What changed in this filing

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Item 1. Business

2023-04-13 compared with 2022-03-03 · 226 added, 166 removed, 172 unchanged (70% of the section changed)

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has no business operations or material assets other than its cash and ownership interest of approximately 74.6% of the common membership units in NCM LLC as of December 29, 2022.

NCM LLC’s other members, Cinemark and Regal, two of the three largest motion picture exhibition companies in the U.S., held the remaining 51.7% of NCM LLC’s common membership units as of December 30, 2021.

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

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

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

NCM LLC’s other member is Cinemark, one of the largest motion picture exhibition companies in the U.S., which held the remaining 25.4% of NCM LLC’s common membership units as of December 29, 2022.

In December 2022, AMC and Regal each redeemed all of their outstanding membership units, 5,954,646 and 40,683,797, respectively, in exchange for shares of NCM, Inc.

common stock, reducing AMC’s and Regal’s ownership to 0.0% as of December 29, 2022.

In February and March of 2023, Cinemark redeemed 43,690,797 of its outstanding membership units in exchange for shares of NCM, Inc.

common stock, reducing Cinemark’s ownership to 0.0% as of March 23, 2023.

NCM, Inc.’s primary source of cash flow from operations is distributions from NCM LLC pursuant to the NCM LLC Operating Agreement.

also receives management fees pursuant to a management services agreement with NCM LLC in exchange for providing specified management services to NCM LLC.

Chapter 11 Proceedings

On April 11, 2023, NCM LLC filed a voluntary petition for reorganization (“Chapter 11 Case”) with a prearranged Chapter 11 plan under Chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the U.S.

Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).

The Chapter 11 Case is being administered under the caption In re:

National CineMedia, LLC , Case No.

On April 11, 2023, NCM, Inc.

entered into a restructuring support agreement (the “Restructuring Support Agreement”).

with NCM LLC and certain of NCM LLC’s (a) prepetition lenders under (i) the Term Loan Credit Agreement, dated as of June 18, 2018 among NCM LLC as Borrower, JPMorgan Chase Bank, N.A.

(“JPM”) in its capacity as administrative agent, and the lenders party thereto (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”);

(ii) the Revolving Credit Agreement, dated as of June 20, 2018 among NCM LLC as Borrower, JPM in its capacity as administrative agent, and the lenders party thereto (as amended, supplemented or otherwise modified from time to time, the “Revolving Credit Agreement 2018”);

(iii) the Revolving Credit Agreement dated as of January 5, 2022 among NCM LLC as Borrower, JPM in its capacity as administrative agent, and the lenders party thereto (as amended, supplemented or otherwise modified from time to time, the “Revolving Credit Agreement 2022”);

and (b) prepetition noteholders under (i) the Secured Notes Indenture dated as of October 8, 2019 and Computershare Trust Company, National Association (“Computershare”) in its capacity as indenture trustee (as amended, supplemented or otherwise modified from time to time, the “Secured Notes Indenture” and together with the Term Loan Credit Agreement, Revolving Credit Facility 2018, and Revolving Credit Agreement 2022, the “Prepetition Secured Debt Documents”) and (ii) the Unsecured Notes Indenture dated as of August 19, 2016 with Computershare in its capacity as indenture trustee (as amended, supplemented or otherwise modified from time to time, the “Unsecured Notes Indenture”).

The parties to the Restructuring Support Agreement hold, in the aggregate, more than two-thirds of all claims arising under the Prepetition Secured Debt Documents.

The Restructuring Support Agreement provides for, among other things (i) the “Up-C” structure pursuant to which shares of NCM, Inc.

are sold to the public and the limited liability company common membership units of NCM (“common membership units”) may be redeemed for NCM, Inc.’s public shares shall remain in place to enable NCM LLC and NCM, Inc.

to continue to comply with the ESAs (as defined herein) and other joint venture agreements, meaning (a) that certain Third Amended and Restated Limited Liability Operating Agreement;

(b) that certain Common Unit Adjustment Agreement;

(d) that certain Management Services Agreement;

(e) that certain Software License Agreement;

and (f) those certain ESAs (as defined herein)(“Joint Venture Agreements”);

(ii) the Joint Venture Agreements shall be assumed as of the plan effective date through a plan of reorganization;

(iii) NCM, Inc.

shall affirm its obligations under the Joint Venture Agreements and to take the necessary corporate action to maintain the “Up-C” structure;

(iv) outstanding claims under the Prepetition Secured Debt Documents, existing equity interests in NCM LLC, and notes, instruments, certificates and other documents evidencing claims or interests, including credit agreements and indentures, shall be cancelled, and (A) holders of Prepetition Secured Debt Documents and NCM, Inc.

will receive 100.0% of the common membership units of the reorganized NCM LLC (the “new common membership units”) a portion of which will be reallocated to NCM, Inc.

pursuant to the NCMI 9019 Settlement (as defined within the Restructuring Support Agreement), subject to dilution, and (B) if no unsecured creditors committee is appointed in the Chapter 11 Case, then the holders of Unsecured Funded Debt Claims (as defined in the Restructuring Support Agreement) shall receive warrants, exercisable at a total equity value of $1.04 billion, for five percent of the new common membership units, subject to dilution;

(v) NCM, Inc.

shall make a capital contribution of approximately $15.0 million of cash on hand in exchange for new common membership units (the “NCMI 9019 Capital

Contribution”);

(vi) holders of Prepetition Secured Debt Documents will be issued preferred stock of NCM, Inc.

entitling the holders to voting rights equal to the economic interests held by such holders in NCM LLC;

and (vii) NCM LLC shall emerge without any debt, but if additional exit financing is needed, NCM LLC will first seek to obtain a revolving credit facility from a third party lending institution, but if, despite best efforts, NCM LLC is unable to obtain a revolving credit facility acceptable to NCM LLC’s secured lenders, then certain of NCM LLC’s secured lenders shall provide such financing in the form of a first lien term loan facility on such arm’s-length terms and conditions as to be agreed upon.

Following the transactions contemplated by the Restructuring Support Agreement, NCM, Inc.

is projected to have an aggregate ownership interest of approximately 13.8% of NCM LLC on account of the NCMI 9019 Settlement, NCM, Inc.’s ownership of Secured Notes and the NCMI 9019 Capital Contribution.

expects to continue to manage NCM LLC, the “debtor in possession”, under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

Prior to filing the Chapter 11 Case, because of potential conflicts that may arise between NCM LLC and NCM, Inc., NCM LLC appointed Carol Flaton of Hamlin Partners LLC as an independent manager at NCM, LLC to address these limited conflict matters in March 2023 (the “Independent Manager”).

This appointment of the Independent Manager does not otherwise change NCM, Inc’s position as manager of NCM LLC.

In general, as debtor in possession under the Bankruptcy Code, NCM LLC is authorized to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court.

Pursuant to “first day” motions filed with the Bankruptcy Court, the Bankruptcy Court authorized NCM LLC to conduct its business activities in the ordinary course and, among other things and subject to the terms and conditions of such orders, authorized employees at NCM, Inc.

to continue providing day-to-day management services to NCM LLC, and NCM LLC to pay employee wages and benefits and vendors and suppliers in the ordinary course for all goods and services going forward.

NCM LLC will continue to pursue approval of a proposed plan of reorganization, which will incorporate the terms of the Restructuring Support Agreement.

In addition, as part of its “first day” relief, NCM LLC received authority to use its encumbered cash collateral with the consent of certain of its prepetition secured lenders to administer the Chapter 11 Case and continue its business operations (the “Cash Collateral Order”).

Consistent with the Cash Collateral Order, NCM LLC’s normal operating cash flows are providing liquidity for NCM LLC to operate as usual and fulfill ongoing commitments to stakeholders.

We are unable to predict when NCM LLC will emerge from this Chapter 11 process.

For more information about the Chapter 11 Case refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 16—Subsequent Events of the audited Consolidated Financial Statements.

As of December 29, 2022, we faced multiple liquidity challenges due to NCM LLC’s over-levered capital structure.

On February 15, 2023, NCM LLC elected to delay an interest payment in the amount of $6.6 million under the Senior Notes due 2026 and utilize the 30-day grace period.

Further, NCM LLC has borrowings under two Revolving Credit Facilities with $217.0 million outstanding as of December 29, 2022, that mature on June 20, 2023 (Refer to Note 10—Borrowings).

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

On March 15, 2023, with the consent of the noteholders under the Unsecured Indenture (the “Unsecured Noteholders”), NCM LLC entered into a supplemental indenture that extended the grace period for an event of default involving an upcoming interest payment to April 3, 2023 (the “Grace Period”).

