9.6 0.1 1.0 %

Impairment of long-lived assets 5.8 — 5.8 (100.0) %

Depreciation expense 1.5 2.6 (1.1) (42.3) %

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Advertising operating costs.

Advertising operating costs increased $3.2 million, or 213.3%, from $1.5 million for the first quarter of 2021 to $4.7 million for the first quarter of 2022.

The increase was due primarily to a $3.1 million increase in advertising affiliate expense due an increase in revenue share payments driven by the increase in revenue for the first quarter of 2022, as compared to the first quarter of 2021.

Advertising operating costs increased $5.1 million, or 159.4%, from $3.2 million for the second quarter of 2021 to $8.3 million for the second quarter of 2022.

The majority of the increase was due to $5.0 million of higher advertising affiliate expense, which was driven by improved revenue for the second quarter of 2022, as compared to the second quarter of 2021.

Network costs.

Network costs increased $0.2 million, or 11.1%, from $1.8 million for the first quarter of 2021 to $2.0 million for the first quarter of 2022.

The increase was primarily related to a $0.2 million increase in personnel related costs due to the reinstatement of full salaries to all employees within the first quarter of 2022, compared to the first quarter of 2021 when temporary salary and wage reductions were in place.

Network costs increased $0.2 million, or 10.5%, from $1.9 million for the second quarter of 2021 to $2.1 million for the second quarter of 2022.

This increase was primarily due to a $0.2 million increase in personnel related expenses from the reinstatement of full salaries to employees in the first quarter of 2022, compared to the second quarter of 2021 when temporary salary and wage reductions were in place.

Theater access fees and revenue share—founding members.

Theater access fees and revenue share increased from $3.1 million for the first quarter of 2021 to $17.9 million in the first quarter of 2022.

This increase was primarily due to $8.1 million caused by the substantial increase in average active screens for the first quarter of 2022, as compared to the first quarter of 2021, and $6.4 million of the increase was due to a 496.6% increase in founding member attendance.

Theater access fees and revenue share increased from $11.2 million for the second quarter of 2021 to $23.2 million for the second quarter of 2022.

This increase was primarily due to the substantial increase in theater attendance for the second quarter of 2022 as compared to the second quarter of 2021, resulting in $8.1 million of additional expense.

Additionally, $3.1 million of the increase was associated with the founding member digital screens which were partially not in use in the second quarter of 2021 and a $0.8 million increase in platinum revenue share in the second quarter of 2022, compared to the second quarter of 2021.

Selling and marketing costs.

Selling and marketing costs increased $2.5 million, or 32.5%, from $7.7 million for the first quarter of 2021 to $10.2 million for the first quarter of 2022.

This increase was primarily due to a $1.3 million expense increase related to increasing market activity, a $0.5 million increase in personnel related expenses due to the reinstatement of full salaries to employees in the first quarter of 2022, compared to the first quarter of 2021 when temporary salary and wage reductions were in place, a $0.4 million increase in redundancy costs related to the sales force reorganization and a $0.5 million increase in bad debt expense driven by the increase in revenue in the first quarter of 2022, compared to the first quarter of 2021.

These increases were partially offset by a $0.5 million decrease in non-cash barter expense for the first quarter of 2022, compared to the first quarter of 2021.

Selling and marketing costs increased $1.5 million, or 16.9%, from $8.9 million for the second quarter of 2021 to $10.4 million for the second quarter of 2022.

This increase was primarily due to a $0.6 million increase in personnel related expenses from the reinstatement of full salaries to employees in the first quarter of 2022, compared to the second quarter of 2021 when temporary salary and wage reductions were in place, a $0.5 million expense increase related to increasing market activity and a $0.5 million increase in the allowance for doubtful accounts driven by the increase in revenue in the second quarter of 2022, compared to the second quarter of 2021.

These increases were partially offset by a $0.2 million decrease in publisher expense for the second quarter of 2022, compared to the second quarter of 2021.

Administrative and other costs.

Administrative and other costs decreased $0.5 million, or 4.9%, from $10.2 million for the first quarter of 2021 to $9.7 million for the first quarter of 2022.

This decrease was primarily due to a $1.3 million decrease in personnel related expenses driven by a $1.1 million decrease in non-cash share-based compensation expense related to a modification of share-based compensation awards occurring in the first quarter of 2021, with little comparative activity occurring in the first quarter of 2022, partially offset by a $0.3 million increase in legal and professional fees as well as a $0.3 million increase in cloud computing expense incurred following the implementation of our new cinema advertising management system in the first quarter of 2021.