In addition, on March 31, 2023, NCM LLC entered into a second supplemental indenture with the Unsecured Noteholders to further extend the Grace Period to April 13, 2023.

On March 31, 2023, NCM LLC entered into an amendment to the Term Loan Credit Agreement, pursuant to which the payment of the outstanding principal due under the agreement was extended to April 13, 2023, among other modifications.

Additionally, based upon current projections, NCM LLC will not meet certain financial covenants for the period ending March 30, 2023.

We have concluded that NCM LLC’s financial condition and projected operating results, the defaults under NCM LLC’s debt agreements subsequent to December 29, 2022 and the risks and uncertainties surrounding the Chapter 11 Case raise substantial doubt as to our ability to continue as a going concern.

Accordingly, the audit report issued by our independent registered public accounting firm contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.

We are America’s Movie Network.

As the largest cinema advertising network in North America, we unite brands with young, diverse audiences through the power of movies and engage movie fans anytime and anywhere.

NCM’s Noovie ® pre-show is presented exclusively in 50 leading national and regional theater circuits including AMC, Cinemark, Regal and 47 network affiliate theaters as of December 30, 2021.

NCM’s cinema advertising network offers broad reach and unparalleled audience engagement with over 20,700 screens in over 1,600 theaters in 195 Designated Market Areas® (“DMA ® ”) (including all of the top 50).

As the largest cinema advertising network in North America, we are a media company dedicated to uniting brands with young, diverse audiences through the power of movies and pop culture.

NCM’s Noovie ® show is presented exclusively in 47 leading national and regional theater circuits including AMC, Cinemark, Regal and 44 network affiliate theaters as of December 29, 2022.

NCM’s cinema advertising network offers broad reach and unparalleled audience engagement with over 20,000 screens in over 1,500 theaters in 195 Designated Market Areas®

(“DMA ® ”) (including all of the top 50).

NCM digital and Digital-Out-Of-Home (“DOOH”) go beyond the big screen, extending in-theater campaigns into online, mobile and place-based marketing programs to reach entertainment audiences.

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

We also sell digital online and mobile advertising through our Noovie Audience Accelerator product, across our suite of Noovie digital properties, including Noovie Shuffle , Noovie Trivia , and Noovie ARcade , on third party internet sites, as well as a variety of complementary out of home venues, including restaurants, convenience stores and college campuses, in order to reach entertainment audiences beyond the theater.

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

We also sell digital online and mobile advertising through Noovie Audience Accelerator, across our suite of Noovie digital properties such as our Noovie Trivia , on third-party internet sites, as well as a variety of complementary out of home venues, including restaurants, convenience stores and college campuses, in order to reach entertainment audiences beyond the theater.

In 2022, NCM launched NCMx™, our new data, insights and analytics platform that taps the Company’s comprehensive knowledge and extensive data about moviegoer behavior to connect brands with custom audiences in theaters as well as on digital screens before and after attending movies.

The broad reach and digital delivery of our network provides an effective platform for national, regional and local advertisers to reach a large, young, engaged and affluent audience on a targeted and measurable basis.

NCM LLC has long-term ESAs with the founding members and multi-year agreements with our network affiliates, which grant NCM LLC exclusive rights in the founding member and network affiliate theaters to sell advertising, subject to limited exceptions.

In September 2019, NCM LLC entered into the 2019 ESA Amendments with Cinemark and Regal.

The 2019 ESA Amendments extended the contract life of the ESAs with Cinemark and Regal by four years, resulting in a weighted average remaining term of the ESAs with the founding members (based upon pre-COVID-19 attendance levels) of approximately 17.7 years as of December 30, 2021.

The network affiliate agreements expire at various dates between March 14, 2022 and December 2037.

The weighted average remaining term (based upon pre-COVID-19 attendance levels) of the ESAs and the network affiliate agreements together is 15.5 years as of December 30, 2021.

We believe that the broad reach and digital delivery of our network provides an effective platform for national, regional and local advertisers to reach a large, young, engaged and affluent audience on a targeted and measurable basis.

COVID-19 Impact and Outlook —The COVID-19 Pandemic has had a significant impact on the world and our business beginning in March 2020 as the United States’ government and other state and local governments issued restrictions on travel, public gatherings and other events and issued social distancing guidelines.

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

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

Beginning in 2021, the FDA approved COVID-19 vaccines, which have been widely administered throughout the United States.

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

Multiple, successful major motion pictures were released during the second half of 2021 resulting in the highest attendance numbers within our network since the start of the COVID-19 Pandemic.

During 2021 and into 2022, variants of the COVID-19 virus spread throughout the United States.

This resulted in the reinstatement of mask mandates in certain areas with increased infection rates and caused concern for some advertisers about the impact on theater attendance.

Certain information herein is provided for the fiscal year ended December 26, 2019 to provide information on more normalized operations prior to the impacts of the COVID-19 Pandemic.

These and subsequent developments are referred to as the “COVID-19 Pandemic.”

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 of approximately 16.8 years as of December 29, 2022.

The network affiliate agreements expire at various dates between May 29, 2023 and December 2037.

The weighted average remaining term of the ESAs and the network affiliate agreements together is 14.0 years as of December 29, 2022.

Cineworld Proceeding — On September 7, 2022, Cineworld Group plc, the parent company of Regal, and certain of its subsidiaries, including Regal, Regal Cinemas, Inc., a party to the ESA with NCM LLC, and Regal CineMedia Holdings, LLC, a party to other agreements with NCM LLC and NCM, Inc., filed petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the Southern District of Texas (the “Cineworld Proceeding”).

On October 21, 2022, Regal filed a motion to reject the ESA without specifying an effective date for the rejection and indicated that Regal planned on negotiating with the Company.

NCM LLC has also filed an adversary proceeding against Regal seeking declaratory relief and an injunction prohibiting Regal from breaching certain exclusivity, non-compete, non-negotiate and confidentiality provisions in the ESA by entering into a new agreement with a third-party or bringing any of the services performed by NCM LLC in-house.

On February 1, 2023, Cineworld filed a motion for summary judgment on NCM LLC’s adversary proceeding with a hearing scheduled during the second quarter of 2023.

The timing of the hearing could be impacted by the Chapter 11 Case.

Although there can be no assurances that NCM LLC’s proceeding for declaratory relief will be successful, the Company believes these exclusivity rights will survive any attempted rejection of the ESA by Regal in the bankruptcy proceeding.

As of the filing date, the Company continues to negotiate with Regal regarding the ESA and NCM LLC’s provision of advertising services.

In the event that NCM LLC’s or NCM, Inc.’s agreements with Regal and its affiliates are rejected, it could have a materially negative impact on the Company’s operations or financial condition.

COVID-19 Impact and Outlook —The COVID-19 Pandemic has had a significant impact on the world and our business beginning in March 2020 and continuing into 2023.

In 2021, theaters in key markets fully reopened, and by the end of the third quarter of 2021, all of the theaters within the Company’s network were open and multiple, successful major motion pictures were released resulting in the return of meaningful attendance.

The movie slate for the year ended December 29, 2022 improved from prior years but continued to be limited due to post-production delays and major motion picture release schedule changes.

Attendance levels increased from the year ended December 30, 2021 but were not consistent throughout the year due to timing of major motion picture releases and number of releases.

In-theater advertising revenue for the year ended December 29, 2022 remained below historical levels due in part to a lag between the recovery of attendees and advertisers, as well as current macroeconomic factors, such as rising interest rates, inflationary pressures and any potential recession, and the respective impacts on advertisers.

These and subsequent developments are referred to throughout this Annual Report as the “COVID-19 Pandemic.”

Noovie ® On-Screen Advertising

Noovie On-Screen —Our on-screen Noovie pre-show provides an entertaining pre-movie experience for theater patrons while serving as an incremental revenue source for our theater circuits.

The Noovie pre-show gives movie audiences a reason to arrive at the theater early to discover what's next, with exclusive entertainment content, in-theater gaming, and engaging advertising from national, regional and local brands, as well as long-form entertainment and advertising content provided to us under exclusive multi-year arrangements with leading media, entertainment, technology and other companies (“content partners”).

Beginning in November 2019 following the completion of the 2019 ESA Amendments, we now present two different formats of our Noovie® pre-show depending on the theater circuit in which it runs.

In Cinemark, Regal and certain affiliate theaters, the Noovie pre-show includes advertising inventory after the advertised showtime consisting of (1) a lights down segment that runs for five minutes after the advertised showtime with trailer lighting and (2) a 30- or 60-second Platinum Spot, as further described below (“Post-Showtime Inventory”).