Impairment of long-lived assets.

Impairment of long-lived assets increased $5.8 million, or 100%, from $0.0 million for the first quarter of 2021 to $5.8 million for the first quarter of 2022.

This increase in impairment expense was primarily related to the write-off of certain long-lived assets during the first quarter of 2022.

Administrative and other costs remained stable with an increase of $0.1 million, or 1.0%, from $9.6 million for the second quarter of 2021 to $9.7 million for the second quarter of 2022.

Depreciation expense.

Depreciation expense decreased $1.3 million, or 39.4%, from $3.3 million for the first quarter of 2021 to $2.0 million in the first quarter of 2022, primarily due to the write-off of internally developed software in the first quarter of 2022.

Depreciation expense decreased $1.1 million, or 42.3%, from $2.6 million for the second quarter of 2021 to $1.5 million in the second quarter of 2022, primarily due to the write-off of internally developed software in the first quarter of 2022.

Amortization of intangibles recorded for network theater screen leases.

Amortization of intangibles recorded for network theater screen remained consistent at $6.1 million for the first quarter of 2022 and the first quarter of 2021.

Amortization of intangibles recorded for network theater screen increased $0.1 million, or 1.6%, from $6.2 million for the second quarter of 2021 to $6.3 million for the second quarter of 2022.

Non-operating expenses.

Total non-operating expenses increased $9.8 million, or 71.5%, from $13.7 million for the first quarter of 2021 to $23.5 million for the first quarter of 2022.

The following table shows the changes in non-operating expense for the first quarter of 2022 and the first quarter of 2021 (in millions):

Total non-operating expenses decreased $3.1 million, or 17.9%, from $17.3 million for the second quarter of 2021 to $14.2 million for the second quarter of 2022.

The following table shows the changes in non-operating expense for the second quarter of 2022 and the second quarter of 2021 (in millions):

$ Change % Change

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Interest on borrowings $ 20.4 $ 16.9 $ 3.5 20.7 %

Loss on modification and retirement of debt, net — 0.4 (0.4) (100.0) %

Interest income (0.1) (0.1) — — %

(Gain) loss on modification and retirement of debt,

net (5.9) 0.4 (6.3) (1575.0) %

(Gain) loss on the re-measurement of the payable

to founding members under the tax receivable

agreement (0.1) 0.1 (0.2) (200.0) %

Other non-operating (income) expense (0.1) — (0.1) (100.0) %

Total non-operating expenses $ 14.2 $ 17.3 $ (3.1) (17.9) %

The decrease in non-operating expense was primarily due to a $6.3 million increase in the gain on the modification and retirement of debt driven by NCM Inc.’s purchase of $25.8 million of the Notes due 2028 on the open market, reducing the principal amount owed by NCM LLC to third parties as of June 30, 2022.

This was partially offset by a $0.2 million increase in the gain on the re-measurement of the payable to founding members under the TRA related to the increase in our payable to the founding members under the TRA resulting from an increase in projected taxable income before TRA deductions for the year ended December 29, 2022.

The increase was also due to a $3.5 million increase in interest on borrowings primarily related to the issuance of the New Revolving Credit Agreement in January of 2022.

Net loss decreased $22.0 million from net loss of $22.7 million for the second quarter of 2021 to $0.7 million for the second quarter of 2022.

The decrease in net loss was due to a $35.2 million increase in operating income and a $3.1 million decrease in non-operating expense, offset by a $16.3 million decrease in net loss attributable to noncontrolling interests.

Six months ended June 30, 2022 and July 1, 2021

Total revenue increased 430.9%, from $19.4 million for the six months ended July 1, 2021 to $103.0 million for the six months ended June 30, 2022.

The following is a summary of revenue by category (in millions):

Six Months Ended $ Change % Change

June 30, 2022 July 1, 2021 YTD 2021 to YTD 2022 YTD 2021 to YTD 2022

National advertising revenue $ 77.0 $ 11.8 $ 65.2 552.5 %

Local and regional advertising revenue 16.6 5.0 11.6 232.0 %

Founding member advertising revenue from

beverage concessionaire agreements 9.4 2.6 6.8 261.5 %

Total revenue $ 103.0 $ 19.4 $ 83.6 430.9 %

The following table shows data on theater attendance and revenue per attendee for the six months ended June 30, 2022 and July 1, 2021:

Six Months Ended % Change

June 30, 2022 July 1, 2021 YTD 2021 to YTD 2022

National advertising revenue per attendee $ 0.385 $ 0.188 104.8 %

Local and regional advertising revenue per attendee $ 0.083 $ 0.079 5.1 %

Total advertising revenue (excluding founding

member beverage revenue) per attendee $ 0.468 $ 0.267 75.3 %

Total revenue per attendee $ 0.514 $ 0.308 66.9 %

Total theater attendance (in millions) (1)

200.2 62.9 218.3 %

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(1) Represents the total attendance within our advertising network, excluding screens and attendance associated with certain AMC Carmike theaters that were part of another cinema advertising network during the periods presented.

National advertising revenue.

National advertising revenue increased by $65.2 million, or 552.5%, from $11.8 million for the six months ended July 1, 2021 to $77.0 million for the six months ended June 30, 2022.

The increase was due to a significant increase in impressions sold and a 41.4% increase in national advertising CPMs for the six months ended

June 30, 2022, compared to the six months ended July 1, 2021.

Local and regional advertising revenue.

Local and regional advertising revenue increased by $11.6 million, or 232.0%, from $5.0 million for the six months ended July 1, 2021 to $16.6 million for the six months ended June 30, 2022.

The increase in local and regional advertising revenue was due primarily to our network being fully reopened for the six months ended June 30, 2022, considering that 40% of our network remained closed for three of the six months ended July 1, 2021.

The increase was also driven by a significant increase in network attendance primarily due to an increase in movie slate in the six months ended June 30, 2022, compared the six months ended July 1, 2021.

Founding member beverage revenue.

National advertising revenue from the founding members’ beverage concessionaire agreement increased $6.8 million, or 261.5%, from $2.6 million for the six months ended July 1, 2021 to $9.4 million for the six months ended June 30, 2022.

The increase was due to a 230.9% increase in founding member attendance for the six months ended June 30, 2022, compared to the six months ended July 1, 2021 and an increase in beverage revenue CPMs in 2022, compared to 2021.

Operating expenses.

Total operating expenses increased $42.6 million, or 55.1%, from $77.3 million for the six months ended July 1, 2021 to $119.9 million for the six months ended June 30, 2022.

The following table shows the changes in operating expense for the six months ended June 30, 2022 and July 1, 2021 (in millions):

Six Months Ended $ Change % Change

June 30, 2022 July 1, 2021 YTD 2021 to YTD 2022 YTD 2021 to YTD 2022

Advertising operating costs $ 13.0 $ 4.7 $ 8.3 176.6 %

Network costs 4.1 3.7 0.4 10.8 %

Theater access fees and revenue share—founding members 41.1 14.3 26.8 187.4 %

Selling and marketing costs 20.6 16.6 4.0 24.1 %

Administrative and other costs 19.4 19.8 (0.4) (2.0) %

Impairment of long-lived assets 5.8 — 5.8 (100.0) %

Depreciation expense 3.5 5.9 (2.4) (40.7) %

Amortization of intangibles recorded for

network theater screen leases 12.4 12.3 0.1 0.8 %

Total operating expenses

$ 119.9 $ 77.3 $ 42.6 55.1 %

Advertising operating costs.

Advertising operating costs increased $8.3 million, or 176.6%, from $4.7 million for the six months ended July 1, 2021 to $13.0 million for the six months ended June 30, 2022.

The majority of the increase was due to $8.1 million of higher advertising affiliate expense, which was driven by improved revenue for the six months ended June 30, 2022, compared to the six months ended July 1, 2021.

Network costs.

Network costs increased $0.4 million, or 10.8%, from $3.7 million for the six months ended July 1, 2021 to $4.1 million for the six months ended June 30, 2022.

The increase was primarily related to a $0.3 million increase in personnel related costs due to the reinstatement of full salaries to all employees in the first quarter of 2022 impacting the six months ended June 30, 2022, compared to the six months ended July 1, 2021 when temporary salary and wage reductions were in place.

Theater access fees and revenue share—founding members.

Theater access fees and revenue share increased from $14.3 million for the six months ended July 1, 2021 to $41.1 million for the six months ended June 30, 2022.