As of December 30, 2021, theaters presenting the updated Noovie format with Post-Showtime Inventory made up approximately 57% of our network based upon pre-COVID-19 attendance levels.

All other NCM network theater circuits, which make up the remaining 43% of our network based upon pre-COVID-19 attendance levels, present the Classic Noovie pre-show, which ends approximately at the advertised movie showtime when the movie trailers begin.

The movie trailers that run before the feature film are not part of our Noovie pre-show.

Because the Noovie pre-show is customized by theater circuit, theater location/market, film rating, film genre and film title, we produce and distribute many different versions of Noovie each month.

We rotate Noovie ’s long-form content segments between theaters approximately every two weeks to ensure that frequent moviegoers are entertained by fresh content.

programming flexibility provides advertisers with the ability to target specific audience demographics and geographic locations and ensure that the content and advertising are age-appropriate for the movie audience.

We have also launched several specialty networks to cater to specific audiences, including, NCM® LuxeNet™ , which is a specialty cinema network to connect luxury brands with cultured, affluent movie audiences and NCM Black Cinema Network and NCM Hispanic Cinema Network in connection with NuTime Media, a Black-owned media sales representation company, to better serve marketers looking to reach African-American and Hispanic audiences.

All versions of the Noovie pre-show are produced by our internal creative team, which is cost-effective and gives us significant flexibility.

Noovie On-Screen —Our on-screen Noovie show provides an entertaining pre-movie experience for theater patrons while serving as an incremental revenue source for our theater circuits.

The Noovie show gives movie audiences a reason to arrive at the theater early to discover what's next, with exclusive entertainment content and engaging advertising from national, regional and local brands, as well as long-form entertainment and advertising content provided to us under exclusive multi-year arrangements with leading media, entertainment, technology and other companies (“content partners”).

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

In Cinemark, Regal and certain network affiliate theaters, after the Noovie show ends at the advertising showtime, NCM offers additional post-show advertising inventory consisting of (1) a lights down segment that runs for five minutes after the advertised showtime

with trailer lighting and (2) a 30- or 60-second Platinum Spot, as further described below (“Post-Showtime Inventory”).

As of December 29, 2022, theaters presenting the updated Noovie format with Post-Showtime Inventory made up 59.3% of our network.

All other NCM network theater circuits, which make up the remaining 40.7% of our network, present the Classic Noovie show, which ends approximately at the advertised movie showtime when the movie trailers begin, which are not part of our Noovie show.

Because the Noovie show is customized by theater circuit, theater location/market, film rating, film genre and film title, we produce and distribute many different versions of Noovie each month.

This programming flexibility provides advertisers with the ability to target specific audience demographics and geographic locations and ensure that the content and advertising are age-appropriate for the movie audience.

We have also launched several specialty networks to cater to specific audiences, including the Elevate Cinema Network, a strategic sales partnership with Spotlight Cinema Networks which combines nearly 1,500 of our premier screens with Spotlight’s existing premier network of over 1,200 screens.

This combined network provides reach and recall to brands targeting the upscale, educated, adult demographic with disposable income.

Additional specialty networks include the NCM Black Cinema Network and the NCM Hispanic Cinema Network, reaching those audiences where they over index in top DMAs.

All versions of the Noovie show are produced by our internal creative team, which is cost-effective and gives us significant flexibility while offering advertisers opportunities for sponsorship and integration into our movie and pop culture content series.

We also offer pre- and post-production advertising creative services to our clients (primarily local clients who may not have their own creative agency), as well as branded content creation for national brands for a fee.

Classic Noovie Show Structure —The Classic Noovie® pre-show is comprised of up to four segments, each approximately four to ten minutes in length.

The Company revised the structure beginning November 1, 2019, and the structure below incorporates the changes made.

Noovie Show Structure Including Post-Showtime Inventory —The Noovie show with Post-Showtime Inventory format is comprised of substantially the same segments included within the Classic Noovie show , each approximately four to ten minutes in length, as well as two additional advertising segments after the advertised showtime as described below.

The total length of the Noovie show plus our Post-Showtime Inventory is the same as the Classic Noovie show as the amount of time displayed prior to the advertised showtime is reduced by the sum of five minutes plus the aggregate length of time of the Platinum Spot, if any.

The following graphic is for illustrative purposes and is not to exact scale.

• Segment four is the first section of the Noovie pre-show and contains the entertaining content that is a core element of Noovie programming .

NCM programs exclusive Noovie content at the beginning of the show that gives audiences a look at “what’s Noovie?, ” including movies ( Noovie Backlot and Noovie Genius), music ( Noovie Soundcheck), trivia ( Name That Movie® ) and more.

• Segment three features a long-form entertainment content segment from one of our content partners.

• Segment four and Segment three are the first sections of the Noovie show which contain the entertaining content that is a core element of Noovie programming .

NCM programs exclusive Noovie content at the beginning of the show that gives audiences a look at what’s happening in the movie and pop culture arenas and features long-form entertainment from our content partners.

We launched several new Noovie editorial series in 2022 featuring celebrities, creators and journalists to appeal to both our moviegoing audience and to advertisers for sponsorship and integration opportunities.

These include The Noovie Trivia Show , where our Emmy-award winning host Maria Menounos quizzes celebrities about their career through the lens of movie trivia;

Noovieverse , which stars popular social media influencers who analyze upcoming superhero blockbuster movies;

and Perri’s Picks , starring movie expert Perri Nemiroff, who shares her insider reviews on what movies to watch and why.

• Segment two features primarily local and regional advertisements, which generally range between 15 to 90 seconds, as well as a long-form entertainment content segment from one of our content partners.

This segment also typically includes a spot for Noovie programming, such as Noovie ARcade or Noovie Trivia where audiences have the opportunity to play our featured interactive games on the big screen using their mobile phones.

This segment also typically includes a spot for Noovie programming, such as Noovie Trivia, Noovie Cultural

Celebrations (e.g.

original content around Black History Month or Hispanic Heritage Month, which can also be sponsored by advertisers), and shorter segments from the editorial series mentioned above.

• Segment one runs closest to the advertised showtime and features primarily national advertisements, which are generally 30 or 60 seconds, as well as a long-form entertainment content segment from one of our content partners.

Segment one also includes an advertisement for the founding members’ beverage supplier and a public service announcement (“PSA”).

Noovie Show Structure Including Post-Showtime Inventory —The Noovie pre-show with Post-Showtime Inventory format is comprised of substantially the same segments included within the Classic Noovie pre-show , each approximately four to ten minutes in length, as well as two additional advertising segments after the advertised showtime as described below.

The total length of the Noovie pre-show including Post-Showtime Inventory is the same as the Classic Noovie pre-show as the amount of time displayed prior to the advertised showtime is reduced by the sum of five minutes plus the aggregate length of time of the Platinum Spot, if any.

Segment one also includes an advertisement for the founding members’ beverage supplier and a courtesy public service announcement (“courtesy PSA”) (e.g.

Silence Your Cell Phones).

• The Showcase Segment features a post-showtime lights down segment with trailer lighting beginning at the advertised showtime with approximately 5 minutes of national advertisements which generally range between 30 or 60 seconds, followed by a courtesy PSA and a 30 second or a 60 second advertisement for the founding members' beverage supplier;

• The Platinum position features an additional single advertising unit that is either 30 or 60 seconds deeply embedded within the movie trailers at trailer level lighting and at similar volume levels, directly prior to the last one or two trailers preceding the feature film, which we refer to as the “Platinum Spot”.

Classic Noovie Show Structure —The Classic Noovie® show is comprised of up to four segments, each approximately four to ten minutes in length running prior to the advertised showtime.

The Company revised the structure beginning November 1, 2019, and the structure below incorporates the changes made.

The following graphic is for illustrative purposes and is not to exact scale.

• The Showcase Segment features a post-showtime lights down segment with trailer lighting beginning at the advertised showtime with approximately 5 minutes of national advertisements which generally range between 30 or 60 seconds, followed by a PSA and one or two 30 second advertisements for the founding members' beverage supplier;

• The Platinum Position features an additional single advertising unit that is either 30 or 60 seconds of the Noovie pre-show deeply embedded within the movie trailers at trailer level lighting and at similar volume levels, directly prior to the last one or two trailers preceding the feature film, which we refer to as the “Platinum Spot”.

References to the Noovie pre-show relate to both the Classic Noovie pre-show and the Noovie pre-show including Post-Showtime Inventory formats, unless specified otherwise.

References to the Noovie show relate to both the Classic Noovie show and the Noovie show including Post-Showtime Inventory formats, unless specified otherwise.