This increase was primarily due to $14.5 million caused by the substantial increase in theater attendance for the six months ended June 30, 2022, as compared to the six months ended July 1, 2021.

Additionally, $11.2 million of the increase in the expense was associated with the founding member digital screens which were partially not in use in the six months ended July 1, 2021 and a $1.1 million increase in platinum revenue share in the six months ended June 30, 2022, compared to the six months ended July 1, 2021.

Selling and marketing costs.

Selling and marketing costs increased $4.0 million, or 24.1%, from $16.6 million for the six months ended July 1, 2021 to $20.6 million for the six months ended June 30, 2022.

This increase was primarily due to a $1.7 million expense increase related to increasing market activity, a $1.5 million increase in personnel related expenses from the reinstatement of full salaries to employees in the first quarter of 2022 impacting the six months ended June 30, 2022, compared to the six months ended July 1, 2021 when temporary salary and wage reductions were in

place and a $1.0 million increase in bad debt expense driven by the increase in revenue in the second quarter of 2022, compared to the second quarter of 2021.

These increases were partially offset by a $0.7 million decrease in non-cash barter expense for the six months ended June 30, 2022, compared to the six months ended July 1, 2021.

Administrative and other costs.

Administrative and other costs decreased $0.4 million, or 2.0%, from $19.8 million for the six months ended July 1, 2021 to $19.4 million for the six months ended June 30, 2022.

This decrease was primarily due to a $1.6 million decrease in personnel related expenses driven by a $1.4 million decrease in share-based compensation expense in the six months ended June 30, 2022, compared to the six months ended July 1, 2021, partially offset by a $0.4 million decrease in capitalized personnel costs .

The decrease was also partially offset by a $0.4 million increase in cloud computing expense incurred following the implementation of our new cinema advertising management system in the first quarter of 2021, $0.2 million related to an increase in insurance expense and a $0.1 million increase in legal and professional fees.

Impairment of long-lived assets.

Impairment of long-lived assets increased $5.8 million, or 100%, from $0.0 million for the six months ended July 1, 2021 to $5.8 million for the six months ended June 30, 2022.

This increase in impairment expense consisted of the write-off of certain long-lived assets during the first quarter of 2022.

Depreciation expense.

Depreciation expense decreased $2.4 million, or 40.7%, from $5.9 million for the six months ended July 1, 2021 to $3.5 million for the six months ended June 30, 2022, primarily due to the write-off of internally developed software in the first quarter of 2022.

Amortization of intangibles recorded for network theater screen leases.

Amortization of intangibles recorded for network theater screen increased $0.1 million, or 0.8%, from $12.3 million for the six months ended July 1, 2021 to $12.4 million for the six months ended June 30, 2022.

Non-operating expenses.

Total non-operating expenses increased $6.7 million, or 21.6%, from $31.0 million for the six months ended July 1, 2021 to $37.7 for the six months ended June 30, 2022.

The following table shows the changes in non-operating expense for the six months ended June 30, 2022 and July 1, 2021 (in millions):

Six Months Ended $ Change % Change

June 30, 2022 July 1, 2021 YTD 2021 to YTD 2022 YTD 2021 to YTD 2022

Interest on borrowings $ 37.6 $ 31.6 $ 6.0 19.0 %

Interest income (0.1) (0.1) $ — — %

(Gain) loss on modification and retirement of debt, net (5.9) 0.8 $ (6.7) (837.5) %

Loss (gain) on the re-measurement of the payable

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Total non-operating expenses $ 37.7 $ 31.0 $ 6.7 21.6 %

The increase in non-operating expense was primarily due to a $7.9 million increase in the loss on the re-measurement of the payable to founding members under the TRA related to the increase in our payable to the founding members under the TRA resulting from an increase in projected taxable income before TRA deductions for the year ended December 29, 2022.

The increase was also due to a $2.5 million increase in interest on borrowings primarily related to the issuance of the New Revolving Credit Agreement in January of 2022, partially offset by a $0.4 million decrease in the loss on modifications and retirements of debt, net resulting from the Credit Agreement Second Amendment in the first quarter of 2021, with little comparable activity in the first quarter of 2022.

Net loss increased $5.8 million from net loss of $19.4 million for the first quarter of 2021 to $25.2 million for the first quarter of 2022.