National, Regional and Local Advertising —Our cinema advertising business has a diverse customer base, consisting of national, regional and local advertisers.

National and regional on-screen advertising in the Noovie pre-show is sold on a CPM basis to national and regional clients.

National and regional on-screen advertising in the Noovie show is sold on a CPM basis to national and regional clients.

We generally sell our national advertising units across our national network by film rating or groups of ratings, or by individual film or film genre grouping.

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Local advertising is typically sold on a per-theater, per-week basis.

Noovie pre-show inventory is also available in various third-party media buying and selling software systems, which allows advertising agencies to buy cinema advertising in the “National Spot TV” marketplace where advertising is purchased by national advertisers in several markets of their own selection.

Being able to buy both TV and cinema locally in the National Spot TV marketplace makes it significantly easier for agencies to include cinema in the media mix for their clients and allows us to tap into the pool of advertising dollars budgeted for National Spot TV.

As with other premium video mediums like TV, we sell our Noovie pre-show inventory in both the upfront and scatter markets.

As with other premium video mediums like TV, we sell our Noovie show inventory in both the upfront and scatter markets.

Upfront is a term that describes the practice of buying advertising time “up front” on an annual basis for the upcoming year, purchasing inventory in advance and locking in the advertising rates (CPMs).

Consistent with the television industry's upfront booking practices, a portion of our upfront commitments have cancellation options or options to reduce the amount that advertisers may purchase that could reduce what is ultimately spent by clients that have made upfront commitments.

These options could reduce what is ultimately spent by clients that have made upfront commitments.

Scatter refers to the buying of advertising on a shorter-term basis closer to when the advertisements will run, which often results in a pricing premium compared to upfront rates.

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Beverage Advertising.

Each of the founding members has a relationship with a beverage concessionaire supplier under which it is obligated to provide on-screen advertising time as part of its agreement to purchase branded beverages sold in its theaters and we have a long-term agreement to exhibit the advertising of the founding members’ beverage concessionaires.

We have a long-term agreement to exhibit the advertising of the founding members’ beverage concessionaires.

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

Beginning in 2020 and in accordance with the 2019

ESA Amendments, the price for the time sold to Cinemark and Regal beverage suppliers increases 2% each year.

The time sold to AMC’s beverage supplier is priced equal to the greater of (1) the advertising CPM charged by NCM LLC in the previous year for the time sold to AMC’s beverage supplier and (2) the advertising CPM for the previous year charged by NCM LLC to unaffiliated third parties during segment one (closest to showtime) of the Noovie pre-show in AMC’s theaters, limited to the highest advertising CPM being then-charged by NCM LLC pursuant to the ESAs.

Beginning in 2020 and in accordance with the 2019 ESA Amendments, the price for the time sold to Cinemark and Regal beverage suppliers increases 2% each year.

The time sold to AMC’s beverage supplier is priced equal to the greater of (1) the advertising CPM charged by NCM LLC in the previous year for the time sold to AMC’s beverage supplier and (2) the advertising CPM for the previous year charged by NCM LLC to unaffiliated third parties during segment one (closest to showtime) of the Noovie show in AMC’s theaters, limited to the highest advertising CPM being then-charged by NCM LLC pursuant to the ESAs.

During 2022, we sold 60 seconds to two of the founding members and 30 seconds to one of the founding members to provide on-screen advertising for their beverage concessionaires.

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In the instance of certain theaters that are acquired by the founding members but are not incorporated into our network because of an existing on-screen advertising agreement with an alternative provider, we remain entitled to these encumbered theater beverage payments under the terms of the ESA which are treated as a reduction to the intangible asset and not classified as revenue.

Beyond the Noovie -branded content at the beginning of the pre-show, the majority of our entertainment and advertising content segments are provided to us by content partners.

Under the terms of the contracts, our content partners create original long-form entertainment content segments that are entertaining, informative or educational in nature, exclusively for our Noovie pre-show and make commitments to buy a portion of our advertising inventory at a specified CPM over a one- or two-year period with options to renew, exercisable at the content partner’s option.

The original content produced by these content partners typically features behind-the-scenes looks at the “making-of” feature films, upcoming media programming, or technology products.

Beyond the Noovie -branded content during the Noovie show, the majority of our entertainment and advertising content segments are provided to us by content partners.

Under the terms of the contracts, our content partners create original long-form entertainment content segments and make commitments to buy a portion of our advertising inventory at a specified CPM over a one- or two-year period with options to renew, exercisable at the content partner’s option.

The original content produced by these content partners typically features upcoming media programming or technology products.

In 2022, the content partner segments were between 90 and 120 seconds in length.

In 2021, we had two agreements to exhibit a 40-second courtesy “silence your cell phone” PSA reminding moviegoers to silence their cell phones and refrain from texting during feature films, one of which expired in 2021 and the other renewed its agreement to continue its courtesy PSA for 2022.

Courtesy PSA .

In 2022, we had one agreement throughout the year and one additional agreement for the fourth quarter to exhibit a 40-second “silence your cell phone” courtesy PSA reminding moviegoers to silence their cell phones and refrain from texting during feature films.

The agreement in place throughout 2022 was renewed for 2023.

Theater Circuit Messaging.

The Noovie pre-show also includes time slots for the founding members and network affiliates to advertise various activities associated with the operations of the theaters, including concessions, online ticketing partners, gift card and loyalty programs, special events presented by the theater operator and vendors of services provided to theaters, so long as such promotion is incidental to the vendor’s service or products sold in the theater.

The Noovie show also includes time slots for the founding members and network affiliates to advertise various activities associated with the operations of the theaters, including concessions, online ticketing partners, gift card and loyalty programs, special events presented by the theater operator and vendors of services provided to theaters, so long as such promotion is incidental to the vendor’s service or products sold in the theater.

This time is provided to the theater operator at no charge.

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Noovie digital products is an integrated suite of products designed to innovate the moviegoing experience in ways that help brands tap into the excitement, emotion and magic of the movies.

Noovie digital products take the Noovie experience beyond the big screen with our Noovie Trivia and Noovie ARcade gaming apps and robust audience data and digital advertising capabilities to create the perfect immersive marketing solution for brands.

Noovie Trivia – Noovie Trivia is an app that launched in 2020 which now unites all of our popular movie trivia games into one place.

Noovie Trivia lets fans level up their movie obsession and test their movie knowledge with multiple ways and games to play, including Name That Movie and Noovie Shuffle.

Noovie digital products take the Noovie experience beyond the big screen with our Noovie Trivia and robust audience data and digital advertising capabilities to create the perfect immersive marketing solution for brands.

Noovie Trivia— Noovie Trivia is an app that launched in 2020 which unites all of our popular movie trivia games into one place.

Noovie Trivia lets fans level up their movie obsession and test their movie knowledge in multiple ways with games to play, including Name That Movie and Noovie Shuffle.

New challenges are added on a regular basis.

Fans can also make their voice heard on fun movie topics through Noovie Motion Picks.

Noovie Shuffle , a collection of card-based movie-trivia mini-games, initially launched in 2019.

New games and card decks are added to Noovie Shuffle on an ongoing basis to match the current film slate and keep Noovie Shuffle fresh and challenging for players.

We also work closely with movie studios to create custom games and card decks that highlight specific new movie releases.

In 2020 we incorporated Noovie Shuffle into our Noovie Trivia app.

Name That Movie started in 2017 as a trivia segment for our Noovie® pre-show, social media channels and digital properties in order to further entertain and engage moviegoers.

Name That Movie started in 2017 as a trivia segment for our Noovie® show, social media channels and digital properties in order to further entertain and engage moviegoers and is now included within our Noovie Trivia app.

We also offer the opportunity for our advertising clients to sponsor the Name That Movie segments and incorporate advertising into the game.

In 2019, we developed and released Name That Movie iOS and Android mobile apps, and in 2020 we incorporated the game into our Noovie Trivia app.

Noovie ARcade – Since 2018, movie audiences nationwide have been able to play big screen interactive augmented reality (“AR”) games on their mobile phones by usin g Noovie ARcade, the companion app for the Noovie pre-show.

Noovie ARcade games and AR experiences have included the Ball Park® Brand Hot Dog Derby (our first-ever branded game), movie studio collaborations including Ralph Breaks the Internet and It:

Chapter Two and No Time to Die:

Road to Matera .

Noovie ARcade games can be sponsored by advertisers or customized by brands to create unique and engaging experiences for movie audiences.

Digital Advertising

Data & Digital Advertising

In 2022, we launched NCMx™, our new data, insights, and analytics platform that taps the Company’s comprehensive knowledge and extensive data about moviegoer behavior to connect brands with custom audiences in theaters, as well as on digital screens before and after attending movies.