The increase in net loss was due to a $9.8 million increase in non-operating expense and a $1.8 million decrease in net loss attributable to noncontrolling interests, partially offset by a $5.8 million decrease in operating loss.

The increase in non-operating expense was primarily due to a $7.7 million increase in the loss on the re-measurement of the payable to founding members under the TRA related to the increase in our payable to the founding members under the TRA resulting from an increase in projected taxable income before TRA deductions for the year ended December 29, 2022 and a $6.0 million increase in interest on borrowings primarily related to the issuance of the New Revolving Credit Agreement in January of 2022.

These increases were partially offset by a $6.7 million increase in the gain on the modification and retirement of debt driven by NCM Inc.’s purchase of $25.8 million of the Notes due 2028 on the open market, reducing the principal amount owed by NCM LLC to third parties as of June 30, 2022.

Net loss decreased $16.2 million from net loss of $42.1 million for the six months ended July 1, 2021 to $25.9 million for the six months ended June 30, 2022.

The decrease in net loss was due to a $41.0 million decrease in operating loss, partially offset by a $18.1 million decrease in net loss attributable to noncontrolling interests and a $6.7 million decrease in non-operating expense.

Known Trends and Uncertainties

COVID-19 —As discussed within the ‘ Recent Developments ’ section, due to the COVID-19 Pandemic certain theaters within the Company’s network were temporarily closed during a portion of 2021.

The Company's ability to advertise within theaters once opened in 2021 was limited due to reduced movie schedules and patron capacities at many network theaters and the timing and frequency of new major motion picture releases as compared to prior years due to the COVID-19 Pandemic.

The Company's ability to advertise within theaters once opened in 2021 was limited due to reduced movie schedules and patron capacities at many network theaters and

the timing and frequency of new major motion picture releases as compared to prior years due to the COVID-19 Pandemic.

Our theater access fees, network affiliate payments and Platinum Spot revenue share payments are driven by attendance, active screens and/or revenue, and therefore, were not incurred when theaters were closed and attendance-based fees were reduced for the period of time that attendance was lower than historical levels.

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Beverage Revenue —Under the ESAs, up to 90 seconds of the Noovie® pre-show program can be sold to the founding members to satisfy their on-screen advertising commitments under their beverage concessionaire agreements.

For the first three months of 2022 and 2021, two of the founding members purchased 60 seconds of on-screen advertising time and one founding member purchased 30 seconds to satisfy their obligations under their beverage concessionaire agreements.

For the first three and six months of 2022 and 2021, two of the founding members purchased 60 seconds of on-screen advertising time and one founding member purchased 30 seconds to satisfy their obligations under their beverage concessionaire agreements.

The founding members’ current long-term contracts with their beverage suppliers require the 30 or 60 seconds of beverage advertising, although such commitments could change in the future.

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The payment per theater patron increases by 8% every five years, with an increase occurring in the current year and the next increase occurring in 2027.

Pursuant to the

ESAs, the payment per digital screen increases annually by 5%.

Pursuant to the ESAs, the payment per digital screen increases annually by 5%.

Pursuant to the 2019 ESA Amendments, Cinemark and Regal each receive an additional monthly theater access fee beginning 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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As discussed within the ‘ Recent Developments ’ section, due to the COVID-19 Pandemic, certain theaters within the Company’s network remained temporarily closed during a portion of 2021 and the Company's ability to advertise within the reopened theaters in 2021 was limited due to lower than historical levels of attendance due in part to reduced movie schedules and patron capacities at many network theaters and the timing and frequency of major motion picture releases as compared to prior years due to the COVID-19 Pandemic.

The Company has had limited cash receipts as attendance levels normalize and advertising revenue increases.

The Company’s attendance levels have continued to improve but still remain below historic levels, which continues to impact cash receipts and advertising revenue.

Further, there is a lag between when revenue is generated and when the Company ultimately collects the associated accounts receivable balance.

The Company also had reduced cash payments during the period when theaters within the Company's network were closed or attendance levels were low as expenses related to theater attendance (i.e., theater access fees, Platinum Spot revenue share and network affiliate revenue share payments) were either not incurred or incurred at lower levels .

As all of the theaters within our network were open for the first quarter of 2022, the screen-based portion of these expenses returned to historical levels and the attendance-based portion of these e xpenses is expected to continue to increase as attendance increases following the continued release of many major motion pictures.