NCM clients are able to leverage NCMx to execute advanced audience-matching against key geographic, behavioral and contextual targets on the big screen, as well as use the NCMx capabilities to retarget moviegoers with digital ads and mobile offers.

NCM provides marketers access to one of the largest collections of deterministic moviegoer data in the industry.

With over 374.4 million unique data records as of December 29, 2022, NCMx makes 26.2 million unique data records available over a 90-day look back period, delivering marketers a 360-degree view of recent consumer behavior with performance metrics to refine campaign plans and generate a better return on their advertising investment.

Neustar, iSpot, Catalina, Affinity Solutions, PlaceIQ, Crossix, Kochava and ElementalTV are all partners on the

new platform.

NCM is leading the cinema advertising industry as it transforms into a data-first media company that reaches audiences at scale with the most engaging content.

NCM’s consumer-facing digital products all feature advertising opportunities that allow brands to continue to reach movie audiences across multiple platforms, including sponsorships, digital ad inventory such as leaderboards, banner ads, half- and full-page ads and a variety of digital video ad inventory.

Our Noovie digital products are designed to not only provide

digital advertising inventory to further enhance the marketability of our cinema advertising product offerings, but also to capture exclusive first-party data.

Our Noovie® digital products are designed to not only provide digital advertising inventory to further enhance the marketability of our cinema advertising product offerings, but also to capture exclusive first-party data, which is funneled into NCMx™.

As of December 29, 2022, approximately 7.3 million movie-goers have downloaded our mobile apps.

These downloads and the acquisition of second- and third- party data, including deterministic ticket transaction data from exhibitors and geo-location and micro-event data for moviegoers that enter theaters in our network, have resulted in data sets of over 274 million as of December 30, 2021.

Noovie Audience Accelerator – In addition to our ad-supported consumer-facing digital products, our Noovie Audience Accelerator digital product, formerly known as Cinema Accelerator , expands cinema advertising campaigns beyond the big screen to reach movie audiences wherever they seek out movie content online and on mobile devices.

Noovie Audience Accelerator identifies moviegoers through our first-, second- and third-party data sets.

Noovie Audience Accelerator identifies moviegoers through our first-, second- and third-party unique data records.

We can target specific demographics, genres or layer on other data to provide our clients with a match against their target audience.

Digital ads are then distributed through multiple channels, including online and mobile banners, online and mobile pre-roll video and social media newsfeeds through our owned and operated ad inventory as well as third-party ad inventory across multiple platforms including the Internet, mobile devices and over-the-top (OTT) devices/connected televisions (CTV) to reach moviegoers wherever they may be seeking entertainment information and content.

We sell NCM’s digital products through a digital sales group that is embedded as part of our national and local sales organizations to enable collaborative, integrated selling.

We sell NCM’s data platform and digital products through a digital sales group that is embedded as part of our national and local sales organizations to enable collaborative, integrated selling.

We believe that our new and upcoming digital products can be sold in combination with in-theater advertisements as integrated marketing packages as discussed in “Business—Our Strategy”.

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Under the terms of the ESAs, the founding members also have the right to install a second network of additional screens in their theater lobbies which would not display our LEN programming, but would be used to promote strategic programs or products sold in their theater concessions, bars and dining operations, online ticketing partner promotions, gift card and loyalty programs and special events presented by the founding member and vendors of services provided to theaters, so long as such promotion is incidental to the vendor’s service.

Lobby Promotions —We also sell a wide variety of advertising and promotional products in theater lobbies.

In May 2022, the Company’s Lobby Entertainment Network launched a programmatic offering through partnership with Place Exchange, a leading supply-side platform (SSP) for programmatic out-of-home media.

This new automated offering allows advertisers to access and purchase available LEN programming through partner demand-side platform (DSP) websites.

The new partnership now enables advertisers to reach the largest network of lobby screens in movie theaters across the country programmatically for the first time.

Lobby Promotions —We also sell a wide variety of advertising and promotional products in theater lobbies across our founding members and network affiliates.

These products can be sold individually or bundled with on-screen, LEN or digital advertising.

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Digital Out-of-Home Products

NCM’s new Digital Out-of-Home (“DOOH”) group is embedded as part of our national and local sales organizations and was created in October 2020 to further unite brands with the power of movies by extending movie-centric Noovie® entertainment content, trivia and advertising beyond movie theaters to a variety of complementary venues, including restaurants, convenience stores, and college campuses.

In 2021, NCM sold DOOH media inventory on a national, regional, local and programmatic level in relationships with digital place-based properties including ATM.TV, Trooh, Coinstar and Ziosk.

NCM’s Digital Out-of-Home (“DOOH”) group is embedded as part of our national and local sales organizations and was created in October 2020 to further unite brands with the power of movies by extending movie-centric Noovie® entertainment content, trivia and advertising beyond movie theaters to a variety of complementary venues, including restaurants, convenience stores and college campuses.

In 2022, NCM sold DOOH media inventory on a national, regional, local and programmatic level in relationships with digital place-based properties including ATM.TV, Trooh and Ziosk.

Noovie® On-Screen is distributed across NCM LLC’s national theater network — the largest digital in-theater network in North America — through the use of our proprietary DCN and Digital Content Software (“DCS”).

With the DCN and DCS, we are able to schedule, deliver, play and reconcile advertising and entertainment content for the Noovie pre-show and the LEN on a national, regional, local, theater and auditorium level.

With the DCN and DCS, we are able to schedule, deliver, play and reconcile advertising and entertainment content for the Noovie show and the LEN on a national, regional, local, theater and auditorium level.

The DCN is the combination of a satellite distribution network and a terrestrial management network.

We also employ a variety of technologies that aid in distribution where satellite delivery is not available to provide service to our network of theaters.

The DCN is controlled by our Customer Experience Center located in NCM’s headquarters in Centennial, Colorado, which operates 12 hours a day, seven days a week to proactively monitor and manage our network.

NCM's DCN dynamically controls the quality, placement, timing of playback and completeness of content within specific auditoriums, and it also allows us to monitor and initiate repairs to the equipment in our digital network of theaters.

Advertising and entertainment content for our Noovie pre-show and LEN is uploaded from our Customer Experience Center to our satellite distribution network and is delivered via multicast technology to the theaters in our network and received by our Alternative Content Engine.

The DCN is integrated with NCM’s cinema advertising management system to seamlessly schedule and distribute advertising content.

NCM's integrated system dynamically controls the quality, placement, timing of playback and completeness of content within specific auditoriums, and it also allows us to monitor and initiate repairs to the equipment in our digital network of theaters.

Advertising and entertainment content for our Noovie show and LEN is uploaded to our cinema advertising management system and is delivered via multicast technology to the theaters in our network and received by our Alternative Content Engine.

The Alternative Content Engine holds the content until displayed in specified theater auditoriums and lobbies according to contract terms.

Each theater auditorium and lobby has hardware and software architecture that controls the content to be shown.

After playback of content, confirmation of playback is returned via satellite to our Customer Experience Center to be included in “post” reports provided to our advertising clients.

Prior to the COVID-19 Pandemic, more than 650 million moviegoers annually attended theaters in our network.

In 2021, more than 250.7 million moviegoers attended theaters that are currently under contract to present the Noovie pre-show.

Each theater auditorium and lobby has hardware and/or software architecture that controls the content to be shown.

After playback of content, confirmation of playback is returned to NCM and is included in “post” reports provided to our advertising clients.

In 2022, more than 394 million moviegoers attended theaters that are currently under contract to present the Noovie show.

A summary of the screens and theaters in our advertising network is set forth in the table below:

(As of December 29, 2022)

As of December 30, 2021, our Noovie pre-show was displayed on network movie screens using digital projectors.

As of December 29, 2022, our Noovie show was displayed on network movie screens using digital projectors.

Almost all screens within our network receive content through our DCN and are equipped with more powerful digital cinema projectors, with the remainder comprised of LCD projectors.

The limited screens not connected to our DCN display national and regional advertisements on digital projectors with content delivered on USB drives that are shipped to the theaters via overnight delivery services.

Human Capital Resources

We had 297 full-time employees as of December 29, 2022.

As part of the liquidity measures taken in response to the COVID-19 Pandemic, 85 of our full-time employees were working on a reduced schedule and 17 of our full-time employees were temporarily furloughed as of December 30, 2021.

Additionally, the Company has experienced increased levels of

voluntary and involuntary turnover throughout the COVID-19 Pandemic while adapting to the current staffing needs of the Company.

Effective January 28, 2022, the Company discontinued the temporary personnel-related measures implemented in response to the COVID-19 Pandemic and returned all part-time and reduced salary individuals to full-time and full pay.

Our employees are located in our Centennial, Colorado headquarters, in our advertising sales offices in New York, Los Angeles, and Chicago, our digital development offices in Los Angeles and New York and our software development office in Minneapolis.

Our employees are located in our Centennial, Colorado headquarters, in our advertising sales offices in New York, Los Angeles and Chicago and our digital development offices in Los Angeles and New York.

We also have many local advertising account executives and field maintenance technicians that work primarily from their homes throughout the U.S.

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The Human Resources department also focuses on defining and embedding the NCM culture into all people-related practices and policies to help us recruit, develop and retain a world-class team to grow the business.

The Company has also implemented a number of targeted initiatives to increase employee engagement and satisfaction, including surveys, career and succession planning and analyzing our total rewards program.

Total Rewards —We invest in our employees by providing comprehensive benefits and compensation packages.

Our benefits packages include comprehensive health insurance with a wellness program for all employees working 30 hours or more a week, parental leave for all new parents for the birth or adoption of a child or placement of foster care, 401k plan with a comprehensive financial wellness component and voluntary benefits employees can tailor to their specific needs ranging from additional life insurance to pet insurance.

Health & Safety - NCM is committed to the safety, health and welfare of its employees.

The COVID-19 Pandemic led the Company to evaluate its practices and implement processes for the protection of employees.

We have established a Safety Committee to recommend and implement safety measures for the Company and tailored to each of our office locations.

These extensive safety measures are actively managed and updated based on CDC and state and local guidelines, and, in November 2021, the Company announced a COVID-19 vaccine mandate for all employees.

Our benefits packages include comprehensive health insurance with a wellness program for all eligible employees, parental leave for all new parents for the birth or adoption of a child or placement of foster care, 401k plan with a comprehensive financial wellness component and voluntary benefits employees can tailor to their specific needs ranging from additional life insurance to pet insurance.

Our revenue and operating results are seasonal in nature, coinciding with the timing of marketing expenditures by our advertising clients and to a lesser extent the attendance patterns within the film exhibition industry.

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Advertising revenue is primarily correlated with new product releases, advertising client marketing priorities and economic cycles and to a lesser extent theater attendance levels.

Seasonal demand during the summer is driven by the absence of alternative attractive advertising mediums and during the winter holiday season due to high client demand across all advertising mediums.

Seasonal demand during the summer is driven by the absence of alternative attractive advertising mediums and during the winter holiday season due to high client demand across all advertising

The actual quarterly results for each quarter could differ materially depending on these factors or other risks and uncertainties.

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There can be no assurances that seasonal variations will not materially affect our results of operations in the future.

The following table reflects the quarterly percentage of total revenue for the fiscal years ended 2019, 2020 and 2021:

The following table reflects the quarterly percentage of total revenue for the fiscal years ended 2020, 2021 and 2022 and a historic average for FY 2016-2019 for comparison given the impacts of COVID-19 on the film release schedule and audience behaviors:

Quarter Second

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FY 2022 14.4 % 26.9 % 21.9 % 36.8 %

FY 2016-2019 Average 17.3 % 24.8 % 25.6 % 32.3 %

Government Regulations

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• Our advertising network consisted of 20,095 screens (16,062 operated by the founding members) located in 1,598 theaters (1,182 operated by the founding members) in 47 states and the District of Columbia, including each of the top 25, 50 and 100 DMAs®, and 195 DMAs® in total, as of December 29, 2022;

• Over 250.7 million people attended theaters in our network in 2021 and 71%, 67% and 64% of the total theater attendance in theaters that present cinema advertising in the top 10, 25 and 50 U.S.

• Over 394 million people attended theaters in our network in 2022 represented 72.2%, 68.4% and 65.2% of the total theater attendance in theaters that present cinema advertising in the top 10, 25 and 50 U.S.

DMAs®, respectively, and 61.3% of all DMAs® nationally, providing an attractive platform for national advertisers who want exposure in larger markets or on a national basis;

• The average screens per theater in our network during 2021 was 12.4 screens, 1.8 times the U.S.

theater industry average;

• The aggregate annual attendance per screen of theaters included in our network during 2019 was 30,714, versus the U.S.

theater industry average attendance per indoor screen of 28,209, using metrics reported by the National Association of Theatre Owners.

Scalable, state-of-the-art digital content distribution technology —Our use of the combination of satellite and terrestrial DCN network technology, combined with the design and functionality of our DCS and Customer Experience Center infrastructure, makes our network efficient and scalable and also allows us to target specific audiences and provide advertising scheduling flexibility and reporting.

National, local and regional advertisers are generally able to run their ads in the Noovie® pre-show less than 72 hours following the close of the proposal which is comparable to the lead time of television advertising, giving businesses that rely on time-sensitive promotional advertising strategies the opportunity to take advantage of the power of cinema.

• The average screens per theater in our network during 2022 was 12.6 screens;

• The aggregate annual attendance per screen of theaters included in our network during 2022 was 19,647.

infrastructure, makes our network efficient and scalable and also allows us to target specific audiences and provide advertising scheduling flexibility and reporting.

National, local and regional advertisers are generally able to run their ads in the Noovie® show less than 72 hours following the close of the proposal which is comparable to the lead time of television advertising, giving businesses that rely on time-sensitive promotional advertising strategies the opportunity to take advantage of the power of cinema.

The Company plans to further decrease this lead time following additional upgrades of our cinema advertising management system, as further discussed below.

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Further, 44.0% of our moviegoers have a household income greater than $100,000 (versus 37.0% of the general population), with a median moviegoer household income of $91,000, and 38.0% have received a bachelor’s degree or higher (versus 33.0% of the general population) according to the 2021 Doublebase GfK MRI Study.

Because of the impact of cinema’s state-of-the-art immersive video and audio presentation, we also believe that movie audiences are highly engaged with the pre-show advertising and entertainment content that they view in our theater environment.

The results from a Cross Screen Engagement study conducted in 2021 for the Company by Reach 3/Rival shows that cinema advertising delivers two times the engagement and almost three times the ad recall versus both television and social media.

Further, based upon an average of 5 years of research studies including 262 advertisers across various categories, advertising on the big screen has generated brand lift for the critical KPIs of awareness (increase of 64%) and consideration (increase of 24%).

Additionally, according to an intercept study conducted by eWorks, a market research company, a Platinum Spot advertiser experienced 85% brand recall, 136% lift in unaided awareness and a 39% increase in consideration after advertising with the Company in 2021.

Along with the big screen, our DOOH screens drive impact.

Mfour, a mobile based research company, conducted an ad effectiveness study in 2021 for the Company’s DOOH network of ATM.TV screens.

The study found that the major beverage advertiser realized a 20% lift in unaided awareness among the coveted adult 18-34 demographic, proving the value of the ad placement for this beverage advertiser in applicable convenience stores.

World-class entertainment and innovative, branded pre-feature content —The film content created by Hollywood studios is considered by many to be the finest entertainment content in the world, which creates a highly-desirable advertising environment for brands.

We believe that our Noovie pre-show program provides a high-quality entertainment experience for theater audiences and an effective marketing platform for advertisers.

Because of the impact of cinema’s state-of-the-art immersive video and audio presentation, we also believe that movie audiences are highly engaged with the Noovie show advertising and entertainment content that they view in our theater environment.

In a recent study performed by Lumen, a leader in attention measurement, moviegoers viewed advertisements in theaters for twice as long compared to advertisements on television and up to 10 times longer than advertisements on social media platforms.

Additionally, moviegoers paid four to seven times greater attention to the advertisements shown in theaters than the advertisements shown on television or social media platforms.

Further, based upon an average of 5 years of research studies including 262 advertisers across various categories, advertising on the big screen has generated brand lift for the critical key performance indicators of awareness (increase of 64.0%) and consideration (increase of 24.0%).

Additionally, according to an intercept study conducted by eWorks, a market research company, a Platinum Spot advertiser experienced 88.0% brand recall, with significant lifts in unaided awareness (increase of 100.0%), favorable opinion (increase of 21.0%) and future consideration (increase of 19.0%) after advertising with the Company in 2022.

World-class entertainment and innovative, branded pre-feature content —The film content created by Hollywood studios is considered some of the finest entertainment content in the world, which creates a highly-desirable advertising environment for brands.

We believe that our Noovie show program provides a high-quality entertainment experience for theater audiences and an effective marketing platform for advertisers.

By partnering with leading media, entertainment, technology and other companies, we are able to provide better original content for our audience and more impact for the advertiser.