As all of the theaters within our network were

open during the first six months of 2022, the screen-based portion of these expenses returned to historical levels and the attendance-based portion of these e xpenses is expected to continue to increase as attendance increases following the continued release of many major motion pictures.

The Company also implemented the following cost-saving measures in order to preserve cash at the start of the COVID-19 Pandemic, and those measures remain in place as of the filing date:

• Temporarily reduced cash compensation of the Company's Board of Directors by 20% and offered the option for the Board to receive the cash retainers beginning with the first quarter of 2021 in equivalent value of the Company’s common stock in lieu of cash;

• Curtailed certain non-essential operating expenditures, including marketing, research, employee travel and consulting services;

• Offered the option for the Board to receive the cash retainers beginning with the first quarter of 2021 in equivalent value of the Company’s common stock in lieu of cash;

• Curtailed certain non-essential operating expenditures, including marketing, research, and consulting services;

• Temporarily suspended the 401K employee match program;

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• Strategically worked with our vendors, and other business partners to manage, defer, and/or abate certain costs during the disruptions caused by the COVID-19 Pandemic;

• Decreased our quarterly dividend beginning in the second quarter of 2020, which results in cash savings of $13.0 million in the first quarter of 2022 and cash savings of $84.3 million for NCM, Inc.

• Decreased our quarterly dividend beginning in the second quarter of 2020, which results in cash savings of $13.0 million in the second quarter of 2022 and cash savings of $84.3 million for NCM, Inc.

since the beginning of the pandemic;

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In March 2020, we drew down an additional $110.0 million on our revolving credit facility, in March 2021, we received $43.0 million in proceeds under incremental term loans that mature on December 20, 2024, and in January 2022 we received $43.3 million in proceeds under an incremental revolving credit facility that matures on June 20, 2023.

The $76.2 million of cash at NCM LLC as of March 31, 2022 will be used to fund operations during the period of expected reduced cash flows.

The $57.7 million of cash at NCM LLC as of June 30, 2022 will be used to fund operations during the period of expected reduced cash flows.

Cash at NCM, Inc.

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

In accordance with the Credit Agreement amendment entered into on April 30, 2020 (“the Credit Agreement First Amendment”) and the Credit Agreement Second Amendment, 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.

As of March 31, 2022, NCM LLC was in compliance with the requirements of the Credit Agreement, as amended, and the New Revolving Credit Agreement.

Management believes the Company can meet its operating obligations, including all currently scheduled interest and debt service payments within one year following the date of issuance of the accompanying financial statements, based on its current financial position and liquidity sources, including current cash balances, and forecasted future cash flows.

In accordance with the New Revolving Credit Agreement and the Credit Agreement Third Amendment, for the period beginning in the second quarter of 2020 through the date that NCM LLC delivers a compliance certificate for the fourth quarter of 2023, 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.

As of June 30, 2022, NCM LLC was in compliance with the requirements of the Credit Agreement, as amended, and the New Revolving Credit Agreement.

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.

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.

A summary of our financial liquidity is as follows (in millions):

As of $ Change $ Change

March 31, 2022 December 30, 2021 April 1, 2021 YE 2021 to Q1 2022 Q1 2021 to Q1 2022

June 30, 2022 December 30, 2021 July 1, 2021 YE 2021 to Q2 2022 Q2 2021 to Q2 2022

Cash, cash equivalents and marketable securities (1)

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_________________________

(1) Included in cash, cash equivalents and marketable securities as of March 31, 2022, December 30, 2021 and April 1, 2021, was $76.2 million, $58.6 million and $139.4 million, respectively, of cash held by NCM LLC that is not available to satisfy dividends declared by NCM, Inc., income tax, tax receivable payments to NCM LLC’s founding members and other obligations.

(1) Included in cash, cash equivalents and marketable securities as of June 30, 2022, December 30, 2021 and July 1, 2021, was $57.7 million, $58.6 million and $98.2 million, respectively, of cash held by NCM LLC that is not available to satisfy dividends declared by NCM, Inc., income tax, tax receivable payments to NCM LLC’s founding members and other obligations.

(2) 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.

NCM LLC’s total capacity under the revolving credit facility pursuant to the Credit Agreement was $175.0 million as of March 31, 2022, December 30, 2021 and April 1, 2021.