Because we offer local and national “pods” within our Noovie pre-show (that is, groupings of ads interspersed among video content), our format consistent with the grouping of ads on television networks, which allows advertisers to more easily integrate our Noovie® pre-show into traditional sight-sound-and-motion media buys.

Because we offer local and national “pods” within our Noovie show (that is, groupings of ads interspersed among video content), our format is consistent with the grouping of ads on television networks, which allows advertisers to more easily integrate our Noovie® show into traditional sight-sound-and-motion media buys.

Prime movie audience data, measurability and targeting —As with many other advertising mediums, we are measured by third-party research companies.

Prior to September 2020, Nielsen measured our audience.

In January 2021, Epicenter Experience LLC began measuring our audience, including the total attendance that are in their seats during our Noovie pre-show.

Additionally, unlike some other advertising mediums, we also receive attendance information by film at least monthly, by rating and by screen for all of the founding member theaters, and by location for the theaters operated by our network affiliates at least monthly, which allows us to report the actual audience size for each showing of a film where our Noovie pre-show played.

Epicenter Experience LLC measures our audience, including the total attendance that are in their seats during our Noovie show.

Additionally, unlike some other advertising mediums, we also receive attendance information by film, by rating and by screen at least monthly for all of the founding member theaters, and by location for the theaters operated by our network affiliates at least monthly, which allows us to report the actual audience size for each showing of a film where our Noovie show played.

We believe that the ability to provide detailed information to our clients gives us a distinct competitive advantage over traditional media platforms whose measurement is based only on extrapolations of a very small sample of the total audience.

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To further enhance the connection between brands and movie audiences, we accumulate audience data from several sources within our DMP.

This audience data is then leveraged for the targeting of ad campaigns and can also serve to deliver closed-loop attribution reporting.

This audience data is then leveraged for the targeting of ad campaigns and can also deliver closed-loop attribution reporting.

We expect to continue to enhance the capabilities of the platform in 2023 by continuing to gather first-party data through our Noovie digital products, as well as additional second- and third-party data sources and segments.

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We believe these multiple marketing impressions throughout the entire entertainment experience allow our advertisers to extend the exposure for their brands and products and create a more engaging relationship with movie audiences in every stage of their movie journey.

Additionally, our digital products provide us with valuable, exclusive first party data which we can use with our Noovie Audience Accelerator product to better reach advertising clients’ target audiences with higher degrees of accuracy and measure business outcomes more accurately.

Additionally, our new NCMx™ data platform makes cinema advertising more measurable, targetable and attributable than ever before.

Our exclusive first and second party data, including the valuable data derived from our owned and operated digital products, help us

power our Noovie Audience Accelerator product to better reach advertising clients’ target audiences with higher degrees of accuracy and measure a variety of business outcomes more accurately.

Contractual theater circuit and advertiser relationships —Our exclusive multi-year contractual relationships with our founding members and network affiliates allow us to offer advertisers a national network with the scale, flexibility and targeting to meet their marketing needs.

Our exclusive contractual relationships with our content partners and PSA sponsors, as well as our agreements to satisfy the founding members’ on-screen marketing obligations to their beverage concessionaires, provide us

with a significant upfront revenue commitment, accounting for approximately 29%, 27% and 23% of our total revenue for the years ended December 30, 2021, December 31, 2020 and December 26, 2019, respectively.

Our exclusive contractual relationships with our content partners and courtesy PSA sponsors, as well as our agreements to satisfy the founding members’ on-screen marketing obligations to their beverage concessionaires, provide us with a significant upfront revenue commitment, accounting for approximately 25.6% and 29.1% of our total revenue for the years ended December 29, 2022 and December 30, 2021, respectively.

In addition, our participation in the annual advertising upfront marketplace has allowed us to secure significant annual upfront commitments from national advertisers looking to secure premium cinema inventory.

These upfront commitments accounted for approximately 24%, 28% and 14% of our total revenue for the years ended December 30, 2021, December 31, 2020, and December 26, 2019, respectively.

Due to the COVID-19 Pandemic, the Company was not able to participate in the 2021 upfront market, and thus, outside of content partner and PSA agreements, the majority of 2021 deals were sold in the scatter market.

These upfront commitments accounted for approximately 30.4% and 23.9% of our total revenue for the years ended December 29, 2022 and December 30, 2021, respectively.

Due to the COVID-19 Pandemic, the Company was not able to participate in the 2021 upfront market, and thus, outside of content partner and courtesy PSA agreements, the majority of 2021 deals were sold in the scatter market.

Strong operating margins with limited capital requirements —Our annual operating income and Adjusted OIBDA margins from our IPO through the year ended December 26, 2019 were consistently strong, ranging from approximately 33.1% to 38.7% and 46.5% to 51.5%, respectively, over the previous five years.

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Our capital expenditures were 1.7% and 5.6% of revenue for the years ended December 29, 2022 and December 30, 2021, due to the impact of the COVID-19 Pandemic on our operations.

For the year ended December 30, 2021, our capital expenditures and other investments were $6.5 million, of which $1.7 million was related to investments in our digital infrastructure, $1.5 million related to certain implementation and prepaid costs associated with cloud computing arrangements related to the planned upgrade of our end-to-end order management and scheduling system that was implemented in the first quarter of 2021 and $1.6 million associated with upgrades to our existing systems both related to the planned upgrade of our cinema advertising management system.

Given the impact of the COVID-19 Pandemic on our operations, our current focus is on cash containment and non-essential capital expenditures were reduced in 2020 and 2021 accordingly.

Following the normalization of our operations, we believe our historical level of Adjusted OIBDA and capital expenditures should provide us with the strategic and financial flexibility to pursue the further expansion of our national theater network, invest in our digital products and other growth opportunities, opportunistically repay NCM LLC’s debt and continue to make dividend payments to our stockholders.

Further, due to the network equipment investments made in recent years by our founding members and network affiliates in new and acquired theaters, ESA provisions requiring founding members to make future investments for equipment replacements, and the scalable nature of our Customer Experience Center and other infrastructure, we do not expect any necessary major capital investments to grow our operations as our network of theaters continues to expand.

For the year ended December 29, 2022, our capital expenditures and other investments were $4.2 million, of which $1.9 million were associated with digital product development;

$0.9 million were associated with upgrades to our existing systems related to the planned upgrade of our cinema advertising management system;

$0.4 million were associated with network affiliate additions;

and $0.1 million were for certain implementation and prepaid costs associated with Cloud Computing arrangements.

Given the impact of the COVID-19 Pandemic on our operations, our current focus is on cash containment and non-essential capital expenditures were reduced in recent years accordingly.

Due to the network equipment investments made in recent years by our founding members and network affiliates in new and acquired theaters, ESA provisions requiring founding members to make future investments for equipment replacements, and the scalable nature of our Customer Experience Center and other infrastructure, we do not expect any necessary major capital investments to grow our operations as our network of theaters continues to expand.

As we continue to move our technology to cloud based Software as a Service (“SaaS”) platforms, we will continue to reduce our annual capital expenditure spending.

However, operating expenses associated with the SaaS licenses will continue to increase.

Certain implementation costs of our SaaS platforms were capitalized during the implementation period and are recognized within operating income over the term of the SaaS contract after the systems are fully implemented.

We are continuing to pursue a growth strategy that we believe will create significant stockholder value following the normalization of our operations, making NCM a unique investment vehicle by delivering a substantial dividend driven by long term revenue and free cash flow growth.

We are continuing to pursue a growth strategy that we believe will create significant value following the normalization of our operations.

Our strategy includes the following three key components:

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We intend to drive an increase in value through innovation and optimization of our current product offering.

Achieving one of our key initiatives in this strategy, we introduced new inventory in our Noovie® pre-show after the advertised showtime within Cinemark and Regal theaters following the 2019 ESA Amendments.

Achieving one of our key initiatives in this strategy, we introduced new inventory following our Noovie® show after the advertised showtime within Cinemark and Regal theaters following the 2019 ESA Amendments.

This Post-Showtime Inventory consists of a total of five minutes between the lights down segment beginning just after the advertised movie showtime and including trailer lighting and the 30- or 60-second Platinum Spot deeply embedded within the movie trailers with trailer lighting and full trailer volume.

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We believe our local and regional clients will also benefit from better inventory as their placement will now be closer to the advertised showtime.

We introduced this new inventory at select network affiliate theaters beginning in early 2020 and plan to continue to work toward expanding the portion of our network including this new inventory.

We believe this higher value inventory, combined with an entertaining and engaging pre-show program that is integrated with our Noovie digital ecosystem, provides a unique cross-platform premium video product that will stand out in the media marketplace.