As of March 31, 2022, December 30, 2021 and April 1, 2021, the amount available under the NCM LLC revolving credit facility pursuant to the Credit Agreement in the table above was net of the amount outstanding under the revolving credit facility of $167.0 million, $167.0 million and $167.0 million, respectively, and net letters of credit of $1.2 million, $1.2 million and $2.4 million, respectively.

As of March 31, 2022, the weighted average remaining maturity of our debt was 4.0 years.

As of March 31, 2022, approximately 54% of our total borrowings bear interest at fixed rates.

NCM LLC’s total capacity under the revolving credit facility pursuant to the Credit Agreement was $175.0 million as of June 30, 2022, December 30, 2021 and July 1, 2021.

As of June 30, 2022, December 30, 2021 and July 1, 2021, the amount available under the NCM LLC revolving credit facility pursuant to the Credit Agreement in the table above was net of the amount outstanding under the revolving credit facility of $167.0 million, $167.0 million and $167.0 million, respectively, and net letters of credit of $1.2 million, $1.2 million and $2.4 million, respectively.

As of June 30, 2022, the weighted average remaining maturity of our debt was 3.7 years.

As of June 30, 2022, approximately 53% of our total borrowings bear interest at fixed rates.

The remaining 47% of our borrowings bear interest at variable rates and our net income and earnings per share could fluctuate with market interest rate fluctuations that could increase or decrease the interest paid on our borrowings.

We have used and generated cash as follows (in millions):

Three Months Ended

March 31, 2022 April 1, 2021

Six Months Ended

June 30, 2022 July 1, 2021

Operating cash flow $ (40.4) $ (61.6)

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• Operating Activities.

The $1.4 million decrease in cash used in operating activities for the first quarter of 2022, as compared to the first quarter of 2021, was primarily due to a $7.9 million increase in the noncash loss on the remeasurement of the payable to founding members under the TRA and a $5.8 million increase in the impairment of long-lived assets related to the write down in the first quarter of 2022 of certain internally developed software no longer in use, partially offset by a $3.9 million increase in payments of accounts payable and accrued expenses due in part to increased market activity, a $4.0 million increase in consolidated net loss and a $5.0 million increase in deferred revenue related to higher revenue in the first quarter of 2022, as compared to the first quarter of 2021.

The $21.2 million decrease in cash used in operating activities for the six months ended June 30, 2022, as compared to the six months ended July 1, 2021, was primarily due to a $34.3 million decrease in consolidated net loss, $7.7 million decrease in the noncash loss on the remeasurement of the payable to founding members under the TRA, a $5.8 million increase in the impairment of long-lived assets related to the write down in the first quarter of 2022 of certain internally developed software no longer in use and a $4.8 million decrease in cash used in other changes in operating assets and liabilities, partially offset by a $15.0 million decrease in the receivable balance driven by higher revenue in the six months ended June 30, 2022, compared to the six months ended July 1, 2021, a $7.7 million increase in deferred revenue related to higher revenue and a $6.7 million increase in the gain on the early retirement of debt.

• Investing Activities.

The $1.3 million decrease in cash used in investing activities for the first quarter of 2022, as compared to the first quarter of 2021, was due to a $1.3 million decrease in purchases of property and equipment in the first quarter of 2022, compared to the first quarter of 2021.

The $1.4 million decrease in cash used in investing activities for the six months ended June 30, 2022, as compared to the six months ended July 1, 2021, was due to a $1.4 million decrease in purchases of property and equipment in the six months ended June 30, 2022, as compared to the six months ended July 1, 2021.

• Financing Activities.

The $0.5 million decrease in cash provided by financing activities for the first quarter of 2022, compared to the year first quarter of 2021 was primarily due to the $50.0 million issuance of the second tranche of term loans that occurred in the first quarter of 2021 and $1.6 increase in debt amortization costs in the first quarter of 2022, partially offset by the $50.0 million increase from the issuance of the New Revolving Credit Facility in the first quarter of 2022, as discussed above, and a $0.9 million decrease in the repurchase of restricted stock tax withholding related to the increase in tax liability settlement through selling of shares, rather than withholding shares in the first quarter of 2022, compared to the first quarter of 2021.

The $17.8 million decrease in cash provided by financing activities for the six months ended June 30, 2022, as compared to the six months ended July 1, 2021 was primarily due to the $50.0 million issuance of the second tranche of term loans that occurred in the first quarter of 2021 and $19.8 million increase in the purchase of Notes due 2028, partially offset by the $50.0 million increase from the issuance of the New Revolving Credit Facility in the first quarter of 2022, and a $1.8 million decrease in dividends paid related to the decrease in the dividend amounts declared from $0.10 per share during the six months ended July 1, 2021 to $0.08 per share during the six months ended June 30, 2022.

Sources of Capital and Capital Requirements

NCM, Inc.’s primary source of liquidity and capital resources is the quarterly available cash distributions from NCM LLC as well as its existing cash balances and marketable securities, which as of March 31, 2022 were $115.1 million (including $76.2 million of cash held by NCM LLC).

NCM, Inc.’s primary source of liquidity and capital resources is the quarterly available cash distributions from NCM LLC as well as its existing cash balances and marketable securities, which as of June 30, 2022 were $74.4 million (including $57.7 million of cash held by NCM LLC).

NCM LLC’s primary sources of liquidity and capital resources are its cash provided by operating activities, availability under its revolving credit facility and cash on hand.

NCM LLC drew down an additional $110.0 million of its revolving credit facility in March 2020 in order to supplement the decrease in cash provided by operating activities during the period our network theaters were closed.

On January 5, 2022, the company entered in the New Revolving Credit Agreement and drew down upon the new revolving credit facility of $50.0 million.

On January 5, 2022, NCM LLC entered in the New Revolving Credit Agreement and drew down upon the new revolving credit facility of $50.0 million.

The $57.7 million of cash at NCM LLC will be used to fund operations during the period of expected reduced cash flows.

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NCM LLC is required pursuant to the terms of the NCM LLC operating agreement to distribute its available cash, as defined in the operating agreement, unless prohibited by NCM LLC's Credit Agreement, quarterly to its members (Regal, Cinemark, AMC and NCM, Inc.).

The available cash distribution to NCM LLC’s members for the three months ended March 31, 2022 was calculated as approximately negative $27.2 million, of which NCM, Inc.'s share is approximately negative $12.9 million.

The available cash distribution to NCM LLC’s members for the six months ended June 30, 2022 was calculated as approximately negative $33.4 million, of which NCM, Inc.'s share is approximately negative $15.8 million.

Further there was $93.7 million and $85.2 million of negative available cash generated during the years ended December, 30, 2021 and December 31, 2020, respectively.

Pursuant to the NCM LLC operating agreement and the Credit Agreement amendments, there will be no available cash distributions made for the first quarter of 2022.

Pursuant to the NCM LLC operating agreement and the Credit Agreement amendments, there will be no available cash distributions made for the first or second quarter of 2022.

Negative available cash distributions for the years of 2021 and 2020 are expected to be netted in accordance with the NCM LLC operating agreement 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.

expects to use its cash balances and cash received from future available cash distributions (as allowed for under the Credit Agreement) to fund payments associated with the TRA with the founding members and current and future dividends as declared by the Board of Directors, including a dividend declared on May 9, 2022 of $0.03 per share (approximately $2.4 million) on each share of the Company’s common stock (not including outstanding restricted stock) to stockholders of record on May 23, 2022 to be paid on June 7, 2022.

The Company does not expect to make a TRA payment in

2022 for the 2021 tax year.

expects to use its cash balances and cash received from future available cash distributions (as allowed for under the Credit Agreement) to fund payments associated with the TRA with the founding members and current and future dividends as declared by the Board of Directors, including a dividend declared on August 8, 2022 of $0.03 per share (approximately $2.4 million) on each share of the Company’s common stock (not including outstanding restricted stock) to stockholders of record on August 22, 2022 to be paid on September 6, 2022.

The Company does not expect to make a TRA payment in 2022 for the 2021 tax year.

The Company will also consider opportunistically using cash received for partial repayments of NCM LLC's outstanding debt balance.

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Critical Accounting Policies

For a discussion of accounting policies that we consider critical to our business operations and understanding of our results of operations, and that affect the more significant judgments and estimates used in the preparation of our unaudited Condensed Consolidated Financial Statements, see Item 7.

Condensed Consolidated Financial Statements, see Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” contained in our annual report on Form 10-K filed for the fiscal year ended December 30, 2021 and incorporated by reference herein.

As of March 31, 2022, there were no significant changes in those critical accounting policies.

As of June 30, 2022, there were no significant changes in those critical accounting policies.

Recent Accounting Pronouncements

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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 2. Management’s Discussion and Analysis