We introduced this new inventory at select network affiliate theaters beginning in early 2020, expanding throughout 2021 and 2022, and plan to continue to work toward expanding the portion of our network including this new inventory.

We believe this higher value inventory, combined with an entertaining and engaging show program that is integrated with our Noovie digital ecosystem, provides a unique cross-platform premium video product that will stand out in the media marketplace.

We also believe it will help mitigate the potential future impact of reserved seating on our business.

It is the Company’s intention to increase the number of affiliate theaters in our network showing the improved Noovie pre-show format featuring the premium Post-Showtime Inventory.

While adoption across our affiliate network is expected to take some time, 44% of our network affiliates are running our Post-Showtime Inventory as of December 30, 2021, which including Regal and Cinemark, accounted for approximately 57% of our total network attendance based on 2021 levels.

It is the Company’s intention to increase the number of affiliate theaters in our network showing the improved Noovie show format followed by the premium Post-Showtime Inventory.

While adoption across our affiliate network is expected to

take some time, 55.6% of our network affiliates are running our Post-Showtime Inventory as of December 29, 2022, which including Regal and Cinemark, accounted for 59.3% of our total network attendance based on 2022 levels.

Our relationships with our exhibitors are a key focus of our business.

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In January 2021, we entered into an exhibitor agreement with Harkins Theaters, the fifth largest exhibitor in the U.S., increasing our network by over 501 screens and 33 theaters beginning in May 2021 through December 2037.

In September 2022, we entered into an exhibitor agreement with VIP Cinemas, a family-owned and operated circuit of seventeen theaters across eight states.

Under the terms of the ESAs and common unit adjustment agreement with the founding members and our network affiliate agreements, all new theaters built or acquired (subject to existing advertising sales agreements) by the founding members or network affiliates will become part of our network.

Including our founding members and network affiliates, our net screens have increased in each of the last ten fiscal years prior to the year ended December 30, 2021, other than the fiscal year ended December 31, 2020.

Including our founding members and network affiliates, our net screens have increased in eight out of the last ten fiscal years .

We believe this expansion continues to improve our geographic coverage and enhances our ability to compete with other national advertising mediums, which allows our exhibitor clients to maximize the advertising value of their audiences.

In 2021, NCM teamed up with NuTime Media, a Black-owned media advertising sales representation company, to better serve marketers looking to reach Black and Hispanic audiences.

Under our arrangement, we formed two specialty cinema advertising networks — the Black Cinema Network and Hispanic Cinema Network — in the U.S.

to directly serve those demographics.

NuTime Media will assist the Company in selling advertising for these new specialty networks.

In 2022, we launched several specialty networks to cater to specific audiences, including the Elevate Cinema Network, a strategic sales partnership with Spotlight Cinema Networks which combines nearly 1,500 of our premier screens with Spotlight’s existing premier network of over 1,200 screens.

This combined network provides reach and recall to brands targeting the upscale, educated, adult demographic with disposable income.

We also created NCM Black Cinema Network and NCM Hispanic Cinema Network in connection with NuTime Media, a Black-owned media sales representation company, to better serve marketers looking to reach African-American and Hispanic audiences.

Also in 2022, we launched NCMx™, our new data, insights, and analytics platform that taps the Company’s comprehensive knowledge and extensive data about moviegoer behavior to connect brands with custom audiences in theaters as well as on digital screens before and after attending movies.

Our valuable unique data records consist of both our own NCM first-party data from our owned-and-operated digital products, as well as a variety of key second- and third-party data addressable consumer records, including location-based data that allows us to track when our audiences go to the movie theater to see our Noovie show and where they go in the days and weeks afterwards.

NCMx has proven to be a highly successful tool in attracting existing and new advertisers for NCM.

Diversify our Revenue Model

We are also reimagining the Noovie® pre-show to strive to increase revenue and grow our advertiser base by developing branded content, sponsorships and integration opportunities which also drive moviegoer entertainment.

We have developed various segments that we plan to launch in 2022 including Perri’s Picks, the Noovie Trivia Show, and Noovie Unwind.

We are also reimagining the Noovie® show as we strive to increase revenue and grow our advertiser base by developing branded content, sponsorships and integration opportunities which also drive moviegoer engagement.

We have developed and launched various segments in 2022 including The Noovie Trivia Show , Noovieverse , Perri’s Picks , Noovie Unwind and Noovie Cultural Celebrations.

Our Noovie Studios in-house creative team develops and produces original storytelling content for advertisers for a fee, with content tied to these new Noovie show segments or fully customized based on brand needs.

We intend to build and monetize digital and data driving solutions.

We continue to invest in the creation of compelling digital entertainment products and expand our Noovie digital ecosystem and user base of movie fans with NCM owned-and-operated products like Noovie Trivia (including Noovie Shuffle and Name That Movie) and Noovie ARcade.

These products create new ways for brands to engage with movie audiences beyond the big screen, reaching them anytime (before and after the movie) and anywhere with new higher-margin digital ad inventory and creating valuable addressable first-party customer data.

We expect to then monetize this data through advertising sales and sponsorships, as well as by leveraging our Noovie Audience Accelerator product.

In 2022 we plan to launch player-to-player functionality within our Noovie Trivia app allowing players to face their friends and fellow movie-goers on the app.

We also expect to launch a Noovie Rewards program across all of our digital products to further incentivize movie-goers to download and play the apps and increase consumer engagement and retention of existing users.

Along with growing our digital products, we plan to build a data-driven business that will allow us to meet the needs of today’s modern video advertising marketplace.

We had 171.0 million and 274.0 million first-, second- and third-party data sets as of December 31, 2020 and December 30, 2021, respectively.

These valuable data sets consist of both our own NCM first-party data from our owned-and-operated digital products, as well as a variety of key second- and third-party data addressable consumer records, including location-based data that allows us to track when our audiences go to the movie theater to see our Noovie pre-show and where they go in the days and weeks afterwards.

This initiative will allow us to re-target audiences with digital advertising through our Noovie Audience Accelerator product and increase the value and effectiveness of cinema campaigns for our advertisers.

It is important that we accelerate the growth and scale of our theater audience data to a critical mass to be able to effectively use that audience data to deliver value to our clients.

It is that scale that we believe will make our NCM digital capabilities increasingly attractive to advertisers, especially to national brands who buy both our national and regional inventory.

Along with growing our digital products, we plan to expand upon NCMx™, our data-platform that allows us to meet the needs of today’s modern video advertising marketplace.

It is important that we accelerate the growth, scale, targeting and measurability of our theater audience data to maintain a critical mass to be able to effectively use that audience data to deliver value to our clients.

It is that scale that we believe will make our NCM digital and data capabilities increasingly attractive to advertisers, especially to national brands who buy both our national and regional inventory.

We also intend to enter into synergistic business opportunities.

In 2020, NCM's DOOH group was created to further unite brands with the power of movies by extending movie-centric entertainment content, trivia and advertising beyond theaters to a variety of complementary Digital Out-Of-Home platforms.

NCM is now able to combine the strengths and effectiveness of Cinema, Digital and Place-Based media together to create innovative, integrated campaigns that engage movie fans anytime and anywhere.

We continued to strategically add partners throughout 2021, including Ziosk, ATM.TV and Trooh.

NCM's DOOH group serves to further unite brands with the power of movies by extending movie-centric entertainment content, trivia and advertising beyond theaters to a variety of complementary Digital Out-Of-Home platforms.

NCM is now able to combine the strengths and effectiveness of Cinema,

Digital and Place-Based media together to create innovative, integrated campaigns that engage movie fans anytime and anywhere through our partnerships with Ziosk, ATM.TV and Trooh.

Optimize Operation Effectiveness and Efficiency

We intend to ensure our technology infrastructure is built to support sustained revenue growth.

Our first initiative in this process is to further enhance our cinema advertising management system implemented in January of 2021 to allow for self-

serve programmatic purchasing for certain of our product offerings beginning with LEN.

We expect to finalize the functionality for LEN in 2022, followed by local and national onscreen programmatic.

Our first initiative in this process is to further enhance our cinema advertising management system implemented in January of 2021 to allow for self-serve programmatic purchasing for certain of our product offerings beginning with LEN.

We finalized the functionality for LEN in 2022, and expect to follow this with local and national onscreen programmatic in 2023.

Intellectual Property Rights

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We have secured U.S.

trademark registrations for NCM ® , National CineMedia ® and Noovie® .

trademark registrations for NCM ® , National CineMedia ®, Noovie® and NCMx™ .

It is our practice to defend our trademarks and other intellectual property rights, including the associated goodwill, from infringement by others.

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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-K

Item 1. Business